13 December 2022, 2:35 (CET)

INSURANCE: USECASES FOR A2A PAYMENTS

What uses do InsurTech businesses have for A2A payments?

The estimated value of European InsurTech companies is now $39 billion. That’s a 970% increase since 2016.¹ This shouldn’t be surprising given that companies deploying InsurTech solutions have been shown to reduce their application processing time by more than 99.9%.³

InsurTech solutions constitute a wide range of technologies. AI, machine learning, Blockchain, robo-Advisors, GPS, and drone technology have all been employed to facilitate the work Insurers do. But a sometimes-overlook area in which Insurers can digitise, improving their services and revenues, is payments. Specifically, account-to-account payments.

What is A2A and InsurTech?

Account-to-account payments include bank transfers, direct debits, standing orders, and even in-store transactions. They include push payments, which are one-off transfers initiated by the payer or triggered by an API, or pull payments, where a company automatically withdraws money from a consenting client’s account as part of a subscription or recurring payment.
When it comes to InsurTech, A2A payments can be useful in several payment areas:

Consumer-to-Business (C2B)
This is when money is sent from an individual to a business, typically a merchant. For Insurers, C2B payments can pose problems when it comes to security and authentication. If an initial payment is made with incorrect information, that can mean missed payments in future, lost revenue for Insurers, and void policies for customers.

Business-to-Consumer (B2C)
This is where money is sent from a business to an individual, potentially as wages or refunds. In the case of InsurTechs, B2C payments may be used for claims disbursements. If these payments are made slowly or incorrectly, Insurers risk reputational damage and customer churn.

Business-to-Business (B2B)
This is where money is sent between accounts of separate business entities, typically for products and services. For Insurers, B2B payments are mostly used for supplier payments. As with any business, if these can’t be made quickly, securely, and effectively, serious operational issues arise.

What are the benefits of A2A payments?

A2A payments can help in all three of the areas above. But not all A2A solutions are equal. Insurers should look to partner with PSPs that can take full advantage of open banking, and provide best-in-class services to enhance security and customer experience. Here are the top five benefits a strong A2A payments solution can offer:

#1: Improve Security

Most A2A payments require some type of multifactor authentication (MFA), be it a one-time passcode on their phone number or biometric confirmation. This greatly enhances security, but under the open banking regulations that govern SEPAexpress’s A2A payments solutions, SCA (Strong Customer Authentication) is a requirement, adding an additional layer of confidence. Our Account Information and Payment Initiation Services (AIS/PIS) additionally provide consolidated information on payment accounts held by the service user, and initiate payments from within a customer’s account to transfer funds on their behalf. Both methods are considerably more secure than relying on intermediaries or manual initiation. For more on how A2A payments can improve security in insurance, make sure to read How A2A payments can bring improved security for Insurers.

#2: Improve Customer Experience

With A2A payments, customers can send money easily from their web browser or mobile app. And they can also link their bank account with your application, meaning they’ll never have to manually enter their card or account details when sending money. With this kind of embedding, web redirects and manual input are a thing of the past. And recurring payments—which are particularly important for Insurers—can be handled in a few seconds without the need for letters, invoices, or intermediaries. Our PAYOUT service also uses Account ID checks to make mass B2C payments faster and easier.

#3: Improve Streamlining

With Open Banking-powered A2A payments, insurers can do away with the slow and costly process of sourcing and managing data from multiple sources. With the policyholder’s consent, all necessary data can be shared directly from their bank and used both for payments, and as part of the underwriting process. For more information on how A2A payments can help improve efficiency, take a look at Streamlining Insurance with A2A payments.

#4: Improve Risk Management

A2A payment solutions like those from SEPAexpress include functionality such as risk and engines and account limits, making use of the data available through open banking to help Insurers make the best possible decisions about policies. Because this data is sourced and managed in a more streamlined way, much of the process can be automated, making Risk Management quicker, safer, and easier.

#5: Improve Cashflow

Because A2A payments don’t come with the same interchange fees as other payment methods, Insurers are able to keep a greater portion of their sales. And with open banking, Insurers benefit from instantaneous transfers. That not only means more predictability when it comes to managing cash flow, but lower administrative and accounting costs as well.

How to find the right A2A payments partner

When seeking out an A2A payments solution, it’s important that Insurers understand the best way to choose a provider. Done right, this can offer a raft of benefits from improved customer experience to security and tracking, as well as having an immediate impact on the value of each and every customer relationship.
Here are some of the key questions Insurers should pose when looking for a best-in-class PSP:

What unique features does the provider bring to the table?

How easily does the payment processing software integrate with your business?

Do they offer a clear and transparent fee structure?

Are their solutions compliant across Europe and the UK?

How quickly can they provide Reconciliation and Chargeback status updates?

Can they provide a balance check?

Are they GDPR compliant?

Can they identify the account holder for reduced fraud?

Wrap up

In summary, with the right A2A payments provider InsurTechs can quickly improve multiple areas of their business, as well as paving the way for better data management and automation in the future.
SEPAexpress’s open banking-powered A2A payments solutions are easily integrated with Insurers’ existing infrastructure, offer advanced AIS and PIS services, lightning fast Reconciliation and Chargeback Reports, and full regulatory compliance. All with a clear, transparent fee structure.

If you’re interested in finding out more about alternative payment methods, get in touch today.

¹dealroom.com (2022, 29. June): European Insurtech 2022: insurtech is well alive, [online]
https://www.economist.com/leaders/2017/05/06/the-worlds-most-valuable-resource-is-no-longer-oil-but-data [22.11.2022]

²altexsoft (2020, 27. September): Insurance Technologies: 13 Disruptive Ideas to Change Insurance Companies with Telematics, Blockchain, Machine Learning, and APIs, [online]
https://www.easysend.io/blog/6-pain-points-of-traditional-data-collection-in-insurance-and-how-to-solve-them [22.11.2022]

INSURANCE: USECASES FOR A2A PAYMENTS

What uses do InsurTech businesses have for A2A payments?

In this blog:

What is A2A and InsurTech?