The world of insurance has evolved massively in the last few years alone. Gone are the days of long, arduous form-filling and complicated sign-up processes. Today, people can arrange coverage in just a few taps, or clicks, with the flexibility to amend a policy to fit a change of circumstances.
Amid the cost of living crisis, picking an insurer in Australia is dictated more so than ever by value for money and experience. People want to feel protected and reassured, without any hassle or hurdles while purchasing a policy, renewing, or making a claim. And with sectors such as retail offering embedded insurance with large purchases at the point of checkout, it’s crucial your payments process is as easy - while remaining secure.
Adrian Davis, Commercial Leader of Financial Services & Insurance at Adyen, sheds light on the key priorities and challenges insurers face today, emphasizing the role of payments in driving business success.
Adyen overview of the insurance industry
At Adyen, we spend a lot of time in the market speaking to executives in the insurance industry about the challenges and opportunities that they face. It’s clear to me that insurers are deeply focused on three distinct priorities, no matter if they are a large legacy player, a high growth embedded insurance provider, or the latest generation of InsurTech. It’s important that we take time to deeply understand these issues because they form the foundation of how we develop our services to meet the needs of today’s insurer.
The number one priority for insurers is the need to significantly and permanently reduce the cost of service policies. This needs to happen whilst also focussing on the second priority, innovating the customer proposition, for example, thinking more deeply about developing digital customer journeys or thinking about new ways in which insurance can be bought and consumed. Finally, all insurers need to find better ways to enhance risk management and reduce fraudulent claims. When thinking about these challenges that insurers face, an executive will rarely consider payments as the key to unlocking better performance in these focus areas.
However, at Adyen, we believe that our single platform is uniquely well placed to help insurers reach their business goals: Our payment processing can maximize the investment made in customer acquisition, and reduce the cost of taking payments. Our financial platform makes payment flows more efficient, for example, by making previously manual reconciliations automatic. Our insight into customers enhances the identification of risk, whilst our pay out capabilities can significantly reduce the cost of fraud.
So, our contention is that payments aren’t a downstream or non-value adding activity. To the contrary, many insurers are recognising that digital transformations should start foremost with the customer journey and payments often represent that crucial first step.
We’re proud of our heritage supporting the Insurance industry and look forward to developing even closer relationships with this hugely important market sector in the future.
1. Appeal to a new generation of insured
With other industries offering a speedy, streamlined service, consumers now expect that in all areas of their lives. This is especially true for Gen Z and Millennials, who are more likely to give up if the initial steps are too slow and complicated.
According to Adyen's latest research, ecommerce alone reached an estimated 22% of total purchases in 2022, up from 15% in 2019. And a whopping 87% of Aussie consumers are more likely to shop with brands that use technology to improve the shopping experience. To master this world, we recommend you focus on these two areas in particular:
Easy sign-up
Sign-up processes are make or break when it comes to taking out a policy. Customers expect to be able to whip out their phone and spend just a few minutes filling in their details. Many insurtechs offer app-based sign-ups, where they provide the quote before speeding people through purchasing.
A feature as simple as autofill is an effective way to whizz customers through traditionally time-consuming forms without losing them halfway. No one wants to enter their details over and over while researching quotes, and saving them precious minutes could make a world of difference in the decision they make.
Faster payments
It used to be the case that customers could only use certain types of payment methods to take out insurance, traditionally credit or debit cards. Times have changed, and with the younger generation preferring the likes of digital wallets such as Apple Pay and Google Pay™ you’re missing a trick if you exclude them.
Digital wallets store all relevant information needed to complete a transaction, meaning customers don’t need to pull out their card to enter details. And with built-in security features it means they make for a faster checkout as they are less likely to fail
Then there’s Click to Pay, built on EMV specifications and supported by major card schemes, such as Visa and Mastercard. The payment process is the same, but instead of entering the card details manually, enrolled customers see their cards on screen, eliminating the need to manually enter card details at checkout. Adding it to your checkout allows you to tap into a large customer base and offer them safe and seamless payments.
2. Reduce manual intervention caused by declines
It’s one thing when a customer chooses to switch insurers, but another when you lose them by accident. The percentage of loss due to non-payments can be high, but it’s easily preventable if you have the right measures in place.
Having a payments service provider (PSP) that has tools to tackle this is a big plus. You can spend less time worrying about churn and more time focusing on other areas of your business. Tools you should be able to utilize are:
Real-time account updater
This amazing feature automatically updates card details that are expired, lost or stolen, which prevents a payment from going through. This is done by checking Visa and Mastercard for updated details and instantly retrying if there has been an update. The best part? It’s all done in real time—no need to reach out to the customer.
In 2022, Adyen was the first platform to launch its Real Time Account Updater with Visa under our RevenueAccelerate suite, while offering it with other global card networks since 2017.
Auto retry
Many payment providers offer automatic retries on payments that fail due to technical errors. Since this takes place straight after the first decline, customers don’t need to re-enter their details, and - like account updater - they do not know of any disruption to the payment. In Adyen’s case, we only do this when there is a high chance of success, so your customers can secure their coverage, and your revenue isn’t impacted.
Network tokenization optimization
Major card networks offer this service to replace primary account numbers (PANs) - plus other sensitive data - with a token. Network Tokens stay the same while the network updates the card details, meaning uninterrupted billing for cardholders and less work for you. Because of the built-in security, issuers trust Network Tokens, so the likelihood of an accepted payment is higher when a Network Token is used.
They’re on the rise too; Visa confirmed last year that it surpassed 4.8 billion tokens—almost doubling from 2021. Though keep in mind you need the right tool that knows when to use either a token or the PAN, as without this the process may be sluggish due to issuers who are slower to adopt.
Adyen’s machine learning knows when to use network tokens and, if failed, automatically switches to the PAN to ensure authorization. This means no awkward conversations with customers who are accidentally unprotected, causing friction and operational burden.
3. Consolidate your processes
Insurance is already complicated; using multiple payment providers with separate systems for premiums and claims, makes operational processes difficult and reconciliation a headache.
When you unite all your processes within one place, applicable across business units, brands and regions, you open yourself up to more opportunity and less friction. Overhauling outdated systems and moving onto more modern tech will save you money in the long run while improving the overall customer experience. Adyen for example feeds all payments across regions, channels and systems into a single platform. With this, a company has a cohesive, detailed overview of its business while identifying areas of improvement or opportunity.
Not only will this digital acceleration increase productivity within your team, but with faster processes you can launch new products quicker and integrate new tech partners seamlessly. It may appear as a big investment, but in the long-run it will save you money fixing old systems. Just make sure you involve your IT department in the decision-making from the get go; having everyone - from customer experience to finance teams - on the same page, will ensure you stay agile and ahead of competition.
4. Streamline insurance Payouts
In today's fast-paced world, policyholders expect quick and seamless claims payouts tailored to their preferred methods. Adyen's Payouts Service* allows insurers to leverage a global payout network, connecting seamlessly with central banks, clearing houses, and banking partners. By utilizing a single API, insurers can eliminate the complexities and manual processes associated with multiple service providers, ensuring efficient and hassle-free payouts for policyholders.
Moreover, the traditional process of pre-financing expenses ahead of reimbursement exposes insurers to increased risks of fraudulent claims. With Adyen's Issuing* solutions, insurers can issue debit cards directly to policyholders, granting them immediate access to funds without the need to dip into their resources. This streamlines the claims process ando enhances fraud prevention measures by implementing MCC (Merchant Category Code) and amount limits. Additionally, insurers can unlock a new revenue stream through interchange revenue share, further optimizing their financial operations.
Leveraging Adyen’s Payout Services and Issuing allows insurers to enhance customer satisfaction, streamline processes, and mitigate risks, ultimately driving greater efficiency and profitability in the insurance industry.
*: Regional availability: US, UK, EU
5. Pick the right partners for success
You can feel confident that all areas of your business are running like clockwork if you work with partners that share your goals and aspirations.
When picking the right PSP, looking beyond the obvious - processing payments - you want a partner that is there to provide what you need on a day-to-day basis. Around the clock technical support, a dedicated account manager and being kept up to speed with new areas of opportunity shouldn’t be taken for granted. These simple but impactful qualities are really the building blocks to success.
But with some providers, you can do so much more together. Adyen, for example, provides access to tools that prevent risk and boost revenue, with all products available through a single integration. And with all popular payment methods available out of the box, we’ll ensure you give your customers the freedom they desire.
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