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How do innovative payment methods change the dunning processes of insurers?

What impact do innovative payment methods have on the customer experience?

The digital transformation of the insurance industry is already well underway. This is not just visible in journals and blogs – customers are already experiencing it in their day-to-day dealings with their insurers, such as through innovative apps and an increasing range of digital policies. New payment methods are also changing customer expectations in downstream transactions.

For me as Sales Manager Collection Insurances at Arvato Financial Solutions, there is one aspect that is particularly interesting: the applications of modern payment methods in the dunning process.

In this article, you will learn how you can optimize your dunning processes, raise the customer experience and reduce your costs.

The digital transformation starts from the customer

Big data, predictive analytics and customer-centered thinking – the digital transformation is a trend which on the one hand starts from technical innovations and on the other hand from the customers themselves. In relation to unpaid invoices or premium arrears, I instinctively think of the floods of letters that leave the mail rooms of insurance companies. We know that there are customer groups who do not respond to postal reminders at all or who do so very late. The reason for this is not necessarily an unwillingness or incapacity to pay. 

Many people do not handle their mail from the post box as they should. A lot lands unread in the wastepaper basket. They prefer communicating by e-mail. You can more easily find, file and respond to letters and invoices, including from insurance companies, in your own e-mail account.

You can find out which of your customers this concerns with the implementation of big data applications. Data such as household size, profession, education and previous behavior indicate how customers respond to reminders. This can also be used to derive how they respond to alternative communication channels, and above all new payment methods such as mobile or even instant payment processes, with which payments can be transferred within just a few seconds. 

Will the classic premium collection soon be a thing of the past? 

No. Premium collection and the direct debit system will still be an important component of payments in the insurance industry. I firmly believe that PayPal & Co. will not (completely) replace the established forms of payment, especially direct debit. Rather, the range of payment methods and payment processing with the customers will become much more customized and significantly more effective.

Customer experience and payment without a media break 

A modern brand must also create a positive experience overall for their customers. This means that customers should feel at ease at every touch point with the company: from the first visit to the website to the conclusion of the contract, and beyond.

Dunning processes that are perceived as flexible and personalized by customers can be a valuable Customer Experience Management instrument. As such, even reminders which were always unpleasant, can contribute to a satisfied customer becoming a loyal customer, and to them recommending your products and services.

Payment without media break can ensure that the reminder is settled quickly and easily. An example: Your customer is in arrears with their payment and receives a link to your pay page by SMS or e-mail. This offers various payment options and addresses them individually. With just a few clicks, you customer can settle the reminder and immediately receive feedback with your thanks for the payment made.

How do modern payment methods make your dunning processes more efficient?

In conversations with our clients from the insurance industry, I am often asked how integrated payment methods impact payment receipts in dunning. My response: “Payments become faster and occur more frequently than before.”

If you address your customers by e-mail or SMS and at the same time offer various payment methods, you establish temporal relevance and break down barriers. This means that your customers can immediately respond using their smart phone and settle the unpaid invoice. This is convenient and reduces the risk of invoices being forgotten in the hectic daily routine.

In order to appropriately integrate digital payment methods in an efficient dunning process, we recommend an integral digitization of dunning processes and payment processing.

Also read our other posts on the topic of “Optimizing dunning processes” 

In this blog post, I was only able to briefly mention interesting topics such as “differentiated dunning strategies” and “big data”. On these topics, read the two previous posts:

Why insurance companies should optimize their dunning processes

Big data and the optimization of dunning processes

Would you like to find out more? Our white paper gives an insight into how new developments such as innovative payments methods and modern means of communication can be capitalized on in the optimization of the dunning process.

Would you like to find out more? Our white paper gives an insight into how new developments such as innovative payments methods and modern means of communication can be capitalized on in the optimization of the dunning process.

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