10/15/2018

Amazon Insurance & The Consumerization of Payments

Gary Dorfman October 15th, 2018

Last month, Mr. Bezos officially entered India’s insurance market.

The rumors swirled all summer, especially after Amazon’s acquisition of PillPack, an online pharmacy that’s giving brick-and mortar-operations a run for their money

If Amazon could eventually master the payment processing complexities of the medical industry, why couldn’t they consider the insurance market?

Some insurance experts claimed it would be difficult for Amazon to enter the industry; but others believe the company’s smart home technologies designed to improve digital vigilance, “could affect actuarial statistics and lower the damage risks associated with home ownership in the future.”

Sure enough, last week Travelers, one of the nation’s larges insurance companies, announced their new Amazon store front, where consumers could buy discounted home security equipment.

Without a doubt, insurance companies are scrambling to meet customer’s demands for a digital, streamlined experience.

The payment processing opportunity

Payment processing is a critical part of the insurance industry’s customer experience and it’s an area that’s in dire need of digitization. Many of the nation’s largest insurers receive low marks from customers when it comes to billing and payment satisfaction, according to JD Power & Associates data for the top 20 U.S. insurers.

Source: JD Power & Associates 2018 U.S. Small Commercial Insurance Study

Errors in cash application that arise from complex, inefficient payment processes come with a high cost. They trickle down customers and come back to bite providers with higher call volumes, diminished financial performance and a bad experience with the brand.

Today’s insurance providers still lack efficient processes for payment research, disputes and adjustments. Lacking automation, their processes rely heavily on staff subject matter experts who need to reference multiple systems in order to determine how to manage each payment situation.

In the case of one insurance company Deluxe Treasury Management Solutions partnered with, their previous receivables platform required manual intervention for processing of electronic payment channels. Staff would receive notice of wires and ACH payments and had to reference open receivables ledgers and notes in a separate customer service system. Any payment that didn’t match an account required employees to consult a spreadsheet with 30 rows of different cash application business rules. Each product had its own separate spreadsheet with rules specific to each state. As you can imagine, it took months for new hires to memorize these rules. Seasoned staff members struggled when the rules and processes changed.

Integrated payment processes solves the problem

We’re seeing a trend towards truly integrated, multi-channel receivables processes. This integration provides billers with enterprise-level controls across all payment channels, while still meeting needs of their individual business units. By replacing staff-based tasks and human judgement with automation, billers can achieve consistent predictable results without the risks of staff involvement and errors.

Solutions like Remote Deposit Capture (RDC) and system based rules for cash application have naturally evolved to better streamline and speed up several steps of the payment process.

For some billers, vendor supplied applications and programming interfaces enable tighter integration into different client or third-party environments. For insurance providers, our RDC solutions can be set up to integrate directly into an insurance company’s Accounts Receivables system. This integration can take place right from capture. Agents can capture checks, documentation, and virtual or electronic information and then immediately match them to open accounts. These new capabilities can greatly reduce costly delays and errors that lead to a negative customer experience.

Keeping pace with the consumerization of payments

Today’s payment channels are typically comprised of checks, lockboxes, remote capture, ACH, and wire. Large billers now have an eye towards other emerging payment channels such as Zelle, Apple Pay and others. Looking down the road, one can only see an increasingly complex and potentially costly payment landscape.

Sometimes, I’ll remind my clients of the “First Rule of Holes.” When you find yourself in a hole – stop digging. Before you add that next new payment channel, implement an efficient process for your current payment channels; and do so in a way that will provide efficiency and control as new channels emerge.

Smart insurance companies will recognize that Amazon and other major online retailers have propelled the consumerization of billing and payments. And smarter insurance leaders know that without flexible, scalable and extensible financial operations, they will be hard-pressed to navigate these disruptive changes.

Today’s advanced remittance and cash application solutions leverage machine learning, artificial intelligence and other emerging technologies. These approaches offer a competitive advantage when it comes to improving billing and payment solutions and customer satisfaction. In an age where Amazon absolves us from dealing with the usual hassles that accompany life’s necessities, a modern experience is key to competing for new insurance customers and retaining existing customers.

This content is accurate at the time of publication and may not be updated.