When Prelude Software was getting its start 30 years ago, fixing payments for insurance carriers meant solving for what EVP Bill Clausen called a “benign but important request," which was finding a way to switch from pre-printed check stock to blank check stock.
In a conversation with Karen Webster, Clausen noted jokingly that this may now seem almost quaint, but 30 years ago it was the cutting edge of cost saving innovation for firms. And for Prelude Software, it was an important starting (but not ending) point for their wider world of moving the very paper-based world of insurance payments into the digital era.
“What we realized is that we didn’t want to just build a quick, one-off solution for getting to blank checks,” Clausen said. “Instead, we built a database that did more than just move data from the carriers to the printers. We wanted to build something a lot more broadly useful for insurance outbound payments.”
What they built over time, he explained to Webster, was the PayPilot disbursement hub, which allows any part of a carrier’s business – claims, treasury, finance or “anyone in the organization responsible for an outbound payment” – to properly stage an outgoing payment so that it is ready to be dispatched as smoothly as possible, whether the payment method is a check or (later) an ACH payment.
The two firms officially announced their partnership this morning. According to the release, the integration of Ingo Money’s push payments tech with Prelude’s roster of insurance carriers and ancillary firms will switch on instant claims payments that are capable of reaching more than 4.5 billion consumer accounts.
Connecting to Complicated Systems
Ingo Money’s instant payment solution was always built with the insurance industry in mind, CEO Drew Edwards said, as it is a vertical where speed of payment matters greatly. But insurance payments are notoriously complex and highly regulated, which can make it notoriously complex to deliver that last digital payments mile to the end consumer.
Clausen said that for many insurance carriers, there are a lot of silos – claims, billing and treasury, to name but a few – and as many as 14 or 15 different systems for processing payments. What Prelude has done over the last 30 years, Clausen said, is to build the bridges to the 21st century that all those legacy platforms natively lack, so there is one modern, digital interface into which all their data can be correctly and compliantly sorted.
Through the partnership with Prelude, Ingo’s instant money platform is now integrated with Prelude’s modern payments processing platform, and can serve the payout needs of all their many insurance carriers.
“We want to give the customer what they really want, which is to kill the check," Edwards noted. "The partnership with Prelude is a huge step forward in delivering that last mile to the millions of consumers served today, through a trusted partner that has delivered great value for them for more than 30 years."
A Risk-Averse Industry
And for good reason, Clausen noted – other than the fact that they spend much of their time looking at actuarial tables and assessing risks, the history of firms attempting to “modernize” their payments operations and do something better or differently is dotted with great ideas … that weren’t.
“You’ll hear a lot about the rogue department that did a pilot and found a way to save 40 cents on every payment transaction," he said. "So the firm tries to put it into practice, and finds out not only is it not saving them money, but because they didn’t really think holistically about the project, it’s actually costing them 80 cents per transaction.”
That adds up. A small carrier might do 12,000 transactions a year, while an enterprise-level firm is doing 12,000 insurance payments per hour. Prelude Software serves firms of all sizes, from small mom-and-pops to the largest national carriers.
Firms know they want to get away from slow, cumbersome processes that involve using paper checks, Clausen noted. They understand they are working with digital-era consumers and are striving to offer new and more highly digitized services.
They even understand that this is something they have to do, he said, because that is the direction in which the market is developing: Digital-only insurance firms are rising and putting themselves forth to consumers as the way to have a fully seamless experience end-to-end.
But, as Clausen pointed out, they need a trusted partner to get them there and to make sure that when those switches flip on – and when their payments are in line with the modern experience – they are helping themselves and their customers at the same time.
The Modern Consumer
At the end of the day, both agreed: The challenge at hand lies in giving payees what they want – which is an end to paper checks and the time-consuming processes around them.
Consumers in an urban market, Clausen noted, are used to a commerce life that involves instant shipping and service on demand.
And insurance companies have built to that need, with things like “touch-free claims processing,” where customers can upload their photos and claim information, and AI can then process the data and offer a decision and payout offer within a few minutes.
“It doesn’t make any sense to then say to the customer, great, we processed all this in under an hour – now wait three or four days for a check," Clausen said.
In an emergency situation – when something like a car or house has been lost – that reaction is tone-deaf and runs counter to the reason a customer paid for insurance faithfully each month. “If something happens, you have got my back,” Clausen said.
And even in a non-emergency, that smooth digital process followed by a long wait for a piece of paper feels fundamentally out of sync with what customers want. A recent PYMNTS.com survey found that 96 percent of consumers hate checks and 82 percent prefer to receive funds instantly.
“What we can now enable is something customers have been asking from their insurance carriers for a long time, which is to make it possible for the payee to get their money instantly,” Edwards noted. "Because, no matter what the technical challenges, that’s when the customer needs the funds.”