Introduction
The insurance industry has not always been considered a stronghold of innovation. But times are changing, and with the rise of tech companies, insurtechs, and third-party capital comes higher customer expectations. All of this is putting pressure on more traditional insurance companies to take on a more systematic, innovative approach. Staying ahead of rapid transformation within the industry is imperative to preserve existing market share and financial performance. According to a Gartner study, legacy modernization remains a high priority for insurance CIOs, with 55% of insurance organizations currently going through a
modernization project of core IT or back-end systems. 1
When it comes to making payments, the insurance industry has the highest cart abandonment of any sector, currently standing at 84%. On average, that’s two in every 10 customers that fail to convert 2 .
In the digital age, consumers are looking for seamless payment experiences that offer a variety of payment methods to choose from. In Europe, for example, 44% of consumers prefer to pay for online goods and services with a digital wallet, surpassing the 42% who prefer card payments. 3
With such a high rate of cart abandonment, it’s evident that
the payment process often falls short of customer expectations. The primary interaction insureds have with their carrier is their bill and premium payments. Mastering these interactions by digitizing your payments solution could not only lead to greater customer loyalty and retention, but also act as a revenue driver.
Four strategies for insurance merchants to accelerate revenue.
< 2 / 8 > Legacy systems transformation: Adacta 2How to improve customer experience in insurance Insurance Business UK 3Preferred payment methods in Europe Ecommerce news
1. Offer multiple payment methods
Customers love choice – and this extends to how they pay, whether the transaction is a one-off, or a monthly recurring. According to a 2022 Accord report, fewer than 25% of insurance companies worldwide have truly digitized their value chain, and this extends to the array of payment methods offered to customers. In the US, paper checks still make up a considerable proportion of transactions in the insurance industry. This payment method can be slow and expensive for insurers compared to digital payments - checks are estimated to cost insurers about 10x more than ACH payments.4
Payment method preference can vary based on a variety of factors ranging from customer age to their location. Younger consumer groups such as Gen
Z or Millennials have a higher preference for digitally native wallets or payment apps (such as PayPal, Apple Pay or Google Pay) while older generations prefer cards. In the US, cards are still more popular than other methods but in countries in Europe or Asia Pacific payment apps like WeChat, Alipay or iDeal are king.
Integrating more payment methods – targeted to your customers’ preferences depending on type or location – is a winning strategy. Don’t give customers the option to walk away from completing a transaction simply because their preferred payment method is not available. Working with an experienced payment partner who understands payment method preference is also key – so choose wisely.
< 3 / 8 > 4Digital payments for insurance startups CB Insights
2. Demonstrate flexible payins and fast payouts
Another aspect which can help with attracting and retaining customer loyalty when it comes to insurance is pay-ins and payouts. An Accenture study found that 85% of surveyed insurance claimants were dissatisfied with their insurer’s digital experience. 58% of surveyed claimants’ reason for dissatisfaction during a claim is that the claim payment took longer than expected 5 . The claims process is notoriously complex across the industry, and it can take weeks from the time a claim is filed to the time a payment is disbursed. A customer making a P&C claim may need those funds immediately and be unable to access a bank, say if they lost their home during a natural disaster.
Instant payouts with multiple options are, therefore, critical to customer experience. Offering innovative and instant payout methods like ACH, SEPA Instant, Visa Direct or Mastercard Send can help prevent abandonments and boost customer retention.
The same is true for flexible premium payins. Most insurance companies require premiums to be paid monthly, bi-annually, or annually. Offering customers the option to pay their recuring premium fees via other methods, such as bank transfer, could reduce the cost for both the insurer and insured when compared with card payments. The costs saved could enable your company to reduce premium prices, giving you a competitive advantage.
...of surveyed insurance claimants were dissatisfied with their insurer’s digital experience
...of surveyed claimants’ reason for dissatisfaction during a claim is that the claim payment took longer than expected
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5Accenture Global Pulse Survey
3. Take a strategic approach to
Strong Customer Authentication
In 2021, UK insurance companies registered 89,000 fraudulent claims, valuing £1.1 billion. 6 Robust security measures, such as Strong Customer Authentication, are therefore vital to protect against possible fraud and data breaches. Because 3DS2 includes multifactor authentication, it can create additional friction into the paying approval process. To ensure a frictionless payment experience for customers, insurance companies can employ exemption rules that bypass the need for multi-factor authentication where the risk that the payment is fraudulent is low.
6https://www.abi.org.uk/news/news-articles/2022/08/own-goals-cruise-con-diy-vandalism--fall-in-insurance-fraud-good-news-for-honest-customers-but-no-room-to-go-easy-on-thecheats-says-the-abi/ 7Impact
In the US, insurance fraud costs consumers $308.6 billion every year. 7 Even in regions such as the US, where 3DS regulation does not apply, it is still essential to invest in fraud detection that will protect customer data, such as a fraud and identity manager solution. This would allow your business to connect to a broad range of identity management service providers worldwide, enabling you to keep up with the latest regulatory compliance requirements while protecting your business and customers against fraud.
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of insurance on US economy | Coalition Against Insurance Fraud
4. Invest in a Payment Orchestration platform
The insurance sector faces numerous hurdles when it comes to payments, posing obstacles for insurers in effectively handling and overseeing transactions. Primarily, the complexity of the insurance industry, demands for enhanced transparency, changing customer expectations, and the gradual replacement of outdated systems all contribute to these challenges. A Payment Orchestration platform provides businesses with a centralized hub for managing payments, as well as reconciliation and reporting and fraud prevention capabilities. By leveraging a Payment Orchestration layer, insurance companies can streamline operations, enhance customer satisfaction, cut costs and drive business growth in a rapidly changing market – all via
one integration. In addition, it would allow insurance companies to quickly adapt to changes in the market, such as new payment methods or regulations, which are crucial for staying competitive in the insurance industry.
With few, if any, insurance providers offering a truly integrated payment platform, a Payment Orchestration layer could set your business apart from most in the market.
To learn more about how Payment Orchestration could accelerate the growth of your businesses, read our study.
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Where next?
Nuvei can be your innovation-led payment partner that offers the latest technologies to support your insurance business as it expands.
20 years’ experienceGlobally connectedIndustry leading acceptance rates
Reduced card abandonment
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ABOUT NUVEI
Nuvei (Nasdaq: NVEI) (TSX: NVEI) is the Canadian fintech company accelerating the business of clients around the world. Nuvei’s modular, flexible and scalable technology allows leading companies to accept nextgen payments, offer all payout options and benefit from card issuing, banking, risk and fraud management services. Connecting businesses to their customers in more than 200 markets, with local acquiring in 45+ markets, 150 currencies and more than 600 alternative payment methods, Nuvei provides the technology and insights for customers and partners to succeed locally and globally with one integration.
For more information, visit https://nuvei.com/
CONTACT:
EMEA
APAC LATAM
Theodore Law
North America: Ella Koren
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