A survey by Adyen and EY underscores a significant gap between insurer capabilities and customer expectations concerning digital payments.
- Insurance consumers exhibit a marked preference for mobile-first purchasing options, with a growing interest in subscription models among younger demographics.
- Insurtech companies are leading the charge in adapting to these consumer demands by refining payment solutions with integrated data.
- Experts stress that insurers need to modernise their payment infrastructures to improve operational efficiencies and enhance customer experiences.
- Payment ease has emerged as a critical factor for younger customers, even outpacing traditional policy considerations like claims processes.
A comprehensive survey conducted by Adyen and EY highlights a growing disparity between what customers expect in online transactions and what the insurance industry currently offers. Conducted across the UK, Spain and France, the survey of 3,000 insurance customers and 200 industry experts reveals a striking contrast between traditional insurers and their more agile insurtech counterparts when it comes to meeting digital payment expectations.
The data reveal a strong inclination among online insurance consumers towards mobile-first purchasing pathways. This trend is particularly pronounced among individuals aged 25 to 34, two-thirds of whom favour insurance subscription models. Despite this clear consumer preference, many longstanding insurance firms find it challenging to adapt to the evolving digital habits of their clients.
Adrian Davis from Adyen points to a significant oversight, noting that many insurers possess a ‘payments blind spot’. This oversight means they often fail to recognise the substantial benefits that could be gained from modernising online payment systems, which include enhancing sales, reducing costs, and decreasing fraud. Consumers, meanwhile, routinely compare their insurance payment experiences to those in more digitally advanced sectors like retail, where the latter tends to lead.
Echoing these sentiments, Chris Payne of EY notes a misalignment between perception and reality concerning new payment technologies. He identifies a vast opportunity for insurers to innovate and enhance their customer experiences in this space. Insurtech firms, with their integrated data strategies and unified systems, are better positioned to respond agilely to consumer demands, thus reshaping product offerings and refining payment solutions.
The survey underscores the necessity for insurers to bolster their payment infrastructures. Such improvements could significantly enhance error detection, clear payment status visibility, and automate reconciliations. While 78% of industry specialists acknowledge the operational importance of payment processing, traditional insurance firms appear slow in grasping its strategic value. Peter Neufeld from EY recommends that insurers embrace intuitive and flexible payment experiences to distinguish themselves in a competitive online environment.
Ease of payments has become a priority, especially among younger consumers, ranking as a top-three factor in choosing insurance providers. A notable 67% of individuals aged 25-34 are attracted to subscription models, and 65% prefer prepaid virtual cards to avoid out-of-pocket expenses during claims. Moreover, any friction in payment processes can disrupt initial purchases or lead to policy lapses, while prolonged pay-out times and rigid processes further diminish customer satisfaction.
Interestingly, a vast majority of 92% of customers prefer using credit cards, debit cards, or digital wallets for online insurance payments, yet many current providers persist with outdated methods like bank direct debits. In response, improving customer retention has become a strategic priority for 58% of insurers, followed closely by the need to enhance overall customer experience. As Jacqueline Quinn of EY concludes, an effective digital payment strategy can significantly boost operational performance and resilience, aligning with insurers’ broader digital transformation agendas.
Addressing the digital payment gap is crucial for insurers to remain competitive and meet evolving customer needs.
