In an increasingly competitive marketplace, insurers are looking for every edge they can find to enhance operational efficiency and drive profitable growth. Digital payments have had a positive impact in these areas as the transition from traditional payment by check streamlines the disbursement process and reduces costs. Now, new research shows that digital payments are just as important when it comes to retaining customers in the face of rising premiums.
One Inc. commissioned industry analyst Celent to investigate key drivers of policyholder satisfaction in the claims process so insurers could better understand where to focus improvement efforts that would really move the needle. To do this, Celent polled more than 300 auto insurance claimants about their experience.
The good news is that 75% of respondents were "somewhat" or "extremely" happy with their claims experience. Moreover, a good claims experience can also create "loyalists," which Celent defined as policyholders who will stay with their insurer despite a rise in price. Nearly 40% of cat claimants and 25% of non-cat claimants in the study said they would stick with their current insurer, even if it costs them more. Impressive numbers, to be sure, but that leaves a significant majority of policyholders — both cat and non-cat — at risk with every claim.
Insurers must focus on strategies for retaining these price-sensitive customers, and this is where the power of digital payment capabilities can make a major difference in policyholder loyalty.
Speed of Payment is King
While policyholders appreciate quick claims cycles, how fast a claim closes matters less than how fast they receive their payment. For all claimants, speed was the most important aspect of payments. What is more striking is the response from dissatisfied claimants who were much more likely to say that speed was a top priority and were less likely to be satisfied with the speed of payment. These claimants really care about how quickly they're paid, and it's critical for insurers to meet that expectation.
Among dissatisfied non-cat claimants, 55% said payment speed was their top priority, and 62% of dissatisfied cat claimants ranked speed most important. It comes as no surprise that catastrophe claimants place even greater weight on how quickly insurers disburse claims since they are trying to rapidly rebuild their lives. Cat claimants were found more likely to be "extremely" dissatisfied with speed of payment (9% compared to 3% of all claimants) and less likely to be "extremely" satisfied (38% compared to 43%). Insurers must take advantage of this clear opportunity to deliver speedy payment and ensure an experience that creates lasting loyalty.
While slower payments don't necessarily doom the process, faster payments are clearly a driver of satisfaction.
Payment Choice Matters
It is not only the speed of payment that matters, but also policyholder control over how claims get paid.
The research found that paper check was the most common form of payment, at 34%, and most claimants (57%) don't have the ability to choose how they receive their payment. It was also found that when the insurer chose the form of payment, the claimant wished they would have been able to make their own choice in a majority of cases.
Indeed, allowing claimants to choose how they receive their payments leads to high levels of satisfaction. Of claimants who were allowed to choose, 85% indicated they had a positive experience overall, with 50% indicating their experience was "extremely" positive. Just providing choice of payment methods can be a game changer for insurers.
Moreover, the study revealed claimants' familiarity with digital wallet products. Nearly half said they have used Cash App, Apple Pay, or similar products in the past, and over two-thirds of the total survey group have previously used a virtual card. Clearly, the insurance policyholder market is becoming comfortable with digital payments and wants the ability to choose between traditional methods and the proliferating number of digital payment options.
Growing the Loyalists
While digital payments are not the only factor in claims satisfaction, based on this new data, partnering with providers who can facilitate faster payments and more flexible payment options for policyholders is critical for insurers to build more loyal customers.
Digital payment solutions such as our ClaimsPay are delivering on the promise of insurance, enabling insurers to disburse claims the way people are transacting more and more in their everyday lives. Leveraging modern technologies may have seemed esoteric just a few years ago, but today, virtual cards, electronic funds transfers, and digital wallets such as Venmo, PayPal, and Apple Pay can take a stressful and rare process and make it a familiar one.
Digital payments are a critical tool that gives insurers more control over the customer experience when premium increases are inevitable, over time. Taking advantage of this financial technology is critical to transforming claimants from being at risk with every claim to "loyalist" policyholders who will stick with their insurer even if their costs increase.
