How to Solve the 'Last Mile Problem'

Today's customers are accustomed to instant everything, and the outdated paper check payment model is a gut-punch in a time of a need.

The insurance industry has a last-mile issue. Insurers have known it for quite some time, and policyholders are quickly catching on. For consumers, the claims process is a critical moment – the one that often matters the most. Faced with the prospect of loss, they demand an experience that is speedy, familiar and customized to their needs. They want to feel confident that their insurer is acting swiftly to make them whole again. Forward-thinking insurers have invested in new processes to submit claims, including easier-to-use online and mobile platforms. The result - most can now offer claims filing and approval in just minutes. Yet, the way in which insurers pay people has been overlooked and remains slow, inconvenient and - well - frustrating. Nearly all insurers still pay people the old-fashioned way using paper checks or ACH. This experience falls far short of modern customer expectations. Waiting for a paper check to be printed, mailed and then deposited is unacceptable when a customer must repair a car needed for daily commutes or rebuild a home damaged by a natural disaster. Even an ACH deposit requires the customer to submit bank routing and account information – which no one has on hand, much less if they’ve lost their home to a flood – and can only be issued on a business day. Furthermore, managing checks that have been lost or issued but not cashed is an expensive process for insurers. Today, customers conditioned by online, on-demand and smartphone experiences are accustomed to instant everything, and the insurance industry’s outdated paper check payment model is a gut-punch in a time of a need. They are demanding more from their insurance partners. See also: The ‘Moment of Truth’ for Claims   The rise of instant payouts is helping to fill this void. Already in use across other consumer-facing industries like lending, banking and travel, real-time disbursements have become familiar to policyholders, and pioneering insurers are beginning to take notice. By putting funds in the hands of policyholders immediately upon approval – 24/7– and in a financial account of their choosing, insurers can gain a competitive advantage through increased customer loyalty, customer acquisition and operational cost savings. Those insurers exploring instant payout technologies or service providers should consider the policyholder experience as the beginning, middle and end of any successful digital payment transformation. The three key elements of that experience are convenience, choice and confidence. Convenience Policyholders submitting a claim are often inconvenienced - or worse - by unforeseen circumstances. Your goal is make them whole and do it in the easiest way possible. A push payment delivers the speed and simplicity that fulfills the promise of insurance. Unlike batch ACH payments or even slower instruments like paper checks, push payments are real-time delivery of funds 24/7 - even on weekends and holidays. Even better, the process of setting up a push payment is incredibly fast for the consumer. In contrast to ACH or a check, push has no process because it uses the same instruments and accounts that policyholders already know and trust. These are the cards they carry in their wallet or the accounts stored on their smartphones today. No need to look up a routing number, activate a new card or open an account. The way in which insurers communicate with policyholders about claims fulfillment should also make it as easy as possible to choose and manage a push payment. That means immediate electronic notifications that a payment is available and the ability to accept and select account destinations with the press of a button. Choice Historically, claims payments have been issued using a paper check or ACH deposit, constraining customers to the use of a traditional bank account. This limited the policyholder’s options and led to delays in them moving money to needed accounts to pay for auto repairs or begin work with a contractor. But policyholders pay for purchases in their daily lives using a wide range of accounts: debit or credit cards, online wallets and more. A successful claims payment should mirror this choice in accounts. Push payments allow insurers to send funds to a specific account designated by the policyholder (a familiar card or existing online wallet) for instant funding of ready-to-spend proceeds. To fully take advantage of this capability, insurers should find a push payment provider that reaches a comprehensive network of consumer accounts. As a benchmark, Ingo Money has built a network of networks that can fund more than 4.5 billion consumer accounts. Confidence By definition, push payments arrive in an account as fully guaranteed and ready-to-spend funds. In and of itself, this fulfills on the promise of insurance and inherently delivers the confidence that policyholders crave. The process of orchestrating a push payment can also instill confidence in your customers and lead to more loyal policyholder relationships. Insurers should support this with clear and transparent communications, helping policyholders understand when a payment is available, which accounts are supported and when funds have arrived. See also: How Robotics Will Transform Claims To deliver this confidence, be sure to tap a reliable push payments provider. Premier technology partners should provide reliable funding 99%-plus of the time. This is attainable by the reach of their network and ability to support millions of consumer accounts. In this way, it ensures redundancy to route transactions through multiple paths to the customer. The policyholder and business advantages of a modern, real-time last-mile payment process can no longer be ignored. Insurers that are not delivering on the promises of convenience, choice and confidence in payments risk being left behind by customers. With instant payouts, insurers can dramatically improve customer acquisition and retention, lower claims costs and claims leakage, reduce payments fraud and shorten claims cycles. Insurers that act now to embrace this shift will gain a competitive advantage in the marketplace and create distance from laggards that will increasingly be perceived as out of touch with the instant money economy.

Drew Edwards

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Drew Edwards

Drew Edwards is the chief executive officer of Ingo Money, a company he founded in 2001, which has become a leading provider of moving money instantly for businesses and consumers.


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