Paying Claims Digitally May Be the Next Big Thing in Insurance


The first claims reimbursements of history happened by post: a customer reported a loss, an underwriter made an assessment, and a check went in the mail (unless a local adjuster hand-delivered it).

Most claims payments still do happen this way. With the addition of ACH, an electronic payment method has been in the mix for some time now, but the conventional balance has remained tilted toward paper.

That’s changing. Instant payments supported by digital platforms have added another option to the mix to expedite reimbursements and get policyholders paid faster – and it seems customers are keen on this option, according to a recent study by the Aite Group.

What are the benefits of digital claims payments?

The obvious benefit is immediacy. Speed of reimbursement has a big impact on customer satisfaction. If there’s one complaint policyholders are likely to raise about a recent claims process, it’s speed of payment. By shortening the time it takes for money to hit their account, you’re also fighting churn and supporting retention.

Efficiency is another benefit. Paying claims digitally can significantly decrease administration costs. For example, the Association for Finance Professionals said in its inaugural 2015 Payments Cost Benchmarking Survey that the estimated median cost of a check transaction is $3.00, compared with a range of between $0.26 and $0.50 per automatic clearing house (ACH) credit transaction and $1.50 for a purchasing card transaction, making e-payments roughly 10X cheaper than paper checks, reports. Digital claims payments can also eliminate the time spent stopping and reissuing checks lost in the mail.

Finally, there’s choice. Like immediacy, this has a direct customer impact. It’s nice to get paid quickly, but no matter how long your reimbursement takes, it’s nice to know that you had a say in the matter, and that your payment is coming to you in the manner you find most convenient. For some, that will be a paper check. For others, an electronic payment can be a source of relief.

What are the downsides?

While there is no significant downside, digital claims payments require the right technology. Is your policy administration system capable of tracking e-payments? Does your payment acceptance platform facilitate outgoing payments? If multiple payments are required as part of the claim process, can both systems accommodate that?

What’s the secret to success?

If you decide to add electronic payments to your claims toolset, be sure to select a partner who will provide all the benefits, while minimizing the potential risks. Silvervine has been helping insurers with customized and affordable payment processing for many years. Soon we will be adding a new solution to accommodate claim e-payments. Interested in learning more? View a demo of our payments tool in action and see how you can become more efficient and generate revenue at the same time.