Insurers and Open Banking – Boost client satisfaction with innovative payment methods!
Published: 14 March 2022
In the insurance sector, paymasters and financial directors are facing major challenges linked to cash flow optimization, unpaid debt management as well as the response (and effectiveness!) to payment of insurance claims (which in 2022 will still be of relevance). Digital transformation is the nerve center of these issues. The regulatory context and changes in consumer behavior have also had an impact on insurers’ activity. They need to be more flexible, review their client management relationships and adapt their offers accordingly.
This is why in January 2021 Klein Blue Partners referenced more than 224 Insurtech players on the French market, 9% of whom offered their clients insurance products and services (on demand, collaborative or so-called joint purchasing).
Innovation in the payments sector is being followed closely by the insurance sector, since they are able to provide concrete answers to professionals’ financial concerns. This is also a sector that is always on the move. Every day, new directives are issued.
Whether these are European initiatives, such as the Second Payment Services Directive (PSD2), or Instant Payment: the everyday life of paymasters and insurance brokers, as well as client satisfaction, can be drastically improved and enriched by all these new products.
European initiatives to facilitate the everyday life of paymasters
The bank transfer is an irrevocable payment means (since it is initiated by the payer) and the one most used in France. Thanks to the bank transfer, the paymasters of insurers and brokers have benefited from better asset visibility, collection optimization and better risk management. They have also been able to reduce payment rejections and the cost of processing them. However, payment by bank transfer was still – up to now – a complex phase in the client experience. In order to make a transfer, the consumer had to have access to the recipient’s IBAN, add it as the beneficiary and wait for it to be approved by their bank before being able to make the payment.
With DSP2, a new payment service – which is revolutionizing payment by transfer – has seen the light of day: the Payment Initiation Service (PIS). This innovation offers a better client experience (seamless), which allows payments to be made from account to account. Only redirection to the bank space and a strong authentication is required to initiate a transfer to the right recipient. Thanks to this strong securing – which follows the standards laid down by DSP2: the risks of fraud are almost non-existent.
This new service can also be combined with an offer of Instant Payment– enabling instant payments to be set up for the companies. Thanks to this combination of services, insurers can benefit from almost immediate availability of funds (in less than 10 seconds, 24/24 without interruption). The cash flow can then be monitored in real time.
Improving client satisfaction with their insurance thanks to payment innovations
A real opportunity for insurers and insurance brokers, Instant Payment enables them to offer their clients a high value added service. Today consumers demand simplicity, accessibility and transparency in all aspects of their life.
In many cases, clients who are coping with a disaster are not in a position to pay the costs linked to repairs, medical expenses or any assistance. To remedy this, it would be worthwhile developing Instant Payment offers to make essential funds available instantly. This would help them to deal with the pressing urgency of certain situations.
Within the framework of car insurance, for example, a client in need of a breakdown service on a bank holiday could receive the funds necessary to meet his requirements immediately. Eliminating the 2 to 3 day wait before receiving the reimbursement will only add to client satisfaction with their insurer.
However, a claims compensation service via Instant Payment could only be totally effective if combined with safe and rapid anti-fraud tools, a client service available to meet their needs and an efficient processing procedure.
Price is no longer the only argument in the consumer’s choice. Immediacy, safety, transparency of costs and frictionless client experience are all key assets which the brands must take into account from now on. Clients expect tailored policies and are willing to pay only for what they need. Insurers must therefore choose adequate payment services which meet current challenges, set up concrete actions to make the entire client experience coherent – all of which will optimise their financial management!