Introduction: Transforming Insurance
We live in an era of rapid change, and the insurance industry is no exception. As the world shifts, so do the expectations of insurance policyholders, who now demand more from their providers than ever before. These expectations now extend significantly beyond just the initial purchase of a policy. Whether it's on-demand access to information, automated status notifications, flexible payment options, or quick solutions to queries and issues, customers want their insurance buying and servicing experience to mirror the speed and convenience they have grown accustomed to receiving from other industries. Frequent and effective interactions shape the customer experience and are pivotal in maintaining customer satisfaction and loyalty. Here’s why modernizing these touchpoints is crucial for staying competitive in the insurance industry.
Customer Experience and Expectations
Insurance customers usually have contact with their insurer only once or twice a year. This is quite different from other financial industries such as banking, where customers interact ten to twenty times more frequently. Due to the infrequent touchpoints in the insurance sector, ensuring that every interaction is handled perfectly is crucial.[1] Moreover, these points of contact are important opportunities for insurance companies to build lasting relationships with their policyholders. Each and every experience can significantly enhance the customer journey and ensure ongoing satisfaction and retention.
The Psychology Impact
The psychology behind billing and payments is straightforward: customers equate time-saving and convenient services with value. No one wants to spend excessive time managing payments or hunting down policy information. Modernized systems that offer reminders, pre-filled payment details, and easy access to policy benefits can transform an ordinary billing interaction into a valued service touchpoint. Here’s where the psychology really kicks in. Studies show that one in four consumers are willing to pay up to 10% more for a product to receive a better experience[3].
An enhanced billing and payments platform offers more than mere transaction processing; it provides a comprehensive service experience tailored to policyholder needs. Beyond issuing invoices, it can send personalized messages and content that connect the dots between their insurance coverage and the real-life benefits they receive. This might include practical advice for weather-proofing properties, special promotions on other insurance products, or reminders about claim procedures if necessary. By leveraging the latest communication technologies, modern systems can alert customers to upcoming payments through pre-filled emails and texts and provide multifaceted self-service options through robust omnichannel tools and telephony systems employing AI for rapid query resolution. Additionally, for those instances that require a human touch, advanced platforms maintain live customer support to ensure all policyholder concerns are adeptly managed.
Strategic Benefits for Insurers
Besides meeting customer expectations, which translates to increased revenue, a modernized billing and payments platform also has distinct advantages for an insurer. When deployed strategically, upgrading billing and payments can create operational efficiencies and cost savings that improve a company's bottom line.
For instance, by integrating billing as a service, a cloud-based platform, insurers can remove the financial costs and responsibility of maintaining and upgrading in-house technology. New technologies also allow insurers to automate much of the manual processes involved with fulfilling the tasks associated with the premium collection lifecycle. These tasks include bill and notice presentment, receipt, and reconciliation of payments distribution of broker commission, and providing a unified documentation database.
Furthermore, according to a report produced by PwC, specific internal benefits associated with modernized billing and payments include
- A 3-5% increase in speed-to-market for new product launches
- Up to 40% decrease in cash processing costs
- Reduced internal workflow friction with streamlined issue resolution
- Reduced bill error rates
- Reduced time spent on customer service and underwriting
- Improved compliance and ability to audit and report
- A 20-25% improvement in days premium outstanding
The Risks of Status Quo
While billing and payment touchpoints offer insurers a chance to impress policyholders and enhance their financial standing, these interactions can also lead to dissatisfaction if merely treated as secondary back-office tasks, a practice too commonly seen among insurers.
Maintaining outdated billing systems is a risky strategy. The insurance industry's 18% customer experience gap highlights the disparity between customer expectations and satisfaction. Couple that with the fact that in the United States: (a) 59% of customers will walk away after a few bad experiences, (b) 17% walk away after just one bad experience, and (c) 67% will tell of their bad experience to family and friends, it then becomes clear exactly how important it is to deliver a billing and payment experience that surpasses the status quo.
Customers have become savvier, and they know what they want. They want to be able to choose from a good selection of policies at reasonable prices. They want clear, transparent information and smooth, hassle-free interactions. They may be attracted by good marketing and advertising, but if they don't experience these things, they are more than willing to switch to a competitor who can provide it. Negative experiences can prompt customers to switch to more agile competitors, severely affecting an insurer’s market share and reputation. In a time where customer feedback spreads swiftly, maintaining a high standard in every interaction is not just good practice—it's essential for survival.
Conclusion
As insurers navigate a rapidly changing market, the adoption of advanced billing and payment platforms is pivotal. These systems are no longer just administrative tasks but crucial elements of customer interaction that can dictate an insurer's success or failure. By investing in these technologies, insurers can not only meet but exceed their customers' evolving expectations, securing their loyalty, and expanding their market presence.
