Insurance executives recognize that digitization is central to forward-thinking strategies and long-term sustainability. It has been the subject of thought leadership for years, yet the reality is that many insurers have been slower to embrace the rapidly evolving digital revolution than their counterparts in other industries.
Enter the year 2020 and the ongoing pandemic, and prioritization of digital investments has catapulted to a priority position. As the insurance sector turns the corner, C-suite leaders must make wise technology decisions amid competing priorities to deliver big wins around ROI, satisfying both consumers and stakeholders. It is in this area that digital payment shines as the low-hanging fruit of any overarching digital strategy. Consider the following five ways insurers can capitalize on digital payment investments to drive better customer experiences, capture and retain market share and improve overall operational efficiency.
Increase efficiency and reduce waste. A 2019 VPay and Engine Insights survey found that 60% of consumers were still receiving claim payments by paper check, and for more than half of these respondents, it took longer than four days to gain access to funds. Payment delays not only impact the financial health of clients, but can also increase costs for insurers. For example, consider the costs associated with car rentals for a self-insured auto fleet. Extra rental days that result from delayed payment can equate to significantly higher costs that an insurer could otherwise eliminate with the right digital payment infrastructure. Evolving payment solutions such as automated clearinghouse (ACH), virtual cards and push-to-debit speed these processes and can support same-day and near-real-time access to funds in some cases.
Ensure continuity of operations. Maintaining safety, security and business continuity quickly rose to priority status in March 2020 following the emergence of COVID-19 in the United States, a
Streamline operations by eliminating paper-based processes. To reduce cycle times and improve operational efficiencies and net promoter scores, many insurers have taken first steps with digital payment by deploying ACH. Yet when strategies end with ACH, carriers fail to address a holistic solution to paper-based payment, which is inefficient, costly and time-consuming. They also fall short of realizing a digital payment strategy’s full potential. Consider the possibilities: What if a workers’ comp payer or health plan could completely eliminate the cost of every paper check issued? When ACH is complemented by other types of digital payment, such as virtual cards or push-to-debit, insurers can more holistically address paper, even when remitting data to vendors. In truth, an expanded digital payment portfolio, when thoughtfully designed, can more than pay for itself.
Speed disaster response. At a time when access to near-real-time payment is becoming the norm, insurers can expect that policyholders will accept few excuses for payment delays during a crisis, when access to funds is vital to meeting basic needs such as housing, transportation and food. It’s one reason why some of the largest carriers have already taken action to improve turnaround times for claim payment. For example, advanced technology in the form of drones is now used by some carriers to speed damage assessment, improving lag times of days or weeks that might accompany an adjuster coming on site. Once claims are approved, some insurers can initiate funds transfer within minutes using push-to-debit technology.
Strengthen customer loyalty.In the VPay and Engine Insights survey, the vast majority of respondents—more than 95%—pointed to ease and convenience of claim payment, speed of payment and the ability to access funds quickly as criteria that impacted satisfaction with an insurer. Other recent findings that suggest 42% of consumers would be more likely to stay with an insurance provider that pays approved claims within minutes and that the majority of policy holders would change carriers to gain access to real-time payment. The reality is that customer loyalty—especially across younger generations—is increasingly tied to the convenience and speed of digital payment.
The digital payment landscape is advancing at a rapid pace, and forward-thinking insurers recognize the potential for not only reaping operational benefits, but also staying competitive in the marketplace. Technological advances will ultimately usher in greater opportunities to pass near-real-time payment on to policyholders, claimants, members and service providers. Progressive fintech companies are leading the way to introduce these options to the industry and can help today’s insurers identify holistic ways of generating ROI from their investments.
