16/09/2022

What is insurance payment processing?

By Mariana Marques

As an insurer, you often have two crucial payment touchpoints: collecting money for premiums from your customers and paying out claims when something goes wrong. Making these touchpoints as seamless as possible enables you to improve customer satisfaction and retention. To cover the needs of all your customers, you need multiple payment providers (PSPs) that cover various countries, regions, and customer preferences. Below we provide an overview of the two payment touchpoints we mentioned and how you can optimize the payment processing for both.

Collections

When it comes to collections, customers may prefer to make a one-time payment, use Direct Debit for recurring monthly or quarterly payments, or even use a payment link that directs them to a checkout page every time they need to pay for their policy. Offering this variety of collection methods from the beginning helps ensure that your customers are happy and won’t feel the need to look for a new insurer. A positive first impression is as important as customers’ continuous satisfaction, especially in a connected world where customers can pick and choose from a wide range of insurance providers.

Customers’ collection preferences

Another aspect to remember is that customers’ payment preferences vary widely based on various factors. Demographics such as age, gender, and accessibility play a role in these differences. Younger customer bases prefer to use alternative payment methods, particularly digital wallets. Research shows that 65% of millennials have used a digital wallet in 2021, and more than 67% of millennials are open to using cryptocurrency. Almost 75% of BNPL (Buy Now Pay Later) users in the US are Gen Z or millennials too, according to Insider Intelligence.  

Older generations, on the other hand, prefer more traditional payment methods. According to research, Baby Boomers (those born between the second half of the 1940s and the early 1960s) prefer to use cash, cheques, ATM cards, or bank transfers. Generation X (those born between the second half of the 1960s and the early 1980s) use more credit and debit cards.

Equally, payment preferences vary by continent and country. For instance, the most popular payment method in the UK is the credit or debit card. On the other hand, in Switzerland, the most popular payment method is bank transfer. In order to meet specific customer needs, insurers need to integrate with multiple payment providers and technologies. However, the lack of payment expertise, resources, time, and reliance on antiquated infrastructure hinders insurers from delivering best-in-class payment experiences.

Payouts

The second critical moment, also the moment of truth for customers, is the claims payouts. For a claim to be made, it means that something went wrong in the customers’ lives. Being a difficult time already, customers now need their insurers to act on their promises and deliver the experience they are expecting. This means ensuring that customers are covered and receive their money conveniently through their preferred channels. There are various payout methods, too, from push-to-card to bank transfers and vouchers. Meeting each customer’s individual needs and preferences is crucial to closing the circle and delivering the experience customers were looking for.

Customers’ payout preferences

Customers’ payout preferences will change drastically based on the situation that your customers are in. For instance, if a policyholder loses their luggage while travelling overseas, they may need their money as quickly as possible to book accommodation and buy necessities. Yet, if that policyholder travels back to their own country, a bank transfer may suffice, as they may be able to get home and access their necessities. In this case, they may not need urgent help and may be happy to receive their money a few days later. This is just one of the many situations that insurers need to consider. For paying out claims, it is not only about customers’ individual payment preferences but their unique situations and the kind of help they need.

How to optimize payment processing

In order to deliver optimum payment experiences for both collections and payouts, insurers need to integrate with various payment providers that cover their different locations and customers’ payment preferences. No single provider will cover all the payment methods and technologies available worldwide, so connecting to various providers is likely required. Long gone are the days when these multiple integrations had to be a cumbersome, expensive, and lengthy process. Payments is an incredibly innovative sector where new solutions launch all the time. Some of these solutions make insurers’ lives easier by optimizing processes while ensuring that customers are as satisfied as they can be with an end-to-end seamless payment journey.

Imburse covers both collections and payouts, enabling you to connect to any payment provider or technology in any market. This means you can integrate with any PSP you want and do so quickly and efficiently while saving money, time and resources. When integrated into Imburse, you open the door to the payments world and gain the flexibility to add or change providers whenever needed depending on the business and customers’ requirements. Equally, Imburse provides the agnostic payment experience to help you navigate the complexity of the payments world and select the providers that best suit your needs.

Aside from this, you also get access to various payment capabilities and features that will make your processes much easier and more efficient. Some of these include Direct Debit mandate management, smart routing, unified reporting, and our recently added Pay-By-Link feature. Pay-By-Link allows you to collect money or payout simply by sending a link to a checkout page. When customers click on the link, they will be directed to the hosted page and requested to add their payment details. No more long and painful checkouts are needed.

About Imburse

Imburse is a cloud-based middleware connecting large enterprises to the payments ecosystem, regardless of their existing IT infrastructure. Through a single connection to Imburse, enterprises can collect or pay out using various payment technologies and providers around the globe.

In a world where consumers’ payment preferences and technologies are ever-evolving, Imburse works with insurers to future-proof their payment requirements. Regardless of the business area, market, or needs, Imburse will connect you to your choice of technology and provider.

Reach out to our team should you want to discuss how Imburse can help you. Our team is happy to show you what our platform can do for your business and offer you a free demo.

About Mariana Marques

Mariana is a content writer at Imburse, specialising in Finance and Technology topics.

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