Consumers’ need for speed when it comes to insurance payouts may be at odds with common practices in the sector.
When consumers are owed money, whether gambling earnings or insurance payouts, they want to be paid as soon as possible. In fact, 68% of all consumers surveyed would choose instant payments for all types of disbursements when available. However, unlike product purchase-related disbursements, where instant payment use rose five percentage points between August 2021 and January 2023, its use has decreased across all insurance sectors.
This preference gap in disbursement payouts may be due to a decrease in the option offered by insurers only 62% of the time. Nevertheless, consumers’ want for instant insurance payouts is found in PYMNTS’ collaboration with Ingo Money, “Disbursement Satisfaction Report 2023.”
Despite today’s cost-cutting environment, 41% of consumers would be willing to pay a fee to receive this method of payout. This concession may indicate just how deeply this consumer desire runs. And for nearly all types of insurance (with the possible exception of healthcare as those plans are generally employer-sponsored, leaving consumers with few other options), customers are liable to switch if unsatisfied.
The reasons for this sector pullback in payment choice may be varied and could include industry expectations for low premium income growth or other economic headwinds. Another reason may be a reliance on legacy systems, such as the health insurance sector’s persistence in paying by paper check.
Given the current competition for consumer spending, insurers may be reconsidering their instant payment options. In an interview with PYMNTS, vice president of payments at software-as-a-service platform CCC Intelligent Solutions Inc. Kelli Svymbersky, explained how insurance companies seeking to expand their payment methods don’t have to make this change on their own. She describes how third-party providers may do the “dirty work” to facilitate the switch. “Ultimately, we can help keep the insurer up to date on offering multiple payment methods. The carrier doesn’t actually have to have that payment tech stack inside their organization. We’re taking that on and taking on some of that technical lift for them.”
As consumers would overwhelmingly choose instant payouts for their insurance disbursements if given the option, insurers may be making a mistake by failing to offer the choice. Sooner or later, if given the option, consumers may switch to a carrier that better caters to their demands.