Digitizing payouts leads to better policyholder experience

Policyholders look to their insurance company for assistance and reassurance in high-stress situations, such as after a car accident or house fire.

For insurance claimants experiencing a crisis, the claims process cannot move fast enough. In many cases, days or weeks can pass between the claim approval and the moment a claimant receives funds. Payout experiences are overdue for an overhaul, and customers will benefit from innovations that simplify the way they get their money in times of need.

Imagine enabling a claims payout process that gives customers a personalized experience and a near real-time payout. With just a point and click following claim approval, customers choose when and how they are paid – reducing payout timelines down to minutes or less, and providing payout choices that match how people prefer to manage their money.

By bringing digital innovation to insurance payouts, companies can build a differentiated customer experience that reduces stress for the claimant and gives their brand a competitive advantage that will help retain current customers and win new ones.

A look at customer preferences

Providing people with multiple options for how they receive payouts is critical to creating differentiated customer experiences that help drive brand loyalty. Today's consumers are managing their money in new ways. According to a recent Carat Insights study from Fiserv, which polled more than 2,200 adults in the U.S., only 38% of insurance customers have ever received a payout digitally – with most still accustomed to payouts arriving in the mail via paper checks. This gives insurers a tremendous opportunity to deliver new digital payout experiences to wow their customers.

So, what forms of payouts do customers prefer? Well, it often depends on the person. Customers primarily care about two things when receiving a payout – security of the funds, followed by speed of payment. According to the same Carat Insights study, older consumers are more likely to prioritize payment security, while millennials and younger generations prioritize speed and convenience. Because preferences often vary, brands must enable multiple payout choices to meet each customer when and where they are ready to manage their money.

For example, because older Americans prioritize security, they often prefer to be paid via ACH and with deposits to bank accounts because these capabilities are familiar and provide self-assurance, even if the payment takes one to two days to clear. Meanwhile, younger consumers preferring speed and convenience are more likely to seek payouts delivered instantly to a debit card or digital wallet.

Efficiency benefits of digitizing payouts

Although creating a better claims experience for customers is a primary goal of digitizing payouts, insurers can also reap the rewards of a much more efficient workflow as they transition to a digital-first operating model. Digital payouts facilitate a positive customer experience and provide meaningful return on investment for insurers. For every payout made digitally by a business, our data shows that the business will realize:

• A 25% decrease in call center volume.
• A 60% cost reduction (compared to paper checks).

Further, when payouts are enabled by a provider that also serves as the merchant acquirer, the insurer can realize additional cost efficiency by routing the consumer payments for insurance premiums (the “pay-in”) through the same payment rails as the payout.

Condensing the claims process to a matter of minutes

Many insurers in the U.S. are beginning to focus on digitizing multiple touchpoints within their claims process. One option is to create a customer-facing digital portal that gives claimants the control to accept claims funds, and the ability to choose how they would like funds delivered.

For example, when a customer is notified by their insurer that their claim has been approved, the customer is prompted to access the digital portal via their personal device, at which point they can opt for a digital payout instead of a paper check. Claimants choosing to receive funds digitally then select from a list of payout options that include having a digital check delivered instantly via email, payouts sent to their bank account via a debit card or ACH transfer, or even having funds delivered directly to their PayPal or Venmo account.

This process helps insurers deliver an industry-leading experience for their customers. When paired with parallel efforts from the insurer to expedite how claims are reviewed and approved, some insurance claimants have been able to complete the entire claims process (from submission to payout) with their insurer in less than 20 minutes.

The insurance industry is taking important steps toward modernizing the customer experience, with digital transformation playing a significant role in how the industry operates and serves its customers. From streamlined enrollment processes, simplified customer communications, and now the speed and convenience of digital payouts, customers can look to insurers to enable the differentiated experiences they have come to expect.

Robert Clayton is vice president, digital payouts, at Fiserv. He may be contacted at [email protected].

© Entire contents copyright 2023 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.