By Bill Kenealy
When it comes to the novel use of technology among different lines of business, workers' compensation is not widely regarded as a hotbed of innovation, especially when compared to areas such as personal lines auto. Similarly, the typical billing system an insurer runs may tend to lack some of the technological sheen of the most modern claims and policy administration systems.
This state of affairs seems odd when one considers the importance of billing in customer service and the increased emphasis carriers are giving it. While an argument can be made for maintaining separate policy administration systems, the case for a legacy, decentralized billing system is much harder to make.
Yet, quick reconnaissance of the billing systems currently in use at workers' compensation carriers would no doubt detect a telltale monochromatic glow. "If you look at the state of the industry in workers' comp, a lot of them are using legacy platforms," says Anil Chitale, SVP and client executive at the P&C division of Edison, N.J.-based MajescoMastek. "There's a lot of green screens still around."
One place where the green lights are fading is Farmington Hills. Mich., where Amerisure Mutual Insurance Co. is currently phasing out a green screen, direct billing system in favor of MajescoMastek's STG billing system. Tim Quinn VP, treasury and finance for Amerisure, says, ultimately, the company expects the system to engender savings and deliver a better product to customers.
Quinn recalls the company put in agency billing systems about five years ago with the intent of eventually moving to the vendor's direct billing system. However, he says, Amerisure came to realize the system wasn't as customer- or user-friendly as they wanted. Ultimately, the company opted for the STG system for several reasons, including a desire to expand its online capability and mollify their agents.
"Our agents wanted more access to our systems, in particular, our billing system," he says, noting the new system will enable agents to access internal documents electronically instead of calling on the phone. "Agents want up to pull up the invoice and navigate through it. They want to click on an endorsement and go to the actual document."
Quinn believes the new system, slated to be fully implemented by the late third quarter or early forth quarter of this year, will also help clarify uncertainties agents had about to which installment or endorsement a given invoice pertains. Previously, neither of those things would fit on an invoice due to space constraints, he says.
There are many reasons legacy billing systems persist. Many of these systems were shackled to a particular book of business, or inherited upon a merger or acquisition. Another reason is the nature of the workers' compensation business itself. If P&C is a collection of exceptions, it is even more so the case with workers' compensation. As a specialized line of business, systems servicing workers' compensation need to fulfill some incredibly nuanced requirements.
Indeed, the legacy systems, for all their faults, are highly customized and perform well despite an abundance of manual work-arounds. Chitale notes many of the legacy billing systems originally came tied to long-retired policy administrations systems. In many cases, carriers would upgrade the policy administration system only to retain the legacy billing system for want of a better option.
There are drawbacks to extending the life of a new legacy billing system. Agency employees may be disinclined to learn its nuances. "It's hard to teach somebody those legacy systems," Quinn says, "That's one reason we realized we needed a new billing system."
However, carriers (especially small and mid-sized ones) opting to investigate a modern billing system may find their options somewhat restricted. Quinn says many of the systems Amerisure investigated seemed tailored to larger organizations. This relative dearth of best-of-breed choices seems all the more pronounced if compared to the plethora of choices available in claims and policy administration.
According to Chitale, a preponderance of systems marketed to the workers' compensation market were originally built around standard personal and commercial lines products, and subsequently modified. Accordingly, many lack some unique functionality carriers servicing the market require. "There weren't a lot of alternatives in this area, so carriers have stayed with what they have." Chitale says. "Very few vendors write a system with workers' comp in mind."
This lack of solutions targeting the workers' comp market is less of a hindrance on the policy administration side, Chitale contends, but becomes a greater challenge in the billing area. "Billing in workers' comp has some very special requirements," he says, noting that most of the unique requirements center around the handling of estimated premiums, as well as cancellations and reinstatements. "It's an animal in and of itself."
Making Things Easy
One area where vendors are striving mightily to add increased functionality is e-billing and payment. Flexibility and self-service - the ability to pay any time of the day, any way you want - are becoming increasingly common customer demands.
It is this commitment to ease of use that guided a joint offering from Hartford, Conn-based The Hartford Financial Services Group Inc. and Mountain View, Calif.-based Intuit Inc. In mid 2008, the companies began offering The Hartford's XactPAY Web workers' compensation premium payment service to Intuit payroll customers free of charge.
Ray Sprague, SVP for small commercial for The Hartford, says that since workers' compensation insurance is not an emotionally appealing product, carriers must focus on ease of use. "The value can be elusive," he says, noting that although the service is aimed at small businesses, it is applicable to larger businesses as well.
Sprague says The Hartford has offered workers' compensation linked with a payroll provider for about 12 years. Many of these payroll providers formed their own insurance agencies, much to the vexation of The Hartford's agents. "We have been looking to bring this product innovation to a broader segment of the market by having a partner who was supportive of distributing it through our independent agents," he says.
One of the main benefits of this electronic link is that it calculates and bills premiums with every pay cycle. Traditionally, The Hartford would estimate an annual payroll from an insured, and then invoice them throughout the year based on those estimates, regardless of how their business may have changed throughout the year. At the end of the year, they would conduct an audit and adjust accordingly. This could lead to unwelcome surprises for companies that added and subtracted employees throughout the year. "We've tied in with the record keeping that is part of payroll process and now calculate their premium every time a company runs a payroll," he says. "We have matched premium collection with the business cycle. Anything we can do to make the experience easier for them to match up to the cyclical nature of their business makes it more appealing for the small business owner."
Now, small business owners can upload data directly from their Intuit QuickBooks accounts. Donato Monaco, VP for The Hartford's payroll alliance, says that his company used a software development kit that was available to Intuit business partners to build the integration directly into QuickBooks. He says the exclusive deal with Intuit has given the insurer the opportunity to access a broader set of business owners - estimated by Intuit at more than a million users.
Sprague also notes the frequent calculation of premiums may help the Hartford educate small business owners about workers' compensation requirements. "It can be a bit of a black box to small business owners," he says.
This use of the Web to solicit premium information is part of a larger strategy by The Hartford to leverage technology. "We are investing heavily in making a better experience for our agents," Sprague says. "Technology is a cornerstone. More than 95% of our business flow is submitted to us over the Web by agents."
(c) 2009 Insurance Networking News and SourceMedia, Inc. All Rights Reserved.
This article was originally published on InsuranceNetworking.com.
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