Technology is being used to make business leaner, faster and more convenient – and the banking and insurance industries are no exception. Within the past five months, two financial companies doing business in Springfield have released software solutions specifically designed to modernize the insurance claims payment processes.
Commerce Bank, a subsidiary of Commerce Bancshares Inc. (Nasdaq: CBSH), launched CommerceVantage Claims Payments in June, and Jack Henry & Associates Inc. (Nasdaq: JKHY) released its insurance claims software three months ago.
Insurance companies are currently fulfilling the vast majority of claims with paper checks that are mailed to each client, said Leonard Richileau, vice president and industry consultant for claims payment at Commerce.
“(That) doesn’t serve the customer very well in an era when the majority of us don’t go to the bank and cash a check anymore,” he said. “We’re getting funds electronically, from work and even things like PayPal.”
The same technology used to pay employees with direct deposit or buy products online with credit cards can now be used to send money from insurance company’s bank accounts to their clients in a variety of formats.
“If you’re getting a check, it’s going to take three to five days to get that check in the mail,” said Richileau, who works in Commerce’s Texas market. “We have funding options that can get you your money in 30 minutes – deposited to your bank account.”
Insurance companies using the software can credit funds to clients’ bank accounts by referencing their debit card number, Richileau said, or they can send money to bank accounts through automated clearing house transfers, known as ACH. Paper checks and debit cards may still be mailed to clients, if they prefer.
“The customer is the one who makes their choice, in a secure environment, on how they want to be paid,” he said.
Many of the same features are available on Jack Henry’s version, said National Product Sales Director Jerry Federico, via a partnership with fund disbursement and management firm TransCard Payments LLC.
“We are able to provide payments so that the insurance company can send an email or text message – the client gets it on their phone and they have the ability to choose how they want to receive it,” he said.
The newer technologies also handle the paperwork involved with claims electronically, collecting signatures and keeping records online. This is especially important, Federico said, when dealing with medical billing, which requires many records to be processed.
The shift in business practices is an effort to cater to the wide range of ages and technology literacies observed in the population, Federico said. Older, more traditional clients are more likely to carry a checkbook and have access to the routing numbers needed to send money by ACH. But the millennial generation does most or all of its banking online.
“We built a system that allows them to provide us with credentials, so that we can go to their bank, pick up all the data that’s required – their routing and account number – and then deliver it as an ACH,” he said.
Electronic payments are also useful for workers’ compensation claims, which often require repeated payments over time.
Revamping the insurance claims payment process has been a major initiative of Commerce, Richileau said, since he was hired 18 months ago. The white-label solution is deployed to insurance company clients without any Commerce branding, he said.
“It has their same look, feel, logos,” he said, although neither Commerce nor Jack Henry officials would disclose the names of insurance company clients.
The software development effort is designed to make Commerce more competitive in the market, said CEO Doug Neff.
“The banking industry can look like a commodity. Money’s all green and it’s all priced about the same way. We’re all becoming much more like business consultants and value adders in many unique ways,” Neff said.
Federico said insurance companies have complained to him of claims processing costs totaling up to $5.50 per check. Although declining to specify how much the new check processing costs, he said it allows Jack Henry to save insurance companies money and get insurance clients their money faster.
“We see it as a huge opportunity,” he said. “These insurance companies generally all have financial institutions as partners. We can now facilitate those relationships of being able to provide, in working with their financial institutions, the best way to deliver these payments.”
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