Billing as a Service for Life and Annuity Insurers: A Primer

Insurers send out a lot of bills. It’s an expensive process — not just in terms of the physical costs of printing, paper, and postage: human beings are also needed to answer questions, manage accounting, and oversee reconciliation. Some think of sending out bills as the most “back office” of the back office processes — one which adds little to no strategic value. After all, every insurer can collect money. The basic ability to do so is not a differentiator. But for many customers, the bill is the most frequent contact they have with their insurer. And for many insurers, legacy billing systems simply don’t meet the challenge of high service expectations from today’s consumers, business customers, and distribution partners.

Consumers today expect much more flexibility in how their bills are handled and expect transparency in their payment history. They expect to be able to change bill types easily (e.g., go from monthly billing to quarterly billing). They may need to change from payroll deduction to direct pay because of a disability situation.

Insurers certainly have the option of selecting a modern billing system that has robust capabilities to handle these kinds of situations. But an increasing number of insurers are questioning the overall costs of handling billing. Rather than replacing their billing system in order to provide new capabilities, they’re deciding to outsource the whole process.

We’ve seen increased interest in outsourcing this process due to the pandemic. As insurers began to work from home, they found some employees still had to come to the office in order to collect and manage the billing process.

Billing-as-a-Service (BaaS) is an alternative that insurers can use to manage this essential function without putting their own employees at risk — often resulting in reduced costs and improved services.

This primer explains what BaaS is and how it typically works. It describes the features to look for when selecting a provider and provides a listing of nine of the providers that are active in the life insurance marketplace.