Today, digital payments allow businesses and consumers to instantly send money for a variety of purposes. Many businesses have already integrated digital payments into their regular practices. Unfortunately, one industry has been quite slow to make this change. Many insurance companies still seem to rely heavily on paper checks for their transactions.
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Lower Processing Costs
Insurance companies process a lot of payments in and out of their business. From payments received when billing for life insurance policies to claims checks sent to customers, a lot of checks are sent, often through the mail, to and from the insurance company every single day. Each check comes with a cost to the insurance company.
Mailing a paper check can be a costly process for any business. From the time an employee needs to process a check, the cost of the paper, and the cost of mailing the check, the steps involved can cost a company an average of $3.00 per check sent. Receiving a check, although less expensive than sending, still costs a company an average of $1.57 for each check.
These costs can be significantly reduced by converting to a digital payment system. Even if a company only processes ACH payments instead of a check, it still cuts costs greatly. Sending and receiving these types of payments only cost about $0.29. Adding credit or debit cards or even some of the newer digital payment methods could provide significant savings for a company.
Consumer Convenience
From life insurance and homeowner’s insurance to car insurance and health insurance, there is a type of insurance for nearly every aspect of a person’s life. With so many ways to protect themselves, nearly every American maintains at least one type of insurance. With more than 330 million Americans, that is a lot of insurance premiums being paid each month.
Consumers prefer convenience. For many people, writing out a paper check and then mailing it every month to pay their insurance premium can be quite the hassle. With the busy lives of most Americans, it can be easy to forget to make such a payment. This can lead to lapses in their very important insurance policies.
Consumers want the convenience of paying their insurance premiums digitally. Whether this requires putting in their payment information on a website or setting up automatic payments, the more convenient the payment options are, the more likely payments will be sent on time every month.
Convenience is also a way to help attract new customers. Customers who are tired of the hassle of paying their premiums by check every month will be attracted to companies that accept digital payments. Switching to digital payments can help retain or even attract new customers.
Back End Cost Savings
When dealing with a significant amount of paper checks, paper checks and their records often need to be stored at the company. It also requires employees to sort and manage these checks and records to keep them organized for the company.
With digital payments, the transactions are all digital. Each transaction can be easily followed to determine which account was paid and which customer paid their premium. Digital payments can improve efficiency for a variety of processes within the company. It can also help reduce costly errors that can come from lost checks or misfiled paperwork.
For any insurance company that is wishing to be the conversion to digital, there are solutions specifically designed to meet their unique needs. There are also experienced professionals ready to help launch an insurance company’s digital payment processing.
