Insurance is an enduring industry that boasts a remarkable history, standing as one of the most ancient enterprises known to humankind. With the continuous emergence of novel products and technologies (specifically insurtech), the landscape of insurance undergoes a constant evolution, giving rise to prevailing trends in the realm of billing and payments. Below, we present a choice of such trends that have already begun shaping the industry.
Consumers are Shifting to Mobile-Friendly Options
With the rise of smartphones and other devices, consumers are increasingly turning to their phones for all kinds of tasks--including paying their bills. In fact, many companies now offer app-based payment options that allow you to manage your account from your phone in a matter of seconds.
This trend is expected to continue growing in popularity as more people expect a modernized, online experience to pay bills and make purchases.
E-Wallets and Other Digital Payment Options are Increasing in Popularity
The insurance industry is experiencing a growing demand for digital payments. E-wallets and other digital payment options are increasing in popularity as consumers become more comfortable with technology.
There are several factors that are driving this trend:
- Increased consumer demand for convenience and speed when paying bills or making purchases online.
- To gain a competitive edge, businesses expect to invest in their payment infrastructure. Forbes reported 81% of merchants plan to focus their investment budgets specifically on digital wallets and digital invoicing.[1]
- Growth in the number of merchants accepting these forms of payment at checkout. eBay reported that its merchants processed $1 billion (about $3 per person in the US) worth of transactions using PayPal during Q4 2018).
Security is More Important Than Ever
Although it’s one of the last industries to digitally transform, the insurance industry is quickly becoming one of the most data-driven and technologically advanced in the world. With more information being stored than ever before on digital platforms, it's important to ensure that your company's security measures are adequate.
Security is one of the biggest concerns for insurers today--and for good reason: The Ponemon Institute estimates that cyberattacks cost businesses $8 billion (about $25 per person in the US) annually in lost revenue and remediation costs alone. And with more than half of all organizations reporting at least one breach in 2018 alone, security has become a top priority for insurers across industries worldwide. To protect yourself from cybersecurity threats and keep your customers' trust intact, here are some tips for keeping your business safe:
- Use end-to-end encryption whenever possible (and when appropriate) so that only authorized users can access sensitive information like personal data or financial details.
- Make sure all employees know how best practices should be followed when dealing with sensitive information.
- Regularly update software versions so they're always up to date with current standards.
- Conduct regular audits on internal systems and third parties who may have access.
More Companies are Expected to Offer Alternative Payment Plans
More companies are expected to offer alternative payment plans in the insurance industry, including premium financing. Premium financing allows customers to finance their insurance premiums over time, rather than paying for them upfront in one lump sum. This option is especially useful for those who may not have the funds available to pay the full premium upfront but still want the protection and benefits that come with insurance coverage.
With premium financing, customers can choose to make monthly, quarterly, or annual payments, depending on what works best for their budget. Unlike a subscription plan, where customers are locked into paying monthly installments until they cancel service or the policy expires, premium financing allows for more flexibility in payment options. Customers can adjust their payment amounts as needed, making it easier to manage their finances and ensure that they're able to keep up with their insurance payments over time.
Overall, as the insurance industry continues to evolve, it's likely that more companies will offer alternative payment options like premium financing to help make insurance more accessible and affordable for customers.
Automated Payments Will Gain Traction in the Insurance Industry
Automated payments and recurring billing are becoming more common, and customers are getting used to them. This trend is driven by a desire for increased customer loyalty, but also by necessity: automated payments help insurers collect premiums on time and reduce administrative costs associated with manual payment processing.
Flexible Payment Options Will be Adopted by More Companies
Flexible payment options are becoming increasingly important for insurers, as they allow them to improve customer satisfaction and retention. For example: If a customer is having difficulty paying their premium on time, an insurer can offer them an alternative method of payment such as direct debit or automatic debits from their bank account. This will help ensure that the customer has access to the insurance coverage they need while also reducing administrative costs associated with collecting premiums manually (e.g., printing invoices).
The Value of Omnichannel Payments Made via Digital Wallets Will Reach $2 Trillion Globally by 2023
The value of omnichannel payments made via digital wallets will reach $2 trillion (about $6,200 per person in the US) globally by 2023, according to a report from Juniper Research.
According to the study, growth in digital wallets is being driven by increased demand for convenience and customer loyalty. The popularity of mobile payments has grown rapidly over the past few years thanks to the rise of smartphones and other mobile devices that allow people to make payments on-the-go.
Insurance Providers Need to Make It Easy to Implement Alternative Payment Methods
According to a report from Avalere Health, insurers are increasingly using alternative payment models (APMs) with the goal of improving customer experience and lowering costs. But it also found that some insurers are not supplying the support they need to fully implement these models successfully.
Insurers often do not provide enough education about APMs and don't offer sufficient training and support on how they can be implemented, according to Avalere Health. This makes it more difficult for providers to start using APMs and may put them at risk of losing money on these programs if they aren't implemented correctly, the report found.
For example, more than half of surveyed providers said they didn't have enough information about APMs from their insurer partners when entering a contract with them. In addition, two-thirds of providers said their insurer partner didn't provide them with enough guidance on how APMs work or how to succeed in them.
This lack of education is a problem because many providers don't know how much money they could lose by implementing an APM incorrectly or missing opportunities for cost savings by not doing so correctly.
Adopting a Mobile-First Approach to Billing and Payments is Essential
Mobile-first billing and payments are essential. It's no longer enough to have a website that works well on desktop computers, but it's also important to provide an optimized experience for mobile users as well.
Mobile-friendly options include:
- Responsive design (the ability for a website or app to adapt its layout according to the device being used)
- Optimized user experience (a seamless transition between platforms)
Conclusion
In conclusion, the insurance industry is experiencing a shift toward value-based care and consumerism. This means that consumers are demanding more transparency and control over their experience. As a result, insurers must work harder than ever to ensure they're providing excellent customer service while meeting regulatory requirements for transparency. To meet these demands, insurers need to update their technology and data systems. The good news is that technology can help insurers meet these challenges. By investing in new systems and creating a unified customer experience across multiple channels, insurers will be able to supply better service while also meeting regulatory requirements.
If you want to streamline and transform your insurance business to keep up with these new shifts, Input 1 can help with end-to-end insurance billing and payment solutions that modernize and improve the entire premium collection lifecycle. Learn more at www.input1.com.
[1] Forbes: Payment Preferences are Rapidly Evolving