Ensuring Better Insurance Payments
How new digital payment solutions bring peace of mind to policyholders and providers.
Cool, calm, and collected. It’s what many of us aspire to be. But how about cool, calm, collected … and covered? Policyholders, naturally, want to protect themselves, their loved ones, and their most important assets. Making it easy for them builds lasting feelings of safety and security. But when it comes time for them to pay and for you to get paid, outdated processes and slow wait times don’t inspire the same feelings about your coverage.
If your payment model is out-of-date, you’re not alone. Dinosaur payment platforms are commonplace in the insurance industry. Key Merchant Services is an expert at identifying opportunities to enhance the process of invoicing and payments, making it easier on the policyholders and providers. Here’s how you can offer the kind of easy payments that keep your clients close and not shopping around for other coverage.
Damages
What harm can an out-of-date payment system really do? Let’s look at a few examples.
Limited Payment Options
A lack of flexibility in how policyholders can make payments puts more old-fashioned insurance providers in a vulnerable position. According to insurancethoughtleadership.com, an industry-leading content creator, nearly 70% of customers believe that businesses “should offer new ways to get existing products and services via technology-enabled processes1.”
Even with overwhelming support for new payment alternatives, many insurance companies still choose to issue bills using paper invoices. We’re talking physical xeroxes or a paper form for a premium payment, deductible, or other charges. Many of these paper invoices require paper checks, too. That means twice the possibility of delays and other mistakes due to the unpredictable and overloaded mail network in our country. In other words, lick it, close it, stamp it, and hope for the best. Then, do it all again next month.
What’s more, many insurance companies opt to pay out claims via the exact same medium: paper checks through the mail. This move is out of sync with younger age groups and those who choose banks that allow them to transact almost exclusively online or via their mobile device. Why would you send a physical check to someone in those groups knowing they prefer to do their banking using a digital method?
Internal Expenses
Insurancethoughtleadership.com also reports that, since the onset of COVID-19 in 2020, operating margins for the insurance industry are at a 15-year low.1 This means operating efficiency, and keeping operations costs down, is more important now than it has ever been.
Did you know that processing paper checks can cost providers about ten times more on average than ACH payments?2 Combine that with billing, bookkeeping, and other outdated, manual processes and costs start to add up — quickly.
Sure, changing operating models looks (and often very much is) expensive. Time is money, as they say. But think about it. Take the time your business is spending on paper payment processing. Add that to the cost of human resources and physical materials. Throw in a few costly mistakes, pesky fees, and needless corrections — and what do you get? Rapidly increasing costs and quality concerns that all could have been avoided with faster, more streamlined payments systems.
Slow Processing
That brings us to the crux of many policyholders’ problem with their insurance provider: speed. Paper processes slowly. It’s manual. It’s inaccurate. It’s harder to manage. And, as we’ve said before, it’s costly and inefficient.
According to research firm CB Insights, over half of insurance policyholders would switch providers just to have access to instant claims payments. Fast, easy, and seamless payments across devices that offer the ability to use multiple payment options are now the norm. Most consumers report that they wouldn’t want to do business any other way.
COVID-19 pushed many businesses, including insurance providers, to implement new technologies and more modernized payment processes. Because who wants to phone or mail something in when they could submit paperwork digitally using a website? Some insurance providers are even turning to chatbots to guide clients through the claim submission process. These are crucial conversations that can be funneled to a live service agent if necessary.
Coverage
How can insurance providers start to repair the relationship with policyholders? It begins with digitization.
Digital Payments
Going digital with payments and payment systems is the best way for providers to offer policyholders a range of convenient ways to pay. Studies show that giving customers a choice in how they pay improves the consumer experience dramatically. Payments are easier, so they’re submitted more quickly. Secure insurance payment processors quickly gain the trust of both the sender and receiver. Customers are happy to retain their coverage because it’s a simple and safe transaction. This instills confidence in the quality of their insurance provider by assuring policyholders that both they and their money are equally protected.
For providers, the proof is in the payback. The ROI of digital transformation and moving to digital payments is nearly instantaneous. The cash changes hands much faster, meaning more is coming in. Plus, it’s at an infinitely scalable pace thanks to the unmatched operational efficiency of our next topic.
Automated Processing
One undeniable advantage of digital payments is automated processing. By digitizing transaction data, insurers eliminate the time-consuming processes that come with manual bookkeeping. Accounts receivable and accounts payable are integrated into one digital payment system, making it easy to send invoices, track finances, and accept payments in real time. All the while avoiding the potentially costly errors and pitfalls of paper.
And this provides trackable, quantifiable data about how your business is doing. Through AI and machine learning, providers can find out fast what’s working and what isn’t. Then they can put the smart money toward a more tailored consumer experience that better fits their customers and their business model.
Self-Service
Even with top-notch customer service, it can be hard to be there for everyone. Self-service models put the power in the hands of the policyholder, inviting them to select or change plans, update account details, make payments, and receive claim disbursements all on their own. Easy, speedy, and most importantly secure portals give agency to the consumer. This helps them to feel more educated and informed. And this feeling of understanding is one of the biggest factors in creating and maintaining customer loyalty.
Self-service models also take the strain off insurance providers, freeing up human resources and lowering overall costs. Much like digital payments, the ROI of effective self-service systems is immediate. Customers appreciate a soft sell and being able to shop plans at their leisure. Combined with an informative approach and an accessible and responsive support network, these do-it-yourself offerings make choosing coverage personal. Easy-to-use digital tools reinforce the value of your products, as well as supplement the policyholder’s trust.
When it comes to choosing coverage, peace of mind isn’t optional. It’s the biggest piece of the home, auto, health, and life insurance puzzle. Digital payments help policyholders navigate a world that’s confusing, sometimes anxiety-inducing. But it’s also one that’s necessary for supporting their health and safety. Providers can use digital payments to ease the manual load, simplifying, securing, and speeding up payments processing so that coverage is the number one concern, not payments.
To learn more about how digital payments are modernizing and driving revenue growth in the insurance industry, read our article Future-Proofing the Insurance Industry: The Ohio National Financial Services Payments Transformation.
There really has never been a better time to talk with one of our payments experts. We can help you make the switch to new digital payment solutions, so you can get back to doing what you do best: helping people. Visit the Key Small Business Insurance Payment Solutions center for more info and contact an expert today. We’ve got you covered.