Tag Archives: payment

The Best Boost to Customer Experience

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.

See also: It’s Groundhog Day for WC Claims Handling  

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.

retirement

75% of People Not on Track for Retirement

A new study shows that three in four Canadians are not on track for retirement. With the recent economic turmoil, many working Canadians are struggling to make ends meet as it is. The same survey indicated that half the population is living paycheck to paycheck, and very few have any emergency savings built up. Living in the moment means that they’re not focused on retirement goals, and many expect to be working several more years as a result.

Although workplace pensions, the Guaranteed Income Supplement (GIS), Old Age Security (OAS) and the Canada Pension Plan (CPP) can provide funds, it’s often not enough. Moreover, the higher your income is now, the less likely you are to have your future needs met by these types of programs. If you’re among the 75% who are not on track to retire, here are the changes you need to make now:

Take a Hard Look at the Money Coming In

You’ll need to set a budget, but long before you get to it you must have a full accounting of how much money is coming into the household. Then, you’ll need to deduct between 20% and 30% of the gross for emergency expenses and retirement. Focus on building emergency savings that will cover you for three to six months first.

Eliminate Bad Debts

Carrying a balance for a mortgage or vehicle isn’t usually a problem, but more and more Canadians are maxing out credit cards and racking up other smaller debts. These things should also be knocked out of the way first.

Say Goodbye to Luxury Spending

While the older population is much better at assessing value and affordability, the younger generation is geared toward luxury items. Expensive cars, lavish clothing and trending technology add to debt. If you aren’t on track for retirement, and you’re carrying unnecessary debts, you should get yourself back on track and only purchase essential and value-oriented products.

Reevaluate Your Investment Choices

Unfortunately, many investment firms take a chunk of payments, and they fail to deliver in returns. Do a cost-benefit analysis and see if you need to consider moving your money to another firm or program. Diversification, both on a local and international level, is essential, as it provides a kind of insurance in case the economy falters. Think beyond stocks, as well. Bonds, commodities and real estate holdings can provide extra layers of security.

Use a Budgeting Program

There are numerous options available, but they all serve the same essential function. Using software or an app to track expenses takes the brainwork out of it and enables you to stick to your budget without having to work so hard.

Incrementally Increase Retirement Savings

As you pay off your debts and eliminate your mortgage, and your children become self-sufficient, you’ll obviously have more money to spend on yourself. Many people jump into doing the things they’ve been holding off on, like vacations and home remodels, but this becomes a slippery slope. As you find yourself free of expenses and debts, it’s imperative to increase your retirement savings, as well. During your last decade or two of work, your goal should be buildings toward setting aside 60% of your income for retirement. Some of the cash should go into savings, but a fair amount should be invested into dividend-paying stocks, which will add a steady trickle of supplemental cash as your non-working days progress.

Reevaluate Your Goals and Get Expert Advice

Even though most people can benefit from visiting with a financial planner, very few people do. You don’t have to be wealthy to benefit from one, either. A financial planner can help you figure out ways to minimize debts and how to save and may be able to help you get lower interest rates on the debts you already carry. If you choose not to visit a financial planner, you should still reevaluate your budget and strategy on a regular basis. This way, you can find ways to increase your savings if you aren’t setting aside enough, or enjoy more of your income now, provided you’re on track for retirement.

There was a time when a person could outright retire at a certain age, but it’s not like that any more. Today’s workers have to contribute more on their own to be able to maintain the same standard of living, and they have to work longer to be prepared. It’s still possible to retire at about the age your parents and grandparents did, but it requires more planning on your part.

How Bureaucracy Drives WC Costs

Workers’ compensation is one of the most highly regulated lines of insurance. Every form filed and every payment transaction is an opportunity for a penalty. Claims can stay open for 30 years or longer, leading to thousands of transactions on a single claim. Each state presents different sets of compliance rules for payers to follow. This bureaucracy is adding significant cost to the workers’ compensation system, but is it improving the delivery of benefits to injured workers?

Lack of Uniformity

Workers’ compensation is regulated at the state level, which means every state has its own set of laws and rules governing the delivery of indemnity and medical benefits to injured workers. This state-by-state variation also exists in the behind-the-scenes reporting of data. Most states now require some level of electronic data interchange (EDI) from the payers (carriers or self-insured employers). There is no common template between the states; therefore carriers must set up separate data feeds for each state. This is made even more complex when you factor in the multiple sources from which payers must gather this data for their EDI reporting. Data sources include employers, bill review and utilization review vendors. The data from all these vendors must be combined into a single data feed to the states. If states change the data reporting fields, each of the vendors in the chain must also make changes to their feeds.

Variation also exists in the forms that must be filed and notices that must be posted in the workplaces. This means that payers must constantly monitor and update the various state requirements to ensure they stay in full compliance with the regulations.

Unnecessary Burden

Much of the workers’ compensation compliance efforts focus on the collection of data, which is ultimately transmitted to the states. The states want this information to monitor the system and ensure it is operating correctly, but is all this data necessary? Some states provide significant analytical reports on their workers’ compensation systems, but many do little with the data that they collect. In a world concerned about cyber risk, collecting and transmitting claims data creates a significant risk of a breach. If the data is not being used by the states, the risk associated with collecting and transmitting it seems unnecessary.

Another complication is that there are multiple regulators involved in the system for oversight in each jurisdiction. Too often, this means payers have to provide the same information to multiple parties because information sent to the state Department of Insurance is not shared with the state Division of Workers’ Compensation and vice versa.

Some regulation is also outdated based on current technology. Certain states require the physical claims files to be handled within that state. However, with many payers now going paperless, there are no physical claims files to provide. Other states require checks to be issued from a bank within those states. Electronic banking makes this requirement obsolete.

How Is This Driving Costs?

All payers have a significant amount of staffing and other resources devoted to compliance efforts. From designing systems to gathering and entering data, this is a very labor-intensive process. There have not been any studies on the actual costs to the system from these compliance efforts, but they easily equate to millions of dollars each year.

States also impose penalties for a variety of things, including late filing of forms and late and improper payment of benefits. The EDI process makes it possible for these penalties to be automated, but that issue raises the question of the purpose of the penalties altogether. These penalties are issued on a strict liability basis. In other words, either the form was filed in a timely manner or it was not. A payer could be 99% compliant on one million records, but they would be automatically penalized for the 1% of records that were incorrect. In this scenario, are the penalties encouraging compliance, or are they simply a source of revenue for the state? A fairer system would acknowledge where compliance efforts are being made. Rather than penalize every payer for every error, use the penalties for those that fall below certain compliance thresholds (say, 80% or 90% compliance).

The laws themselves can be vague and open to interpretation, which leads to unnecessary litigation expenses. Terms such as “reasonable” and “usual and customary” are intentionally vague, and often states will not provide further definition of these terms.

How Can We Improve?

One of the goals of workers’ compensation regulations is to ensure that injured workers are paid benefits in a timely manner at the correct rate and that they have access to appropriate medical treatment. There was a time when payers had offices located in most states, with adjusters handling only that state. Now, with most payers utilizing multi-state adjusters, payers must be constantly training and educating their adjusters to ensure that they understand all of the nuisances of the different states that they handle.

The ability to give input to regulators is also invaluable, and payers should seek opportunities to engage with organizations to create positive change. Groups such as the International Association of Industrial Accident Boards and Commissions (IAIABC) and the Southern Association of Workers’ Compensation Administrators (SAWCA) provide the opportunity for workers’ compensation stakeholders to interact with regulators on important issues and also provides the opportunity to seek uniformity where it makes sense (EDI, for example).

There needs to be better transparency and communication between all parties in the rule-making process so that regulators have a better understanding of the impact these rules have on payers and the effort required to achieve compliance.

Developing standards in technology would be helpful for both the payers and the states. If your systems cannot effectively communicate with the other systems, you cannot be efficient. Upgrading technology across the industry, particularly on the regulatory side, has to become a priority.

Finally, we need to give any statutory reforms time to make an impact before changing them again because the constant change adds to confusion and drives costs. In the last 10 years, there have been more than 9,000 bills introduced in various jurisdictions related to workers’ compensation. Of those, about 1,000 have actually been turned into law. People expect that these reforms will produce the desired results immediately, when in reality these things often take time to reach their full impact.

These issues were discussed in depth during an “Out Front Ideas With Kimberly and Mark” webinar on Feb. 9, 2016. View the archived webinar at http://www.outfrontideas.com/archives/.

3 Problems Solved by Going Digital

Much has been written about the promise of digital technology to change insurance. But what does this mean in practical terms? Can digital technology reshape traditional patterns of engagement between insurers and their customers that have existed for decades (or centuries)? Can technology create a value proposition that avoids a zero sum game and benefits both insureds and insurers simultaneously?

This post identifies three major opportunity areas for insurance and describes what one insurer, Tokio Marine & Nichido Fire Insurance, has delivered to make the transition to a digital insurance platform.

Consumer expectations are increasingly being conditioned by the best practices found on sites such as Amazon, PayPal and eBay. Compared with these experiences, the traditional insurance process presents insurers with a number of challenges. Three problematic areas are:

  • Buying is periodic: In the majority of sales, insurance is purchased infrequently. In some lines of business, such as life insurance, it may only be bought once (and used only once!). In personal lines, annual or semiannual renewals are automated, and a customer may never speak with an agent or a representative of an insurer. This lack of contact limits the opportunity for a distributor or an insurance company to establish a significant relationship with a customer and personalize the buying experience.
  • Risk is poorly managed: Sales may be periodic, but risks are continuous. Business conditions and lifestyles change over time, and specific products, limits and coverages should be introduced at strategic times to respond appropriately. Changes in conditions – when a contractor offers a new type of construction, or a commuter in a dense metro area begins working from home and parks his automobile – need to be identified immediately and responded to appropriately. In an ideal insurance scenario, risks are managed on a continuous basis. However, in the current model, active risk management is a high-touch, high-cost service. Low premiums on products such as small business insurance provide little incentive for agents to service the risk management needs of customers appropriately. As a result, too often, insureds unintentionally self-insure. Many a claim submission includes the comment, “I have insurance; I thought I [or my business] was covered!”
  • Payment, not avoidance, is the focus: The best loss is the one that is avoided altogether. However, the core of most traditional insurance products is to compensate an insured financially for a loss caused by a covered peril. This results in an emphasis on paying claims, not avoiding losses. While insurers are very familiar with the typical causes of loss, their customers generally are not aware of how their day-to-day behavior affects their loss exposure. Consumers and business owners do not typically evaluate their behaviors, lifestyles, operations or choices in light of loss potential and, thus, participate in behaviors that expose them to loss. For example, individuals choose to post vacation pictures on public forums such as Facebook, which increases their exposure to theft at their vacant home.

Tokio Marine & Nichido Fire Insurance (TMNF) began addressing the periodic sales challenge in 2010 by moving to a more continuous delivery platform. Offering personal lines insurance in the Japanese market, the company found that its traditional products did not allow it to sell to clients on a frequent basis. To change this dynamic, the company combined new technology with updated insurance products to fundamentally change the traditional process of customer engagement. The company developed a series of one-time, short-term insurance solutions that addressed targeted needs such as travel, skiing and one-day automobile insurance. The company partnered with a leading telecommunication provider, NTTdocomo, to sell these on mobile telephones. The buying experience requires very little customer input of information (because the phone company has most of the required demographic information), and payment for the policy is part on the next phone bill.  Over time, the product set has expanded into health coverages and now takes advantage of continuous health tracking technology. These make wellness recommendations to users on a daily basis and has helped TMNF make the transition from a periodic insurance provider to an active participant in its customers’ lives.

Leading insurers are beginning to discover how to innovate with technology and product to change traditional trade-offs and deliver higher-value solutions to their customers. In subsequent posts, some solutions to the challenges of suboptimal risk management and loss avoidance will be detailed.