Differentiating the claims experience in a virtual world

Consumers are very comfortable with the digital experience and expect it for their insurance purchases and claims payments.

In one survey, 42% of consumers said they would be more likely to stay with an insurance provider that pays approved claims within minutes. (Photo: Shutterstock.com)

As the insurance industry defines what a competitive advantage looks like in a post-COVID world, insurers must move digital strategies to a top-level priority to differentiate themselves in the market’s “new normal.” Along with digital shopping experiences, claim processes — especially payment — will be central to these strategies.

At the beginning of 2020, growth predictions were already high for global InsurTech, with researchers pointing to an upward trajectory of market revenue from 5.48 billion in 2019 to 10.14 billion by 2025 — representing a CAGR of 10.8%. A 2020 J.D. Power study released mid-year reported that the pandemic had further thrust digital expansion into the spotlight as consumers and businesses increasingly looked to web-based interaction and remote services.

Notably, one author of the J.D. Power study noted that “the line between brand and digital brand is rapidly disappearing” for insurers, underscoring the need for smart, forward-thinking strategies and investment dollars. Yet many insurers struggle to strike the right balance between automation and personalized, highly responsive customer support experiences.

On the claim process front, insights from experts at a recent webinar featuring four of the nation’s largest insurers suggested that the ability to “deliver empathy at scale” will define successful claim experiences of the future. As companies wrestle with investments in optimal digital design, many find that the business case for adopting a comprehensive electronic payment portfolio is an easy one to make as the advantages are two-fold: 1) streamlined operations and 2) happier customers.

Digital payment strategies

When considering how to design digital shopping experiences and overall claim processes, the nuances of customer interaction and providing the right information at the right time are complicated. As noted by one of the partners in the J.D. Power study, insurers must navigate the intricacies of striking an optimal balance of providing the right information at the right time and in the right format with a digital shopping experience. With payment, the evidence supporting adoption is much simpler: consumers are demanding convenience and faster access to their money.

In one survey, 42% of consumers said they would be more likely to stay with an insurance provider that pays approved claims within minutes. Further, findings from a VPay and Engine Group report revealed that the majority of policyholders — especially across younger generations — would change carriers to gain access to real-time payments.

Aside from aligning with consumer expectations, digital payment structures are increasingly important strategies to support streamlined operations. Especially in the current economic climate, the need for eliminating costs associated with paper-based payment processes — ranging from $3-$20 for each check issued — is greater than ever and can produce a quick bottom-line win. Plus, these processes have become a liability within the framework of the pandemic as employers needed to implement remote working options to promote employee safety and provide payees and policyholders with non-paper payment options.

The advantages of electronic payment — meeting customer expectations and creating economies of scale — fully align with insurer priorities in the aftermath of the COVID-19 pandemic. As insurers faced the need for remote services to support business continuity, an April Celent survey found that digital transformation remained an important component of ongoing recovery strategies, which included:

Choosing the right payment strategy

As insurers consider how to position for the rest of 2020 and prepare for 2021, there is a solid business case for investing in digital payment options, especially when strategies lean on third-party expertise and limit any drain on internal IT resources. Whether taking the plunge for the first time or expanding beyond an existing portfolio characterized by an automated clearing house (ACH), the future of payment can be described in three words: speed, convenience and choice.

In the near-term, the first steps should include:

ACH may have been a good first step to digital payment adoption, but it will not be enough to meet future expectations. Insurers can round out their payment options with push-to-debit, virtual card and mobile payment options to speed payment to businesses and consumers. This way, consumers can access same-day or near real-time processing from any device.

Choice matters to consumers, and it can vary significantly across generations. The VPay and Engine Group survey found that 82% of policyholders say the ability to personalize payment experiences and choose a preferred model is an important factor for policyholder satisfaction. While younger generations may be quick to adopt electronic options, others may have more confidence in a paper check.

Once insurers take the first steps to modernize their payment models, they must stay abreast of rapid technological advancement. For example, consumers are increasingly embracing disruptive person-to-person models such as Venmo and Zelle, yet before considering how these fit into a digital payment portfolio, insurers must consider the complex landscape of financial data, banking and security requirements.

It’s a new day for digital transformation across the insurance sector. While the reasons for prioritizing these efforts may have changed amid the pandemic, the reality is that those without a progressive, informed strategy that embraces digital payment trends in the next 12-18 months will be left behind. The choice for electronic payment is a sure win across the industry as it not only meets growing consumer expectations, but it also delivers insurers solid bottom-line advantages. 

Elisa Logan is vice president of growth with VPay. She brings more than 25 years of B2B strategy and marketing experience to her role and has worked as a senior executive with a variety of Fortune 100 technology leaders and start-ups in healthcare and technology. Contact her at elogan@vpayusa.com. The opinions expressed here are the author’s own. 

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