Supply and demand is the eternal balancing act in economics, and in payments, too.
Drew Edwards, CEO of Ingo Payments, noted to Karen Webster that there’s been a 7% increase, year over year, as determined jointly by Ingo and PYMNTS Intelligence, in instant payments used as a disbursement option in the insurance industry.
Overall, 33% of consumers receiving insurance disbursements get them instantly — which poses the question, What’s going on with the other two thirds?
Simply put, as he said, there’s no consumer choice problem in the mix. The problem’s not with demand: Individuals and households want the option to get insurance claims paid out quickly, because those payments are tied to events (medical needs or accidents) that otherwise might be unaffordable. In fact, 80% of consumers opt for instant funds when given the choice.
No one wants to wait around for weeks to receive a check — and for the carriers, there’s a cost benefit to making payments digitally, rather than cutting a check.
Regardless of whether the funds are flowing directly to bank accounts or to cards or digital wallets, Edwards said, no matter who’s receiving the disbursement or even if they are using aliases (a favorite of “middle generation” consumers, he said), “They need it when they need it.”
As to the disconnect, the problem lies with supply.
“They’re not being offered instant,” said Edwards, who noted that the complexities of the “send” side of the equation have stymied instant payments’ ubiquity.
There’s an analogy here that sheds some light on the challenges inherent in the insurance industry, Edwards said.
“I grew up in the banking industry,” he said, “and I’ve always said that the banks are strapped with technology debt, but the insurance industry is worse than the banking industry.”
Siloed technology systems abound. In one silo, single-party auto claims may reside, while multiparty real estate claims may be tied to another silo, Edwards said.
For providers like Ingo, serving insurance industry clients means that they’ve been able, through the platform model, to connect those legacy back-end systems to the payments “layer” of functionality so these large carriers “can interact with the modern world, which is where instant is for the consumer.”
The actual payouts that the companies are facilitating extend well beyond claims — and instant payments also are valued by, and are valuable to, agent commissions (which are recurring), to vendors and to other stakeholders.
There are even industries where instant payouts are a given, and not choice, said Edwards, who offered up the example where restaurants mandate that workers get their tips in digital form at the end of their shifts, avoiding the dangers of walking around with a lot of cash late at night.
“They are getting one choice,” he said, “which is instant into their bank account.”
As for the insurance industry, breaking down those silos is no easy task.
“There’s a lot of work to be done,” Edwards said. But there’s a natural progression, as larger players “solve” for instant payments with the smaller claims, before moving onto more complex use cases and payments. Along the way there’s the chance to monetize instant payments, and to turn those payments into the foundation that underlies an ecosystem — spanning consumers, appraisers and body shops.
“You move from a cost center to a moneymaker to an incentive to drive consumer behavior,” he told Webster.
