Aside from standard claims leakage issues, legacy payment instruments can lead to heightened costs for account verification, customer authentication and fraud. (Credit: Andrey_Popov/Shutterstock)

The claims process is critical to an insurer's relationship with a customer. More than any other interaction, this overall experience drives customer satisfaction and retention.

In fact, an Accenture study found that 83% of customers dissatisfied with the way a claim was handled planned to switch or had already switched to a new provider. As consumers have become even more accustomed to the "smartphone lifestyle", it's easy to imagine these numbers have only increased.

That focus on the claims process is why so many insurers have poured time and money into reimagining claims filing as a digital-first, customer-initiated effort. It is a near industry-wide standard for customers to be able to initiate an auto or other damage claim using a mobile app to take photos, share details and receive claims estimates. From start to finish, this process can take just minutes.

But that's where the convenience ends and the friction begins. The majority of claims payouts today are still executed using paper checks or automated clearing house (ACH) deposits. These take time — including printing, mailing and eventual settlement; are expensive and risky for the insurer; and are disliked by customers. No one wants to wait days, even weeks, when it's time to repair their home or auto after catastrophic damage.

Beyond customer complaints, these legacy payment instruments also expose insurers to a number of hidden costs. Slow payments, especially non-digital payments, can become a drain in multiple ways.

Special Reports /

4 ways non-digital payments can expose insurers to hidden costs

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