Recently while attending the AppliedNet 2020, SimplePin took a poll from over 200 brokers and carriers to find out top challenges when it comes to premium payment collections. Results were quite interesting and in some ways a bit surprising.
So, let’s look at the top three challenges insurance providers are experiencing today.
Number 1: Manual labor of handing and posting payments.
Over 45.2% of companies surveyed responded that manual labor throughout the process of handling payments was a top challenge.
Somewhat surprising you might think, as most if not all providers have shifted to online payment options, which should actually decrease the amount of touches a payment has to go through and theoretically be a lot more cost effective than traditional payment options, especially checks.
These online payment options have also seen a significant increase in utilization by end customers, especially during this COVID-19 pandemic we are all managing through today. With customers increasingly adopting online payments and demanding more options, it really boils down to efficiency of the electronic payment options deployed by providers.
We have covered this topic in prior blogs, but now our research clearly shows that electronic is quite different from a completely digital payment experience.
Deploying non-integrated traditional checkout payment methods such as credit card, EFT/ACH, eTransfers , PAD’s is significantly impacting operations and increasing the cost of labor to handle, process, post and reconcile each of these payment types. Errors are increasing, which is understandable as operations now have to handle multiple different streams of payments and match volumes of payments to right policies and customers.
All of this is causing delays in updating the GL, impacting customer accounts, and accuracy of reporting; so it really should not come as a surprise that the cost of handing payments is actually increasing rather than decreasing.
Deploying a digital payment platform can eliminate these challenges and remove friction within your payment flow by posting payment in real-time back to your GL, 100% accurately and without human interaction.
As more and more customers shift toward online payments, digital payments provide an opportunity to significantly reduce the cost of process (what electronic payments were supposed to deliver), improve operational efficiencies and staff experience, while reducing errors.
Number 2: High cost of processing fees
Not surprising... The number two challenge facing insurance providers is the high cost of fees for accepting payments online.
When it comes to online payments, credit card is the most convenient checkout experience, because the other options such as EFT/ACH, PAD, and eTransfers are not inherently meant to be used for online purchases.
Just think if you were shopping on Amazon, or any other online e-commerce site, and when it came to payment you needed to fill out a pre-authorized agreement - add your transit, branch, account information, and possibly validate the account with a couple micro debit/credit transactions prior to completing the purchase?
The checkout abandonment would be astronomical!
Credit cards make it easy to checkout, but the merchant fees will take a serious bite out of the providers profits, which contrary to consumers beliefs are pretty massive. This is where digital payments can help improve the checkout experience with most cost-efficient payment instruments.
Layering digital technology over EFT/ACH processes that make the checkout experience as seamless as credit cards will increase the utilization by customers of this payment method, while reducing hard dollar costs for providers.
SimplePin has developed a checkout experience for bank-to-bank payments that is as seamless for customers as logging into your online banking, while simultaneously providing the ability to validate the accounts and funds instantly to deliver funds as quickly as a credit card with significantly lower fees.
With the ability to surcharge for this service, providers can offer a breadth of payment options to customers, allowing them to choose from a number of frictionless checkout experiences at different service fee levels thus completely eliminating the cost for the provider.
By outsourcing to a digital payment provider, organizations are not only able to eliminate cost of payment acquiring, but also cost of IT support, infrastructure, banking fees and compliance for their payment process.
Number 3: Customer experience and breadth of payment options.
It was definitely surprising to see customer experience and improving the breadth of payment options come in at only number three for the insurance providers surveyed, as it’s top of mind for almost all digital initiatives.
Perhaps, payments have not achieved the visibility other projects have or more likely providers feel that they have already for most part delivered online payment capabilities to end customers.
However, over 25% of respondents feel this is not the case and customer experience needs to be enhanced.
Payments are the first and last mile of every journey, and it’s no different when it comes to insurance. Your customer relationship starts with a payment that bonds the policy and your relationship. Insurance is a complex instrument, but like the rest of the world, it's moving to a digital experience at warp speed and payments are a big part of that journey.
Organizations that feel existing checkout experience or payment options are just fine are missing a big opportunity. Without a doubt existing payment processes or checkout experiences would not suffice for any other e-commerce site.
Let’s be frank... insurance is moving to digital and therefore becoming part of e-commerce.
The question becomes, why put roadblocks in front of customers that are ready to buy your product?
Smart organizations are obsessing about their customer experience and removing all friction points in their buyer’s journey. Just look at Lemonade Insurance. They have simplified every aspect of their customer journey and in five short years achieved massive traction at a $2.8B valuation.
Just shows you what big payoffs listening to your customers and eliminating friction can truly deliver.
From a speed to market perspective, reviewing your payment journey can be a low hanging fruit opportunity delivering big payoffs.
So there you have it, insurance providers see labor costs, processing fees, and customer experience as the top three challenges when it comes to payments. The impact of existing payment processes therefore is costly and inadequate, but it doesn’t need to be this way.
A digital payment strategy can turn this challenge into a significant opportunity to streamline operations and actually help you win more customers. Most of all, the right digital platform can be very light and quick to deploy delivering immediate results to your digitization initiatives.
Interested in learning more about this software? Want to know more about SimplePin? Call our toll free number: 1 800 727-4136. You can also email us at email@example.com, contact us through our online form, or schedule a demo with one of our product specialists.