Insurance is defined as “Protection against future loss”. Insurance
companies offer different policies which cover different losses to their
customer in order to protect themselves from huge losses. There are different
transactions associated with a policy like premium payment, claim settlement,
policy renewal etc. All these
transactions have to be handled within the Insurance Company without any
errors. Modern Insurance companies employ Insurance billing software to handle
and keep track of their transactions.
All major Insurance providers categorize their operations into three
major sections namely Claims Centre, Policy Centre and Billing Centre. All
these three sections are intertwined and together to form the Insurance firm
.Claims Centre captures and handles data in connection to claims made on all
the policies offered by the insurance firm. Policy Centre handles all
information in connection to all the policies offered by the firm including
premium amount, insurance period, coverages etc. Billing Centre employs Insurance billing software to handle all the
financial transactions involved right from issue of policy, premium calculation
and collection, premium deadlines claim settlements and policy renewal.
Insurance companies calculate their premium based on complex
statistical principles, the simple formula is that the premium is high when the
risk associated with the policy issued is high and therefore there is a higher
probability of claims to be made on the policy. For example in case of health
insurance the premium amount paid by a 21 year old is going to be much lower
than premium paid by a 40 year old. Mathematical formulas are coded in the
Insurance billing software to calculate this premium, and information regarding
deadline is also stored in the software. When a policy is issued by the
insurance company, a certain percentage of the value of the policy is set aside
as reserve for the policy. This reserve is used to settle claims made on the
policy. The Insurance billing software automatically calculates this reserve
amount based on the policy issued and keeps in track of claims settled through
claim centre against the policy.
As claims continue to be made and settled against a policy the reserve
amount diminishes, once the entire reserve is consumed, the billing centre
raises a flag. The amount paid in excess of the reserve allocated is either
claimed from a third party or compensated partly by adding to the next premium
to be paid by the policy holder. The
software also keeps in track of the policy period, once the policy period is
over the billing software ensures that no more transactions are made on the
policy before it is ensured.
Insurance firms use the latest computer and software technology in the
world to ensure smooth functioning. Insurance Billing Software takes care of
all the financials of the insurance firm and keeps them error free.
