The benefits of instant payments

Insurtech Review | May 2019

Angus McDonald, Co-Founder and CEO of Cover Genius, explores how instant payment technology could have major benefits for the insurance industry

A rise in mobile penetration and the roll-out of new online payment options are creating greater opportunities for global ecommerce businesses, which have found themselves in a marketplace that is pegged to exceed US$24 trillion by 2025.
But as mighty as it seems, it has – until now – been an under-served market from an insurance perspective. Insurers simply haven’t been able to connect their products to the world’s leading ecommerce players because of barriers such as legacy systems and rising risk factors. Indeed, delivering a first-class customer experience on a global level, which runs from policy creation to an instant claim, has been inherently difficult for insurers to achieve. This is due to three major challenges:

  • Manual processes in getting correct bank details, especially where the bank transfers are international and where there are different rules for 90-plus currencies.
  • Global insurers are encumbered by monolithic legacy software systems and internal bureaucratic processes that delay claims and payment approvals.
  • Banks can be slow to notify payees if their payment fails.
What these challenges have meant for global insurers is that post-claim approval payment times have exceeded 20 days.
Developments such as the instant payment of claims have been seen to push NPS scores skywards, well above the industry average, by as much as 75 points
But we’re now in a world where cross-border commerce has become business as usual. And people are transacting across multiple currencies more than ever before, relying on their service provider to make sure that transactions happen seamlessly. A 20-plus days-to-payment timeframe just isn’t acceptable. 
A new level of customisation, in an instant
The good news is that with the advent of fintech service providers everywhere in the payments value chain, there’s plenty of potential to resolve the points of friction that get in the way of faster payments. 
An example is instant payments. Making payments into almost any currency is now possible; however, there are two important requirements:  
  • There is a large service design effort that accompanies the creation of bank accounts in all those countries. While the service design ensures that customers get clarity on the micro details of payments into their preferred currency, the second major piece of work is incredibly important: a microservices approach.
  • A microservices approach means that the customer communications, interface, payment delivery and notifications all need to come from separate APIs that sync together, but the process is seamless to a customer. It’s impossible to deliver a frictionless experience from legacy systems that encumber global insurers.
In short, it’s one thing to invest extensively in data centres, labs and digital transformations, but ultimately the entire technology platform of a traditional insurer is not suitable or flexible enough to take advantage of the innovations currently underway in the payments space. So the emergence of a new breed of next-gen insurance providers couldn’t be timelier. 
Harnessing technology, they can slice through the complexities to deliver solutions that are both instant and stress-free. Importantly, these technologies can contribute measurably to the overall customer experience: developments such as the instant payment of claims have been seen to push net promoter scores (NPS) skywards, well above the industry average, by as much as 75 points.
Imagine booking a trip with one of the travel ecommerce giants, tailoring your trip around what you want to do, in the language you want, the currency you need
When an ecommerce brand’s success comes from having satisfied and loyal customers, maintaining differentiation in terms of customer experience is vital. To stay ahead in the game, they should look to integrate these latest technologies that are now emerging. If they don’t, they risk not having the ability to offer their customers custom policies in multiple jurisdictions and the ability to manage global distribution of instant payments to claimants.
Smoothly does it
Racing headfirst into a partnership, however, is a risky business too. There needs to be careful consideration when choosing the right partner, to ensure a smooth journey flow. This is especially important in a travel industry scenario, as the insurance experience should blend perfectly with the wider travel-planning experience: imagine booking a trip with one of the travel ecommerce giants, tailoring your trip around what you want to do, in the language you want, the currency you need. The insurance journey needs to mirror this, rather than being a clunky add-on component.
The journey should then flow just as naturally throughout the amendment or cancellation stage so the customer can remove the benefits that they don’t want. By creating a bespoke and satisfying experience for the customer, the business will benefit from strong NPS.
Getting the next stage right – the claim component part of the journey – will be critical. Remember, today’s travellers expect instant solutions delivered to the palm of their hand. If they need to make a claim because of a delayed flight, they expect it to be repaid in the same time it took them to book the flight in the first place.
You need to ask yourself:
  • Can the customer lodge the claim easily and in their own language?
  • How fast is the response time?
  • And more importantly for the customer, how quickly can they get the money back?
If this stage falls down, the whole experience of the insurance journey falls down.
Good for business
Ultimately, the recipe for a successful insurance offering hinges on two key ingredients: consistency and customer-centricity.
Insurers haven’t been able to connect their products to the world’s leading ecommerce players because of barriers such as legacy systems and rising risk factors
Consistency: make sure the messaging is clear, concise, tailored and consistent with the rest of the travel experience associated with your brand. Having a consistent experience is important for customers, and technology can help deliver this.
Customer-centricity: a sad fact that is often forgotten in the world of insurance is that when a customer is making a claim, it’s because something has gone wrong in their life. You don’t make an insurance claim when everything is going well. And so, customer-centricity has got to be at the heart of your insurance experience. It’s about being able to give a customer a stress-free route to their payment, particularly when they are offshore, travelling in unfamiliar markets. It’s about giving them peace of mind, so they can either continue with their holiday or be repatriated without hassle or expense. And it’s about doing it instantly, or as near to realtime as possible. This is what differentiates the customer experience and is what will build trust and loyalty.
If you’re an ecommerce travel business that’s looking to improve your insurance offering, or you are just starting out on your insurance offering journey, here are our top reasons as to why you should look to find the right partnerships with those tech-powered insurance providers who are at the bleeding edge of customer experience delivery:
  • Customer-centric policies and claims processes deliver NPS at scale.
  • High NPS create organic customer referrals.
  • Happy customers are repeat customers.
  • Higher lifetime value from each customer.
  • Less friction for your business at every step in the customer journey.
  • Differentiation from your competition.
  • Allow a growth mindset while your competition flounders.
  • Help shift value away from global insurers towards the rightful heirs – you have the customers after all! 
Angus McDonald

Angus McDonald is Co-Founder and CEO of insurtech company Cover Genius, the parent company of XCover, a distribution platform that enables the world’s largest ecommerce companies to sell any line of insurance, and, a B2B2C global specialty line insurer. Prior to starting Cover Genius, Angus was in the executive team of several high growth advertising technology companies, including iClick Interactive (NASDAQ: ICLK) and Yahoo. Angus has a Bachelor of Science majoring in Mathematics and Computer Science from the University of Technology Sydney.