Accounts receivable in the insurance industry
The insurance industry is thriving. In 2016, home, car and business insurance sales reached $533 billion in the United States and just over $53 billion in Canada (Source: Insurance Bureau of Canada and Insurance Information Institute).
So it is critical for insurance companies to maximize their chances of getting paid. Although the accounts receivable process may seem unimportant, insurers stand to gain a lot by improving their AR mechanisms. It’s time to focus on them and nurture the customer experience, especially in this age of digitization.
Dual challenge for insurers: managing their products’ special features and the customer’s expectations
Insurance policies are very specific products: they consist of variable data that is fully tailored to each customer. So this has implications for billing. If an insurer wants to provide a comprehensive document that is tailored to the customer, a number of sometimes complex tasks must be performed.
At the same time, meeting customer expectations is a real challenge. An increasing number of consumers have gone digital and their needs are now different. For instance, according to a survey by Fiserv, 76% of consumers are accustomed to making their monthly payments in more than one way. So they expect different options for paying their bills. Further, online payments have increased by more than 50% in the past 10 years—proof that today’s consumers have very specific expectations that insurance companies cannot ignore.
Accounts receivable in the insurance industry: an opportunity to seize
Why do insurers need to improve their accounts receivable processes, and in particular their billing? There are four key reasons:
- To enhance the customer experience: In addition to ensuring customer satisfaction, developing a good customer experience in accounts receivable helps insurance companies build consumer loyalty. Satisfied customers tend to renew their contracts and rely on a single company to take care of all their insurance needs. A study by McKinsey in the US showed that insurance companies who provide the best customer experience generate two to four times more new contracts and 30% higher profits than those who make the customer experience less of a priority. On top of that, by making information detailed and clear, there are fewer ambiguities as to the amount to be paid, and that can speed up payment.
- To offer more customization: Based on a study by Accenture, 88% of insurance customers are asking for more of a personal touch. Consumers want products that take their needs and circumstances into consideration. In fact, 77% of customers want their history taken into account so that they can be offered customized insurance protection. Billing is also affected and must reflect this customization, both in content and design.
- To diversify the channels of communication: Insurers have been sending bills by regular mail forever. But it’s now time to offer alternate channels to customers. In an Insurance Journal survey, close to half of the respondents said they want more online interactions with their insurers. The same applies when it comes to invoices: customers want to be able to read their invoices online and, in some cases, even pay online.
- To develop new opportunities: We tend to forget, but the invoice is the document with the highest open and read rate. Invoices are an ideal opportunity to send new offers to existing customers. Knowing that it costs five times as much to attract new customers than to keep existing ones, insurance companies should take advantage of invoices to create new business opportunities with their existing customers.
All of these reasons demonstrate that it’s important for insurers to rethink how they bill customers and manage their accounts receivable. Whether it’s to digitize them, make them available on a variety of channels, tailor their design, automate or accelerate the process, at Objective Lune we have the tools to help insurers improve their accounts receivable process. Visit our website to learn more about our solutions!