What’s the Difference Between Monthly Self-Reporting vs. Pay-As-You-Go Billing in Workers’ Compensation Insurance?
Pay-as-you-go billing has gone from “nice to have” to “must have” over the last two years. There are a variety of reasons why carriers have been adding pay-as-you-go billing, including rising customer expectations due to their digital experiences in other industries, increased customer retention efforts, as well as providing a solution to help businesses better manage their cash flow.
Often when we meet with our carrier prospects, we hear: “We already offer our policyholders the ability to self-report, it’s just like pay-as-you-go.” Whenever we hear this response it provides us with an opportunity to demonstrate how pay-as-you-go billing really works. For anyone who has implemented a pay-as-you-go program, they know self-reporting is just one component of the overall solution.
In the sections below, we’re going to discuss the differences between monthly self-reporting vs. pay-as-you-go billing, as well as demonstrate how pay-as-you-go billing really works.
While monthly self-reporting is a great first step to improving the customer experience, policyholders are still required to put a down payment (usually 20%) to secure coverage. This down payment is required because a policyholder’s premiums are estimated in most cases. For many business owners, this can be a big deal because inflation has driven up the cost of goods and services, reducing their cash flow.
Along with putting a down payment to secure coverage, business owners or support staff will also have to go to a carrier’s site once a month and manually input payroll data. Unfortunately, this could potentially lead to data entry errors and provide a less than optimal customer experience. According to the State of Connected Customer report, 84% of customers say the experience a company delivers is as important as its products or services.
In addition to manually entering payroll data once a month, policyholders will also have to undergo an audit before coverage expires to make sure premiums haven’t been over or underpaid. If a policyholder has overpaid, they’ll have tied up vital funds, which could have been used towards their daily operations. In the case of underpayment, this could potentially lead to lost revenues for carriers in the form of uncollectable premiums/bad debt.
Unlike monthly self-reporting, pay-as-you-go coverage typically requires no down payment because premium payments are based on actual payroll data. Furthermore, as policyholders make changes to staffing levels or move staff into different roles, it’s all reflected when premiums are paid during the payroll period.
One of the benefits of InsurePay’s platform is that it’s integrated with 2000+ payroll providers. This allows us to automatically load payroll data into our platform each payroll period (weekly, bi-weekly, semi-monthly or monthly) saving policyholders valuable time and reducing the chances of any data entry errors. In addition, another benefit of InsurePay’s platform is its reporting options, which allow users to track estimated premiums versus actual premiums collected.
For policyholders who prefer to self-report, they can upload a spreadsheet of their payroll data or they can use our “enter payroll grid” in a carrier’s portal. If a policyholder chooses the latter option, they can report their payroll at the individual employee level or they can report payrolls summed up to the state/class level (depending on the carrier). Once the payroll data has been reported, InsurePay provides the insured with visibility into their premium amount and how it was calculated.
In addition, InsurePay also generates an invoice each pay period enabling policyholders to pay their workers’ comp premiums based on actual payroll data, not estimated premiums. Not only does this improve cash flow for policyholders, but it also reduces the amount of work and potential surprises during a policy’s annual audit. Finally, by implementing a complete pay-as-you-go solution, carriers can reduce billing, collections, and claims processing expenses typically associated with policies that are based on estimated premiums.
To see for yourself how pay-as-you-go billing can improve your customer acquisition and retention efforts, reach out to us today!