The insurance industry is huge. Why? Because it’s a necessity. Whether it’s for travel, car, home, mobile, business, life — people feel the need to ensure the assets that mean the most to them. The insurance industry is one of the oldest and most traditional around today and globally it’s worth billions.
It’s a sector that up until recently has been slow to change, but thanks to the advances in disruptive digital technologies around the world, the insurance industry is being shaken up by ‘insurtech’. In 2018 alone insurtech enjoyed $1.7 billion in investment and it’s great for bringing the insurance industry into the modern age. But insurance still has a big issue and it’s one that frustrates those working in insurance and the customers of these companies. That issue is payments.
The landscape is changing
The nature of insurance is changing – insurance is no longer an annual transactional payment, it’s now an on the go multi-purchase industry. Insurance is now more available, customers want apps on their phones so they can ensure on the go. For example buying camera insurance for when they go on holiday, car insurance for when they are lift-sharing, extra home insurance for properties when they get put on Air BnB. People want to be able to buy insurance as they need it, and anywhere they might be so the payment process has to allow for that.
This means payments need to be completed in one touch ideally — to avoid external factors like signal loss from interfering. The payment display must also be seamless, page re-directions, for example, are simply too time-consuming. Customers ensuring ‘on the go’ want to be able to see what they’re buying on one screen.
When it comes to paying out a claim, the insurance industry can again be too slow. For some insurers, the current paying out model is still manual and like anything manual, this process can often be impacted by human error. Whether its incorrect input of reference numbers or trying to find the relevant details of the customer who’s making the claim, it doesn’t matter because this all takes time and frustrates both the customer and the provider. In fact, recent research from Banking Circle found that only 28% of insurance providers rated their paying claims process as excellent.
Another factor to be aware of for insurance companies is their infrastructure. Because of the traditional nature of the industry, many are still tied down to legacy systems and so whilst some may want to change the process, they are not really in the position to do so. Being shackled by infrastructure is a similar problem that incumbent banks had in the finance industry — the issue being they couldn’t react fast enough to consumer needs and so lost them to companies that embraced new technology and fixed problems.
The same will soon be said for insurance providers who aren’t ready for change and are still using payment providers that can’t keep up with the changing landscape of insurance.
To begin your payment revolution, you must recognize that there is an issue with your payment process and make it a priority that’s worth fixing. Make it your mission to improve the speed in which you onboard customer payments and also pay-out claims to customers as this is what matters most to your customers. Once this is in order you can then start looking at other areas of the payments journey.
Embrace a technology partner
Insurers need to embrace technology. Implement automation into the paying out process which will eradicate the problems that crop up during the manual procedures.
Look to digitize your payment system, this will cut down on cost and time. Take the paying out process as an example. Staffing call centers and sending cheques through the post is not only a slow process, its also expensive. Being able to just pay a claim out into a customer’s account or on to a customer’s card in which payment was made is much easier and cost-efficient. A mobile technology partner can process this for you.
Look to partner with a payments provider who can make your payment systems digitally native, this will allow insurers to combine offerings and be more flexible. A payments partner that can ensure the system is based on APIs and SDKs will mean your customer’s payments will be processed via a range of different methods.
We’re in an age where consumers expect to get things done with ease. The same can be said for payments, if the journey becomes a chore people will go somewhere where it’s not. Payments need to be quick and keep customers engaged with short processes and straight forward payments. It’s time that insurers prioritized payments.