Have you been holding out on digital payments? You’re not alone. The insurance industry can be slow to change, and this trend has held true in the adoption of digital payments for insurance. There’s a difference between cautiously slow and ludicrously sluggish, however. Technology has made digital inbound and outbound payments possible, and the time for insurance digital payments has arrived.
Technology Has Shaped Consumer Expectations
There’s a concept known as lifestyle creep. According to Investopedia, lifestyle creep occurs when a person receives more discretionary income, and their standard of living improves. Things that used to be considered luxuries begin to be perceived as necessities.
Improvements in technology are leading to a somewhat similar change in expectations. Tech tools that would have been considered luxuries in the past and now taken for granted. A notable example can be seen in the way people think about smartphones. For many people, a smartphone isn’t just a cool gadget that’s nice to have. It’s an absolute necessity. According to CNET, one survey of smartphone owners in the U.S. found that 42% of people would rather be distanced from their significant other for a month than go without their smartphone.
But this technology creep doesn’t just apply to personal devices. People also expect more from companies. Salesforce conducted a survey and found that 75% of customers expect companies to use innovative technologies to improve their experience. Furthermore, 67% of customers say that the way a company uses technology is a reflection on how they operate in general.
Digital payments for insurance are one fantastic way to meet changing consumer expectations for fast and easy service.
People Are Becoming More Impatient
Technology may also be making people more impatient. A study from Ohio University found that people are not willing to wait for a larger reward, even if they only have to wait a matter of seconds. The takeaway? People are very impatient.
If people aren’t willing to wait a few seconds for a reward, it seems reasonable to assume that they won’t want to wait days for a claims payout. Agents aren’t going to want to wait for their commissions, either. People want instant gratification, and digital payments can provide that.
The Pandemic Has Pushed People to Demand More
Thanks to emerging technology, expectations were already changing before 2020. Then the pandemic pushed those changes into overdrive.
According to Retail Dive, the ease of online and omnichannel shopping during the pandemic resulted in higher expectations, and a report found that 58% of respondents said their customer service expectations were higher than they had been just a year earlier.
The Insurance Industry Is Embracing Digital Transformation
The 2021 U.S. Auto Claims Satisfaction Study from J.D. Power found that overall satisfaction with the auto insurance claims process had reached a record high. Improvement in settlement was one of the key factors driving the overall increase in satisfaction.
McKinsey & Company says that “COVID-19 has pushed companies over the technology tipping point. The pandemic accelerated digital transformation by several years, and now that this change is here, there’s no going back.
The insurance industry is experiencing a critical period of transformation. Over the coming months and years, some insurers will move ahead and meet (or even exceed) rising consumer expectations. Other insurers will fall farther and farther behind, becoming relics of a bygone era. In short, technological change will separate the wheat from chaff.
Digital Payment Is the Next Frontier
CB Insights says that the insurance industry has lagged behind other industries in terms of digital payment adoption. In 2019, 52% of payments in the insurance industry were made by check, compared to only 22% of payments in all industries. Now, insurers are finally starting to invest in digital payments in response to customer demand.
It’s about time. Digital transformation in the insurance industry can take many forms. Insurance companies are investing in artificial intelligence, predictive analytics and a score of other emerging technologies. Many of these advancements are important – but digital payments for insurance need to be on the list.
After all, payments are a critical part of many interactions between insurance customers and insurance companies. Customers purchase coverage by paying premiums. Insurance brokers receive commissions for selling policies. Insurers honor coverage by paying claim payouts after a loss. Payments are at the center of all of these transactions, and digital payments can make the payment process go more smoothly. Also, a good customer experience is one that fits the needs of the individual customer. By adding digital payments to your payment options, you can boost customer satisfaction.
Multiple Payments Are Ripe for Digital Transformation
Accepting digital premium payments is a good start, but digital payments hold enormous potential beyond this.
Payments Journal says that digital payments have the potential to transform the claims experience. It makes sense. Many insurers still rely on paper checks, and that means days can be wasted waiting for mail delivery, deposit and processing. Digital payments can speed up the process, and that can bolster customer satisfaction.
Digital payments can also simplify the process of paying refunds. USA Today says that more than 82% of auto insurance companies offered refunds and credits during the pandemic, when people were driving less. These refunds totaled around $6.5 billion. Processing all those refunds can take time, and digital payments could have expedited the process.
Insurers shouldn’t forget about brokers, either. With digital payments, brokers can get their commissions faster. That can make them more satisfied with your company – and more likely to want to continue to do business with you.
Will You Embrace Digital Payments – Before It’s too Late?
Digital payments for insurance have been on the horizon for a while. Now, technological developments, the desire for more efficient systems, the pandemic and changing customer expectations are driving the need for fast and easy digital payments. It’s time for insurers to adopt both inbound and outbound digital payments, and insurers that delay will fall farther and farther behind their competition.
Are you ready to embrace digital payments for insurance? Request a demo today.