While 2022 was something of a banner year in that $1.37 trillion in insurance claim payouts were sent, and $277 billion — or 20% — went via instant payment rails, the most since 2018, there’s more in store when we break down data on consumer payout preferences.
The “Insurance Disbursements Brief,” a PYMNTS and Ingo Money collaboration based on surveys of over 2,420 U.S. consumers, found consumers prefer instant, and that’s where disbursements and payouts are heading — rapidly.
To summarize, when companies gave consumers a choice in the method of disbursement receipt, consumers picked instant disbursements in 23% of the cases — up from 19% in 2021.
“Consumers were most likely to opt for instant methods for life insurance payouts,” the study found. “Consumers chose instant payment rails for 46% of all life insurance payouts in 2022 — well above the 11% of consumers who chose to receive these disbursements via same-day bank account transfer.”
The research showed that instant was the second-most chosen method of receipt for health insurance, automobile insurance and P&C insurance payouts.
“Consumers showed a preference for instant health insurance payouts 20% of the time when the choice was offered, just below the 21% who chose to receive them via same-day bank account transfer,” the study stated.
More consumers chose instant insurance disbursements than ever in 2022, and those instant payouts also represented a larger share of the payouts they received. Twenty percent of the insurance disbursements the average consumer received came over instant rails, compared to 17% in 2021 and just 8.7% in 2020.
As real-time payments likely take a new turn with the July introduction of the FedNow Service, the demand for instant payouts and disbursements is expected to rise as awareness of instant is amplified by the Federal Reserve, the media and FinTechs.
That’s in line with findings from the study, which noted that “the total number of consumers receiving instant payouts and the number of payouts they received both increased for three consecutive years,” giving all the right signals of a consumer population who has seen the promised land of instant and wants it to become the way their payouts are sent.