For insurers, the next automation opportunity lies between systems

Insurers have already automated many of their processes to a high degree. Yet automated payment processing, reconciliation and follow-up do not automatically make the financial chain as a whole efficient. Complexity often remains between systems, processes and teams. And that is precisely where the next opportunity for automation lies.

The financial chain also has to meet an increasing number of requirements at the same time. Premium payments need to be processed quickly and reliably, while claims should be paid out as promptly as possible. At the same time, customers expect payments and changes to be recognised quickly and reflected correctly in subsequent actions.

There is also growing emphasis on appropriate treatment when customers fall into arrears, while insurers must be able to demonstrate that processes are carried out correctly and remain under control.

The challenge does not lie in any one of these developments. The same chain needs to become more up to date, more customer-focused and more demonstrably controlled. It is this combination that makes further automation both more complex and more relevant.

Automating individual processes does not create an automated chain

Many individual parts of the financial process are already highly automated. Payments are processed automatically, much of the reconciliation takes place without manual intervention, and workflows trigger reminders and other follow-up actions. The policy administration system manages the policy, the CRM supports customer contact and the finance system handles accounting, controls and reporting.

Each system performs its own role well. But a payment does not stop at system boundaries.

Once received, a payment needs to be identified and matched. The updated financial status must then become available for follow-up. A payment arrangement or previous agreement may determine the appropriate next action. And if arrears could affect the policy, that context also needs to be available at the right time.

The relevant question therefore shifts from “How do we automate each individual process step?” to “How do we make those process steps work together as one automated financial chain?”

Exceptions reveal where the chain starts to strain

In standard situations, fragmentation between systems often goes largely unnoticed. The quality of the chain becomes much more visible when something deviates from the expected flow.

A payment cannot be matched immediately. A direct debit is reversed. A customer makes a partial payment, uses a different payment route or has an existing payment arrangement. At that point, processing the payment alone is not enough. The organisation also needs to determine what that financial event means and what should happen next.

If an employee has to consult several systems, compare statuses or manually combine information to do so, the benefits of automation quickly diminish.

With large volumes of recurring premium payments, only a small proportion of transactions need to deviate from the standard process to create a significant amount of operational work.

That is why the percentage of automatically processed payments tells only part of the story. Just as important is what happens to the transactions that do not flow straight through the chain. This is often where controls, worklists, robots, spreadsheets and corrective actions appear — and where much of the true cost and complexity of the process sits.

Current payment information needs to flow through the entire chain

Timeliness is crucial. From the customer’s perspective, once a payment has been made, the obligation has been met. But if that payment has not yet been reflected in the information used to drive follow-up, processes can start to cross.

A reminder may be sent even though payment has already been received. An employee may still see an outstanding balance during a customer conversation. Or a follow-up action may be triggered and then need to be corrected later. All of this creates additional work and affects the customer experience.

The challenge therefore goes beyond receiving payments quickly or reconciling them efficiently. The customer’s current financial position also needs to be available to the next step in the process.

A financial event only has real meaning once the rest of the chain knows that it has happened.

Appropriate follow-up requires context

An outstanding balance on its own does not tell the full story. The nature of the financial event and the context around it together determine the appropriate next step. A direct debit reversal calls for a different response from a partial payment. And an existing payment arrangement comes with different agreements from a situation where there has been no previous contact with the customer.

Appropriate follow-up therefore requires more than an up-to-date payment status. Payment behaviour, previous agreements and relevant customer and policy context all help determine the right next action. Payment processing, reconciliation and follow-up are therefore not separate processes, but successive stages within the same financial chain.

When that information and context are available at the right time, a larger proportion of the follow-up process can be automated. Standard situations and frequently occurring exceptions can be handled through defined workflows. Cases that require judgement, tailored treatment or personal contact can be routed directly to an employee.

Smarter automation means using human capacity where it genuinely adds value.

Control requires a traceable chain

The connection between processes is equally important from a control perspective. At every handover, it needs to remain clear which status is leading, when it changed, which rule triggered the next action and where manual intervention took place.

Every interface, synchronisation, robot, spreadsheet or manual handover adds another dependency. It creates both a point at which something can go wrong and a point that needs to be controlled.

The more of these handovers there are, the more complex both execution and control become. Further integration is therefore about more than efficiency. A more connected financial chain also makes it easier to follow process steps, decisions and exceptions, and to reconstruct what happened afterwards.

This traceability is becoming increasingly relevant. The Dutch insurance sector’s Protocol on Payment Arrears forms part of the sector’s binding self-regulation, while the Dutch Central Bank (DNB) is placing increasing emphasis on insurers being able to demonstrate effective management of operational risks.

From separate automation to one financial chain

A more connected chain does not require insurers to replace their entire application landscape. The policy administration system, CRM and finance systems each have their own role and can continue to fulfil it.

The key question is where the process connecting payment processing, reconciliation and follow-up is organised. When these processes work from the same current financial information and relevant context, financial logic no longer needs to be repeatedly distributed across different systems.

A payment, direct debit reversal or payment arrangement can then feed directly into the next step. Standard situations and frequently occurring exceptions can be automated further, while cases requiring tailored treatment reach an employee together with the relevant context.

With Abillity^®, FIQAS brings payment processing, reconciliation and follow-up together in one integrated financial process layer. Financial events and relevant context come together there, enabling the appropriate next action to be determined and executed from an up-to-date financial position. The surrounding systems continue to perform their own roles.

This reduces manual work and corrective actions, while making appropriate customer treatment and control part of the same process.

For many insurers, the next opportunity for automation no longer lies within the individual systems. It lies between them.