Paul Clarke Chief Growth Officer at Cashflows.
Anyone with insurance knows how frustrating the claims process can be. Recent studies show that 80% of policyholders selected the length for receiving compensation as their least favourite part in filing an insurance claim. Typically, clients are faced with an extended period (ranging from a couple of days to several months based of the insurance type) along with uncovered expenses and lengthy paperwork all while waiting for reimbursement. In critical situations where claims are required quickly, such a long process can cause additional stress.
Situations like these, often create friction between the customers and the insurers. In fact, 83% of unhappy claimants often decide to swap insurance providers within this process. Though insurers may claim that the lengthy process can’t be helped, it does not improve things from the customers’ point of view.
The truth is that insurers often choose to prioritise fraud prevention over expedited claim processing, which is what causes delays in the reimbursement process. This is due to the use of traditional systems. However, the customer’s expectation is a seamless process where they feel supported through every step of the already tiring journey. To retain customers and stay ahead, insurers must consider a more balanced approach of speed and fraud prevention, which prioritises clients.
Case study: Parametric Insurance.
If old technology is the problem, then it stands to reason that new technology will be the answer, and this appears to be the case. With parametric insurance claims have been transformed by automating payments based on predetermined conditions, eliminating the need for customers to file a claim. Unlike traditional insurance, where claims are initiated by the policyholder, parametric insurance relies on external data triggers. This means a travel insurance policy could automatically issue a payout if a customer’s flight is delayed beyond a set time.
The data-driven, automated approach enhances customer experience by eliminating common friction points, particularly in urgent situations. It’s especially valuable in sectors where time-sensitive claims are common, such as travel, agriculture and property. By using real-time data to trigger payments, insurers reduce administrative costs, improve efficiency and increase customer satisfaction. As more insurers adopt parametric models, customers will benefit from faster, hassle-free payouts.
Fixing The Repetitive Payment Problem
Recurring payments are essential in insurance (as they are in many other industries), with most policies relying on monthly or annual premiums. However, issues such as expired cards, insufficient funds, or bank changes frequently lead to payment failures. Missed payments can lead to coverage lapses, increased administrative costs, and customer dissatisfaction.
To address these challenges, insurers are implementing tools like Account Updater services, which automatically refresh stored payment details when customers’ bank or card information changes. Smart retry technology, which times payment attempts for optimal success, also helps reduce failed transactions. Fraud detection further improves security by monitoring transactions for irregularities, ensuring policies remain active and reducing the risk of failed payments. Together, these solutions make recurring payments smoother and improve overall customer satisfaction and retention.
In today’s competitive market, customer loyalty is closely tied to the quality and efficiency of the claims process. A faster, more customer-friendly approach can transform what’s often viewed as an inconvenience into a positive experience. By offering digital payment options like virtual cards, direct debits and digital wallets, insurers can meet customers’ payment preferences and keep information up to date for seamless service. Insurers that choose the balanced approach of managed risk and speed, they choose to put customer convenience at the heart of their process. In the long run, that improves their reputation and provides higher customer satisfaction.
By removing friction from the claims process, insurers build trust and foster long-term relationships with customers.
What works for 21st Century Mid -Term Adjustments?
The technology that facilitates recurring payments also makes changing them equally easy. Technology like network tokenisation makes adjustments significantly easier by increasing the likelihood of new payments going through. By ‘packaging’ the customer’s payment details in a way that card schemes will accept, we can make it far more likely for an individual payment to go through, whether it is a first payment, a recurring payment or a changed payment.
Accepting modernisation as the Next Phase for Insurance Payments
Adaptable digital solutions are the next step up for insurance payments to meet with changing customer expectations. If legacy systems are unable to offer these, it is time for insurers to redevelop their processes into one that maximises efficiency, transparency and customer satisfaction. By doing so, insurers will be in a better position to embrace and stand out as customer centric. Through investing in innovative payment technology, insurers can move from lagged claim processing to data-driven support.
About the author
Paul Clarke Chief Growth Officer at Cashflows.
Paul has a wealth of experience successfully leading product, business strategy, and innovation functions in the payments, eCommerce, and digital sectors. He was previously Executive Vice President for Product and Innovation at international payments solutions provider: Network International. Prior to this, Paul held leadership positions at key payment organisations, such as Barclaycard, Elavon, and Worldpay.
Having joined Cashflows in 2021, Paul is responsible for leading the commercial, proposition, strategy, go to market and delivery functions of the business.
