How more efficient payment processes can improve your insurance company's combined ratio

If you compare with, for example, claims processing: how much focus does invoice and payment management receive in your company's current digitalization strategy? Many insurance companies do indeed set ambitious goals to become digital-first, for example by only sending paper mail to customers who have explicitly requested it. And certainly, a Kivra-invoice, PDF invoice via email, or on your Mina Sidor is digital, technically speaking. But the management as a whole is still far from as efficient and smooth as it could be – neither for your employees nor your customers.

What is preventing insurance companies from fully digitalizing?

The reason that the digitalization of payment processes within the insurance industry has not progressed further is largely due to the complex IT structures that many companies struggle with. The systems have been built up over a long time and cannot be updated in a snap. Instead, one often muddles through with a mix of internally developed solutions and external partners. The result is that many internal processes are unnecessarily cumbersome. At the same time, payment is a crucial part of the customer experience. In industries with “silent” products, such as insurance, the invoice is indeed the most critical point of contact your customers have with you as a provider (after claims processing). Every friction in the customer experience increases the risk of the customer becoming dissatisfied and looking for alternatives – something that more consumers do in times of inflation, rising costs and recession.

As we state in our post about administrative black holes for insurance companies, there is plenty of potential to save time and resources when it comes to managing invoices and payments. But how do you utilize the opportunities of digitalization to achieve the greatest effect?

3 ways to increase profitability through digitized payment processes

1. Offer your customers a higher degree of self-service

Every small mistake from your customers – for instance, an incorrect OCR number or a revoked direct debit mandate – generates a case of error that your employees need to handle manually. With the right digital tools, you can instead set up automated flows for different scenarios. This way, you can let the customer correct their payment themselves before it generates an even more time-consuming late payment case (or leads to the insurance being canceled due to non-payment). A higher degree of digital self-service also reduces the total number of cases to your customer service and shifts remaining cases towards digital contact points rather than phone.

2. Convert more customers to payment methods that increase renewal rates

The payment frequency you prefer as an insurance company is not necessarily the same as what customers demand. It's really basic psychology: a consolidated annual invoice in the mailbox, email inbox, or on the mobile presents a high amount that can prompt the customer to start comparing with competitors (or with last year's premium from you). Monthly payments blend more seamlessly into the household's other ongoing costs – especially if the amount is deducted automatically. With a smooth, digital process, the customer can activate direct debit themselves in less than a minute. It lowers the barrier so that more switch to a payment method with proven effects on renewal rates.

3. Keep it together and future-proof management with a digital platform

Recent developments in mobile payments and increased e-commerce have changed customers' perceptions of how a payment can be made; expectations that spill over into everything from parking fees to electricity bills. How does your insurance company keep up with the changing payment landscape? Continuing to build on a complex, internal IT structure is rarely a realistic option. However, adding yet another external actor for each new payment or contact channel – to have one partner for SMS payments, another for email invoices, and a third for Mina Sidor – is also not effective in the long run. Managing the various agreements and solutions quickly becomes a heavy administrative burden in itself. Moreover, there is a risk that the customer experience becomes fragmented.

To save time internally, future-proof management, and offer customers a unified experience regardless of channel, you could instead consolidate all payment processes into a single digital platform. But how do you ensure that such an investment truly pays off? In our next blog post, you will find the four most important requirements to place in order to get a solution that delivers concrete results – both in the short and long term. It will be published soon, but do you want to know more about how you can use internal resources more intelligently while also providing your customers with a better overall experience? Contact us!