It's time to cut the check: The case for digital insurance payouts

In the aftermath of a fender bender, Jenna nervously checks her mailbox daily, awaiting a reimbursement check from her insurer. It's been weeks, and her savings are dwindling. Jenna's story is far from unique – it's a shared narrative for many awaiting insurance reimbursements. In today's digital era, it's high time for insurance companies to ditch the paper check and embrace electronic payouts.

Electronic payouts are not just a convenience; they are a beacon of relief. In times of distress, such as post-accident repairs or unexpected healthcare costs, customers like Jenna seek reassurance – not the added stress of tracking mailed checks. Digital payments offer a swift, secure, and transparent solution. They signify insurers' commitment to service at a time when customer satisfaction can be the differentiator in a crowded market.

Electronic payouts are the instant answer.

However, many insurance companies chose to be at a disadvantage by continuing to reimburse customers by paper checks. The time it takes to print and mail a paper check will, in all likelihood, generate a number of anxious phone calls and even social media complaints. What makes matters worse, is that customers have to wait for said paper check to be issued, mailed, and then clear their own account before having access to funds. Not to mention, it could get lost in the mail creating a back to square one scenario. This lack of transparency regarding where a check is only creates more problems for insurers. It's not uncommon for a check payment on an insurance claim to take so long that an adjuster will void and reissue payment to appease a customer.

In addition, increasing costs on the insurer's side and a lack of transparency will make it harder for insurers to manage cash flow which will inhibit faster payments on claims— whether it's for the home, automobile, compensation for missed work, or a particular medical procedure. 23% of consumers want instant payouts for insurance claims, and less than two-thirds (62%) of payments are accompanied with the option for consumers to pick and choose instant as an option. (PYMNTS)

Expediency

Electronic payouts put an emphasis on fast turn-around times. This account-to-account transfer allows for immediate availability of funds to the beneficiary of the transaction. With a real-time transfer, an insurer can send a claim payment within seconds which enhances customer satisfaction and creates positive word of mouth, while greatly reducing the number of calls service representatives have to answer each day. Other benefits include providing instant confirmation of each transaction, accessing payment history, and reducing the need of future follow-ups. It also eliminates the need to write a check to cover overpayment refunds and costs such as covering health-related conditions.

Payment methods

The most popular methods of electronic payments include credit cards, debit cards, direct deposit, direct debit, electronic checks, and bank transfer payments. Gen Z and millennials comprise a majority of the active insurance-buying population and they are seeking electronic payouts as the preferred method of getting paid. However, there are more than 5,900 insurance companies in the U.S., but only a few select companies control the fate of the entire industry. This is because of two factors: time and loyalty. The top companies have been in existence for decades and they are trusted by their customers.

Automobile industry example

Anyone that's been involved in a car accident can tell you that waiting on reimbursement for out-of-pocket expenses to repair damage is anxiety filled. In this post-accident scenario, reimbursement may take up to 90 days or more by the other person's insurance company. Electronic payouts, however, provide customers with a better experience.

Combined personal and commercial auto insurer liability claim payouts rose to $105 billion only a year ago (Insurance Information Institute). This incredible claim payout causes hardship and duress to many customers, and it's incumbent upon insurance companies, not only in the automobile industry, to find a better way to pay.

As we envision the future of insurance transactions, it's clear that electronic payouts are not just a fleeting trend but a vital evolution. This change could save industries like healthcare billions (Healthpayer Intelligence). annually, offering a more appealing customer experience and fostering brand loyalty. Insurers have an opportunity to lead the charge, redefining the standards of their services.In conclusion, the shift to electronic payouts is an undeniable win-win. For insurers, it means streamlined operations and satisfied customers. It's time for the industry to collectively embrace this change and make electronic payouts the norm. The question is no longer if, but when.