Is old payment tech costing the sector billions?

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Insurance industry incumbents operating under the weight of legacy systems are exposed to back-office cost inefficiencies, lost revenue opportunities, risks and changing customer needs – but Simfuni has a solution

THE COMMENT that Simfuni chief executive Shaun Quincey hears most often about his firm’s cloud-based digital payment solution reveals a lot about the state of play in New Zealand’s insurance industry when it comes to leveraging digital technologies within current business processes. “I often hear ‘you solve a whole lot more problems than we thought you would’,” he says. When Quincey looks at the status quo around payment methods in insurance, he sees a menagerie of inefficiencies. “When there is no software layer interpreting the payment data, the sector simply relies on bank files, spreadsheets and manual processes. This is very slow, full of risk and adds significant costs,” he says. “Digitising the customer payment experience into a single platform with all the payments instantly mapping to customers and policies solves what is a largely disconnected and fragmented internal and external experience.” Legacy systems don’t provide a positive experience for users, which is the very opposite of what’s expected by global imperatives to make customer-centricity the focal point of the industry’s standard operating model. On a more granular level, it is also well known in e-commerce that even a few seconds of delay in an online transaction can decrease customer loyalty, while a poor experience reduces the likelihood of a person using the same website again. This effect means that the high-friction user experiences happening now in the insurance payments system are almost certainly causing users to deprioritise those transactions.

Simfuni is a cloud-based service that orchestrates the fragmented and labour-intensive processes of insurance invoicing, premium funding and payments into one simple digital payment platform. It helps direct and indirect distributors make sales more easily and drive operational efficiencies. The data flows through the Revenue Control Hub™, which enables real-time visibility and management of revenue and growth. A self-service portal allows policyholders to view and manage their payments whenever they want, improving the customer experience operational efficiency and automation. Simfuni empowers insurance distributors and administrators to succeed by automating processes and systems with technology.

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“Digitising the customer payment experience into a single platform with all the payments instantly mapping to customers and policies solves what is a largely disconnected and fragmented internal and external experience”

Shaun Quincey, Simfuni

“Compared to modern payment experiences in other industries, the time frame in which people can complete an insurance transaction is a lot longer, so the likelihood of people committing to it is lower,” says Quincey. Current systems also have expensive fail-safes built in when customers take 30 days or 60 days or 90 days to pay premiums and other bills. “There are credit controllers, there’s follow-up phone calls, follow-up emails – there are lots of brokers, underwriting agencies and insurers doing credit control activity, which is money off the bottom line.” The difficulty of paying easily is exacerbated by a general reluctance to pay due to rising premiums, sometimes with the unfortunate result that people choose not to pay at all. “You’ve got the opportunity cost of people not paying for the insurance they should have because of cash flow.” Quincey believes that with the cost of premiums going up and people losing patience with cumbersome ways to pay, there’s an opportunity to alleviate these friction points using modern payment technology.

There is no doubt that the pandemic rattled some in the sector to take the plunge and try new ways of doing business as even the most Luddite among us acclimatised to online transactions. “[People are] more comfortable with e-commerce-style transactions, to the point where they are now uncomfortable about entering into transactions which are not e-commerce-driven or internet-enabled,” Quincey says. But the insurance world has been slow to adapt. Simfuni takes all those clunky legacy experiences and amalgamates them into one modern flow with ease of use being the priority. It generates multiple instalment payment options to suit cash flow, enables quick online customer payments with multiple payment methods, and provides a customer self-service portal, automated customer payment reminders and automated policy renewals.

“The Simfuni platform enables any seller of insurance to collect all the different payment types and methods and allocate those to the customers and the policies all in one place. And by doing so, it drives a significant amount of efficiency through the business,” Quincey says. The platform integrates with any insurer, broker group, administrator or premium funder’s quoting and invoicing software. It also includes a range of extra service layers. “[We] provide upstream reconciliation, credit control and visibility of all the revenue from all the premiums coming in.” Other features include automation of premium funding so that every invoice provides monthly, fortnightly and weekly premium options to help with cash flow and affordability. It also has various risk mitigation and compliance tools, and removes risks related to cybersecurity and human error on data entry when using outdated manual systems. Making payments systems more efficient is essential in an economy in which costs are rising and there is less money to go around. Simfuni acts as a growth engine by improving its customers’ businesses. “As the world becomes more expensive, we want to remove as many costs from people’s businesses as we can with digital automation,” Quincey says. So far, the response has been overwhelming. “We only launched five months ago, but the growth has been spectacular – it’s around triple the levels we anticipated.”

This kind of momentum looks to be sustainable for Simfuni with the cost of living crisis likely to continue for the time being. As people rein in their spending, insurance coverage is coming under more scrutiny. “Over the next six months, people will really be analysing the need for insurance and second-guessing and questioning the importance of paying for that over and above other things. [The ability to] pay easily with highly flexible options is going to be one of the tools we can deploy to help.”

“We only launched five months ago, but the growth has been spectacular – it’s around triple the levels we anticipated”

Shaun Quincey, Simfuni

By removing some of the hassle factors, Simfuni increases the chances of renewal. Looking further ahead, Quincey sees the expansion of technology in the insurance sector as an inevitability, with those who forgo or delay the introduction of more seamless systems becoming relics with no customers. Research by McKinsey shows that how quickly incumbents adapt to new technology and related market changes will determine the size of their share in the next generation of the insurance industry.

This gap between relic and modern, once opened, will be very difficult to close again due to the pace of change as technology evolves. Quincey also points to the huge upcoming transfer of wealth, both personal and business, from the baby boomer generation to younger, web-savvy cohorts as a reason to implement new systems now. “The boomers are passing their cash down to their children and handing over their businesses. In that process, there is a technology and a minimum viable expectation of the type of experience and the type of interaction those people are going to want with their insurance.” This means the clock is ticking for those stuck in the past. Customer-centric, loyalty-inspiring, efficient and with an easy process that, over time, can win new business? Or aggravating, painfully clunky and money-wasting with an ever-dwindling customer base?

A key turning point

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Published 09 Oct 2023

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Insurance behind the technology curve

<25%

Proportion of large global insurers that have truly digitised the value chain

Proportion of large global insurers that are still exploring how digitisation can be applied to their business model

>50%

Source: Association for Cooperative Operations Research and Development (ACORD) Insurance Digital Maturity Study, 2022

Source: Bain Automation Pathfinder Survey 2022

Insurance industry automation leaders (invested more than 20% of IT budget in automation)

17%

Insurance industry automation laggards (invested less than 5% of IT budget in automation)

Higher cost savings for leaders in automation

Average percentage of total costs saved over two years – by level of investment in automation

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