Insurance Company - Service Transaction Fee Paid By Consumer (Absorbed)
Absorbed Client: Insurance Company
This insurance company is licensed as a property and casualty insurer in a majority of the US states, as well as the District of Columbia, with approximately 1,200 independent agencies nationwide supported from regional offices throughout the Midwest and Southwest. BillMatrix has permission to share this information, but not to use the company name.
With over 300,000 customers, many have elected to make their payments in installments, resulting in over 1.5 million invoices being sent out annually. A majority of these payments are made by paper check and mailed to a bank lockbox service. However, a large number of cash-flow perceptive insureds were using the pay-by-phone just-in-time payment option, calling the insurance company’s CSR team when they received a “cancellation for non-payment” notice or simply on the last possible day.
The CSR team was taking over 90 check-by-phone payments per day with the number rising rapidly. The company realized this popular service offered both convenience and control for the customers, but at substantial call center costs. Finding a self-service option became a high-priority item with the caveat that the close relationship between the agents and the insureds be maintained.
The insurance company’s customers access the BillMatrix service over the IVR or the Internet using credit cards, ATM/Debit and ACH payment methods. In addition, BillMatrix hosts a website for the company’s independent agents to enter walk-in payments from their remote offices.
First Year & Beyond Transaction Volume
A BillMatrix client for a number of years, the insurance company’s first year transactions rose to approximately 2.5 times the initial transaction volume. In the ensuing years, the company has seen a steady increase in the number of transactions settling in at about 5 times the initial volumes (See graph below; source: BillMatrix Corporation). As the insurance company absorbs the payment processing fees, they have created a sustainable balance between the cost reductions experienced from converting insureds to electronic payments and the associated fees.
Call Center Impact
At typical call required approximately ten minutes to complete a check-by-phone transaction. The CSR had to enter the data into a software application for the payment details (name, address, phone, payment amount, along with bank name, routing and account numbers). Some of the same as well as additional information was then keyed into the customer information/billing system to properly credit the customer’s insurance account.
Once the BillMatrix-hosted dedicated 800-number IVR was in place, the insureds could enter their own information. In response to customer requests and after noting the number of manual transfers, an automatic transfer from the insurance company’s IVR to the BillMatrix IVR was added to the service. Approximately 4300 calls per month are transferred between the two IVR systems, further reducing the burden on the insurance company’s call center.
The number of customer service agents has been reduced or reassigned to other revenue enhancing duties.
Once the CSR team gathered the check-by-phone information, it was transmitted to a third-party where a check was printed. The checks were then returned to the insurance company where they were prepared for deposit and sent to the bank. The BillMatrix system completes all transactions electronically, eliminating this costly and time-consuming process and substantially speeding up the cash flow cycle. With the real-time connectivity for validating ACH payment information instead of waiting for a physical check to clear, the insurance company has substantially reduced insufficient fund items. In addition, by offering payment types that settle more rapidly than traditional physical check transportation such as ATM/debit and credit cards, the insurer can receive funds more rapidly.
With a transaction that has been authorized, the payment data is automatically and correctly posted to the customer’s account and the insurance company’s general ledger. This results in fewer cancellation notices issued and improved customer retention in the highly competitive insurance industry.
Future enhancements under discussion include extending the service to accounts that have entered the credit and collections process, allowing the insurance company to offer choices to their insureds, while utilizing all of the real-time good funds validation methods that are included in the BillMatrix service such as Electronic Check Validation™ (ECV™) and the ATM/debit networks.
As this client says, “Payments are no longer 'in the mail'. They are in the bank.” Specific information on the financial impact of this program is considered confidential.
Technology Impacts, including Field Force Automation (Agent Payments)
The insurance company offers electronic payment methods in a way that supports their existing payment processes and accounting/customer information system infrastructure. Utilizing the capability of XML/Web Services to bridge between the BillMatrix application and legacy technology, the two entities are directly connected, with the ability to validate account numbers, a major customer hurdle with an 18-digit identifier. In addition, this validation ensures that no payments can be made to accounts that have lapsed.
With accurate account numbers, the service automatically credits the customer with the payment amount as soon as the call is completed and the payment is posted to the general ledger in real-time. In addition, the carrier's agents utilize similar functionality to post payments made by insureds at their offices. This provides the independent agents with the ability to retain a high-touch relationship with their customers and simplifies dealing with this insurance carrier, a requirement to keep the agents generating business.
Marketing Support & Results
BillMatrix has formally rolled-out a consumer adoption marketing program over the last 12 months, with dedicated resources to support both successful introductions of the service and on-going efforts to increase usage, maximizing client cost savings from electronic payment methods. The insurance company’s introduction of the service predates this official program, but the company actively promotes the service continuously with a detailed marketing message on all invoices. Additional programs are under discussion to continue the growth in transaction volumes.