29 November 2022, 2:35 (CET)

INSURANCE: STREAMLINING WITH A2A PAYMENTS

Streamline easily and stay competitive with A2A solutions


To remain competitive, Insurers need to find new ways to optimize their services. But with the right A2A payments solutions, streamlining can be simple. In this article we show you how to.


In this blog:

  • Pain points for Insurance providers
  • Payments: an often overlooked problem for Insurers
  • How A2A payments can help Insurers streamline their service

Pain points for Insurance providers

New services and technologies are constantly becoming available in today’s fast-moving business landscape. In all kinds of sectors, if a company doesn’t keep up with the latest and best ways of serving customers and running operations, there’s a strong chance of getting left behind. Insurance companies are no exception. To remain competitive with other Insurers, and especially with the new wave of InsurTechs entering the market, it’s crucial that they find new ways to lower operational costs and shorten approval times. Switching to a best-in-class A2A payments provider is an excellent way to do that, but first, it’s important to identify the pain points Insurers are most likely to face right now.

#1: Access to data

Data is the single most valuable commodity1 in the business world today, but many insurers aren’t using it effectively. That’s why 70% of Insurance companies2 are increasing spending on data management this year. Good data management begins with collection. Overwhelmingly, insurers rely on pdf forms and phone calls to gather customer information, which is slow, unreliable, and difficult to process later.

#2: Subscription renewal

The majority of Insurance customers pay for their plans using either bank transfers or direct debits. With the former, there’s a persistent risk of missed payments and lapsed subscriptions. With the latter, if the first transaction is insufficiently secure issues can arise later to disrupt the payments process. For the minority of customers who pay with debit or credit cards, expiration dates mean there’s a regular opportunity for subscriptions to go unrenewed.

#3: Customer experience

Poor customer experience is the number one cause of churn for insurers. With 26% of people citing it as their reason for switching providers, and 48% pointing to a specific instance of bad service, it has a bigger impact on retention than cost or even the coverage itself. Consumers want faster claims, more personalised offers, and a better digital experience. But with inefficient data collection, manual underwriting, and inadequate security protocols, insurers will struggle to meet their needs.3

#4: Lack of automation

With an overreliance on disparate data sources and legacy systems, many Insurers are only automating around a fifth4 of their operational processes. This slows them down, and makes them more prone to human error, with an impact on everything from customer service and retention to regulatory compliance. Some areas of a traditional Insurance business will require significant overhauls to allow for automation, but in others—like payments—operations can be significantly improved with very little effort.

Payments: an often overlooked problem for Insurers

Anything less than a 100% reconciliation rate is a problem for Insurers. The resulting uncertainty makes it difficult to plan ahead, avoid cash flow challenges, and operate a business day to day. With that in mind, it’s a serious problem that 57% of Insurers have reconciliation rates of between 50% and 90%.5 But this isn’t too surprising when considering that 28% of the market6 still relies on manual reconciliation methods, directly leading to some of the most common problems Insurers face with payments:

  • Delays when an intermediary bank fails to provide a payment reference
  • Delays caused when a payment reference is incorrectly entered
  • Slow payment collection from brokers and intermediaries

When collecting and managing data manually in conjunction with traditional payment methods, these kinds of errors are practically inevitable. For repeat payment services like Insurance, if a mistake is made for the first payment, it has knock-on effects both for customer experience, and lifetime value (CLV). Fortunately, with new optimised A2A payments solutions using open banking, Insurers can streamline their operations for a vastly improved reconciliation rate.

How A2A payments can help Insurers streamline their service

While direct debits and standing orders are relatively efficient choices for Insurers when it comes to payments, they fail to harness the power of open banking, and therefore leave firms unable to solve the pain points mentioned above.
Whereas standing orders and direct debits both have relatively low transaction fees, operational costs for the former are significantly higher because of the need for manual processing. And while standing orders are relatively fast to settle once they’re set up, direct debits take 3 to five days to clear. Both methods also rely on a degree of manual input, making for a relatively poor customer experience.
With open banking-powered A2A payments solutions from SEPAexpress, Insurers can access and manage data easily, improving set-up, authentication, customer experience, and opportunities for automation. With our integrated Reconciliation Service, payment confirmation, chargebacks and reporting are all handled automatically, saving considerable time. Our Payment Initiation Service (PIS) is integrated into the checkout service, and gives Insurers peace of mind by verifying a match between policyholder and payee. This makes for smooth sailing with all future payments. And with our open banking-powered Account Information Service (AIS) we run advanced security checks on the Insurer’s behalf, as well as supplying additional data for more accurate appraisals.
With SEPAexpress’s A2A payments solutions, Insurers can streamline operations by cutting out the manual work and intermediaries that account for so many errors and delays. That means improved reconciliation rates, customer experience, and ultimately revenue.
For more information about SEPAexpress and open banking account-to-account payments click here.

1 The Economist (2017, 06. May): The world’s most valuable resource is no longer oil, but data. [online]
https://www.economist.com/leaders/2017/05/06/the-worlds-most-valuable-resource-is-no-longer-oil-but-data [18.11.2022]

2 Smirnoff, Vera: EasySend: 6 pain points of traditional data collection in insurance and how to solve them, [online]
https://www.easysend.io/blog/6-pain-points-of-traditional-data-collection-in-insurance-and-how-to-solve-them [18.11.2022]

3 Paau, Jason: Intelligent Security Summit (2002, 13. March): Now is the time for traditional insurance companies to embrace innovation, [online] https://venturebeat.com/datadecisionmakers/now-is-the-time-for-traditional-insurance-companies-to-embrace-innovation/ [18.11.2022]

4 insurance News.cm.au (2021, 19. July): Lack of automation affecting actuarial processes, [online]
https://www.insurancenews.com.au/insurtech/lack-of-automation-affecting-actuarial-processes [18.11.2022]

5 Banking Circle: Moving beyond the pain points: Improving the insurance reconciliation and payment architecture, [online]
https://www.bankingcircle.com/whitepapers/improving-insurance-reconciliation-payment-architecture [18.11.2022]

6 Banking Circle (2019, 21. January): Streamlining payments in the insurance industry, [online]
https://www.merchantsavvy.co.uk/payment-fraud-statistics/ [18.11.2022]

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