Revolutionizing Insurance Payments: A Unified Approach

Managing payments has always been a critical, yet often cumbersome, task for insurance carriers. Now faced with a growing volume of transactions and increasing customer expectations, plus the need for seamless financial operations, implementing innovative payment solutions has become a necessity. Paramount to maximizing this transformation is a unified platform for premium collection, claim disbursements, and treasury operations. 

According to a whitepaper from Datos Insights, “A truly integrated inbound/outbound payment solution can revolutionize insurance operations.”¹

Here we explore the insurance industry’s modernization efforts and how next-gen payments technology is giving both carriers and their policyholders faster, more efficient ways to pay and be paid. 

What is Driving Innovation in Insurance Payments? 

The rapid advancements in insurance payment technologies “may well amount to a true revolution in how insurers handle financial transactions,” per Deb Zawisza, senior principal at Datos Insights.² This payments transformation is largely influenced by three factors: 

1. Shifting Consumer Expectations

Modern customers expect ease, speed, and transparency. Whether paying premiums or receiving claims, policyholders demand a seamless digital-first experience. “These expectations, shaped by consumers’ experiences in other industries, include increased demand for real-time, digital, and self-service options across all lines of business, particularly in personal lines,” according to Datos Insights.³

2. Operational Inefficiencies

A fragmented payments infrastructure increasingly can't keep up with the growing complexities in payment operations. Traditional payment processes are often manual, time-consuming, and prone to errors. These issues coupled with an increasing workload can quickly compound finance and operational inefficiencies. Per Mallory Barg Bulman, senior director of research in the Gartner Finance practice, demands on staff capacity “continue to rise.” And a Gartner survey of individuals working in a controller function found that 33% of accountants make at least a few financial errors every week.

3. Regulatory Pressures

In addition to insurance regulations, carriers must comply with stringent regulations around payment security, fraud prevention, and data privacy, all while maintaining transparency in payment operations. In 2024, the payments industry was the subject of increasing regulatory scrutiny, including some of the most significant regulatory and legislative changes since the landmark 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.⁵

Traditional Inbound Payment System Shortcomings 

Premium collection is the foundation of cash flow for any insurance carrier. Proper investment in modern solutions for these payments is not just critical to operations but also shapes the overall customer experience. “Companies that use technology to enhance the customer experience can increase customer satisfaction by 15% to 20%,” according to McKinsey.⁶

Insurance carriers operating with traditional, siloed systems often face the following issues when collecting and managing inbound payments: 

• Delayed Reconciliations 
  Manual processes or outdated systems delay reconciliation of incoming payments, creating revenue tracking gaps. 
• High Costs 
  Using multiple payment gateways and systems increases transaction fees.
• Customer Friction 
  Limited payment options can frustrate policyholders and lead to delays in premium collection. 

Outbound Payments Pain Points 

On the other side of the payments ecosystem, claims disbursements remain a challenge for many carriers. While revenue generation is vital, optimizing outbound payments — including claims disbursements and commission payments — is equally essential. 

Traditional disbursement processes have several pitfalls: 

• Lengthy approval chains delay payout timelines.
• Errors stemming from manual data entry create discrepancies.
• Complex use cases, like lienholder and multi-party payments, can’t be paid digitally.
• Lack of transparency leaves customers and partners in the dark about payment status. 

The true paradigm shift lies in combining all payment operations into one, comprehensive solution. 

Centralizing Inbound and Outbound Insurance Payments  

The challenges of payments that insurers face are interconnected. Payment inefficiencies in one area can create barriers that affect other aspects of operations, whether it’s cash flow forecasting, accounting accuracy, or regulatory reporting.  

Unlike disparate systems that handle premium collections and claims disbursements as separate operations, unified platforms consolidate them into a comprehensive, end-to-end system. 

Advantages of a Unified Solution 

Unified payment platforms centralize every aspect of payment management. According to Datos Insights, these platforms “transcend the capabilities of stand-alone payment solutions, offering distinctive features that create additional value.”⁷

Frictionless Experiences

Unified payment platforms facilitate seamless preference management across inbound and outbound payment flows while maintaining consistent user profiles and payment settings. A uniform interface design for all payment functions, streamlined navigation, and workflow consistency further improve user experiences.  

Consolidated Operations

As a comprehensive treasury management tool, unified payment platforms simplify financial tracking and provide treasury teams with a complete, real-time overview of all transactions. The centralized reporting and reconciliation capabilities also help carriers to gain critical insights into cash flow, optimize their working capital, and improve liquidity planning. 

Accelerated Innovation

A shared technology infrastructure and unified product roadmap allow for coordinated feature development and the swift deployment of cutting-edge capabilities across the payment ecosystem. Further, productized core system integrations can significantly reduce deployment time and lower maintenance costs and complexity.  

Policyholder Convenience 

Modern payment options for both premiums and claims enhance the customer experience by making it easy to maintain coverage as well as rapidly receive disbursements. For example, a policyholder can pay their premiums through PayPal and receive an almost instant payout via the same method should they ever need to make a claim. 

Comprehensive Support

A single technical team managing both application and infrastructure simplifies system management and ensures faster resolution times. Additionally, full vendor and provider support through the web, network portal, and phone systems eliminate calls to carriers. Large vendor networks also accelerate digital payment adoption of industry-specific providers, such as medical clinics and repair shops, which receive claim disbursements. 

Enhanced Security and Compliance

Meeting the insurance industry’s evolving standards and regulatory requirements, particularly around data protection, demands advanced security compliance. An insurance-centric unified payments platform can manage state-specific regulations, like workers’ compensation payment rules or digital payment restrictions, while reducing compliance risk through provider-managed updates. Automated reporting and documentation further ease the security and compliance burden.  

By partnering with specialized providers with a unified platform, carriers can focus on core operations while delivering seamless digital payment experiences to policyholders. 

Streamline Your Payments — and Your Business 

The insurance industry’s successful future depends on smarter, faster, and more reliable payment solutions. “As insurers navigate the rapidly evolving landscape of payment ecosystems, they must take strategic action to leverage innovative technologies and emerging trends,” according to Datos Insights.⁸

A unified payments platform doesn’t just simplify inbound premium collections and streamline outbound disbursements — it delivers tangible benefits to treasury management, operational efficiency, regulatory compliance, and customer satisfaction.  

For a deeper analysis of modern payment ecosystems and the benefits of unified platforms for inbound-outbound transactions, download the Datos Insights whitepaper Paying It Forward: Innovation in Insurance Payment Ecosystems. 

Delivering More   

Are you ready to modernize your payment offerings to do more for your policyholders? One Inc provides a cloud-based, scalable payment platform that enables innovation and growth. By leveraging our unified platform and ecosystem partnerships, we deliver a simplified and seamless payment experience. With One Inc by your side, continually adding value, cloud-based digital payment success is achievable.  

Explore the power of centralized payments today and take a giant, yet simple, step toward improving your business operations. One Inc is here to help — let's talk. 

Sources:

1. Datos Insights – https://www.oneinc.com/lp/whitepaper/innovation-in-insurance-payment-ecosystem
2. Datos Insights – https://www.oneinc.com/lp/whitepaper/innovation-in-insurance-payment-ecosystem
3. Datos Insights – https://www.oneinc.com/lp/whitepaper/innovation-in-insurance-payment-ecosystem
4. Gartner – https://www.gartner.com/en/newsroom/press-releases/2024-02-21-gartner-survey-shows-that-a-third-of-accountants-make-several-error-per-weeo-due-to-capacity-constraints
5. Payments Dive – https://www.paymentsdive.com/news/payments-regulation-legislation-antitrust-bnpl-earned-wage/705993/
6. Insurance Thought Leadership – https://www.insurancethoughtleadership.com/going-digital/top-5-insurtech-trends-watch-2024
7. Datos Insights – https://www.oneinc.com/lp/whitepaper/innovation-in-insurance-payment-ecosystem
8. Datos Insights – https://www.oneinc.com/lp/whitepaper/innovation-in-insurance-payment-ecosystem