Instacart, Netflix, Zoom. It’s hard to imagine our lives without the companies that provide digital experiences and services so we can continue with our everyday lives amid the pandemic. Almost overnight, in-person, paper and manual processes became obsolete, forcing industries like insurance to embrace and reprioritize digital transformation across all business functions at an accelerated speed and as a new reality, rather than just an out-of-reach goal.
Yet, despite advancements in digital payment technologies and offerings, there still has been minimal adoption across the insurance landscape when compared with other industries. Even before the pandemic, the majority of customers preferred instant payments, but just 11% of insurance claim disbursements were paid instantly last year while 52% were sent via paper check. Within P&C, carriers mail paper checks for more than 75% of their claim payments, which can take weeks even without the recent U.S. Postal Service delays.
The most obvious reason to ditch this antiquated, siloed and inefficient approach for a digitized payments process aligns perfectly with insurance carriers' core focus: their customers. By giving policyholders the options they’ve come to expect from nearly every other company they interact with, carriers can provide a seamless customer experience for added satisfaction. And providing the best payment experience and digital payment method helps carriers because digital payment platforms can cut transaction costs by a whopping 10X compared with paper checks. Leveraging a digital payments platform also enables carriers to achieve industry ideals such as automation, transparency and centralization to create simple, cost-effective outcomes for everyone involved.
Automation streamlines pivotal moments in the payments process, decreases cycle times and reduces payment creation effort.
Today, 85% of businesses believe automation helps prepare for future business continuity needs. Not only are carriers looking to automate sub processes, but they are also embracing this new environment to revisit the entire end-to-end process and imagine the value and operational capacity that automation can unlock.
- Carrier-branded, automated payee enrollment better engages beneficiaries and claimants, while driving adoption of digital, real-time payments.
- Digital authorizations and releases with e-signatures enable a faster, fully digital claims settlement and payment workflow.
- Inclusion of third-party processes into the claims file automation removes excess touchpoints, communication and manual payment entry—increasing the velocity of the payment process, payment posting and claim closure.
- Automated verification of claimants’ tax information, as well as digital payments issued to multi-party claimants, vendor plus claimant and law firm plus client payee scenarios, increase a carrier’s digital payment universe and allow for greater overall digital adoption.
Digital platforms and payments make the lifecycle of a payment more transparent for claimants and carriers alike.
Another critical component of achieving claim payment transformation is transparency. Leveraging digital payments platforms instead of manual processing provides an inclusively transparent experience for both carriers and their claimants.
- Through a digital payments process, customers have more visibility into claims payment choice, settlement posting and real-time payment status—ultimately increasing payees’ satisfaction with their insurers and decreasing inquiring phone calls and emails to carriers.
- Increased insight and access to granular payee response and experience data helps carriers inform decisions around their payee experience based on behaviors.
- Additional data inside the claim system and carrier staff visibility outside of claims increases transparency and actionable information to the entire organization.
See also: Payments at the Speed of Light
A centralized platform enables all payment types, engagement and reconciliation to serve as the source of truth for an entire organization.
Adopting digital payments lets insurance companies leverage payment platforms to achieve centralization of multiple workflows and use cases. Carriers need a centralized payments system to ultimately maximize benefits and efficiency across all business, payment and system channels.
- Centralized payments systems empower carriers to leverage economies of scale and add claim types, policies, premium refund and reinsurance payments with incremental effort. The systems also allow carriers to maximize their existing third-party partners such as bill reviewers to streamline and automate system reconciliation and the payment process.
- Multiple payment options and payee self-service allow customers to select their preferred payment method for multiple use cases and reuse that profile in the future.
- Duplicate payment checks, payee identity validation and a unified payment channel reduce losses from payment duplication and fraud.
- Centralized digital payments platforms provide payees with a consistent, engaging and digital process no matter the creation path, line of business or core system limitations.
We may be living in uncertain times, but the pandemic has made one thing clear: The digital future is here. While insurance carriers are recognizing the need for digital transformation and ramping up efforts in certain areas, the industry as a whole has a long way to go, and digitizing payments is a critical part of that process. By embracing a fully digital payments process, the insurance industry can provide innovative, streamlined and convenient experiences that all parties involved expect today, while positioning for the future.