The Adyen Index Australia
Navigating insurance industry trends and driving growth with payments
The insurance industry is facing rapid change, and 2025 presents a pivotal moment. Insurers have a unique opportunity to leverage payment technology to enhance customer experience, improve policyholder retention, and reduce fraud. Discover how payment innovations can help insurers meet rising expectations and unlock growth in an increasingly digital world.
The digital transformation of insurance
The insurance sector is undergoing a major shift, driven by digital disruption and evolving customer expectations. As consumers move more of their lives online, the standard for seamless digital experiences is rising. With younger generations like Gen Z and Millennials becoming key drivers of the market, insurers must rethink their operational strategies and embrace payment technology to stay ahead.
Digital-first insurers are seizing this opportunity, building agile, customer-focused models that capture market share and redefine industry standards. Meanwhile, traditional insurers often face the challenge of adapting legacy systems to meet these new demands, while also facing challenges to optimise their cost to serve.
This report shows how strategic investment in payment technology can help insurers address these challenges. We’ll explore how modernising payment processes can improve policyholder experiences, improve retention, and reduce claims fraud. By understanding these key opportunities and leveraging the right technological solutions, insurance companies can drive growth, enhance operational efficiency, and secure a competitive edge in a rapidly evolving market.
The insights in this deep dive come from the Adyen Index: Australian Digital Report 2024, which combines both business and consumer data across 23 markets.
Adapting to digital customer expectations with modern checkouts
The opportunity:
Modernise the checkout experience
Insurers are operating in an environment where digital experiences in ecommerce and fintech are shaping customer expectations. Today’s customers expect the same level of seamlessness and convenience when interacting with their insurance providers. A key way to meet these expectations is by offering preferred payment methods across all customer touchpoints.
Research shows that 81% of Australian customers are deterred from completing a purchase if their preferred payment method is not available. This presents a significant opportunity for insurers to improve customer experience and drive conversion by expanding their payment options.
Our data shows
54% of Aussie consumers prefer debit cards
37% of Aussie consumers prefer credit cards
28% of Aussie consumers prefer digital wallets
Additionally, Gen Z and Millennials are increasingly opting to pay for insurance from their mobile device or tablets. However, many insurers are blocked by legacy systems that prevent them from offering these payment options, missing out on opportunities to maximise conversion and customer satisfaction.
The solution:
Seamless checkouts that maximise conversion and experience To deliver a seamless checkout experience, insurers must focus on two core areas: payment method diversification and channel optimisation.
Payment method diversification: To stay competitive, offering a range of payment methods is essential. Customers expect a variety of options– credit cards, debit cards, digital wallets, and direct debit. But it’s also important to consider local payment preferences, especially in regions like the EU, LATAM, and APAC, where traditional card payments are less common. By integrating local payment methods, insurers can enhance customer experience and lower payment costs.
Channel optimisation: Ensuring a consistent and frictionless payment experience across all channels is crucial. Digital wallets, such as Apple Pay and Google Pay™, can significantly enhance mobile conversions by providing intuitive and streamlined payment processes. For customers who prefer telephone interactions with a service agent, offering Pay by Link options via email or SMS can simplify the purchase process, while maintaining compliance standards.
A payments provider like Adyen can guide insurers on which payment methods work best for different markets and demographics, supporting all key payment methods globally.
“Many insurers have a payments blind spot. They don’t realise that modernising online payments could drive significant benefits for their business in terms of selling more policies, reducing operational costs, and driving down fraud.”
Enhancing customer retention with optimized payment solutions
The opportunity:
Support recurring and subscription payments Efficient subscription management is becoming increasingly important for insurers as the industry evolves. While fewer than 30% of insurance businesses globally offer subscription payment models, there is a strong trend toward increased investment in this area. In fact, 79% of insurance businesses plan to invest in subscription services over the next year.
A significant challenge associated with recurring payments is the issue of failed transactions. These failures can occur due to:
Outdated payment information
Insufficient funds
Lost or stolen cards
Technical failures
Transactions can fail for a variety of reasons, often requiring manual intervention for recovery. These failures increase the risk of involuntary churn and can lead to customers experiencing lapses in coverage. However, with the right tools and techniques, many lost payments can be recovered, resulting in less churn and reduced financial exposure. Additionally, optimising the subscription setup can lower operational costs by reducing the manual effort involved in recovering failed payments and reinstating policies.
The solution:
Minimise involuntary churn and manual payment recovery To ensure uninterrupted insurance coverage and increase customer retention, minimising payment-related disruptions is crucial. Several strategies and technologies can assist insurers in achieving this:
Automated Card Updates: To address the issue of expired, lost, or stolen cards, leading to outdated card information and recurring payment failure, solutions like Real Time Account Updater can be implemented. This technology automatically checks for updated card details and retries payments with the new information, all within a single transaction.
Intelligent Payment Retries: To limit the impact of payments that fail because of an outage or downtime in systems, it’s worth retrying payments that fail because of technical reasons. A feature that Adyen offers for this is Auto Rescue. This uses smart logic to decide which declined payments can succeed when retried later, and performs these retries at optimal times.
Secure Payment Tokenisation: To create a seamless and secure card-not-present checkouts, Network Tokens let repeat customers pay without entering their payment details and replace sensitive information with secure and easy-to-use tokens.
Leveraging Real Time Account Updater
With Adyen's Real Time Account Updater and Intelligent Payment Retries, HDI Seguros boosted its authorisation rate by 3%, from 88% to 91%. By automatically updating consumer card data, they saw a 0.66% rise in approvals, translating to an estimated revenue increase of about R$1.2 million annually. Automatic processing retries further contributed to an average revenue growth of 0.20%.
Reducing insurance fraud through modernized claims Payouts
The opportunity:
Manage fraud effectively Managing fraud and optimising the payment transaction are two technical areas which, although not directly obvious to the customer, can have just as big an impact on improving business outcomes.
For example, a common fraudulent practice that insurers face is when fraudsters leverage stolen credit card details to buy an insurance policy, and then make a claim against the policy to get a payout. This is a serious risk for insurers, as paying out fraudulent claims drives up the cost of insurance for genuine customers, and claims fraud is one of the biggest challenges the global insurance industry faces today. Therefore, stopping payment fraud before it has the chance to become claims fraud is an opportunity for insurers to lower the cost of doing business and stay competitive.
The solution:
Take a smart approach to managing fraud Stopping fraud is a balance between blocking fraudsters — who may end up making claims fraud — and approving legitimate customers. Two ways to do this include:
Performing AVS (Address Verification Service) or CID (Card Identification) checks on transactions to verify the payment location and the card’s presence.
Applying behavioural analytics technology that flags suspicious behaviour, such as someone purchasing an item multiple times, multiple purchases with the same email, or orders delivered to the same address using different payment details.
However, the catch is that some legitimate customers will have the hallmarks of a fraudulent payment, and some fraudsters will look legitimate.
There is no “right” answer on how to manage this, but the best approach is to work with a partner such as Adyen to identify your risk tolerance, and adopt a strategy that is optimised for your business.
“We protect the global customers of the world’s largest digital companies including Booking Holdings, owner of Priceline and Booking.com, Ryanair, Ola, Descartes ShipRush, and SeatGeek. Since moving to Adyen, while scaling in new markets, Cover Genius has recorded the highest authorisation rates amongst all of our previous payment suppliers, and our chargebacks have significantly decreased.”
Conclusion
Powering insurance growth and efficiency with optimized payments
Powering insurance growth and efficiency with optimised payments
The insurance industry is undergoing a major shift as market forces and evolving consumer demands push it towards personalised experiences and seamless digital interactions. Whether an insurance company is digital-first or an incumbent, there is enormous potential to leverage financial technology to improve in these areas.
By partnering with a single solution such as Adyen, insurers can lower the overall cost to serve, and achieve better outcomes in terms of customer retention, fraud management, and payment conversion.