Money in the Bank
Payment practices can drive differentiation when choosing an insurer for your client
Have you ever considered recommending an insurance company to your client because it has efficient payment systems, cost-effective payment processes and leading-edge payment technologies? No? You’re not alone.
Although you may have advised your clients about the likelihood of an insurance company paying a claim, chances are that you have never given much thought to the mechanism behind claims payments. But you should think about it because all else being equal, the insurance company with superior payment practices represents a better choice for you and for your clients.
Insurance companies that can pay claims faster, more accurately and more conveniently drive improved customer satisfaction scores. Better yet, cost savings from such improvements can lead to reductions in premiums or improvements in service. Could you recommend an insurer to your client because it has lower premiums or better service? We thought so.
Next time you meet with an insurance company, you may want to ask them about their payment practices. In our experience, insurance companies that apply the following practices offer a differentiated advantage.
Remembering the customer: Customer demand must drive the payment process. Already accustomed to improved payment processes in areas such as wages, benefits and even income tax refunds, customers expect similar efficiencies of their claims payments. Leading companies establish easy, convenient and fast payment processes and strive to pay their customers promptly. Some companies either “push” payment information status to customers or make it available via interactive voice response systems (IVRs) or interactive web response systems (IWRs) to give customers 24/7 access to payment status.
Electronic payments: Electronic payment systems automate the payment process and enable companies to conduct business more efficiently while also reducing costs. With systems such as direct deposit, companies can move funds automatically from the company’s account into a customer’s bank account on a designated payment date, all at a fraction of the time and cost of traditional paper cheques. Top insurance companies employ both web-based customer requests and direct deposit to allow straight-through processing (STP) and payments. This is already a popular approach among banking and investment management companies.
Automation and elimination: Companies waste time processing payments manually due to redundant processes or limited technology integration. Leading companies avoid such issues by leveraging information systems to automate or eliminate steps in payment processing. These systems provide for STP, integrated payment functionality on CRM workstations, imaging and workflow systems, electronic data interchange (EDI), web-based technologies for customers and employees and centralized payment processing with little or no handoffs. Where allowable, other top companies even eliminate many payments by crediting a customer’s “account” or contract rather than sending out payments.
Leverage available banking services: Over the past several years there have been numerous new payment services or products offered by banks who have created these services by extending their own internal and commercial capabilities. Some leading companies have avoided further capital investments, reduced operating costs and improved service by outsourcing their payments while maintaining decision-making authority and recordkeeping.
Exploiting the value-added potential of staff: As much of the routine transaction-processing tasks in payments become automated, managers and staff have more free time to engage in activities that advance the business such as product development, broker training and client education.
Paul MacDonald (email@example.com) is a vice president and Allan Buitendag (firstname.lastname@example.org) is insurance operations leader and senior vice president in PwC’s Canadian insurance consulting practice.
Copyright 2011 Rogers Publishing Ltd. This article first appeared in the January 2011 edition of Canadian Insurance Top Broker magazine.