04 Dec

Insurance: Collections and Disbursements Module

Insurance companies around the world make every effort to setup efficient processes for their business and are in a constant quest to discover various available and proven solutions in the market. Handling multiple businesses along with a huge number of clientele is unquestionably very challenging. Though there is a never-ending zeal to increase business and to win customer confidence, it is important for companies to make a wise choice of the various available solutions, as considerable investment, time and effort goes into implementing the chosen solution.

SAP has designed industry specific solutions intended to address various concerns faced by each industry. SAP for Insurance is one such solution specifically designed for handling issues and improving business processes of insurance companies. Out of the different systems SAP provided as part of this solution, FS-CD acts an accounting/settling system that can be interfaced to other SAP or legacy systems.

In this blog we call out and discuss few of the challenges insurance companies face and how SAP FS-CD addresses these (yes, we will keep in mind not to bog anyone down with technical jargons).

Scheduling premiums

Companies often need to calculate premiums periodically, for customers that go for premium payments in installments. Though most companies successfully automate periodic premium calculation, any requests for premium cover, due date or premium period changes etc require a lot of manual intervention. FS-CD not only handles automated premium calculations but also handles related changes very effectively e.g. automated programs are available to handle premium transfers between customers, any change in premium coverage/period come next payment cycle etc.

Payment collections through agents

Managing premium collections made by external collections can be a daunting task to many insurance companies. It gets even trickier in situations where agent commissions are tied to the premiums they collect. Broker collections component in FS-CD helps automate this process. Automatic correspondences can be triggered that acts as a reminder to agents. All customer amounts handled by the agent would be accounted as due by agent and any late payment fees would be charged against the broker. Extensive flexibility FS-CD offers comes to aid here as configuration can be done in system on how to handle any mismatching amounts received from agents. At any point time automated list can be generated to view agent payments, related customers agent handles etc.

Handling late payments

Following up on late payments is another important task business does. Sending proper late payment reminders, setting up late payment chargers based on number of past-due days and placing hold on claim payments if needed are some of the steps business might consider to handle late payments. It becomes imperative to have an automated process (FS-CD Dunning Process) to handle all the follow-up processes charted out by business. As different customers may have to be handled differently, SAP flexible configuration comes handy here too, to setup different actions to different customers (a loyal customer/big firm might have to be handled differently than a relatively new customer).

Performance Deterioration Huge Data

Undoubtedly this is one of the major issues most insurer companies face. Leave alone performance, many companies find it challenging to handle the gigantic premium amounts accurately. FS-CD can be a sure shot solution to handle this issue as the background processes are well designed for parallel processing (i.e. splitting data into related chunks and processing them simultaneously) and SAP supports numeric formats that can handle humungous amount ranges.

Correspondence to Customer/Agents

Sending reminders to customers before their payment date helps in receiving timely payments and avoid the havoc of performing all related follow-up tasks. With FS-CD, periodic invoices can be automatically generated and sent to customers. For customer with multiple policies, automated programs can be scheduled to generate a collated invoice for all the policies they hold. Configuration allows handling of different notification dates, formats and interaction medium for different customers based on their communication preference.

Data Redundancy

Many companies end up creating redundant data for customers that play multiple roles with their business. Doing this increases data load tremendously and thereby heavily affects system performance. e.g. a medical practitioner can be claim recipient and can also be a premium holder and there is no need to create this particular customer twice in the system. SAP FS-CD uses central business partner component so as to avoid this redundancy. Each customer can play multiple roles but will only exist once in the system, thus avoiding redundancies and easing out customer handling.

Customer Status snapshot

It would extremely useful for companies to be able to view all payments and dues related to a customer or collection agent for a selected period. FS-CD provides standard programs with flexible selection criteria enabling users to view the transactions and payments statuses related to customer. Reports can also be generated to view the list of customer based on status e.g. users can periodically analyze the list of customers that have crossed their premium due dates and have not made payments.

Handling oddities

In a perfect world, customers would make all their payments as expected and the amounts would always match. This obviously is not the case in real life e.g. payments received with a customer number that was mistyped by front end user or bank should be corrected and a huge claim amount being processed should need an approval. These kinds of scenarios that popup every now and then even in a completely automated process do call for action from relevant users. SAP FS-CD can be used to trigger automated emails to users when exceptional scenarios occur. And again the specific criteria (that defines if a particular scenario is an exception or not) along with relevant users to be notified are entirely configurable.

As shown above, SAP FS-CD acts as a comprehensive solution to handle customers, agents, premium notifications, payments and to improve the performance of business activities. As a solution that is enabled to be interfaced with external SAP/Non-SAP components, it can be easily be integrated to the existing landscape companies have thus complementing their current process setup.

About the Author

Vidya Singh
Solution Architect

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