Group life insurers looking to maintain a competitive advantage are turning to electronic billing to avoid the back-and-forth billing adjustments with their customers that are traditionally part of group programs. In his report E-Billing: A Strategic Necessity for Group Insurers, Celent Communications senior analyst Matt Josefowicz says e-billing currently has a 30 percent adoption rate among group life insurers, but he expects it to reach 80 to 90 percent in the next three to four years.
Forward-looking insurers are seeing this is where the industry is headed, says Josefowicz. By sending electronic bills to group customers, adjustments can be made more effectively than with a paper bill, where changes and corrections have to be done manually.
Of course, if all group life customers paid the insurer as billed, the urgency to change to e-billing would not be there. The real need is relieving the pain points of list billing, Josefowicz says. List billing for group products has a lot to do with roster management. If you are a group insurer, a benefits insurer, or even a workers comp insurer, your relationship with your customers is dependent upon their employee roster, and that changes frequently. The most important changes involve terminations. Thats the single biggest pain point in list billing, he says.
Depending on the size of the company, the benefits manager sometimes has to cull through a thick stack of paper to make sure the employee roster is accurate. Often, it is not. What happens then is the benefits manager crosses people out, recalculates the amount by hand, sends the bill to the finance department to be paid, and when the insurance company gets the check, it doesnt match the amount that was billed, says Josefowicz. Then the insurer has to do a very labor-intensive reconciliation.
Insurers cant blame customers for not wanting to pay more than customers think they owe, but rebilling can be expensive for an insurer. With group billing [software] solutions, clients can see the bill electronically, sort it by employee, remove employees who are no longer with the firm, and recalculate the bill on the fly, says Josefowicz. They have the recalculation entered into the insurers system, so when they pay the recalculated amount, it doesnt cause an exception on the receivables side of the insurance company.
Many insurers have been using homegrown e-billing solutions, but new products have been generating more business for software vendors. Josefowicz estimates a presentation-oriented system can be purchased for under $200,000, with some products reaching up to $1 million. Most carriers have estimated they start hitting a positive ROI when they get about 20 percent of their customers to convert to e-billing, says Josefowicz.
He believes the biggest selling job needs to be done with the customers. You have to make a real effort to educate the customer on the benefits, he asserts.
The most successful implementations weve seen have been where strong attention is paid to driving adoption through customer education, adds Josefowicz.
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