What to consider when picking a digital claim-payment partner

Here's how insurance executives can be sure they’ve found the right digital claim-payment processing partner.

Paper-based claim payment processing slows time to payment, extending an already-frustrating process. (Photo: iStock)

One-third of insurance executives say technological change and policyholders’ expectations for 24-7 service are the two most disruptive forces in the industry, PwC’s 2018 CEO Survey found.

As the strength of a company’s digital platform becomes increasingly critical, insurers must consider whether an in-house approach to claim payment processing — especially a paper-based approach — is sufficient.

In 2019 and beyond, merely building a digital interface won’t be enough to satisfy policyholders’ expectations for digital interactions, especially with digital front-runners like Amazon, Netflix and Uber setting the bar for superior digital service. The J.D. Power 2018 Insurance Digital Experience Study found policyholders also expect seamless digital interactions across insurance functions, from claim processing to shopping and servicing of policies.

The push to go paperless

Making the move away from paper-based claim payment processing is critical in an era of digital transformation. When insurance companies cling to outdated methods of claim payment processing, this results in a highly fragmented policyholder experience. Paper-based claim payment processing slows time to payment, extending an already-frustrating process. It also adds unnecessary administrative costs and decreases efficiency, since manual claims processing is labor-intensive.

Building a strong relationship with an experienced technology solution provider is critical when making the move to digital claim payment. How can insurance executives be sure they’ve found the right digital claim payment processing partner?

Four questions to consider

How strong are the claim payment processing partner’s insurance-specific digital capabilities?

Many insurers’ digital offerings falter when it comes to insurance-specific capabilities like claim processing and shopping and servicing of policies, the J.D. Power survey found. Take a close look at the provider’s offerings from a policyholder perspective:

Do these offerings support a seamless, customer-directed digital experience across each aspect of the claim process, from intake to processing to payment?

The ideal digital solution will enable policyholders and service providers to select their preferred form of claim payment and will support electronic transfer of funds. This eliminates the wait times associated with paper-based payment, increases policyholder satisfaction and reduced insurers’ costs.

What is the provider’s approach to multiparty payments?

When an auto accident occurs, policyholders want to get back in the driver’s seat as soon as possible. But because auto accidents often require payments to multiple parties — claimants, doctors, hospitals, body shops and towing companies — it’s not always a fast or straightforward process. Additionally, some policies have more than one policyholder, which may require an endorsement for payment.

One emerging option is the use of electronic multiparty payments, which enables payees to approve a payment on their mobile device and choose who should receive the payment and the preferred method of payment. Electronic multiparty payments — whether by automated clearinghouse (ACH), electronic check or direct-to-debit — eliminate the costs of paper checks for auto insurance companies and reduce customer service calls related to claim payments. For claimants, the benefits include convenience, faster payment, and an improved claim payment experience, with mobile communication the instant a payment is available.

Service providers can also choose their preferred method of payment and gain immediacy of payment, increasing their satisfaction with the insurance company. There are a variety of claim payment solutions on the market, with the most flexible being the type insurers can either roll into their existing mobile solution or brand as a standalone application.

What investments has the digital provider made in security and compliance?

 Insurance companies have access to two of the most sought-after categories of consumer data: protected health and/or personal information and payment information. Given that only 51% of CEOs believe their company is well prepared to withstand a cyberattack, it’s critical that insurance company leaders seek a claim payment processing partner that demonstrates strong security protocols for consumer data through regular security audits, training for staff at all levels, and security certifications. In addition to seeking evidence of HIPAA compliance, look for these credentials:

What is the digital provider’s business continuity and disaster recovery strategy?

Ask potential partners to share the investments they have made to ensure data will be protected and available at all times in the event of a disaster. For example, after damage from Hurricane Katrina forced one insurance company to shut down its Mississippi and Louisiana branches for four months, the company moved to an electronic claim processing system. It’s a system that enables branches across the country to provide assistance to one another when disaster strikes. This approach supports timely recovery of operations as well as business continuity, enabling insurers to focus on the critical needs of policyholders during times of distress.

Carefully evaluating a digital provider’s responses to these four questions will better position insurers to meet policyholders’ expectations around claim payment processing while also supporting security and compliance.

Jeffrey W. Brown (jbrown@vpayusa.com) is president of VPay, a leading turnkey claim payments platform focused on the property and casualty, workers’ compensation, health care and warranty industries.

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