BACKOFFICE
Strategies and technologies to boost
behind-the scenes efficiencies
Back-End Changes Equal
Front-End Benefits
To respond to customer and business demands,
insurers take on billing system overhauls. By Carrie Burns
For many years, for many reasons, billing has been a challenge for many in- surers. Now, new billing system options and insights into why this core business
process presents challenges may help
insurers take action.
The notion that “the system” is
broken is a familiar one. “I’ve been in
the insurance industry for more than
20 years, and I’ve been involved in
probably three major billing projects,
and it’s always because we do such a
lousy job as an industry of billing
customers,” says Michael Foerst, CIO,
Missouri Employers Mutual (MEM),
Columbia, Mo.
Survey results, released this month,
show that insurers—especially larger
insurers—are not confident that their
billing systems will be able to meet
future business needs. Of the 40 in-
surers surveyed for San Mateo, Calif.-
based Guidewire’s 2010 “Billing Mar-
ket Survey Results,” only 17% felt
completely confident that current sys-
tems would continue to serve them
well in the future, with more than a
third, 41%, reporting no confidence
in this area. The other 42% were
somewhat confident (see chart, page
36). The company notes that these
statistics are almost identical to its
2008 survey. This overwhelming lack
of confidence highlights an eventual
problem—the day when a critical
business requirement simply cannot
be supported by a carrier’s current
billing system.
While it’s a given that billing prac-
tices have evolved from the back of-
fice to an effective front office tool,
many carriers still face challenges in
using these systems effectively to im-
prove customer service. For example,
of the carriers polled, 59% report that
their current billing systems and pro-
cesses inhibit them from providing
superior customer service.
It was a concern over customer
service levels that led MEM to con-
sider core systems replacement. “We
conducted focus groups with policy-
holders and companies that weren’t
currently policyholders, trying to get
our arms around what it is that cus-
tomers were looking for,” Foerst says.
“We collected great information out
of that—information that fit into a
strategic planning process that we
conducted last summer.” It was then
REPLACEMENT/CONSOLIDATION
In its quest for more flexibility, Catho-
lic Mutual Group, Omaha, Neb., be-
gan its search for a new billing system
in March of 2008. At the time, the
company’s existing system was 10
years old, having been designed and
developed in 1999. A small firm out
of Des Moines had partnered with
business and IT staff from Catholic
Mutual to develop an application that
was designed to meet the insurer’s
specific requirements. Yet, by 2008,
that MEM realized if they were going
to meet some of the customers’ needs,
it needed a different billing structure.
“There are cost-saving issues related
to [a new structure], but the main
goal with the billing component was
customer focused.”
These twin factors are driving
many insurers to reconsider both the
technology in place and the billing
processes itself, says Karlyn Carnahan,
a principal in insurance practice at
New York-based Novarica. “The bill-
ing problems carriers are dealing with
are twofold: They’re trying to become
more customer friendly with their
bills, and they’re also looking inter-
nally at how they can process these
bills more efficiently and more effec-
tively. They’re asking themselves, ‘Can
I get a [single] billing system to pro-
vide a better level of customer
service with more features and
functionalities?’”
