By: Elisa Logan, Vice President, Growth
According to a Lee Resources study, attracting a new customer costs five times as much as retaining an existing one1. And in the insurance world, few things have a bigger impact on policyholder retention than their experiences when they file claims. In fact, according to a recent study by Ernst and Young, 87% of policyholders reported that their claims experience had a significant impact on their decision to remain with their current insurance provider2.
That makes sense. Filing an insurance claim is an emotionally difficult task that’s nearly always based on an unpleasant or traumatic experience. For most policyholders, it’s the most meaningful touchpoint they will ever have with their insurance company. Smart providers recognize this, and they have learned how to turn these inherently challenging experiences into loyalty-building opportunities by making the claims process faster, simpler, and more personal. This includes creating convenient, app-based experiences that mask the complexity of filing and settling a claim—and making sure policyholders have a single point of contact who can take ownership, answer questions, and address concerns throughout the claims process.
However, there is one piece of the claims process that, in far too many cases, still creates a negative drag on policyholder satisfaction and retention. According to Accenture, 95% of policyholders rate the speed of settlement as the top factor in their level of satisfaction3. And in a world where anyone can send and receive money instantly with a few taps on a smartphone, policyholders have little patience for a long, drawn-out payment process where they have to wait days to receive a check in the mail, take the time to manually deposit the check, and then wait even longer for the funds to clear—often in situations where the settlement money is desperately needed.
It’s an unacceptably slow and frustrating end to any claim settlement process—even when the rest of the experience goes smoothly. And because it’s the final step, it sticks with policyholders and has an outsized impact on retention. So why is it that half of all auto claim settlements—and two-thirds of all property and casualty settlements—are still paid with paper checks4? There are plenty of standard answers: regulations, fraud and security concerns, implementation costs, and the list goes on. But when you look closely at how slow, outdated payment processes impact the overall claims experience—and the costs of the resulting policyholder churn—it’s clear that those answers are no longer good enough.
That’s especially true when you consider the growing number and variety of fintech solutions that are systematically eliminating the barriers to claim payment modernization—safely and affordably. The right partner and the right approach can put the loyalty-building benefits of payment modernization well within your reach.
VPay is ready to help. Find out how our Total Payment Solution can help you turn claim payments into one of your most potent and efficient policyholder retention tools.