Payments in insurance: how to influence the value chain
Market conditions have forced established insurance firms towards new distribution channels and product innovation to maintain market relevance. Facing an increase in competition from new entrants who have no legacy systems to manage, large insurers must embrace the value-generation opportunities of digital transformation to stay relevant.
Endava helps insurance companies, amongst other businesses in Financial Services, Telecommunications, Mobility and Healthcare, to accelerate their ability to take advantage of new business models and market opportunities.
“By ideating and delivering dynamic platforms and intelligent digital experiences, we help our clients fuel the rapid, ongoing transformation of their business. By leveraging next-generation technologies, our agile, multi-disciplinary teams provide a combination of Product & Technology Strategies, Intelligent Experiences, and World Class Engineering to help our clients become more engaging, responsive, and efficient.” says Jay Chitnis, Senior Industry Consultant at Endava.
We spoke to Jay about how insurers can leverage payments within the insurance lifecycle to deliver great customer experiences and unlock increased revenue opportunities.
Can you share why specifically innovative payment solutions adds to market needs?
“2022 has proven to be a challenging economic environment for businesses across many industries, and insurance is no exception. With that, the industry has an opportunity to focus on staying ahead of technology trends, identify ways to revolutionise product offerings and revenue streams, and improve customer experience by curating customers’ journeys. Enhancing a payment experience within the full lifecycle should enable insurers to concentrate on delivering a more personalized coverage, allow insurtechs to innovate and embrace more effective payment methods and support every customer’s requirement to have a frictionless experience when purchasing insurance.”
In your view, what is the relevance for insurance customers?
“In my opinion, the actual purchasing of insurance should be the easiest part of the process. At the point of buying a policy so much is known about a customer that really, the final step should be one free of pain and effort. When it comes to claims, it is a very similar situation and often very stressful, so a seamless payments experience should be a certainty. There is so much the market can learn from payments experiences outside of insurance.”
Considering todays trends, embedding payments seamlessly into the insurance lifecycle is a must, as it should enable subscription-based insurance models to benefit both customers and insurers. Besides, it should enable new payment options including cryptocurrency. If the insurance industry would adopt a model like open banking, it would be a smoother reconciliation process for carriers.
Can you share an example of a great customer service experience that insurers could adopt?
“An obvious example is adopting Amazon’s ease of purchase for insurance. For large premiums, enable “one-click” purchase where the first payment is made and then the additional payments are automatically set up as instalments.”
What are the biggest advantages?
“There is a large reduction in cost for insurers with more efficient payment methods, both per-transaction and regarding FTE costs due to a higher degree of automation. For customers, the insurance process becomes smoother with the final step enhanced but also retention is boosted with a happier customer when claims are paid out faster. On a high level you could argue there is easier access to insurance and therefore safety and security. It could also have an impact on ESG with less manpower required to fuel payments processes.”
What is your vision on payments for the insurance industry?
“Lessons from Open banking will influence the way in which payments are handled in the Insurance industry. Payments solutions will become a focus within insurance organizations and see massive investment, run by a Head of Payments and given as much focus and attention as underwriting, rating and claims. Blockchain technology will drip into the insurance industry providing innovative ledger-based solutions and crypto currency will become a more established way to pay for and pay out with policies.”
However, legacy architecture will limit the embracing of new payments solutions and regulatory rules per geography may force different applications of the same solution.”
How does the successful insurer-of-the-future look like?
“A successful insurer takes action. For example, by conducting an independent diagnostic analysis of the existing payments solutions and challenging insurtechs and others within the industry to find more efficient ways forward. Next, it would need to use that data to iteratively apply solutions and measure results. A successful result means the number of customers increase, retention increases, costs decrease and adopting new innovative solutions. Not to mention a healthy increase in profits!
I would recommend starting the internal discussion with those making noise in the market. Nobody is claiming to have the full answer, but innovation in these areas happens when one side engages with the other. Investing in new technology is a must but it must be coupled with an agile practical application of that technology to test the concepts iteratively. Perhaps most importantly, there needs to be a willingness to change and a determined and consistent effort to see a solution come to fruition.”
And what is the role of insurtechs in this?
Insurtechs are a key factor In the adoption of creative payments solutions within the the market. Their innovative and entrepreneurial attitude will enable new technology to be tested and applied within an atmosphere where new technology is embraced and welcomed. Also agnostic technology companies are fundamental to these solutions as they can provide the brains and the brawn to put these solutions into practice. Agile teams can analyse, develop and test solutions delivering value fast and enable quick changes in direction and application.
Who is Endava?
Endava has helped some of the world’s leading Payments, Financial Services, Telecommunications, Media, Technology, Consumer Products, Retail, Mobility, and Healthcare companies accelerate their ability to take advantage of new business models and market opportunities. By ideating and delivering dynamic platforms and intelligent digital experiences, we help our clients fuel the rapid, ongoing transformation of their business.
By leveraging next-generation technologies, our agile, multi-disciplinary teams provide a combination of Product & Technology Strategies, Intelligent Experiences, and World Class Engineering to help our clients become more engaging, responsive, and efficient.
“By ideating and delivering dynamic platforms and intelligent digital experiences, we help our clients fuel the rapid, ongoing transformation of their business.” .Jay Chitnis, Senior Industry Consultant Endava
Visit their website here: https://www.endava.com/