Insurers Find a Loyalty Test in Every Premium Payment

Watch more: Need to Know With One Inc’s Colin Zalewski

For millions of drivers, paying an auto insurance bill is one of the most common financial transactions they make, yet it is also one of the least appreciated opportunities for insurers to strengthen customer relationships.

Claims naturally command attention because they determine whether an insurer delivers on its promise. But before that moment ever arrives, policyholders may spend years making premium payments, creating dozens of opportunities for insurers to reinforce or erode trust.

“You might pay for your car insurance 100 times before you ask your insurance company to come through and hold up their end of the promise,” Colin Zalewski, vice president of product at One Inc, told PYMNTS in an interview.

Billing has become one of the industry’s most frequent customer touchpoints. Yet many insurers continue to treat payments primarily as an operational function rather than part of the overall customer experience.

Uncovering Some Disconnect

To better understand the disconnect, One Inc commissioned a survey of 50 insurers and 500 consumers, concentrating on auto insurance because it is the most widely held form of coverage. The research uncovered differences between how insurers view payment experiences and what consumers increasingly expect.

“We uncovered a number of disconnects between insurance companies and their understanding of how people want to pay and their experience around receiving a bill and making their payment, and what their expectations are around making a payment,” Zalewski said.

Expectations have shifted alongside digital commerce. Consumers who routinely tap phones at checkout, receive instant payment confirmations and manage subscriptions online increasingly expect insurance payments to feel just as straightforward.

For insurers, the gap represents more than a customer service issue. It presents an opportunity to improve an interaction that happens more often than filing a claim.

“That is a real opportunity for insurers to create a better experience, a more transparent one when collecting a bill from their customers,” Zalewski said, adding that consumers are looking for “clarity,” “convenience” and “reliability” throughout the payment process.

Digital payment options have become part of the equation. Consumers, particularly young generations, expect choices beyond traditional cards, ACH and checks, including digital wallets such as PayPal, Venmo, Apple Pay and Google Pay, Zalewski said.

Expanding payment choice alone, however, is not enough. Some insurers already offer more options than policyholders realize because those capabilities are not communicated effectively.

“There are some insurance companies that are actually doing a really great job of offering that optionality, but maybe could be doing a better job of highlighting those options to their consumers,” Zalewski said.

The research also challenged assumptions about what consumers value most. Rather than focusing exclusively on price, respondents ranked clarity as their top priority during the payment experience. Consumers want to know what they owe, why they owe it and, just as importantly, that their payment has been received and their coverage remains in force.

Meeting those expectations requires more than adding payment buttons to a website. Insurers should stop viewing payments as a back-office function and instead treat them as a “center of excellence” that spans technology, treasury, customer service and agent networks, Zalewski said. That starts with auditing every payment channel, including websites, mobile apps, call centers and agent interactions, while offering billing schedules that better match how consumers manage their finances.

The insurers making the most progress are taking an “outside in” approach by asking policyholders what they expect and studying the payment experiences consumers encounter in other industries, Zalewski said. As those expectations continue to evolve, insurers have an opportunity to make every premium payment reinforce confidence rather than simply collect it.

Watch the full interview with Colin Zalewski to learn more about:

Why recurring payment schedules should reflect consumers’ pay cycles instead of insurers’ policy cycles.

How payment design can reduce pressure on call centers and back-office operations.

What insurers can learn from retail and other industries that have spent years refining digital payment experiences.