Sapiens Podcast: Changing Trends in Online Financial Transactions

Julie Schieni
online financial transactions

Online financial transactions are here to stay in the insurance industry. With their speed, security, and ease of processing, it’s no surprise that digital payments are in high demand among policyholders nationwide — these electronic transactions empower all parties within the insurance ecosystem, resulting in enhanced service and greater customer satisfaction.

Kevin Moon, Regional Director of Financial Services for InvoiceCloud, joins podcast host Jiffy Thomas, Sapiens’ Vice President of Professional Services, to discuss changing industry trends and how insurers can use digital payments to enhance policyholder satisfaction and operational efficiency.

Listen to the full conversation or read some highlights from the transcript below:

Jiffy Thomas: Hello and welcome to the Sapiens Insurance 360 podcast. I’m your host, Jiffy Thomas, Vice President of Professional Services here at Sapiens. And I’m so glad you out there listening. This is where we discuss the latest news, trends and issues from across the insurance solutions and technology spectrum. In the insurance ecosystem. Everyone’s familiar with the claim lifecycle and the claim itself that’s at its heart. But what really empowers a lifecycle engine are payments. And on today’s program, “Changing Trends in Online Financial Transactions,” we’ll examine some of the latest trends in claim payments driven by customer demand and the critical importance of digitalization for carriers. With us today to discuss this topic is Kevin Moon, Regional Sales Director of Financial Services at InvoiceCloud. Sapiens’ partner InvoiceCloud’s mission is to simplify payments by removing friction from the most frequent and sensitive policyholder interactions. Kevin’s been with InvoiceCloud for over 10 years, where his various roles have included Regional Sales Director, Account Executive, Business Development Executive, and Sales & Finance Coordinator roles. He has extensive work experience in the financial services industry and Kevin, thanks so much for joining us today!

Kevin Moon: Jiffy, great to see you and thanks for having me. It’s an honor.

JT: So, Kevin, to start off, talk to us about the current trends for claim payments and our customers driving the need for them.

KM: Yeah, this is an exciting topic, something that I think about every day. But I think the most obvious trend from my perspective is the trend toward digital claim payments. So we hear every day that carriers are looking to remove the physical and manual checks that they’re printing and mailing, sometimes even in-house and looking to pay those out electronically. And to your point, I think the customer demand is driving that trend and carriers are also driving that trend. I mean, from the carrier side, I think this came out of COVID. It became top of everyone’s mind. And a theme that I heard over and over again is that carriers were sending employees back into the office just to print and mail claim checks. And so it got them thinking like, hey, and there must be a better way to do this more efficiently without putting our employees at risk. And then customers are also driving this trend. And I think it’s just the trend toward everything becoming digital and customers really want to be paid electronically. We actually did a study at InvoiceCloud with over 2,000 policyholders and how they would prefer to receive insurance claim payments and over 73% said they would prefer to receive a claim payment directly into their bank account and not have to wait through the mail. That makes sense. And so I think it’s safe to assume that customers are demanding this. Carriers are hearing this from their customers and they’re listening to their customers, which is a great thing.

JT: And you’re right about COVID, which has impacted many of our lives and in a positive way. And it’s pushed people to digitalize more and more, with work [working] from home and not going into the office. So totally valid points. Thank you for that, Kevin. Now, on another note, why is it important for carriers to digitalize their claim payments?

KM: Yeah. I love it. Why is it important? This could be a full, two-hour podcast. But I think there’s a few key things that I think come to mind and why it’s important for carriers to digitize these claim payments. I think one, the biggest one, is creating internal efficiencies and reducing costs. When you have a digital claim payment, there’s just far less need for administrative overhead, manual intervention, and paperwork. Also, carriers are looking to reduce the time it takes to settle claims. I think we all know this, but the longer a claim sits out there, the more costly it becomes for the carrier. So they’re really looking to settle those claims more quickly. There was a U.S. property claims report that showed that carriers who implemented outbound digital payment solutions reduced the average time to payment by up to five and a half days. So they can settle those claims almost six days more quickly than with a physical check. And with physical checks in the mail, it can really make matters worse for the carriers in terms of cost. Typically, we hear if a check is lost in the mail, the carrier has to stop the payment with the bank. They’re dealing with a frustrated customer on the phone. And then to remediate that issue with the insurer, they’re commonly having to overnight a check and that’s an additional expense.

JT: Yeah, that’s on the front end. And then there’s still on the back end, there’s additional workflows as well, right? They come into the system, cancel the check, and then they’ve got to reissue the check. And the very interface has got to repeal the request out there. So it’s just compounding it there.

KM: Right. And then the second piece. We had internal efficiencies and reducing costs, but also reducing fraud. Digital payments are simply more secure compared to sending a physical check in the mail. And, you know, there’s no audit trail. So you once you send a check in the mail, it’s out there. And there was a number of studies. But commonly these studies say that paper checks are subject to nearly twice as much fraud risk than any other payment method. And in 2022 alone, there was 1.3 billion lost in check fraud. And I was actually chatting with the carrier last week. It’s pretty topical, but they had an issue with a washed check — a bad actor had intercepted the check, manipulated it, and deposited $100,000, and a year later, this carrier is still disputing that fraud with the bank and still trying to reconcile that issue so that disappears with a digital payment. And then the third reason why it’s important for carriers to digitize these claim payments is going back to the customers driving this trend. I think consumers really expect this. It’s really important for carriers to meet their policyholders where they are and how they want to do business. So as an insurer, think about your personal life. The vast majority of carriers, I’d say 99%, have a way for you as a consumer to pay your premium. But that’s not the same percentage that have an easy way to send you money when you’ve had a catastrophic event. And so I think that’s frustrating for policyholders and they really want to do business electronically.

JT: Yeah, totally. Kevin and [I can] just personally relate to this. I had a recent home insurance claim. And I was talking to the adjuster in the morning and the claim was settled and 20 minutes later I get an email with a online link to go collect my payment and literally in hours I saw the funds in my bank account. Compare that to the traditional model where you get a check in the mail two to three days later you endorse it, bring it to the bank. Then the bank takes another two to three days. So easily five to six days between the claim being settled in using the funds in your bank versus hours.

KM: Right. And that was a good experience for you, Jiffy.

JT: Absolutely.

 

Download our ebook, How to Disrupt without Disruption: An Innovative Guide for Insurance Carriers, to learn more about how insurers can deliver instant, intuitive, and personalized experiences without expensive and time-consuming digital transformations.

Julie Schieni

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