For policy holders, the claims process can be incredibly frustrating – and it is easy to see why. Having your claim approved is one thing, but then actually getting the money owed often proves to be another monster task in and of itself.
An Accenture study found that 83% of customers who felt dissatisfied with the way a claim was handled planned to switch or had already switched to a new provider. As consumers have become even more accustomed to an instant everything economy, these numbers have only continued to increase. When done right, the claims and payment process can prove to be a relationship saver for an insurer and its customer. This overall experience drives both customer satisfaction and retention, more than any other interaction between these two parties.
Improving the claims process is first…
Since first impressions are everything, many insurers have poured a significant amount of time and money into reimagining the claims process as a digital-first, customer-initiated effort. With most carriers, this reporting phase can take just minutes if executed properly. It has become an industry-wide standard for customers to be able to initiate a car or other damage claim using a mobile app to take photos, share details, and provide claims estimates as a result.
Still, once the claim is made, it can take days – even weeks – to receive the money owed. Nearly all insurers still pay policy holders the old fashioned way using ACH or paper checks. No one wants to – or should have to – wait that long when repairs to a home or car after catastrophic damage are needed ASAP. Particularly in today’s “now-economy,” this experience completely falls short of modern customer expectations, and can prove to be very damaging to an insurer’s reputation.
Improving the payout process is second… but insurers are often too wary.
Luckily, with exciting innovations in the payments and disbursements, many insurers have begun offering instant claims payments to allow customers to receive their money immediately and digitally. Historically, insurers are slow to adopt new technologies, and wary of how they will work and be received by customers. Carriers are extremely careful about how to introduce new technologies that will likely touch many internal systems and processes.
As a tried and tested system already used by lenders, banks, gig economy marketplaces, retailers and more, insurance carriers stand to reap a major benefit offering instant payments, as it is obviously eliminating friction and cutting down on the days to weeks it would ordinarily take to receive a paper check or ACH. The claims process is a critical moment in an insurer’s relationship with a customer, and with push payment technology eliminating the headache associated, insurers will benefit from the increased customer loyalty resulting from a great customer experience.
Satisfaction increases exponentially with the adoption of instant payments, and attracts new customers
Innovative insurers have already begun implementing instant payments as a way to earn both customer satisfaction and loyalty. As previously mentioned, although insurance carriers are typically hesitant to adopt new tech – particularly when it comes to payments – the customer and business advantages of instant payments are just far too great to be ignored. Not to mention, the installation costs for instant payments are relatively low, seeing as payments are the last part of the claims process and therefore do not require significant integration to numerous legacy systems.
When it comes down to it, customers are dissatisfied with the friction, time and effort required to cash a check (especially if it takes a long time to get to them in the first place) when they need the funds to overcome or repair an emergency or catastrophe to their home or car. Today, most insurers have a clear target on millennial customers, 33% of whom claimed that they won’t need a bank in five years, according to a First Data study. By exceeding customer expectations through instant payments and truly fulfilling the insurance promise with an instant payout to the account of a customer’s choice, carriers undoubtedly strengthen customer loyalty. At the same time, insurers can also significantly reduce operating expenses by cutting down on claims cycle times, lowering claims leakage and basically eliminating check costs. It is also important to note that instant payments not only help to retain customers but can also be a path to customer acquisition.
With a payments experience dominated by the likes of CashApp, Venmo, and Amazon, these customers have come to expect flexibility and instant payments in every aspect of their lives – including their insurance. Now, the paper check just will not cut it. According to a study by PYMNTS.com, paper checks had a dissatisfaction rate of 14.1 percent, the highest among all payment types.
See also: How to Use AI in Claims Management
Today, there are only a few insurers using instant payments, but the opportunity remains wide open. In the end, the winners in the claims payment transformation race are going to be the insurers who can gain a competitive advantage through instant payments, improving satisfaction among current customers and increasing the likelihood of attracting new ones.