Insurance Premium Payments: Back End or Front End Opportunity?

by Michael Fitzgerald, February 28, 2017
Other
North America

Abstract

In order to understand the current state and trends regarding insurance payments, Celent conducted an online survey with insurers and managing general agents (MGAs). The results indicate that insurers recognize their payments capabilities as a differentiation opportunity and give their strategies careful attention. However, continued adjustments are necessary because not all insurers appear to be transitioning their views of payments from a tactical perspective to a strategic one.

Celent has released a new report titled Insurance Premium Payments: Back End or Front End Opportunity? The report was written by Michael Fitzgerald, a Senior Analyst with Celent's Insurance practice.
 
In order to understand the current state and trends regarding insurance payments, Celent conducted an online survey with insurers and managing general agents (MGAs). The results indicate that insurers recognize their payments capabilities as a differentiation opportunity and give their strategies careful attention. However, continued adjustments are necessary because not all insurers appear to be transitioning their views of payments from a tactical perspective to a strategic one.
 
Survey participants rank convenience as a significant determinant of consumer choice. Ease of payments is an important component of convenience. Over 43% view payments as a customer experience function; another 31% consider it a customer service function, highlighting payments as an important part of customer satisfaction. Slightly more than 40% of insurance payments are via paper check, and 21% are through manual ACH/EFT. Insurance payment methods are still evolving in a digital world.
 
“Celent advises carriers to take a fresh look at their payments capabilities, paying particular attention to factors such as customer and agent convenience, TCO, and process optimization that may have been stalled past efforts,” Fitzgerald commented.

“Unit costs are important, particularly for larger carriers that process high volumes of payments. But unit costs do not tell the whole story, and focusing on them may obscure the fact that powerful drivers of customer and agent behavior are not being leveraged,” he added.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

 

Key Research Questions

1

Introduction

2

 

Respondent Profile

2

Perceptions of Payments

4

 

Participant Perceptions

4

 

Customer Perceptions

5

Executing on Payments

8

 

Payments by Type and Delivery Method

8

Automation of Payments

11

 

Ranking the Customer Purchase Drivers

11

Going Forward

13

Appendix

15

Leveraging Celent’s Expertise

16

 

Support for Financial Institutions

16

 

Support for Vendors

16

Related Celent Research

17

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