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 that are 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At the same time, insurers are under pressure to modernize outdated systems, improve retention rates, and meet increasing customer demands and compliance requirements.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. Over 60% of customers choose to pay with these options¹. 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 1 in 10 policyholders worldwide prefers paying with digital wallets. That number is higher in markets like Singapore and the UAE¹.

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 instalment-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 flexibility². 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 instalment 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 authorization and payment reconciliation, supporting a variety of payment methods, and facilitating quick settlements with multiple stakeholders in order 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 defense 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.

Sources:

Worldpay (2024), “Fully Covered.”

Access Paysuite (2023), “Five Ways Payments Can Help Insurers Drive Value and Growth,” https://www.accesspaysuite.com/blog/leveraging-payments-five-strategies-for-insurers-to-drive-value-and-growth.