The world has become digitalized in almost every way! Today, technology has revolutionized the way we think and live, and if we talk about the insurance industry, it is leveraging the same. One great technical adoption as a part of insurance agency management has been in the form of digital payments or e-payments. Of course, it is streamlining the complex process of insurance renewals and purchases as everything is being managed online using technology to the fullest.
Agents can easily collect e-signatures online and collect payments digitally to complete a purchase. Yes, agencies and brokers need to be technically sound to adopt this but it is surely gaining acceptance and recognition amongst insurers on the global front.
The necessity to embrace digital payments
Customers have become way smarter than before, owing to excessive use of technology in their day-to-day lives. People literally breathe technology these days, and they expect the same comfort from their service providers as well. One of the biggest hurdles that insurers faced in enhancing customer experience was the manual payment process since it was time-consuming and prone to errors, leading to irritation amongst customers.
The solution lies in opting for digital payments that are aimed at modernizing the collection and payment processes so that long-term relationships with the customers can be established through an enhanced level of customer engagement and satisfaction.
Impact of COVID-19 Events
Digital payments have become popular in use
As per a recent Mastercard study, 82% of participants stated using payment methods that are contactless (ten times greater than any other payment method). Almost 3 quarters said they would continue using digital payments after COVID-19 as well. Now, with customers preferring digital payments and virtual wallets over non-digital and in-person methods, insurers feel the necessity to make a shift fast to payments’ digitalization.
Digital payments ensure safe/social distancing
Right from day 1 of the pandemic, we have been instructed to practice social distancing as much as possible. Yes, there is no report that can fully say that the virus can spread through checks and cash, but customers do not wish to take any risk with their health. This is why they prefer digital payments for paying premiums and receiving claims’ payments since they help ensure social distancing.
Digital payments support insurers financially
The insurance sector has been hit hard the most by the pandemic, with almost 203 billion dollars of overall loss (96 in investment and 107 in underwriting), revealed Statistica. By opting for digital payments, insurers can reduce operating costs by lowering manual dependencies, adding up to their financial strength.
Top benefits of insurance digital payments
Greater client experience
There is no denying that e-payments provide clients with a seamless experience as they are highly convenient as compared to manual submissions. Also, digital payments enable customers to make payments as per their preferred schedules by saving information on credit cards or setting up automatic schedules of payment for them.
This type of setting in the insurance processes will enable clients to make payments as per their time and on their own terms. Also, this will help brokers in developing better relationships with customers by utilizing the time saved in chasing payments for boosting meaningful/helpful engagement.
Enhanced cash flow
The prime reason for customers to avoid or delay payments is nothing but a tiring and rigorous payment experience. When they have to take out special time from their schedules to send checks or give cash, they usually tend to delay the process. This results in poor cash flow for both insurers and brokers.
On the other hand, digital payments provide customers with a pleasant transaction experience, and they do not find making payments a burden at all as everything is just a click away from their fingers. So, when easy payment options are available, customers make timely payments, ensuring smooth cash flow eventually.
Streamlined internal processes
The insurance industry is highly competitive at present and insurers are leaving no stone unturned for staying at the top of marketing and customer engagement tactics. In the past, insurers were unable to focus on the same as their maximum time was spent on collecting payments and sending reminders to customers.
However, with the rise of digital payments, insurers have been able to refine their internal processes and are spending time on processes that can bring maximum value to their business or lead to greater customer experience.
Insurers, like any other business, should look for every opportunity that can help them to reduce costs and increase their profitability. Just as we discussed above that digital payments replace manual efforts at large, insurers spend less on manual payment processes and are able to save costs.
This saved money can be used for boosting the marketing efforts for enhancing client retention and acquisition, which is the backbone for the sustenance of any insurance firm.
Transparency and reduced fraud
There have been multiple past occurrences of financial frauds, especially when it comes to processing payments via checks. There are a lot of fraud brokers out there who take cash from customers in the name of a highly successful insurance company, and since no evidence is available, it is impossible to trace them.
This is never the case with digital payments as every transaction is recorded and saved for a lifetime, eliminating fraud in insurance policy administration at large and boosting transparency between a customer and an insurer/broker.
Elimination of human error
There exists every possibility of a human error when it comes to collecting payments via manual methods. One can make mistakes while counting cash received from the customers or in forwarding cheques for clearances. There are times when a single decimal mistake costs insurers huge losses during claims payment.
However, by opting for digital payments, the entire chances of human error can be eliminated as there is no room for the same in electronic transactions.
Apart from all the benefits mentioned above, replacing anything that moves you a step further in becoming environment-friendly should be done immediately. Paper checks consume a lot of paper globally in a single year and similarly do the cash recording books. By making payments digital, insurers can do their part in saving nature and promoting care amongst policyholders.
Also, there are customers who prefer buying coverage from insurance service providers who practice nature-friendliness. So, by switching to digital payments and saving paper, insurers can surely win the hearts of such clients.
Undeniably, digital payments have become a necessity for insurers and brokers worldwide as customers prefer digital payments over manual payment options. This trend picked up pace during the corona pandemic, and with the kind of convenience and benefits it provided to both customers and insurers, it is likely to stay for long. With so many digital payment options coming up every day, it has become easier than ever to make payments digitally possible.
Insurers must realize that it is time to make a complete shift to digitalization, and neglecting to opt for digital payments can leave them standing way behind as compared to others who are leveraging technology to win and retain clients.