This article was produced in partnership with RBC.
Bethan Moorcraft of Insurance Business sat down with RBC’s Michelle Brick, Senior Director, Digital Real Time Payments Integration; Gino Di Paolo, Senior Manager, Commercial Payments; and Sean Snow, Director, Government, Insurance & Financial Markets, to discuss payment modernization in the insurance industry.
As the global marketplace rapidly evolves, businesses are looking for digital payment solutions that are simple, safe, and streamlined. They want faster payments and access to funds – without compromising their security and privacy – and richer payment data that can help to boost operational efficiencies.
Payments Canada, the organization responsible for operating Canada’s core payments systems, is currently leading a payment modernization initiative, which will enable real-time payments and the addition of enriched data for reporting electronic payments through the adoption of ISO 20022 payment message standards.
In line with that initiative, RBC implemented several modernized payment solutions, including the
Interac e-Transfer® Bulk Receivables and Payables, and Interac e-Transfer for Business.
These solutions make it easier for businesses to transition from labour-intensive manual payment processes to digital payment methods, while also enabling them to access important data, such as invoice details, sender messages and other information. This, in turn, unlocks a variety of new business functionalities and streamlining opportunities, including the ability to automatically reconcile transactions.
Modernized payment solutions have the potential to add significant value in the insurance industry, according to Sean Snow, Director, Government, Insurance & Financial Markets at RBC. While Electronic Fund Transfers (EFT) and Automated Clearing House (ACH) payments have served the industry well over the years – reducing reliance on paper cheques – there are still cogs in the insurance value chain where current payment solutions sometimes fall short.
“Where problems often lie are in the making of claims payments and the onboarding process to have clients covered or policies generated,” said Snow. “For example, when a life insurance company is writing a new policy, the onboarding or intake process can often come to a complete halt when the agent, broker, or online application process requires the claimant or potential new client to provide a void cheque to enrol to receive or make automated payments. The client is often challenged to find a cheque – which few seem to carry anymore - or a suitable bank replacement.
“Imagine replacing this experience with the
Interac e-Transfer Bulk Receivables service where a payment request can be instantly generated from the insurer and sent to their customer to respond to and make the payment. I think it will serve to cover a lot of the inherent pain points that the payments process has on our clients’ interactions with their insurance customers.”
In the past year, RBC launched two high-volume
Interac e-Transfer services,
Interac e-Transfer Bulk Receivables and Payables, enabling businesses to send and receive a large volume of payments. Business clients can now access these solutions to send out invoices and generate a large batch of requests for payment or make bulk payments. These could be used, for example, by insurance companies during annual renewals to request premiums from policyholders.
“This is going to be really powerful for businesses in the future to think differently about how they’re managing accounts payables and receivables,” said Michelle Brick, Senior Director, Digital Real-Time Payments Integration at RBC. “Businesses can collect a recurring membership, premium or subscription charge, and it gives the consumer more control over how they send that payment back to the business.”
Interac e-Transfer Bulk Payables can also help to expedite insurance claims payments. For example, after the Fort McMurray wildfires in 2015, many insurers used
Interac e-Transfer to deliver immediate disaster relief to the insured through the claims process. RBC is now trying to encourage tighter integration between insurers and banks so that these types of digital payment solutions can be used across the insurance value chain.
The uptake of modernized payment solutions in the insurance industry has been “slow, but steady,” according to Snow, who said that there are some challenges for insurers to overcome before they can completely embrace these solutions.
“The challenges are around resources for a lot of our insurance customers – access to technology resources for the Treasury group, which is generally the centre where payments are generated and managed,” he said. “Another challenge is the ability to receive payments and related transaction data. Insurers need to think about how they would be able to post payments 24/7, 365 days a year. For their commercial clients or their corporate customer base, if they are receiving these types of ISO-based payments with rich data, how will they intake that information? How will they apply that information to their claims management system and to their ERP treasury systems? These are all things that weren’t really considerations in the past; the payment was basically secondary to the information that was managed throughout the lifecycle of the policy or the claims process.”
With RBC’s modernized payment capabilities, insurers can gain enhanced reporting in the ISO 20022 payment message format. Gino Di Paolo, Senior Manager, Product Development & Initiatives at RBC, explained: “The issue of transparency is very important in everything we do. If the client chooses to send information with their payments, then we send that information to the recipient bank, so they can actually display that for the client through their reporting services.”
Furthermore, RBC’s implementation of payment solutions like those offered by Interac can take the uncertainty and friction out of transactions and allows insurers to provide their clients with a faster, simpler payment experience. In a world where clients expect a fully-digitized experience, adopting modernized payment solutions is a logical step forward.
*Interac e-Transfer is a registered Trade-mark of Interac Corp. Used under licence.
