There are several complexities associated with reviewing and settling claims, given the nature of the insurance industry, which requires stringent customer authentication and documentation.
The uptick in smartphone use and availability, however, has prompted many insurance providers to enable customers to file claims from their phones, but few have implemented mobile disbursements.
“I think one of the largest reasons [insurers are still using checks] is because claim payments, the paying out of a claim, is [a] loss of money, and it is really hard for companies to focus or invest resources in a place in which you are losing money already,” Michele Schmitt, senior product manager for B2B insurance technology firm Trōv, said in a recent interview with PYMNTS.
All that is starting to change, especially as more consumers turn to social media to seek support from their insurers, or even air their grievances.
“So, if an insurance company does not invest in the customer experience of the claim, like during the claim flow, that is going to come back to them,” she said.
Developing that claim flow can be difficult, though, especially when it entails enabling access to mobile disbursements.
Mobile Insurance Disbursement Challenges
The initial barrier blocking mobile payout adoption in the insurance world was simple: The technology to support such disbursements for many claims did not yet exist. This is no longer the case thanks to the widespread availability and adoption of digital wallets.
Institutions such as The Clearing House (TCH) and the Federal Reserve have also created payment networks that have made faster, digital payments a reality for business-to-business (B2B) and business-to-consumer (B2C) payment processes alike. Many insurance disbursement flows are still reliant on paper checks, however, according to Schmitt.
Trōv has looked to solve for these issues by supporting digital automated clearing house (ACH) payments for its insurance partners, significantly cutting down the time it takes consumers to receive funds and businesses to finalize payments.
“We send claim payments through ACH,” Schmitt said. “One of the best positives of that, from a business standpoint, [is] the business knows exactly where the money is, where it went, where it came from and when it went to where it was going, and there is a lot less room for error than there is with checks. A check is just, you put it in the mail, who knows when it gets cashed, [or] then it never gets cashed and [businesses] have to write another — it just gets really messy really fast.”
The challenge is thus not figuring out if mobile disbursements are possible, but how they can be made, given insurers’ legal and compliance issues. There are several options that can be used to send real-time payments to claimants, but many offerings are still undergoing legal or security checks, Schmitt said. Trōv has yet to build out support for more innovative mobile disbursement methods, but it does have the technical capacity to do so.
“[Payment] innovation is definitely one of those things that, when it is mentioned and brought up, everybody loves the idea,” Schmitt said. “The insurance people love the idea, the customer support [and] the marketing people love that idea, but then, when it actually comes time to make the concept a reality, we hit a lot of brick walls when it comes to insurance legal [regulations]. … There are [some] who just say, ‘Well we have always done it this way, this is the way we know is legal, we are interpreting it this way.’ So, it is hard to get people to interpret the laws of insurance through a digital lens.”
Mobile and InsurTech’s future
The insurance space is keeping a careful eye on mobile developments, especially as consumers begin to rely on social media channels as much as traditional customer service channels. That means firms must make sure that disbursements and all other customer experiences can be accessed on multiple channels — including mobile.
A big focus in the insurance industry right now is enabling digitized end-to-end customer experiences, which means enabling online support for all parts of the insurance experience, rather than starting the customer experience online and devolving back into paper processes, Schmitt noted.
“Everyone is trying to figure out how they can make that customer experience for claims as good as the purchase experience, and that is where it is going to keep going,” she said.
Finding ways to tailor the entirety of the insurance experience, including disbursements, for mobile is becoming important for traditional insurance players — especially as younger claimants, including millennials and members of Generation Z, expect high levels of support via such channels. Insurers need to be ready for the shift to mobile.