The seemingly simple function of disbursing payments is more complex for insurance than for other industries. Because the process of settling and paying a claim involves a specific set of procedures and regulations, insurers have been largely limited to good ol’ fashioned checks and snail-mail… until now.
Today, insurers are racing to take advantage of new digital payment platforms built specifically for insurance claims. Among the many benefits, digitizing claims payments helps your company:
1. Retain customers by delivering faster payments through their preferred methods,
2. Reduce cost by expediting claims settlements and eliminating the need for checks, and
3. Minimize risk by reducing the chances of fraud and human error.
1. Retain Customers
Most consumers report the claims experience as having a critical impact on their decision to stay with their current insurance company, and it’s not hard to understand why. After a loss, people are often stuck in a state of limbo – possibly even suffering — which is compounded each day they are driving a rental car, staying in a hotel room, missing work, or delaying surgery. The First Notice of Loss (FNOL) is a vital step toward restoring “normal” life conditions.
As their insurer, you are in a unique position to either become the beloved hero of their story, or just another roadblock on the path to recovery.
Digital payments are the simplest way to expedite the claims process, allowing your policyholders to begin rebuilding and recovering much sooner than with checks. By paying through their preferred methods and cutting out unnecessary wait time, you become an ally in the mind of your customers, which strengthens their trust and brand loyalty.
2. Reduce Cost
Beyond the benefits of an improved customer experience, digitizing your claims payments also increases the efficiency of your own internal operations. A claim is not settled until the payees have received and accepted the payment. For every day a claim remains open, there is additional cost to the insurer (for example, paying another day on a rental car or hotel room). There is also mounting risk of a party involved in the claim taking legal action – which means legal fees and possibly a higher payout. A faster claims process lowers the risk and costs associated with delayed settlements, including claim severity, loss adjustment expenses (LAE), and extended litigation.
Additionally, digital payments save your company the time and expense of manually processing each check. Between labor costs, materials, bank fees, and postage, the average cost per check is $5.91. For a bit of perspective, if your company sends out 1,000 claims payments each month, you’re spending $70,920 per year on checks alone. And this doesn’t even take into account any physical storage needs, environmental implications, and opportunity costs from investing time and money into managing paper products.
3. Minimize Risk
Obviously, when you remove checks from the equation, check fraud is no longer a problem. Some insurers have been reluctant to adopt digital payments due to potential network security risks involved with online exchange of bank account or payment card information. However, this risk can be entirely eliminated by outsourcing to a digital claims payments provider that tokenizes sensitive data, so it never touches your network – nullifying your risk and protecting payees’ payment data.
Malicious attacks are not the only cause of payment complications. In fact, inadvertent mishaps — for example, misplacing the decimal point on a check — can have severe consequences. Digital payments are less vulnerable to human error than manual processes. And while the human component is irreplaceable for many other touch-points along the customer journey, digitizing payments ensures the necessary precision for accurate disbursement and record-keeping.
Regardless of where your company falls on the technology spectrum — whether you’re tied to 1990s mainframes, fax machines, and tape backups, or if you're already using drones, robots, and AI — you can take advantage of all the benefits that come along with digital claims payments. In your search for a solution, ensure it is:
1. Designed to handle insurance claims payments,
2. Capable of integrating into your current systems, and
3. Compatible with your inbound premiums payments platform.
The longer you wait to join the digital revolution, the wider the gap between your company and the market leaders. With the power to improve customer retention, reduce your expenses, and minimize data security risks, digital claims payments is the logical next step for modernizing your business.
For more information on how One Inc's digital claims payments solution—ClaimsPay®—can help your business, contact us today.