InsurTechTalk: Your core is modern — your payments aren't — here's what's costing you

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With wildfire activity intensifying across the country, federal fire officials in the US have raised the National Preparedness Level to Level 4, signalling that firefighting resources are under growing demand nationwide. The move is notable for this time of year. For the insured, it’s key that they get reimbursed for their claim in a timely manner, which can only be achieved through electronic payments. Readiness, availability and the ability to scale up quickly and react  are all essential to serving claimants at speed and retaining customers. 

What can a payment provider bring to the table?

Insurance carriers have their focus on admin, underwriting, claims and quoting and often overlook payments and transactional processes, while the payment process often remains manual, paper-heavy, relying on legacy integrations. Slow claim payments, however, can undercut RoI and increase TCO, while also eroding customer trust. To speed up payments, operational processes must change and technical debt must be adjusted. While other workflows in insurance have speeded up, payments and invoicing are still lagging behind in mainstream insurance – legacy payment systems are often siloed from the policy admin system, relying on manual reconciliations and exception handling. 

Software vendors providing core systems can only operate in an ecosystem of strong partners, who collect payment for the carrier and send payments out. They‘ll take care of all the PCI, keep up with compliance and they also make investments in AI. Software vendors such as InvoiceCloud have all the above capabilities, which are then integrated into the systems of payment gateway vendors such as Sapiens. InvoiceCloud also provides its partners with abstraction opportunities from a risk and compliance perspective. However, if the carrier regards the digitalisation of payments as a pure technology swap, the same control gaps will be replicated in a digital format. A payment vendor can liberate carriers from several aspects of risk management too from PCI to data in motion and data at rest requirements and tokenisation. A payments partner can also ensure that the right person and the right account get the right amount of money at the point of disbursement though identity verification. 

The payment layer that InvoiceCloud provides enforces the same rigour as the underwriting controls. The transformation is not just about moving from batch to API though – it’s also key how this shift is integrated into processes and contact centre workflows. When doing due diligence on their payment vendor, carriers must ensure that they meet all the necessary security requirements too. The test of a successful payment integration and orchestration is whether the system can perform more complex tasks such as reversing a transaction, checking a ledger entry or developing audit artifacts.  Communication with the policyholder through payment notifications is also an integral part of InvoiceCloud’s payment solution, relieving contact centre from some of its workload. There is also a good business case for switching to digital payments. Cheques incur a lot of extra costs when they are inaccurate or get lost in the post and the admin of rectifying errors comes at a cost too – these aspects should also form part of an RoI analysis and so should increased customer retention thanks to better customer experiences. A final upside of switching to a digital payment platform is that its functionalities will keep evolving and updating from day one without the carrier spending additional resources on its maintenance. 

The panel’s advice

• Unhappy policy holders don’t complain. They just leave.
• The payment provider takes care of all three aspects of payments – authentication, validation and execution.
• Include your risk team in the due diligence on your payment vendor.  
• Digital payments, by their nature, reduce the risk of push-to-card and same-day-ACH fraud through auditable, time-stamped payment trails. 
• Carriers that are winning on retention are not the ones with the lowest premium but those who pay fast and accurately and communicate proactively throughout the whole process.