Why payments are the new battleground for insurance

 

From how customers pay their premiums to how insurers disburse claims, the way money moves has become a make-or-break factor in shaping the policyholder experience.

This shift goes beyond just technology – it’s about timing, trust, and transparency. Today’s insurance customers expect interactions to be as fast, seamless, and secure as any other online app. They want easy and flexible premium payments, as well as instant payouts following a claim, and their expectations are rising rapidly.

At the same time, insurers are under pressure to modernise outdated systems, improve retention rates, and meet increasing customer demands and compliance requirements. Payments have become a strategic lever in addressing these challenges.

As insurers recalibrate their strategies, here are four key payment trends shaping the industry to look out for.

Card payments drive speed and simplicity

While direct debits and bank transfers remain a popular method when paying for policies, debit and credit card payments are preferred by most policyholders, with over 60% of customers choosing to pay with these options, according to the 2024 Worldpay report, ‘Fully Covered’. Card payments remain a powerful, fast-growing channel for insurers when collecting one-off and recurring premiums.

Credit and debit cards offer what insurers need the most – ease of implementation, broad consumer adoption and faster settlement cycles than traditional bank transfers and checks. For customers, using card-on-file automated payments is convenient and familiar. For insurers, card use helps reduce churn from failed payments and improves cash flow and predictability.

Beyond simplicity, card payments also unlock other operational benefits. With the right payments partner, card payments can help insurers retain customers through auto-renewals and automatic card updates and reduce policy lapses through smart retry logic when payments are declined or delayed. With global card acceptance built in, insurers can easily expand into new markets without needing to rebuild their payments infrastructure.

The rise of digital wallets

As the world increasingly adopts mobile solutions, the insurance industry must adapt accordingly. From pet to auto and home insurance, the use of digital wallets is on the rise across all insurance markets. With Apple Pay, Google Wallet, and other mobile-first options becoming the default in everyday transactions, customers now expect to use them to pay for their policies, too.

We found that about one in ten policyholders worldwide prefers paying with digital wallets. That number is higher in markets like Singapore and the UAE.

Digital wallets don’t just offer speed and convenience; they also provide added security in payments. Biometric authentication, tokenized transactions, and real-time fraud detection that come with digital wallets offer a level of trust that traditional payment methods don’t always offer.

For insurers, supporting mobile and digital wallets should not be a question of ‘if’, but ‘how soon’. Those who enable these options early position themselves as digitally forward and more in tune with consumers.

Flexibility becomes the differentiator

Affordability is no longer just about price; it now encompasses how people pay. Buy Now, Pay Later options and other installment-based models are becoming increasingly attractive for insurance customers, especially when paying for large annual premiums. With rising inflation and economic pressures, policyholders are seeking financial flexibility without sacrificing coverage.

A significant 80% of Gen Z customers and 77% of millennials seek digital payment options that offer flexibility. Thus, offering these payment options could positively influence their choice of insurance provider.

However, with flexibility comes responsibility. Regulators are keeping a close eye on how installment plans and premium financing are being offered to ensure fairness and transparency. This presents insurers both a challenge and an opportunity. Partnering with the right payments provider can facilitate smarter payment plans that cater to customer needs while complying with regulatory expectations.

Embedded insurance moves into the mainstream

Embedded insurance is rapidly gaining traction, allowing consumers to purchase coverage at the point of sale for various products or services. Whether booking travel, renting cars, or buying electronic devices, insurance can now be seamlessly included in the checkout process.

This trend presents significant opportunities for insurers to connect with customers in innovative ways and collect premiums more efficiently. Instead of relying solely on traditional sales channels, insurers can now engage with new ecosystems that were previously difficult to access, ultimately lowering the cost of acquiring customers.

However, insurers need to prioritize seamless processes for handling split payments, ensuring real-time authorisation and payment reconciliation, supporting a variety of payment methods, and facilitating quick settlements with multiple stakeholders to succeed. Mastering embedded payments is not only about operational readiness; it is also crucial for maintaining long-term relevance in an ecosystem-driven economy.

Where Worldpay fits in

Worldpay assists insurers in addressing today's payment challenges by providing the tools, technology, and expertise necessary for safe and scalable transformation. We enable near real-time payments, digital wallets, and flexible payment methods while ensuring regulatory compliance.

Worldpay offers insurers a powerful, future-ready payments infrastructure. Our integration with core insurance platforms like Duck Creek makes adoption seamless, while our top-tier fraud defence and loss prevention solutions offer insurance companies peace of mind.

In an experience-driven market, modern payment solutions have become essential for insurers aiming to succeed. Find out more about how we help financial services.

About Ainsley Merchant

Ainsley Merchant leads the Financial Services (FS) Vertical Growth team at Worldpay. His team develops and executes Worldpay's growth strategy for verticals like Insurance, PayFac, Trading, and Money Transfers. With a background in fintech and FS consulting, Ainsley is close to emerging industry trends, regulations and innovations and regularly engages on these topics with Worldpay customers, partners and the wider fintech ecosystem.

 

About Worldpay

Worldpay’s vision is to unleash the potential of every business. We do this through our ability to power global commerce by providing payments technology and expertise   to our clients everywhere. Our processing solutions allow businesses of all sizes to take, make, and manage payments in-person and online worldwide. Annually, we   process over 50 billion transactions worth more than USD 2.3 trillion across 146 countries and in 135 currencies.