Projects on process optimization are frequent. The focus is usually on sales, underwriting and claims management. The dunning process is often left out. From my work at Arvato Financial Solutions, I know that optimizing the dunning process is very helpful when facing important strategic challenges in the insurance industry. The success of the dunning process depends on trends and strategic factors such as customer centricity, digitalization, big data and payment methods.
From your own experience, you will know that for several years now insurance companies have been suffering in the midst of extreme economic changes such as the banking crisis and the low-interest phase. Regulatory requirements and reporting obligations are increasing under Solvency II or the Minimum Requirements for Risk Management in Insurance Undertakings (Mindestanforderungen an das Risikomanagement VA – MaRisk VA). They also have a negative impact on cost ratios. In addition, more and more digital competitors such as InsurTechs and online comparison portals are attacking the existing business models. They offer attractive rates, tailored offers, direct communication and digital service. Is it then surprising that customers are changing behaviors along with their expectations from insurance companies?
The revolution has therefore already begun. According to a study by Accenture, 83% of German insurance companies believe that their industry will experience digital transformation over the next three years. The pressure of competition and profitability in the insurance sector is increasing. Along with a higher customer centricity and a clear focus on cost ratios, earning power and combined ratio, insurance companies must therefore undertake the dunning process.
Utilize the opportunities of digitalization and raise the earning potential in the dunning procedure
What does customer centricity mean in the dunning process? If a customer is temporarily unable to pay, do not cancel them right away. Instead, start a dialog. Keep in mind the individual value of the customer and their loss ratio to date.
I believe keeping a holistic viewpoint is very important in the conception and implementation of digitalization projects: it pays off to take into consideration payment requirements and the dunning process. With big data projects and robotic process automation, information from different systems can be made available for differentiated dunning strategies. Digitalization not only allows you to implement customer value-oriented and differentiated dunning strategies, it makes information available around the clock. This leads to shorter response times and quicker and less complex payment processes by connecting new payment methods.
Last but not least, the use of modern payment methods is particularly beneficial if a payment has no discontinuity of media and is digital. For example, if the customer receives a link to the corresponding payment method or the online portal in a reminder e-mail. Or if they receive a payment link by SMS.
I am convinced that insurance companies can profit from current trends and developments in several ways for the dunning process. Used correctly, it is possible to reduce costs, increase return flows and maintain valuable customer relationships.
Trust the experts
The challenges and issues of creating an optimal dunning process are diverse and complex. It is generally recommended that a specialist receivable management service provider be used. We bring our expertise to processes, analytics and systems. This gives insurance companies a strategic partner to actively develop dunning processes together and to considerably increase earnings from receivable management.
What do insurance companies get out of this?
Optimizing the dunning procedures helps insurance companies overcome important strategic challenges and pays into several strategic objectives of an insurance company: customer satisfaction, customer retention, increasing earnings, cost efficiency and consequently an improved combined ratio. An optimized, customer- and dialog-oriented dunning process allows customer relationships to be maintained and even reinforced. On the other hand, insurance companies can reduce costs, reduce the value-added depth in support processes and utilize the freed up resources for core processes.
Would you like to find out more? Our white paper (only in German) shows how new developments such as big data, robotics, innovative payments methods and modern means of communication can be capitalized on in the optimization of the dunning process.