Credit management for insurers: how to keep costs down and ensure happy customers
Author: Abhilash Aryal, Business Development Representative at Onguard
Accountancy and consultancy firm KPMG recently carried out research into the growth of the insurance industry, surveying more than 100 insurance CEOs across ten markets. One eye-catching conclusion from the research is that the majority of insurance companies need to pick up the pace of innovation in order to stay competitive. Overall, it seems there is generally a lack of a strategic vision. As a result, digital transformation is hardly being implemented at all in many cases. Whilst established insurers wrestle with this issue, there are increasing numbers of disruptors entering the market who live and breathe digitisation and make customers happy. In order to remain relevant in the customer’s life, as an established player, it is important that you take the plunge and get stuck into achieving digital transformation.
Customers – i.e. policyholders and insured persons – expect insurance companies to offer the same service that they are now accustomed to getting from other service providers. Customers want the ability to contact you, real-time insight into information and to be able to manage their own affairs 24 hours a day and 7 days a week, preferably all tailored to their own requirements. That is quite a change for the big insurers. It requires a lot of time, but it is one of the ways to bind and retain customers. Innovating – and therefore digitising – is an important strategy for insurers in order to reduce costs, achieve an efficiency step change and offer convenience for the customer. But it is not just innovation that helps bind and retain customers. As an insurance company, you particularly differentiate yourself at the point when a customer has a complaint or a payment problem. But how?
Know the customer and start with personalisation
Complaints and problems arise at various levels. This might include the incorrect handling of a claim, or if a customer is in arrears with paying his insurance premium. The latter situation is challenging, but as an insurer, you can make a big difference here. First of all, it is important to realise as an insurance company that customers prefer to have everything tailored to their own needs. This also applies to paying their insurance premium. Responding to this need and helping them in every way possible to pay the premium is therefore not a frivolous luxury. In order to be able to offer this, it is important to know the customer well. With what frequency would the customer like to pay? Would he like to do that with a direct debit? Or would he prefer to receive a payment link via WhatsApp? As an insurer, you also want to have insight into the customer’s payment behaviour. In addition to his wishes, you should also identify what loans a customer already has, to what extent he is listed as a bad debtor, and whether he has any debts. By gathering as much information as possible you can personalise the invoicing and credit management process. With all that data you, as an insurance company, can create segments and assign customers to them, so that the credit management process is fully automated.
Costs down, cash flow up
Maintaining a grip on a customer’s payment behaviour and simultaneously keeping customer satisfaction high are the keys to success. Segmenting customers and automating the credit management process have an immediate impact on working capital and cash flow. In the insurance industry, a lot of time is still being devoted to repetitive manual tasks in applications such as Excel – tasks that you can easily automate with software. This leaves credit managers with time to focus on customers who require attention and a tailor-made approach. The (problem) customer, therefore, receives the attention that he expects in the event of a complaint. This enables the credit manager to keep control and invest in the relationship with the customer, whilst the rest of the customers receive their invoices and possible reminders automatically. As an insurance company, this is the way to keep costs down. It also offers real-time insight into what actions have been completed and what the organisation’s financial position is. Adjustments and decisions can, therefore, be made much more rapidly. This ensures continuous cash flow for the insurer.
Credit management is also a process that can be effectively digitised within insurance companies, thus improving efficiency within the business. In addition to the credit manager having more time to focus on exceptional cases, this gives a CFO immediate insight into the information, which is very useful for making future (financial) decisions. In short, automation within the insurance industry is not only useful but also necessary in order to structure the business more efficiently and ultimately continue to offer added value to both current and future customers.