One of the most prominent reasons insurance carriers lose policies is due to late or delinquent premium payments. Besides rising levels of churn, delinquent premiums interrupt an insurer’s cash flow and waste staff time and resources with increased manual work, like printing and mailing late payment notices. Not to mention, the long-lasting impacts, like policy cancellations, reinstatements, and complications when claims are filed during a lapse in coverage.

Insurance carriers can avoid the costly fallout of delinquencies and reestablish regular, timely premiums. But first, insurers must identify common reasons for missed payments so they can deploy solutions to prevent cancellations.

Let’s explore some of the prevalent reasons behind unpaid bills and corresponding strategies that carriers can implement to guide policyholders back onto the right payment path.

1. Policyholders are Unaware Payment is Due

One of the biggest challenges insurers contend with is prompting payments from policyholders who aren’t aware payment is due. Whether it’s forgetfulness or some other circumstance that’s keeping customers in the dark, communication is critical.

Payment reminders are key to encouraging regular, timely premiums. Ideally, reminders should be branded so it’s clear which organization they’re from and include important information like the amount due and how policyholders can immediately pay their balance. Plus, InvoiceCloud data shows customers respond best to second and third notifications. Enable multiple reminders to increase your chances of receiving payment before the due date.

2. Checks for Bill Payment are Late or Stolen in Mail

Traditional mail is not the most reliable option for sensitive communications, like bills or their corresponding payments. Besides
the slow pace of this delivery method, the U.S. Treasury reports check fraud has increased nationwide by 385% since the pandemic.

To avoid the dangers of late or stolen payments by mail, it’s important to educate customers on the dangers of using checks for payment. Promote digital payment options in myriad ways, including on paper bills and envelopes, to encourage online adoption. Research shows those who prefer writing checks are largely open to using self-service payments like automated phone options (also known as IVR) and mobile wallets, but insurers must actively promote these digital choices to successfully discourage check use.

3. Policyholders Cannot Access Computer or Internet

Online payments may be a convenient and popular option for many policyholders, but using computers for bill payment is not an accessible option for all people. More than 14 million households across the U.S. don’t have internet and research has found that populations like non-English speakers and the unbanked have limited access to computers.

The PEW Research Center found 97% of Americans have mobile phones, including the unbanked population. Since cellular data can establish an internet connection for those without standard broadband, millions of utility customers are able to use their mobile devices for quick, convenient bill payments.

To cater to customers who prefer using a mobile device for premium payments, insurers should promote mobile wallets, use online portals configured for an optimal smartphone experience, and offer automated phone payments (also known as IVR) or options to pay in cash at retailers.

Get the Full Payments Delinquency Roadmap

For more common causes of late premium payments and strategies insurance carriers can implement to overcome these challenges, get the full Payments Delinquency Roadmap. This free ebook will take you through the twists and turns many policyholders experience when trying to keep their insurance policies active.