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Digital payments - an easy win for insurers

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Randy Barnaby

Claims practice team lead

July 20, 2018 - A recently published report by McKinsey, Claims in the Digital Age, argues that mature insurers must integrate digital technologies – particularly in the face of new insurtech competitors – and be willing to adopt artificial intelligence, machine learning, and chatbots into their front-to-back office operations. It's an interesting finding – and yet, on balance, so much of the report is like a record on repeat. It's the same song being sung in every industry conference, study, white paper, and article that's been published over the past three-plus years. Insurance CXOs must be humming it in the halls without even realizing it.

But the message seems to be sinking in. Large carriers such as AIG and AXA have established incubators to develop and implement emerging technologies, while mid-tier carriers are exploring partnerships with insurtech firms. We're seeing progress being made as mobile solutions become everyday tools in the auto settlement process. Telematics and the IoT are being infused into the claim mitigation and adjudication process at a fairly quick clip. So this begs the question, why is the low-hanging fruit of digital settlements still lagging behind?

Time to ditch the paper

The majority of property and casualty carriers are still settling claims with paper checks, but digitizing payments would be a quick hit for carriers to save on loss adjustment dollars. It's estimated to cost as much as $15 to get a settlement check into the hands of the insured. Additionally, it can take as long as 14 days to process and receive payments. And that's not great for customer satisfaction – especially when competitors are paying claims the same day.

Customer adoption clearly isn't the problem. Indeed, oaying by check is rapidly becoming obsolete – and the average citizen today is more comfortable digitally transferring funds using apps like Facebook, Paypal, and Zelle.

That being said, I think there are a few challenges facing insurers who want to adopt digital settlements:

  • Integrating a payment solution into existing systems
  • Problems associated with multi-party payments
  • Complications arising from field payments
  • Cybersecurity concerns
  • Escheatment tracking (tracking unclaimed funds)
  • Recoverable depreciation tracking (the difference between replacement cost value and actual cash value)
  • Potential for fraud
  • State and federal regulations

These are all legitimate concerns, of course, but I am confident that they are concerns which can be resolved. There are insurance-specific digital payment products on the market which can be used to incorporate multiple digital payment options into claims. This includes instant field payments, branded prepaid cards, electronic fund transfers, and more. By integrating these into desktop and mobile tools, claims settlement can be virtually instantaneous – reducing cycle time and loss adjusting expense significantly, with the added bonus of security, proper tracking, and regulatory compliance all built in.

Our partnership with Invenger Technologies offers all of these benefits to insurers, as we have incorporated its insurance-specific digital payment product, Insurpay, into our claims service. For more details on how Genpact can help insurers transform payment processes, please reach out to your Genpact representative or contact us here.