Insurtech and the dream of seamless, cross-channel payments

A doctor accepts an insurtech payment

Let’s take a look into the future, to a time when coronavirus is a distant memory, and you’re on vacation, traveling to an exciting place you have been waiting to explore.

You hire a motorbike, purchase on-demand insurance just in case, and head off into the hills to enjoy the scenery. The next thing you know, you’re headed to urgent care. A pothole in the road has resulted in a broken ankle. You need medical treatment and a quick flight home.

Thankfully, your digitally forward insurer is ahead of the game. Using their mobile app, you make a claim, and within minutes funds have been added to a Visa virtual card in the digital wallet on your smartphone. You settle up with the local medical clinic, and you’re homeward bound in no time.

Apart from an achy bone, the experience is painless. It’s also in stark contrast to the current way of doing things. Today, it’s not unusual for travel insurance policyholders to have to shell out payments themselves and then present receipts to make a claim. Additionally, medical assistance helpline support can sometimes take hours, if not longer, to authorize treatments, leaving a patient anxious about both possible financial losses and their health.

Travel coverage is just one area where insurance firms can take advantage of modern digital payments technology to deliver a seamless, customer-centric experience. Many other insurance segments can benefit from instant, seamless, cross-channel payments, too.

Better services for victims of catastrophic events

In an always-connected world of screens and ubiquitous internet, natural disasters like hurricanes, floods, fires, and earthquakes are a collective experience. We’ve all watched live news footage of winds ripping roofs off buildings, a wall of flame crossing a highway, or rescuers searching through rubble. And in the aftermath, we’ve all read about or heard first-hand the struggle of a friend or the friend of a friend to collect on an insurance policy only to learn that their coverage is limited.

Insurtechs like Kin, which offers homeowners insurance in Florida; Lemonade, which offers renters, homeowners, condo, co-op, and pet insurance through its website and mobile app; and Hippo, which offers a complementary smart home monitoring system, strive to offer transparency from the start. “The term ‘hurricane insurance’ can be misleading,” Kin’s website states. “There is no single coverage that addresses all the damage caused by a hurricane.” Kin specifies that its insurance covers hurricane wind protection. It offers signups via an easy-to-use mobile app.

When Hurricane Irma hit in 2017, leaving many of Kin’s customers without access to email, Kin figured out how to leverage its customer relationship management system to contact all its customers via text messages. Customers who had sustained damage were urged to upload pictures. Claims were resolved quickly using the latest technology: aerial imagery, drones, and virtual inspections.

When it comes to issuing payment, however, even digitally forward insurtechs still use ACH or paper checks. However, seamless, cross-channel payments could be ubiquitous in the future. By delivering payouts via a tokenized card provisioned to a digital wallet, or simply pushing a payment to a regular payment card, insurtechs can settle claims as they are approved. Not only will the insurtech deliver a superior experience, but it can also help offset payment costs by collecting a portion of the interchange fees when affected customers use the cards to pay for repairs to their homes.

More affordable health care

The cost of health care is a perennial concern that will only become more important as the global population ages. In the United States, three out of five people say they are either very dissatisfied or somewhat dissatisfied with the availability of affordable health care, according to a recent Gallup poll. For insurtechs like Sidecar Health, Oscar Health, and Clover Health this desire for better options is an opportunity to demonstrate the impact modern payment infrastructure can have on the cost of health care and the policyholder experience.

Sidecar Health offers people the flexibility to choose the health care plan that suits their budget, and to pay for it directly using a Sidecar Health payment card. Using a mobile app, policyholders choose their maximum annual coverage, the amount of their deductible, and whether they want their prescriptions covered. When they need care, they can use the app to comparison shop among nearby providers without restrictions. According to Sidecar Health’s website, every provider is in the network.

Sidecar Health’s direct payment model not only strives to give policyholders a better experience, it can also reduce overhead for providers, and enable them to offer discounted care. A typical Sidecar Health plan costs $240 per member per month, compared to a national average of $495.

Earn rewards while you drive

The tech industry has been talking about the benefits of big data for years. But when it comes to insurance, big data is more than a buzzword. Insurtechs and digitally forward insurers like Allstate are using big data to better price the risk they assume on behalf of policyholders and to educate them on specific actions they can take to lower their premiums. These lessons are then reinforced with real-time payments.

Take Allstate’s Drivewise program, which offers drivers the chance to earn rewards in return for good driving behavior. You don’t even need to be a customer. Anyone can download the Allstate mobile app, create a profile, and activate Drivewise. To begin adding to their point balance, they need only to avoid sudden braking, driving over 80 miles per hour, and multiple late-night trips.

Ten “safe trips” without high speeds or sudden braking will net a reward of 200 points. So will three consecutive days with no sudden braking, or three consecutive days with no high speeds.

Allstate indicates its customers can earn cash back, while other drivers can redeem their points for car rentals, hotels, gift cards, brand-name apparel, sweepstake entries, and more through the Allstate portal.

Today, customers requesting cash back from an insurtech often receive a check in the mail. But it won’t be long before insurtech rewards programs such as Drivewise can reward drivers with funds pushed to their credit cards or delivered via a tokenized card to their digital wallets.

Payments as the new differentiator

The emergence of the first insurtechs around 2010 heralded a decade of change and adaptation. By 2018, C-level insurance executives had concluded that traditional differentiators like price, product, and superior claims service were table stakes. To win or retain market share, they needed to improve the customer experience as well as the effectiveness of their distribution channels.

But even as traditional insurers undertook digital transformation initiatives designed to level up customer interactions — including shifts to the cloud, mobile apps, live chat, predictive analytics, and telematics — insurtechs continued to stay at least one step ahead. More than three-quarters of industry leaders surveyed for Deloitte’s 2021 insurance outlook said the coronavirus pandemic uncovered shortcomings in their company’s digital capabilities and transformation plans.

To keep up with insurtechs, insurers need to do more. They need to see emerging technologies as a strategic advantage at the same time as their younger, more nimble competitors do. Seamless, cross-channel payments may be their biggest opportunity. While they are not yet pervasive, they may well be soon.

Insurtechs and traditional insurers can find out more about implementing seamless, cross-channel payments on Marqeta’s modern card issuing platform by requesting a copy of our guide on modern card issuing or speaking with one of our payments experts.