Andy Stalsberg, chief commercial officer at Access PaySuite, looks at how digital payments can help insurers protect customers, and themselves, as household budgets are stretched.
suggests a rise is likely – the result of supply chain issues holding up repairs and the impact of FCA’s new rules on pricing.News that insurance premiums may go up couldn’t have come at a worse time for UK households already weighed down by the rising cost of living. Take motor insurance, for instance. Having dropped to a six-year low in December last year, the ABI’s Motor Insurance Premium Tracker
The ABI has also warned that there could be further pressure on premiums as the number of motoring claims reverts to pre-lockdown levels. This might be nothing more than a market correction, yet even a modest rise could push already-struggling households into difficulties. After two years of pandemic-related disruption, the cost of living crisis brings further challenges for insurers. They’ll need clear policies and communications to support those facing hardship and follow the FCA’s guidance on the fair treatment of vulnerable customers.
Flexibility and innovation
Supporting customers through the cost of living crisis will require flexibility and empathy, just as the pandemic did.
There are signs that this is happening already. AIG Life, for example, has announced that it would extend its protection premiums for customers facing ‘financial uncertainty’, without even having to demonstrate financial difficulties. As well as directly supporting struggling customers, continued innovation in the sector will ensure that products can be tailored to people’s changing circumstances.
Both the InsurTech challengers and established players that have invested in their digital capabilities can leverage vast amounts of historic and real-time data alongside agile IT systems to develop new products and more connected, personalised experiences. Insights from data enables firms to respond quickly to changes in the market, map trends, understand customers’ preferences and spot opportunities to target under-served groups. They might find that people are more willing to take out pay-as-you-go insurance if they only need short-term cover and budgets are tight, which is preferable to them giving up their insurance completely.
Fast and easy payments
Buying insurance can feel like a chore for a lot of people, something to tick off their list but not get excited about. In reality, it offers far more than that – a good policy provides protection and peace-of-mind, especially during tough times. The same is true of payments, which are an important but often-overlooked element of the customer experience. Far from being purely transactional, they are, as our customer Paul Williams, of Ripe Thinking, stresses, an emotive subject. He says that people need assurances that the correct amount of money will leave their account when they expect it to.
monthly direct debits rather than upfront payments when taking out a policy.And payments will only become more emotive as the cost of living crisis worsens. The current situation may drive more customers towards
But regardless of which type of payment they choose, the process has to be accurate, fast and secure. Removing any barriers to payment is critical, especially when there’s a higher risk of people defaulting due to their financial situation. A good digital payments system puts them in control, enabling them to pay easily online, via their computer, smart device or on the phone.
Another simple yet effective change is branding your direct debit pages using your digital payments system. In a departure from the standard and impersonal direct debit mandate, insurers are able to deliver a more personal and seamless customer experience, where people feel connected to the brand from start to finish.
Inflation notwithstanding, insurers need to continually adapt to customers’ behaviour. As the younger and increasingly digitally-savvy generations enter the market, apps should support a wider range of functions, including support, communications and secure payments.
Making digital payments work for you Digital payments not only reduce the risk of non-payment, and enable better customer experiences, they can support insurers in a number of ways too. When integrated with other software, including finance and CRM, payment tools can become part of the wider digital ecosystem.
Payment data can be automatically fed into finance systems, speeding up time-consuming processes such as reconciliation, while reducing the risk of human error and overheads. The data also forms the basis of near real-time insights on customers’ payment preferences as well as potential challenges, such as the risk of late payments on cash flow.
Supporting compliance A challenging economic climate means that insurers have to be on their guard against fraud, even more than usual, as people may be tempted to make up or embellish claims. Fraud detection technology is enabling insurers to root out more false claims – but an integrated and transparent payment system can offer further safeguards. Automation not only saves time by reading human intervention, it can reduce the risk of insider threat too. Insurers are able to complete KYC checks and validate bank details quickly, with no impact on the customer experience. Similarly, when credit checks are seamlessly built into the sign-up process so people are offered the best policy for them, while protecting the business from late or non-payments. Established and challenger insurance firms alike know they must differentiate themselves in a competitive market – and that poor customer experiences could cost them business, particularly when the economic climate is challenging.
Frictionless payment processes are a key point-of-difference and a way to build loyalty, as well as control costs and maximise revenue for insurers.