The economic impact of the COVID-19 pandemic has been devastating, leaving millions unemployed in the U.S. alone. While every corner of the insurance space has been affected by this health emergency in one way or another, certain niches of insurance – such as workers’ compensation – are facing a unique set of challenges.
Namely, workers’ comp insurers are struggling to find a balance between supporting their policyholders during this difficult time, while also experiencing a dip in revenue themselves.
Although contractors are still working consistently in some sectors, other industries that might require workers’ comp policies (retailers, bar and restaurant owners, etc.) are significantly understaffed in this era of COVID restrictions. With an abnormally low number of contracted workers nationwide, some insurance organizations are feeling the residual effects of policyholders paying significantly less in workers' comp premiums.
There’s no perfect answer for insurers looking to both support policyholders and protect their organization in the face of COVID-19 – but there are benefits to be found for both parties in the right online payment solution. Some online payment platforms have the capacity to support the unique needs of workers’ comp policyholders (in both “normal” and more challenging times), while helping insurers save resources in the process.
To find that payment solution, your insurance organization must look for these critical functions that are best suited to best support the needs of workers’ comp carriers.
While workers’ comp is relevant to any organization that employs staff, policyholders that have more fluctuating payrolls (i.e., seasonal employers) typically have the biggest need for workers’ comp policies. These policyholders are often put on an installment plan, where the insured pays the same amount each month, quarter, or on a semi-annual basis, and expects a “final audit” at the end of the year. This audit requires the insurance carrier to look at the actual payroll vs. what the insured has paid and send an adjustment to the policyholder (either returning funds or sending a final bill for the remaining amount due).
With an online payment solution that’s tailored to the needs of workers’ comp, the reporting process is much more streamlined. For example, a payroll reporting or self-reporting functionality can be a game-changer for both insurance organizations and policyholders.
Payroll reporting should allow an insured to sign on to the online payment system and report their own payroll. That data should then immediately be sent to the insurance organization’s core billing system, at which point the system should automatically calculate the premium due and present that amount to the policyholder. Finally, the policyholder should be able to pay the premium immediately or save it for later by setting a calendar or pay by text reminder.
This type of reporting functionality is especially valuable during the rating and/or re-rating phase of workers’ comp policies. Once a policy is rated or re-rated, the premium figures are reported to the carrier’s online billing system. This can become complicated, however, since the policy must be first created for the billing data to populate. In this instance, a down payment is often required for the initial binding phase – but with an online payment solution like Invoice Cloud, a carrier can circumvent the timing of the billing system, streamlining the reporting process even further.
This type of flexible payroll reporting is imperative for insurance organizations to offer. Not only can insurers better accommodate the changing needs of their policyholders by offering self-reporting, but this payroll option also prevents insurers from paying out huge returns after a lighter year of premiums.
Maximized expense reduction
Like many businesses, conserving resources is top of mind for insurers during COVID-19. This concern is especially true in the workers’ compensation space; payrolls have shrunk significantly, which means fewer workers’ comp premiums and less revenue for insurance organizations.
However, there are organizational savings to be found in the right online payment solution.
If an insurance organization implements an online payment platform that policyholders find easy to use, insurers will see a drop in payment-related call volumes and lobby traffic. Not only can this keep administrative costs low, driving more policyholders to online payments is the best way to reduce in-person interactions and keep everyone safe.
A spike in online payments will also save significant costs associated with printing and mailing bills – even better if your online payment system utilizes outbound payments, which enables insurers to send late notices, payment reminders, and more, all through digital channels.
Needless to say, if your insurance organization isn’t seeing sizeable cost savings in these ways, it’s high time to reconsider your online payment solution.
The Open Invoice Model
Online payment systems that support what’s called an “Open Invoice Model” essentially allows for multiple invoices under an account and the ability for users to differentiate which balance they’re reviewing/applying payment to. The other common model, called a “Balance Forward Model,” is simply the combination of total outstanding invoice amounts for a particular account number. This model offers one singular balance, one per account.
There are a few reasons why the Balance Forward Model isn’t the most suitable invoicing option for workers’ comp. For one thing, the traditional Balance Forward Model can’t keep up with the re-rate events that occur on payroll changes, which is a common practice in the workers’ comp space. An Open Invoice Model offers a more versatile infrastructure, one that’s more applicable to the re-rate events of workers’ comp.
Not to mention that Open Invoice Models can utilize real time data with certain billing solutions. With the combined power of open invoicing plus a real time data functionality, workers’ comp insurers can view and send continuously updated invoices or even past due balances.
This is the kind of flexibility workers’ compensation policyholders require, as their labor needs shift month to month. Plus, the with the potential of real time data, these features offer constantly up-to-date data – perfect for the sporadic nature of workers’ comp.
Offering this flexible invoicing option is also essential for younger business owners, who expect insurance organizations to offer the same level of convenience they experience elsewhere as a consumer (think: making a purchase on Amazon or looking up an instant answer on Google). Recent Invoice Cloud research shows that these are the heightened expectations of Millennial policyholders, who are now business owners with significant buying power in the insurance space.
To meet these heightened technological expectations while also meeting the needs of workers’ comp insurers, an Open Invoice Model is essential.
A strong partner network
Seamless partner integrations are key when it comes to ease of use for workers’ comp insurers. This means your online payment solution must have a robust partner network that makes it easy to integrate with leading CIS/core billing software providers in the workers’ comp space.
Strong partnerships enable online payment providers and core billing systems to provide an enhanced customer experience through coordinated client support. This means your customers receive quick and effective issue resolution, every time. Another key benefit of an established partnership between an online payment solution and a core billing system is a reduced implementation time. This lessens the burden on your internal IT teams and enables your organization to bring the new solution to your customers faster.
Not to mention that with real-time integrations between an online payment platform and a core billing system, data updates automatically. This means improved accuracy, no lost data, and less time your team needs to spend correcting manual errors.
Invoice Cloud is uniquely positioned to help workers’ comp insurers
At Invoice Cloud, we work with a wide variety of insurance clients from large insurers to small MGAs, even commercial lines and malpractice firms. But here are several ways Invoice Cloud is uniquely positioned to address the needs of workers’ compensation insurers, especially in this trying time.
Invoice Cloud can integrate with the majority of workers’ comp billing systems, including some of the largest core systems in the space. For example, Invoice Cloud has performed workers’ comp integrations for Sapiens, Insurity, and Instec, which allows the insurers using these billing systems to self-report and much more. These integrations have helped countless insurance carriers provide optimal flexibility for their workers’ comp policyholders, greatly improving the policyholder experience and saving resources for the insurers.
Invoice Cloud also offers both an Open Invoice Model and a Balance Forward Model for workers‘ comp insurers, allowing carriers to rapidly adapt to the changing needs of workers’ comp billing.
Plus, Invoice Cloud has the leading adoption rates in the industry – 2-3x higher online payment adoption than with any other online payment solution – which leads to long-term expense savings for insurers.
The needs of policyholders have never fluctuated as dramatically as they are today. Between the challenges wrought by COVID-19 or the technological expectations that insurers must keep pace with, it’s never been more valuable to know what your policyholders need from you, their insurance carrier.
For an inside look at the needs and expectations of the largest generation of policyholders, Millennials, download our free research report, “Keeping Up with Millennial Policyholders.” This ebook offers insights from nearly 2,000 Millennial policyholders on why Gen-Y is looking to leave their current insurer, what they’re looking for in their next insurance carrier, and more.