For UK insurers faced with multiple financial and competitive challenges, improving the customer experience is vital to continued growth and success. Disruptive insurtech players and macroeconomic pressures continue to cause sleepless nights for those tasked with increasing margins and gaining and retaining customers.
Nowhere is this more important than in the pet insurance space, where recent increases in treatment costs are beginning to expose poor payment processes ripe for an upgrade. Insurance CFOs should therefore look to B2B payments as a key area of differentiation where innovative new payment platforms could drive advantage.
We’ve always known that the UK is a nation of animal lovers. The world’s first animal welfare charity, the RSPCA, was founded here in 1824, while Battersea Dogs and Cats Home has built a deserved international reputation over the past 150+ years. More recently, this national affection for animals is manifest in a growing pet insurance market, where the number of policies grew by almost 11% in 2017 to reach over 3.7m.
According to new figures from Direct Line, there were over a million pet insurance claims in the UK last year. Veterinary cost increases of 4% over the period pushed premiums up a further £29 on average. In total, policyholders claimed £775m in 2017 to cover treatment costs.
The claims process is often a stressful time for these individuals. When the health of a beloved family pet is involved they just want the funds released quickly by their insurer so that treatment can begin. That’s why the payment process needs to be as smooth as possible. But unfortunately, issues can arise.
The problem with legacy payment processes such as cheques or BACS is that they simply aren’t set up for fast, seamless transactions between insurer and supplier (veterinary practice). The cost and complexity of the onboarding process means that the insurer may decide instead to request that the claimant pays first, and they reimburse later.
This results in a poor customer experience all round. Many policyholders may have insurance precisely because they want to avoid the time and stress of having to pay for treatment themselves. Others may have taken out a policy because they don’t even have the cashflow to pay hefty one-off charges up front.
For the insurer, getting the claimant to pay first also increases risk exposure because it means they will need to store those personal bank details for the purposes of reimbursement. This is highly regulated data, falling under the new GDPR, and an attractive target for hackers. It makes sense from a risk management perspective to look for a different approach.
Optal has the answer
Insurers need a better option. They need a low-risk way of sending money to the veterinary supplier without the need to validate their bank details.
Fortunately, they have one with Optal Virtual Account Numbers (VANs). These are single-use, 16-digit numbers backed by Mastercard that can be used to pay vets quickly and securely. They are initiated by the supplier/vet so there’s no complexity involved in the setting up process for new suppliers and no need to store supplier or claimant bank details. Reconciliation is automatic and immediate and you might even be able to get improved terms with suppliers thanks to the increased visibility of spending they help to drive. Rewards are also available on each transaction, helping turn a traditional cost centre into a revenue stream.
But most importantly, the result is a seamless experience for the claimant — and happy customers are more likely to be loyal customers. In an increasingly saturated market it makes sense to differentiate with seamless B2B payments backed by Optal VANs.