How digital are your claims payments?

With the arrival of digital platforms, mobile apps, and big data, customers expect quicker and more effective service than ever before. And, they expect an enriched level of service from the moment they buy a policy to the settlement of a claim. Today, the insurance industry has finally joined the era of the customer as insurers begin to focus greater energies on digital transformation, including how claims are filed.

The seismic shift in the digitization of claims processing and payment has benefitted carriers greatly, including providing a more integrated and holistic customer experience, driving down costs, and delivering faster payments. However, most insurance companies still face a patchwork of payment distributions. Many clients can spend months and untold dollars on transformation and still ask: How digital are we, really?

Shifting from partially to completely digital increases end-customer satisfaction and retention, eliminating the complications associated with working with multiple vendors. Digitization also decreases reliance upon multiple systems across an insurer’s IT estate, ultimately ensuring the claims payment distribution process is well lubricated. We’ve long made a point of how much money this can save customers; however, the same is true for carriers. If you aim to ‘kill the check’ in insurance payments at scale, all sides win.

This proposition has become popular among technology providers, but doing it right requires both sector and payments expertise and the right ambition. In its “P&C Nonbank Disbursement Platforms” study last October, leading research consultancy Aite-Novarica recently highlighted how inbound and outbound payments markets are converging and how insurers have developed a preference for providers that help reduce operational costs, streamline the payments process and reduce workflow-related overhead. They noted that the transition to digital payments on a single platform also allows insurers to offload security and compliance costs and cut down on the time required to bring new features and changes to their policyholders.

Experience teaches that there are a few priorities to emphasize in building a durable digital payments platform of this kind. It must be flexible and accessible, which is essential not only for the client relationship but for the claims payments to distribute smoothly in times of duress. This can include giving customers the option to pay with any method, including cards, direct deposit, a virtual pre-paid card, pre-paid cards, and apps including PayPal and Venmo. It could also include the ability to approve claims and pay customers from a mobile app, with a feature that allows insurance providers to pay claims and provide funds instantly during emergencies by using “Cat” cards.

The second aspect lies in considering payments as more than a basic feature and viewing digital payments as a strategic means of growth in the fast-growing insurance ecosystem. Instantaneous digital payments are not just quick and convenient for claims filers, they are also efficient and predictable for insurers — simultaneously lowering loss ratios and severity at a time when every claim, minute and data point matters.

Adopting a payments “network” or fintech approach allows insurance companies to be thoughtful about their needs and manage how much change their own organization can handle. This enables carriers to move quickly and integrate new components seamlessly — and always continue the drive towards genuine digital. The value of this philosophy has been born out during the pandemic, which has forced insurers to evolve towards more no-touch client service and avoiding physical contact. Those expectations are here to stay.

It’s been said that insurtech is “the threat that inspires” in our industry, but often that inspiration is lost amid poor implementation. There is value created when digital is done right. Improvements in customer experience and satisfaction around claims are not only crucial for insurers’ future, but these demonstrated benefits create a virtuous circle for the insurance company itself, driving them to take more of their payments digital, and with the right partners, to do so better and faster.

Ian Drysdale is the CEO of One Inc. Contact him at idrysdale@oneinc.com.

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