I recently purchased business insurance and was struck by how inconvenient the process was – particularly when it came to paying the premium. Let me explain.
Since I was renewing an existing policy, the first step was for me to review the previous year’s application details and clarify any changes. When that was done and my premium amount was confirmed, I was sent the policy documents themselves, the premium invoice and payment details and options by email in multiple PDF documents.
In order to pay my insurance premium, I was given three options:
i) I could mail in a check (I don’t even have checks anymore!);
ii) I could pay online by credit card, via a secure payment page on the broker’s website; or
iii) I could pay via my online banking website.
So, here’s how I paid. First, I printed the policy acceptance form, signed it and then scanned it so I could email it back. Then, I went to my online banking website and logged in. Of course, I had to add my insurance broker as a “Payee” on the banking site. In the middle of doing that, I had to email my broker and ask what my 7-digit account number was (since my account ID with the brokerage was actually a combination of letters and numbers and a dash and the bank website would only allow letters and numbers). Having resolved the account ID question and adding my insurance broker as a Payee, I was able to successfully pay my insurance premium via the banking website.
All told, It took me almost 30 minutes to pay for my insurance.
20 year old processes
So far, any readers that work in the insurance business might be thinking that my broker is doing a pretty good job by communicating via email and offering me multiple payment options. Except, most of this process could have taken place 20 years ago. PDF documents have been around since the 1990s. Email accounts were common two decades ago (remember AOL and Yahoo!?). And it was relatively easy, even 20 years ago, to set up a secure payment page on your brokerage website to accept credit card payments. The only part that might not have been available in the year 2000 was the ability to pay via my online banking website.
It takes less than 5 seconds to pay at Amazon, Uber or Apple
So what’s the problem here? In a word, friction.
There are so many steps in this process and each step is a potential point of failure. Printing, signing and rescanning PDF documents is a time-consuming task. Why do we need to do that in a time where we do everything else in our lives on an iPhone or a tablet with just a click? It felt more like buying a house rather than an insurance policy.
And it didn’t stop there. In order to complete an online payment, I needed to login to another website, either my bank’s or the broker’s, and submit another form. One thing that is very different today, as compared to 20 years ago, is the popularity of mobile devices. Just over half of all web traffic in 2019 came from mobile devices (source). Everything about this process would be infinitely harder on a mobile smartphone, bordering on impossible (how do you sign a PDF on your mobile device?), as compared to a desktop computer.
Putting Your Customer at the Center of Your Business Operations
Why would anyone in the insurance business in 2020 think this process is good? What comes to mind is the Blockbuster vs. Netflix story. Blockbuster didn’t believe in fast digitalization, while Netflix started off delivering DVDs and quickly pivoted to streaming video. Everyone knows how this story ended.
The insurance brokerage industry lags behind most other consumer industries in digitalization of business processes, especially when it comes to payments.
But there is another, bigger reason for this perception gap. Insurance is still a product-centric business. Insurance agents sell policies and the business processes they follow are built around these products and the needs of the distribution organizations – not the customers.
Convenience beats everything
And this is really the core problem facing the insurance industry: the digital technology that has come to dominate consumer businesses and e-commerce is not only a digital revolution – it’s also a customer-centric revolution. Customers and their experiences, not products, are emerging as the driving force of the new digital economy of the 2020s. Businesses that fail to put customer experience at the center of their operations will struggle to compete and maintain market share.
Our vision at SimplePin is to help make the customer experience in the insurance industry better by streamlining invoicing and simplifying payments. Invoices are sent by email to your customers with one click from within your CRM, policy administration system or broker management system. And customers can pay with one click from their emailed invoice using a variety of payment methods – direct bank transfers, credit cards, debit cards, even ApplePay – using their mobile device, iPad or computer.
Better invoicing and convenient payments is one of the easiest ways for existing insurance brokerage businesses to improve customer experience and get paid more quickly. And what’s good for your customer in 2020 is good for your business!
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Metod Topolnik is the co-founder and CEO of SimplePin which provides tools to help insurance and other professional services businesses accelerate get paid faster by automating e-invoicing, payments and accounts receivable administration.
