Digital Claims Payments: What’s Happening Now
When’s the last time you wrote or cashed a paper check? More importantly, when’s the last time your customers did? Paper checks are giving way to faster, digital payment options. In the insurance industry, this trend isn’t limited to digital premium payments. Claims payments are also going digital.
Customers Want Instant Payments
A survey from Metabank found 42% of participants are more likely to stay with an insurer that can pay approved claims in minutes, and 13% would be willing to switch to an insurer that can do so.
But insurance professionals shouldn’t need a survey to tell them this. Digital payment options like Zelle and Venmo have surged in popularity, especially among younger generations. When people can get instant payments from a friend, they’ll grow to expect the same from their insurer.
And when people are waiting for a claim to be settled so they can get their life back on track, a minor delay becomes a major inconvenience.
The Pandemic Has Caused Priorities to Shift
Despite interest from customers, the insurance industry has been slow to adopt digital claims payments. According to CB Insights, in 2019, 52% of all payments in the insurance industry were done by check, compared to 22% of all payments in all industries. And only 11% of all payments were instant, compared to 19% in all industries.
The insurance industry may finally be starting to catch up.
The pandemic didn’t create the digitization trend, but it has accelerated the movement. According to KPMG, 85% of insurance CEOs say the pandemic has accelerated the digitization of their operations, and 78% say progress toward the creation of seamless digital customer experience has accelerated.
It seems obvious that a seamless customer experience would have to include digital claims payments, and indeed, digital payments appear to be a priority. According to Property Casualty 360, 64% of registrants at a virtual event held by Strategy Meets Action said they wanted to reduce their reliance on paper checks.
Digital Disbursements Are Maturing
According to PYMNTS.com, a second wave of digital disbursements – Disbursements 2.0 – gained momentum in 2018, when insurance CEOs looked to digital claims payments as a solution to the high processing costs associated with traditional, check-based payments. Now, in 2021, we’re gearing up for Disbursements 3.0, the third wave of digital disbursements.
According to the PYMNTS.com article, “In a Disbursements 3.0 world, instant payments expand beyond simple, single-party use cases to more complex scenarios associated with multi-party, B2B and recurring payments, along with a variety of ad-hoc use cases.”
There’s No Fighting Progress
The insurance industry can be slow to change, but change is happening now.
According to J.D. Power’s 2020 U.S. Claims Digital Experience Study, use of digital channels during the claims process has increased 18% since 2017, and satisfaction among claimants who use digital channels is one point higher than satisfaction among claimants who do not use digital channels.
Digital payments are a key part of claims digitization. Carriers that drag their feet on this trend may find themselves falling farther and farther behind the competition.
Why wait another day? Explore Silvervine’s digital payment solutions.