How to stay competitive in an evolving insurance market

As the sector transforms, an efficient payments strategy can help insurers stay on top

Like the banking industry before it, insurance is entering a phase of radical change driven by technology, regulation and above all consumer expectations. For insurance giants, staying competitive will mean embracing innovative solutions like new players in the market, that boost efficiency while minimising costs.

Whether you count your experience in insurance in years or in decades, it’s fair to say you’re likely to see more change in the sector over the next few years than you’ll have experienced over the rest of your career. That’s partly because InsurTechs are changing what consumers expect from insurers by focusing strongly on customer experience and relationships. 

A new paradigm

Consumer loyalty for insurance is waning. According to Google, 41% of consumers said their renewal premiums increased when they believed their circumstances hadn’t changed. And it’s not surprising that many journeys to find an insurer start online.

Google data suggests that when searching for a new insurance policy, people frequently search for both insurers directly and comparison sites. Some even compare prices and policies across multiple comparison sites. Having become used to lower friction and higher levels of service in other parts of their lives, these customers are both more demanding and less loyal to any given provider. The digitally-driven, customer-centric approach employed by InsurTechs is highly appealing to this new generation of consumers.

In this increasingly competitive environment, with InsurTechs quickly growing in number, insurers of any size should be wary of becoming complacent.

Staying competitive

To stay ahead of the pack, insurers need to play to their strengths while moving with the times. Many are doing just that, doubling down on their strong brands, a wealth of experience, reams of data and reserves of capital, while at the same time committing to digital transformation, creating better customer experiences and evolving their business models. But with margins under pressure, how can insurers keep their competitive edge while minimising costs?

Digital transformation to accelerate your growth

Most insurers have set up innovation departments with dedicated budgets. However, according to McKinsey, globally technology’s share of operating costs has been growing since 2010 and legacy systems are being strained to keep up. Many insurers are considering replacing these core legacy systems with technology made for the digital age. But whether you’re transforming your legacy payments systems or re-evaluating your current solution to provide a competitive advantage, collecting payments doesn’t need to come at such a cost.

Leverage your payments for digital transformation and growth. Our intuitive API makes collecting payments an easy task and integrating our API can be done in just a few minutes. And with integrations with more than 350 partner platforms, adding bank payments to your current tech stack couldn’t be simpler. 

In 2021, there were 418 completed insurance mergers globally. That means thousands of customers had to be migrated from one insurance firm to another. As their payments need to be moved too, this flags as a potential cause for friction in the customer experience and even a risk to revenue too. 

If your path to growth includes acquisition, migrating customers might seem like a daunting task, putting revenue, customer experience and even compliance at risk. Bulk migration of mandates and customer data can be a seamless and simple process, thanks to our expert onboarding team. Thanks to over 10 years of payments expertise, we help over 85,000+ businesses collect recurring and one-off payments seamlessly.

Evolving your customer experience

Customer experience is mission-critical to winning and keeping valuable customers. Creating a seamless payment experience will contribute to a notably higher conversion rate. On the flip side, automating payment retries and having clear visibility and instant confirmation of payments minimises the impact of payment failure and improves customer retention. By taking care of payments with a single solution like GoCardless, your insurance business can focus its time and resources on creating the best possible customer experience.

Better margins for better business

While insurance premium revenues are growing, that growth is outpaced by increased expenses and claims. Cost efficiency has never been more important for Insurers. Implementing, integrating and maintaining your own payments solution in-house, means development costs can quickly add up. The plug-and-play nature of our solution minimises development costs while cutting your operational costs with automation. So your cash flow, margins and bottom line improve as a result. 

London-based insurance provider ManyPets, saved valuable time and boosted growth via GoCardless.

“Our legacy system ‘worked’, but could never be used as we grow the business. GoCardless means no extra admin time as we continue the push to grow as quickly as possible.” Guy Farley, CTO, ManyPets. 

Addressing fraud

According to Aviva, insurance fraud rose in 2021, they found the proportion of claims tainted by fraud grew by 13%. They uncovered 11,000 fraudulent claims last year, the equivalent of 30 bogus insurance claims a day, worth a total of £112m. 

With fraud being a prevalent cost centre for the insurance sector, catching fraud in the act early, at the point of payment could have a significant positive impact on cost efficiency. Our end-to-end fraud prevention solution employs payer verification, 24/7 monitoring and reporting to minimise the impact of fraud. This can help stop fraudsters from signing up for coverage in the first place by flagging blacklisted individuals, as well as using machine learning to identify suspicious actors and request further verification.

For businesses looking to remain competitive in a rapidly changing UK insurance market, thinking strategically about your payments can pay off.