By Kim Morton, Guidewire

Billing was once known (and is still often considered) as a simple "back-office" function delivered as a built-in component of policy administration systems. Older policy systems were designed primarily to sell and manage policies, with the billing functionality often little more than an afterthought. As one carrier I talked to summed it up, "As long as the system was able to get the bill out the door, the billing component served its purpose."But, that was then - before policyholders started to demand flexible payment options and bill plans; and before the rise of direct sell carriers. Add in today's economic climate, and carriers are starting to realize how vital billing is to customer service and retention. After all, billing is often their only ongoing communication with the policyholder, prompting more and more carriers to take a serious look at standalone billing systems.

Today's tech-savvy consumers have come to expect flexibility and quick response when it comes to service. Customers with multiple policies want a consolidated bill. They expect a choice of billing cycles (annual, quarterly or monthly) with the option to change their billing cycle whenever and as often as they wish. It all sounds simple enough, that is, until a carrier takes a closer look at the billing functionality delivered in their policy administration systems. Standalone billing systems were designed with today's customers and their needs, desired flexibility, and expectations for quick service in mind.

Besides the customer service issues, shortcomings in billing can also seriously impact compliance. Since compliance is all about dotting the 'i's and crossing the 't's in case of the dreaded audit; good compliance requires that financial data is of the highest quality, rigorously recorded, and easy to access, analyze, and report. Many legacy policy administration systems fail on all these compliance 'must haves', where as modern standalone billing systems are designed to address today's complex compliance needs, and offer the flexibility to continue to adjust to the ever-changing and ever-more-complex compliance landscape.

Lastly, many carriers still rely on multiple policy administration systems to support their respective lines of business. Aside from the obvious on-going maintenance challenges, customer service reps often have to access these multiple systems to field even the simplest billing inquiries from customers. It's nearly impossible for them to easily and quickly gain a comprehensive view of a customer's billing status or history. Implementing a standalone billing application allows carriers to achieve the benefits of centralized billing without the effort, expense, or risk of a full-scale policy system replacement project.

If a carrier is planning to modernize their policy administration environment, they should make sure they aren't leaving billing in the dark ages. Too many times I've heard the story of a carrier spending millions on a new policy system with the primary goal of launching new products, only to discover that while the new policy administration system may get the bill out the door, these systems often do little to capitalize on the new found product features and flexibility. This discovery is prompting carriers to take a much needed closer look at billing systems as a critical core process which can greatly impact the carrier's bottom line and all important customer service.

About the Author: Kim Morton is Guidewire's global product marketing director for the vendor's BillingCenter solution. She can be reached at 518-674-5607 or kmorton@guidewire.com.Implementing a standalone billing application allows carriers to achieve the benefits of centralized billing without the effort, expense, or risk of a full-scale policy system replacement project.