Long and slow policy acquisition process, premium payments and claims payment are some of the greatest challenges facing the insurance industry, affecting its smooth operation and customer experience. Over the years insurance companies have been striving to enhance customer experience and one way to achieve that is by use of digital payment methods.
Kenya has long been a forerunner in digital payments in Africa. The existence of mobile money, cards, cheques, blockchain and online payment processors have been a great facilitator of online businesses. Today, people want to be able to search, explore, and purchase products and services across multiple channels including webapps and mobile apps. The same is true when it comes to buying insurance where potential customers want the ability to search and purchase products and services online.
Payment being the core process between the insurers and policy holders, insurtech startups like Lami and M-tek have managed to build digital payment platforms. While most insurance companies are still dependent on legacy systems, insurance payment platforms are built to integrate directly with the current systems without ripping off or replacing the existing hardware or software. With a payment partner, insurance players can enjoy a modern digital experience making payment a smooth experience.
With the COVID-19 outbreak, the Government of Kenya discouraged the use of cash as a mode of payment in favor of digital payments instead. Mobile operators like Safaricom and Airtel had temporarily waived transaction fees on mobile money transactions while increasing transaction limits. Banks had also waived their fees on bank-to-mobile-account transactions in order to reduce cash transactions and facilitate the cashless system. As these fees are being reintroduced, this seamless payment model should be adopted in the insurance industry since people have become habituated to digital payments.
With an insurance penetration of 3.7 percent compared to Kenya’s 2.4 percent, India has managed to adopt almost fully into a cashless mode of payment between all the players in the insurance industry. General and health insurance premiums, irrespective of whichever bank the insurance policy belongs to can be paid via debit or credit cards, netbanking or mobile wallets such as Paytm.
The digital payment platforms enable policy holders to pay premiums easily and receive claim payments from the comfort of their home also allowing insurers more flexibility to work remotely. Going wholly cashless will benefit the industry as it will lessen the dependency on cash, help in keeping track of premium payers, and make it easier to track irregularities or fraud. Payments made via digital mediums are fast and reflect on the policy faster, thus reducing the time required to wait when paying via cash.
