LEVERAGING A DIGITAL PAYMENT PLATFORM
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.
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.
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.