By Farish Lakhani, VP Sales International at Computop


Multiple industries are being redefined by digitisation and organisations are transforming their business models and routes to market. In the recovery from the pandemic the hope is that the leap into digital processes will provide new impetus for businesses and ultimately lead to growth and increased sales. The effects have also been clearly felt in the area of digital payment solutions in recent years, and not just in online retail, but in the insurance industry too.

Insurers have long relied on traditional methods for payment with collections for premiums made by SEPA direct debit, or by asking customers to transfer the amounts. The question is that if this has been working without any problems for years, what reason do insurance companies have to modernise their payment infrastructure? The answer is that there are many and here are a few examples.


Payment solutions and reports for insurers

As digital payments gather pace, the number of fraudulent chargebacks also increases. Modern chargeback management provides detailed information on how chargebacks occur, allowing insurers to evaluate precise error codes and understand what the reason for the chargeback was. Since the entire process is digital, this discovery process can be carried out quickly and a response put in place immediately. If the evaluation is also accompanied by integrated real-time risk checks, chargebacks are much less likely to occur. Intelligent solutions minimise fraudulent chargebacks, saving the insurer effort and money.

Insurers with large customer bases are also dependent on efficient tools that help them automatically merge transactions and premium bookings, because the greater the volume of data, the greater the cost of analysing it. Equally important is batch handling, a processing method that makes it possible to collect premiums from many thousands of policyholders at the same time.


Bringing the end user into the comfort zone

From a customer’s perspective, an optimised payment infrastructure also represents a huge win for insurers. End consumers are used to having the convenience and security of payment methods such as credit cards, PayPal or, more recently, Apple Pay, thanks to years of experience in online retail.

Insurers can benefit from this trend and increase their conversion rates for suitable products by offering a tailored payment mix. It has been proven that consumers who encounter one of their preferred payment methods at the checkout are more likely to actually purchase a product.

The growing number of new types of insurance offers are well suited to this approach to straightforward payment optimisation. For prospective customers who want to spontaneously buy policies for temporary situations, a SEPA transfer is comparatively inconvenient. In addition, insurers face the risk that customers will charge back amounts if nothing has happened. If, on the other hand, they want to take out flight insurance at short notice while traveling, smartphone theft insurance after buying a new smartphone, or accident insurance on the ski slopes while on holiday, the option to pay quickly with PayPal or a credit card are convenient.

A payment solution that allows insurers to offer their customers an optimised checkout with suitable payment options is worth its weight in gold. Solutions that allow them to activate and deactivate payment options swiftly and easily are particularly attractive to providers. This enables them to respond rapidly to changes in payment preferences and to easily optimise the payment experience for the customer.


Bill payment has never been easier

But what if a policyholder has not paid the premium on an insurance policy that has been in force for a long time? If they simply forgot, that can be an uncomfortable and stressful situation for the customer. Modern payment solutions can assist. Thanks to QR codes and payment links, they can conveniently pay the outstanding amount from an email sent to them by the insurer. All it takes is a click on the payment link and the customer is taken to a payment page that offers them all the options and payment methods they want.

This simple solution has been proven to result in a faster and more positive response to payment requests and reminders with no additional implementation effort on the insurer’s website.

Such a smart approach can also be used in other contexts, such as upselling or cross-selling insurance products. The goal is always to minimise the hurdles for the consumer and maximise convenience.


More than SEPA: recurring payments

Of course, the main business for most insurers is recurring payments. Here, too, it is worth keeping up with progress. So-called recurring payments have long since ceased to be the domain of SEPA direct debits. Credit cards can also offer this service. But to do so, insurers must be able to store the data in their own system. This can only be done in a data protection-compliant manner via PCI DSS certification in tokenized form.

A payment service provider like Computop solves this problem, because it can encrypt the sensitive credit card data in such a way that only tokens, in other words substitute numbers, are stored on the servers. The advantage is that these numbers are worthless to criminals in the event of data leaking into their hands, so they protect the customer and the insurer from fraudulent use.

The PSD2 payment services directive also imposes high requirements on the technical processing of “recurring payments” so they can be executed without re-authenticating the customer when the contract is renewed. This creates appealing alternatives to the SEPA direct debit, which offers consumers added value in many respects.

When it comes to insurance, digitisation is about so much more than just the transformation from branch insurers to direct insurers. Instead it supports a new way of delivering products and services, without any detriment in terms of security, and creates the foundation for greater customer satisfaction and, ultimately, closer customer loyalty and rising sales.



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