Payment Solutions and Insurance: Emerging Opportunities for Leverage

by Craig Weber, November 20, 2009

Abstract

Growing distribution complexity, the growth of the direct channel, changing consumer behaviors and expectations, and the development of technology and service models have created a world where premium payments matter. Insurers need to recognize their payments capabilities as a potential point of differentiation and give their payments strategies careful attention.

In a new report, Payment Solutions and Insurance: Emerging Opportunities for Leverage, Celent examines the insurance industry’s perspective on payments and the solutions that support them. The report is based on in-depth interviews with insurer staff, plus an online survey with over 300 respondents.

The key finding is that the typical focus regarding payments has been on processing efficiency and unit costs. These factors, while important, should be viewed in conjunction with agent and customer service requirements, process optimization, and the total cost of ownership of these solutions.



"In the current competitive environment, insurers can no longer focus exclusively on payment unit costs," says Craig Weber, Senior Vice President of Celent’s Insurance Group and coauthor of the report.
 
"There are other strong drivers of agent and customer behavior that should be taken into account," adds Bob Meara, Celent senior analyst and coauthor of the report. "For example, support for credit card payments sounds expensive if you’re just looking at costs. But if you consider that some customers won’t do business with you if you don’t support credit cards, that can change your strategy pretty quickly."

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 subsidiary 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

3

Introduction

4

An Emerging Holistic View

5

 

Other Considerations

6

 

Assessing the Business Case

7

Insurer Views on Payments

9

 

Survey Methodology

9

 

About the Respondents

9

Perceptions of Payment Capability

11

 

Payments by Type and Delivery Method

13

 

Customer Purchase Drivers

15

 

Ranking the Customer Purchase Drivers

17

 

Assessing Payment Solution Benefits

18

 

Views on Outsourcing

19

 

Current Use of Solution Vendors

21

Conclusions

22

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