Studies show over 5,900 insurance companies exist in the U.S. Moreover, nearly 415,446 Insurance Brokers & Agencies businesses these companies support these companies. Saying the insurance industry is enormous would prove quite an understatement. 2.9% of the national GDP is powered directly by these insurance companies. These numbers rank staggeringly high. However, only a few selected companies control the fate of the entire industry.
The top insurance companies that control the sector have two things going for them:
However, existing less than two decades in business, new players actively strive to disrupt the industry with value-added technologies. Constant innovation helps these smaller, newer companies with limited resources compete with these mammoths. They are incredibly agile and quick in adopting customer-facing technologies that offer revolutionary convenience.
The large insurance companies may not be as agile as these new players, but they are not handicapped either. In fact, most of these new and old insurers are actively relying on fintech providers to compete for the market share. They are partnering with reliable payment processors and data analysis firms to adopt technologies instantly without spending years developing them from scratch.
This blog discusses how insurance companies use digital payment technologies to automate their premium collection processes and offer an excellent customer experience.
Giant insurance aggregators actively increased insurance prices this past year. Geico and State Farm considerably increased their auto insurance rates from June 2022. But that’s not all. Health, home, and life insurance providers will also significantly increase premiums. Given that the insurance rates are already rising, insurers and large aggregators can provide some relief in the overall costs by offering low-cost payment processing.
Using low-cost payment methods like ACH helps these organizations attract more customers by reducing the overall cost of premiums.
Organizations that offer multiple payment options can target a larger audience. Studies by McKinsey show that 82% of Americans now use digital payments actively. Gen-Z and Millennial candidates make the most of today’s active insurance-buying population. Insurance companies that want to attract the evergrowing younger audience must adopt digital payment technologies to stay relevant.
Digital payment solutions like SMS payments, mobile wallets, and contactless payments have gained even more popularity since COVID. Adopting self-serving digital payment platforms enhances customer experience, improving the organization’s overall Net Promoter Score (NPS).
Selling a long-term insurance plan is one of the best ways for the insurance company to retain customers. The second best way is to adopt automated payments. Automated payment solutions help customers pay their insurance premiums regularly without lifting a finger. The insurers that offer costlier premium packages adopt this technology to provide unparalleled convenience to their customers.
Insurers offering automated payment systems will earn higher customer retention if they provide technology and do not raise their prices significantly. Also, recurring payment cycles eliminate the need to pay manually, ensuring that the customer does not search for a better deal on a competitor’s website. This solution reduces customer churn rates.
Unlike checks that take several days, sometimes weeks, to process, digital payments are almost instantaneous. Credit card payments take just a few seconds, and eChecks via ACH take just 2-3 days. Nacha is focusing heavily on same-day ACH payments to increase the availability of fast and low-cost payment processing. Digital payments help large insurers keep an active cash flow by ensuring immediate availability of funds.
Modern digital payments are not only fast but incredibly secure. Next-gen insurers leverage critical technologies to detect and prevent fraud while adopting faster payment systems. They use digital payments with encryption and tokenization technologies to enhance security for themselves and their customers.
Most large insurers partner with reliable payment processors following the latest Nacha and PCI compliance regulations to safeguard customer data. These payment processors uphold the newest payment processing norms for various technologies to mask customer data and reduce the compliance burdens at the insurer’s end.
Hosted payment portals generate website-based payment solutions that help insurance companies accept payments over the internet. They integrate with the insurer’s existing website, if any, or create a different online web page to collect payments. Companies that do not have a website can use a generated URL to add to their Google Business page, social media company page, or even as a QR code to get paid by their customers.
Recurring payment technologies remain prevalent in the insurance and healthcare industry. These technologies help businesses automatically debit a correct preset amount from the customer’s bank accounts.
They help customers pay bills on a recurring fixed schedule without manual intervention.
SMS payments, aka text invoicing solutions, help large insurance companies stay in touch with thousands, sometimes millions, of customers for their payment needs.
Email invoicing solutions help insurance companies generate and distribute a large number of invoices every day.
Interactive Voice Response, aka IVR payment technologies, have gained massive popularity during COVID. These technologies are exceptionally well-received amongst the elderly with trouble accessing the internet for payments. IVR systems help enterprise insurance companies accept payments on the phone securely, without the need for large dedicated call centers.
The flexibility and choice to pay using multiple payment methods help insurance companies attract a more extensive customer base. Ideally, insurers should offer the following payment methods:
Additionally, they must adopt a few, if not all, of the above-mentioned payment solutions to accept online payments from customers. While the use of paper checks and cash payments has reduced significantly, it is not entirely eradicated yet. So, insurers should also accept these payment methods for the more traditional customers unfamiliar with online payments.
Check verification technologies help large companies accept customer check payments without risking fraudulent behavior. Modern check verification systems verify several details on the check to ensure its validity, and they identify fraudulent checks in real-time to prevent fraud. Here are the five most important components of an advanced check verification system.
Account validation technologies go hand in hand with check verification systems. These systems ensure the correct ownership of the account before processing payments. Top payment processors use real-time account validation checks and an active negative data database. Here’s how large banks and insurance companies digitize their payments using account validation and other recent developments in the payments industry to minimize fraud.
Insurers that accept ACH or eCheck payments help their customers save money on processing fees with cash discount programs. Our previous blogs covered the benefits of a cash discount program extensively:
Customized cash discount programs eliminate most card processing fees and reduce the overall cost of premium payments. Such programs help the customers access insurance policies at a lower price and help the insurance company save millions of dollars while processing payments for thousands of customers.
Eliminating paper-based accounting and reconciliation is the first step towards true digitization for most enterprise organizations. Virtual terminal solutions help these organizations create a digital trail of all their payment and collection processes. However, the most intuitive terminals do much more:
The need for contactless payments increased multifold since COVID. Digital online and contactless technologies help customers pay their insurance bills on time without exposing them to harmful viruses.
Partnering with a top-tier tech-savvy payment processor helps the insurer access all the above-mentioned technologies on a single platform. Such reliable processors integrate these modern solutions with their core systems to enhance functionality while reducing the need for additional human resources. Partnering with a one-stop payment processor for all technological needs helps with seamless integration that ensures data flow between different systems without any leakage or risk of exposure.
Digital technologies also reduce postage fees and administration costs by automating several functions. They eliminate the need for large accounting teams by creating comprehensive dashboards and offering single-click reconciliation options. Self-serve hosted payment portals help customers pay their insurance bills from the comfort of their homes, thereby reducing footfall at the insurance office.
This 5-step mini guide helps insurance companies get started with digital payments.
Before evaluating new technologies, the insurance company’s IT team should explore the functionalities of their existing system to their full potential. They should choose solutions based on functionality rather than costs or fancy bells and whistles. Usually, simpler intuitive payment solutions prove much more effective than hyped AI and ML-based modern solutions.
After doing a thorough analysis of their current systems, they should make a list of additional functionalities they can leverage to reach ROI as soon as possible. Taking a functionality-driven approach instead of a vendor-driven approach helps them identify the right partners for technology adoption.
Identifying core functional requirements will help them effectively compare the thousands of vendors in the market. When choosing a suitable payments processor, they should focus on:
Adopting technologies and going live with them is just the first step. Insurers must constantly innovate and listen to their customers' requirements regularly to reach ROI as soon as possible. Conducting customer surveys helps the insurer understand technology adoption at the grass-root levels. Also, surveys are effective in identifying the scope for additional technology adoption.
Companies that do not innovate and offer subpar customer services cannot grow sustainably in the current competitive markets. Staying relevant with the latest digital payment technologies is the only for them to gain a competitive advantage. As their customer base grows, they must develop their business and technology stack with relevant tools.
Modern insurance companies realize they need not spend millions of dollars and several years anymore to stay competitive. Instead of hiring in-house application and software developers to generate payment technologies from scratch, they partner with a reliable payment processor like iCheckGateway.com at a fraction of the cost. Our practical and innovative suite of payment solutions includes:
We help enterprise insurance companies with the most modern and secure payment gateway solutions to help them process payments seamlessly. Get in touch with our team today to help your insurance company customers get the most out of their payment processes.