Digital Insurance - - CLAIMS -

The dig­i­tal pay­ments in­dus­try has changed sig­nif­i­cantly over the past few years. Tra­di­tional pay­ments con­sisted of cash, checks and credit cards. With the use of se­cu­rity chips in pay­ment cards and com­pa­nies like PayPal, Square, and Ap­ple Pay, the land­scape of dig­i­tal pay­ments is evolv­ing at a rapid pace.

To­day, dig­i­tal pay­ments rep­re­sent a whole range of pay­ment meth­ods that are char­ac­ter­ized by speed and con­sumer con­ve­nience, as well as be­ing driven by new dig­i­tal de­vices and plat­forms, such as smart­phones, tablets and so­cial me­dia. In this ar­ti­cle, we’ll dis­cuss pay­ment chal­lenges that per­sist in the in­surance in­dus­try, and how In­surity is ad­dress­ing th­ese is­sues through its core so­lu­tions in pol­icy, billing and claims, by in­te­grat­ing a dig­i­tal pay­ment plat­form. Be­low are four pay­ment con­cerns that in­sur­ers and claims or­ga­ni­za­tions need to be aware of, as well as how th­ese is­sues im­pact tra­di­tional ways of do­ing busi­ness:

Card Se­cu­rity & Com­pli­ance

In 2013, Tar­get ex­pe­ri­enced a land­mark data breach that jeop­ar­dized the se­cu­rity of 40 mil­lion credit card and debit card num­bers and 70 mil­lion records, in­clud­ing names and ad­dresses of shop­pers. This breach cost the com­pany $252 mil­lion, ac­cord­ing to SEC fil­ings, plus $10 mil­lion in a class ac­tion law­suit; and banks sought an ad­di­tional $19 mil­lion to cover ex­penses re­lated to is­su­ing new cards and cov­er­ing fraud­u­lent trans­ac­tions made with breached data.

Since this in­ci­dent, the Pay­ment Card In­dus­try Data Se­cu­rity Stan­dard (PCI DSS) was es­tab­lished, and now ap­plies to any com­pany us­ing credit or debit cards in trans­ac­tions. For ex­am­ple, if an in­surer ac­cepts a credit card pay­ment or makes a claim pay­ment out to a card—and it stores, pro­cesses, and trans­mits this card­holder data—it must host this data se­curely via a PCI-com­pli­ant plat­form or host­ing provider.

To­day, core so­lu­tions must have an in­te­grated dig­i­tal pay­ment plat­form that is PCI Level I Cer­ti­fied, rep­re­sent­ing a high level of card se­cu­rity. To achieve this stan­dard, the dig­i­tal pay­ment plat­form uti­lizes a process called to­k­eniza­tion, es­sen­tially con­vert­ing card in­for­ma­tion into a to­ken, good only within the con­text of this ven­dor-con­sumer trans­ac­tion. In this way, card­holder in­for­ma­tion is kept se­cure.

Stream­lin­ing Rec­on­cil­i­a­tion

As in­bound and out­bound pay­ments are made by in­sur­ers, back of­fices must rec­on­cile pay­ments made and re­ceived against bank state­ments. This process can be time-con­sum­ing and la­bor-in­ten­sive. In many in­stances, the trans­ac­tions don’t match up, and there’s a great deal of frus­tra­tion, as staff man­u­ally per­form line-by-line re­views to try to rec­on­cile amounts. To­day, a dig­i­tal pay­ment plat­form will sig­nif­i­cantly stream­line this process. This plat­form sits be­tween a billing sys­tem and

the banks. It tracks ev­ery trans­ac­tion and matches val­ues in batches. This re­duces the rec­on­cil­i­a­tion process from days to min­utes, so an in­surer’s fi­nan­cial depart­ment can move onto other value-added ac­tiv­i­ties.

Sup­port­ing Mo­bile Trans­ac­tions

Con­sumers in­creas­ingly de­sire trans­ac­tions that can be fa­cil­i­tated through mo­bile de­vices. To­day, 68% of U.S adults have smart­phones, and tablet own­er­ship has edged up to 45%, ac­cord­ing to 2015 sur­vey data from Pew Re­search Cen­ter. In­sur­ers that do not lever­age a dig­i­tal pay­ment plat­form within their core so­lu­tions could risk be­ing un­pre­pared to ac­com­mo­date the im­pend­ing groundswell of mo­bile pay­ments. For ex­am­ple, an in­surer could lever­age a dig­i­tal pay­ment plat­form to au­to­mat­i­cally send cus­tomers texts via Face­book Mes­sen­ger, re­mind­ing them that their poli­cies will soon ex­pire. Us­ing this mes­sage ex­change, a cus­tomer could choose to make a pre­mium pay­ment and im­me­di­ately re­new.

Re­tir­ing Checks

For out­bound claim pay­ments, the main chal­lenge has been the re­liance on paper checks, which cost a lot of money to process and are a hassle to deal with. The Elec­tronic Pay­ments As­so­ci­a­tion (NACHA) es­ti­mates that the av­er­age cost of pro­cess­ing a paper check is $8. To­day, a dig­i­tal pay­ment plat­form in­te­grated within a claims sys­tem, like In­surity’s SIMS Claims, can fa­cil­i­tate real-time pay­ments, so in­sureds quickly re­ceive the funds that they’re en­ti­tled to. In ad­di­tion, pay­ments deal­ing with dual cus­tody and lien hold­ers can be sig­nif­i­cantly stream­lined through a dig­i­tal work­flow, on­line forms and elec­tronic sig­na­tures. For ex­am­ple, with auto in­surance, SIMS Claims would be able to ini­ti­ate a dig­i­tal pay­ment di­rectly to a body shop for car re­pairs, and for com­mer­cial lines like work­ers’ com­pen­sa­tion, it can help in­sur­ers more eas­ily meet man­dated turn­around times for provider pay­ments.

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