INSURANCE: A2A GOES MAINSTREAM!

A2A payments overtake traditional payment solutions

There are multiple reasons experts predict that A2A payments will account for 20% of e-commerce payments in 2023. The improved customer experience and cost of paying without an intermediary is a draw in any industry, but A2A payments offer a specific set of advantages to insurers.

#1: Security

Global losses from payment fraud have tripled⁴ in the last decade with the introduction of new technologies. Since the insurance industry has been rushing to digitise⁵ in recent years, that makes firms increasingly susceptible. This can cause major hurdles for attractive and retaining customers. Adopting a best-in-class A2A payments solution can help insurers overcome these challenges because PSD2—the directive governing PSPs in the European Economic Area—requires the use of Strong Customer Authentication (SCA). This means end-consumers are made to confirm their identities for the majority of transactions, creating a safer payments ecosystem for PSPs, companies, and consumers. SEPAexpress’s services require authentication for the first, and riskiest, ensure that the policyholder and feepayer match, and provide IBAN data to the insurer. All of this saves time at the point of payment, and reduces risk later on.

#2: Reconciliation and Payouts

Reconciliation is traditionally a lengthy, labour-intensive process for insurers. Done manually, it requires attention to payment allocation, chargeback reports, and confirmations. With a best-in-class A2A payments solution like SEPAexpress, though, all of this information can be processed and provided automatically. Similarly, in the event that a claim is made and settled, everything can be handled through a single interface without the need for intermediaries, simplifying and optimising the process.

#3: Customer journey

Noone enjoys buying insurance, but everyone knows it’s a necessity. For many mortgage holders, it’s even a legal obligation. With a glut of brokers and comparison services guiding consumers to the best services available, firms that can offer a fast, seamless customer journey are likely to beat the competition. In fact, 70% of consumers⁶ say they want faster payment access. With account-to-account payments, insurers can offer a smooth customer journey without intermediaries. For mortgage holders especially, it can be a serious problem if an insurance policy lapses, even leading to higher premiums for future loans. With A2A payments ensuring a simple, uninterrupted way to pay for insurance and similar subscription services, customers can feel safe with their providers. Firms enjoy the benefits of efficient premium collection, and consumers can receive quick payouts when needed.

#4: Risk Management

Open Banking and A2A payments are made possible by the sharing of information. PSD2 made it an obligation for banks to instantly share data and account access to authorised third parties with prior consent from the owner. This is significant for the insurance industry because it makes risk management considerably easier. The more data a firm has to work with, the more accurately they can calculate risk. With A2A payments insurers can use that data, along with risk engines, liquidity checks, and amount limits, to make more reliable assumptions before issuing policies. Risk management is a complicated business, but with A2A payments, insurers can effectively outsource it to their payment service provider, safe in the knowledge that they’re benefitting from a huge array of reliable data.