Tackling payment pain points for insurers

There are more innovative digitalized payment methods than ever before, but insurance claims remain heavily reliant on manual payment processes.

In the property and casualty (P&C) insurance field alone, this represents $1.6 trillion in premiums – about one-third of the insurance industry. Insurance payments are made to a diverse range of B2B vendors and B2C consumers, but in 2020, antiquated paper checks still accounted for 52.1% of all insurance disbursements.

However, just like expected customer experience (CX) standards are rising among consumers, so is the continued global rise in the demand for insurance. For P&C insurers, now is the time to consider creating and sustaining a flexible, digitalized end-to-end payment experience that can meet the needs of global customers.

Explore the three key payment pain points facing the insurance industry and read our tips on how we can solve them.

Customer experience

Insurance claims can be a long ordeal for customers before the payment process even begins. When combined with slower, inefficient and more expensive legacy payment methods, the customers are the most negatively impacted. For P&C insurers, this could have significant consequences as 64% of US consumers reportedly move to a competitor following a poor customer experience.

Customer payment pain points can include:

• Slow legacy payments
• A lack of multi-party payouts
• Limited payment options
• Incompatibility with preferred payment methods
• High cross-border payment fees (leaving policyholders with less)

For insurers, the two main touchpoints with policyholders are premium collection and insurance claims disbursement. Unsurprisingly, as of 2020, 52% of disbursement recipients would prefer to receive an instant payment. This makes it essential that P&C insurers move away from legacy methods such as paper checks and automated clearing house (ACH) transfers and embrace modernized payments processes.

Worldpay offers real-time payments (RTP), allowing for seamless, cross-border, real-time insurance payments to policyholders. For example, RTP integrates Venmo’s instant transfers, available 24 hours a day, 365 days a year. It’s allowing insurers to give their customers more freedom in how, when and where they get paid.

Additionally, Worldpay has broad compatibility with digital wallets, APMs and direct debit, allowing P&C insurers to expand their digital payment options for customers. This helps enhance CX with customers enjoying greater freedom in how they choose their policies online, set up their payments, pay their premiums and view their claims.

Productivity

Current insurance claims payment methods such as paycheck and AHC transfers are slow, resulting in increased back-office expenses across reporting, tracking and admin. These kinds of time-consuming, manual processes could eat into profits. Between 2014 and 2019, only 45% of global P&C carriers saw expense ratios fall while the rest saw ratios stay level or increase. This shows that despite investment in innovation, insurance companies are still battling with high internal expenses.

Additionally, changes to card details can negatively affect premium collection processes. However, with Worldpay Account Updater, P&C insurers can receive updated customer information across Mastercard, Visa and Discover accounts. This helps to reduce authorization failures, which in turn lowers administration costs and increases customer retention.

Any unnecessary reliance on manual processes uses up valuable employee time which could be better spent on research or innovation, potentially increasing long-term ROI. Worldpay disbursement products help P&C insurers reduce their reliance on manual processes while also offering other benefits such as global, low-fee, real-time payments that enhance the policyholder’s experience.

Security

Legacy payments aren’t just slow and inefficient, they’re also a higher risk for fraud and theft. In 2020, 40% of financial professionals reported that checks and wire transfers were the payment methods most impacted by fraudulent activity. In addition, paper checks have the potential to be stolen or intercepted in the postal system, preventing claimants from receiving their insurance claim settlements. However, it’s also possible for policyholders to commit check fraud themselves when paying premiums with paper checks.

Through the Worldpay disbursement offering, P&C insurers can send virtual cards to a policyholder’s wallet or their insurance app. With virtual cards, insurers and policyholders can enjoy an efficient and more secure payment method. But they also remove the need to share confidential bank account information, adding an additional security barrier while also reducing administrative complexities. Virtual cards can be branded with your business logo, increasing brand recognition and consumer trust.

Conversely, online payments face threats from cybersecurity risks and online fraud associated with premium processing and claims. FraudSight is a multilayered anti-fraud solution offered by Worldpay that helps to increase approval rates and minimize false positives. This keeps customers and P&C insurers safe while also enhancing the CX.

Enhance your payments

Within the P&C insurance sector, CX is driven by the convenience, speed and dependability of insurance payments – benefits that legacy payment methods are lacking. However, they’re the benefits that digitalized payment methods from Worldpay are built on.

Additionally, digitalized payment methods provide significant potential for P&C insurers to increase productivity by transitioning from antiquated dependencies on time-consuming manual processes. But they also eliminate the potential for paper-based check fraud while offering robust protection against the most sophisticated types of online fraud and cyber threats.

The world is moving on from legacy payment methods. It’s time to embrace the change.

If you need help to make the transition from traditional payments to customer-friendly, secure and streamlined modern payments, Worldpay can lead the way. Get in touch with us for advice and solutions.