August 20, 2013

Consumers encompass dozens, if not hundreds, of potential characteristics. But there's likely one they all share: No one likes paying bills. Luckily for that majority, the digital age provides a number of ways to, if not forgo the actual exchange of money entirely, take the sting out of writing and mailing numerous checks.

As is the case in many other industries, most of the biggest insurance companies offer some kind of e-billing capability. But recently, insurers of all sizes have begun even more enhancement of the billing process in order to provide the best experience for their customers at what's likely the most common touch point between them -- whether via a website or portal or, increasingly, on a mobile platform.

"There is something to the phenomenon that billing has gotten hot again," says Karen Furtado, partner at advisory firm SMA. "We assume everyone can do an e-bill, but not everyone can do it."

SMA research has found that billing-specific replacement activity is particularly high among smaller insurers, Furtado says. It's important to note that companies that used to simply take whatever billing capability was included with their other systems are now separating it out so they can provide the same experience as their larger competitors.

"These types of capabilities are assumed to be available across the board, and you have to keep up with the big boys," she says. "As premium price comes down and you can do as much as you possibly can to compete on price, it starts to be these other customer-driven areas where you compete."

The SMA research found that 26% of Tier 3 insurers and 17% of Tier 1 insurers are planning to prioritize billing alone -- and vendors are taking notice. Christopher Goetze, director of technical services for MphasiS Wyde, which makes an end-to-end platform that includes a billing module, sees "urgency among customers that they want to attempt billing before the full policy administration."

"Initially they're looking for our core capabilities on the policy admin side, but if they don't have the budget to do a full policy replacement, they quickly need a modern billing capability so they can provide self-service capabilities to customers," he explains.

But it's not just self-service via a Web portal that consumers are looking for. Some customer segments are maturing to the point where they expect all sorts of customization of their billing to be available, SMA's Furtado says. For example, some credit card companies let their customers change their bill trigger -- that is, the day a bill is due or the length of a charge period. Insurers need to be on the lookout for those opportunities, she contends.

"There's a greater connection and communication opportunity at the time of bill now," she says. "Have insurers created and transformed to create a new connection with the consumer? Sure, we've replaced paper bills with electronic. That cuts your costs but doesn't add value. Some of the capabilities that people find in modern systems are not in older systems."

Though Furtado and others see most of the billing-related pressure occurring in personal lines, commercial insurers are far from immune. For example, US Assure, the exclusive program administrator for the Builder's Risk Plan, underwritten by Zurich, was able for the first time to offer installment payments and accept payments through an electronic portal, after it went live in June on MajescoMastek's STG Billing platform.

"Our customers run from single-family house to large structure and everything in between, and they're always anticipating how much business they'll do over the course of the year," US Assure CMO Ryan Schwartz says. "Putting billing in a portal format puts those personnel on the insured's side more in control of the accounting process than they have been."

Getting Closer To Policyholders

Another commercial lines billing modernization initiative is taking place at Canal Insurance, a trucking and commercial auto insurer with 9,000 policyholders. The company is in the midst of implementing Guidewire BillingCenter so it can, for the first time, accept bill payments directly from its policyholders, according to CIO Adrian Brown.

"We're looking at our distribution model heavily now, and we're going to have a much higher touch with the insured as we look to expand into different lines of business," Brown says.

Previously, Canal was a fully agency-billed organization. But it needed to change that, especially for its core customer base of on-the-go truckers. Brown notes that the stereotypical view of a middle-aged male trucker is outdated, and that the company's customers encompass many age groups and demographics. And just like personal lines, those customers expect certain capabilities from the companies they do business with.

"Our insureds are very mobile, and they have every electronic device known to man," Brown says. "We're already letting them come in and view claims and payments, and we needed to have billing for those folks."

For example, Canal recently released an iPad app, and "the response was just massive," Brown continues. He says it's an "absolutely wonderful, logical platform for billing." It also fits well with changes in the commercial auto product suite. Advances in telematics have made it easier for insurers to confirm the length and distance of a "last-mile" delivery. These types of ad hoc, per-trip policies mean insurers must be prepared to handle lots of little bills at different times, as opposed to one on a schedule.

"If you're going to do per-trip insurance, you'd better make it available on mobile payment," Brown says. "Policyholders don't want to have to wait to get their agent during working hours. Why not let the agent focus on what they do best, and let us focus on answering some of the other questions?"

And he's not alone: Many other insurers are exploring what mobile billing really encompasses and means, according to Eric Leiserson, senior research analyst for Fiserv. The company recently completed research that found that 23% of insurance bills were paid through a phone app or mobile website last year, he says.

"Paying and receiving bills via smartphone results in a positive relationship with the biller, and the No. 1 reason customers visit a site is for billing and payment," he says. "I think there's a recognition of that fact, and insurers are making sure that billing and payment capabilities are optimized."

Overall, mobile bill payment across industries doubled year over year and now makes up 16% of total bill payments. That means, Leiserson notes, that the billing landscape is only getting more complex.

"The old ways of paying don't go away, new ones just pop up," he says. Insurers have to be prepared to handle these changing consumer expectations and move adeptly among them, he adds.