Rising customer expectation and pressure from insurtechs is driving a fresh wave of competition within the insurance sector, with incumbent firms rushing to revamp legacy products and processes.
A poll carried out by banking-as-a-service specialist Contis shows 58 per cent of customers wait, on average, between one week and one month for a claim to be paid out, with another 25 per cent waiting longer. Meanwhile, research from YouGov and Shelter has shown around 37 per cent of the UK population live payday-to-payday, making the speed of pay-outs more urgent than ever during a cost-of-living crisis.
The poll from Contis showed that antiquated payment methods were still reasonably common, further slowing the claims process: more than 30 per cent of claims were still paid via cheque. In an age when banks are closing local branches rapidly and ushering in digital payments systems, cheques don’t really cut it.
CONSUMERS WANT SMOOTHER PAYMENTS
Data from the Chartered Insurance Institute’s (CII’s) Public Trust Index showed that speed of claims rose from the seventh-highest priority for consumers in July 2021 to the third-highest priority in July 2022. Control over the claims process was promoted from the ninth to the sixth highest priority over the same period, the CII found.
Darren Lane, Business Development Manager at Contis, said customers were becoming used to seamless payment experiences elsewhere in financial services, and now expected the same from their insurers.
“The emergence of fintech, and subsequently insurtech, mean we are seeing more traditional insurance companies built on multiple platforms and legacy technology rethinking their processes and products to meet evolving customer needs,” Mr Lane commented.
“The big challenge for insurance companies is managing the expectations and needs of a diverse customer base while innovating at the right time to stay ahead of the competition.
“In tough economic times, established insurance brands arguably have an edge, as customers trust these firms will stay solvent and be able to pay out claims. But this appeal only holds if dealing with these firms is stress free, with fast, digital pay-outs now a key part of customer expectations.”
Embedded finance in the insurance sector is estimated to be a £62 billion market by 2025. It can help insurance firms not only offer their products online at the right time but also a streamlined claims process and easy claim pay-out.
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