Collections in Insurance cover all aspects of collecting outstanding receivables from preventive dunning to late stage collections. This is achieved by taking advantage of FSCD collection strategy capabilities that have been available since many releases with ERP 6.0.
The needs of the hour for Insurers has been flexibility in determining the right activity for a customer and providing additional functions for the Collections Manager to manage the work in his / her area in the most efficient way and use new functions for the Collector to process work through work lists and views to accelerate.
There has been a shift in the approach for dunning to cater to this requirement.
In the traditional dunning process the dunning procedure assigned to each contract account which determines the number of dunning levels and the respective dunning activity sequence. This determination of the next dunning level is primarily based on the days in arrears and the amount of debt as shown below.
With the introduction of dunning by collection strategy the determination of the dunning activities in the dunning programs takes place using the Business Rules Framework (BRF) / BRF +.
Here we see that dunning by collection strategy is based on business rules that are evaluated at runtime. Therefore new dunning activity that can create work items of various types for processing by Collectors can be carried out efficiently
Moreover this allows for a flexible evaluation of a broad range of parameters in collections. A collection strategy is assigned on master data level. Contract accounts (or Insurance object) can be treated individually or can be grouped together for collections. The evaluation of the business rules within the strategy return the next collection step (as well as related activities) to be carried out.
Hence there is not necessarily a fixed sequence of steps to be carried out one after the other. It is more to do with the specific circumstance of an account that determines the next collection step.
The data that can be evaluated in the rules engine include the dunning data, dunning history, credit risk data and many more (including customer-specific tables) as shown in the above screenshot.
SAP Organizational Management can be used to determine responsible teams and/or agents for dunning activities. Rules can be set up based on a variety of criteria to determine which activity shall be carried in which organizational unit and by whom.
Thus it is possible to automatically assign a collection team or an agent/collection Specialist according to a company’s specific business rules.
Based on the new capability to determine responsible teams and/or agents, it is possible to see how much collections work (i.e. dunning/collections activities) will be created. Before final creation of the work, the Collections manager can do a capacity balancing.
For e.g : Collections department may have a limited capacity of collection agents doing outbound calls, therefore the Collection Manager can limit the number of work items created for these Collection Agents and instead have SMS sent to those policyholders that shall not receive a call from the Collection Agents.
The integration with BI to analyze collections can provide Insurer a good view about the collection success and plan better to increase collection efficiency.