Lots of factors are coming together to make it a good time to be in the global insurance business. The rise of remote work has increased global mobility (one study put the number of expats at 80 million globally) – and while global economic growth is anticipated to slow1, companies are still hiring internationally, and employees are also taking short-term, flexible and long-term global assignments2.
Still, the same macroeconomic factors buffeting businesses globally are of course affecting global insurers and their international health insurance businesses. Smart growth will involve more efficiently scaling the infrastructure around the products they sell.
Concerns can be pushed into three buckets.
- Inflation. It is pushing up premium costs and increasing the cost of doing business.
- Consolidation. Industry consolidation3 that picked up in 2022 will continue into 2024.
- Compliance. There’s urgency to adopt the latest industry security standards and comply with region and country-specific regulations to prevent cybersecurity breaches and fraud. There’s also opportunity from laws and regulations in different countries mandating health insurance coverage4, and urgency to comply with rules in order to provide services.
While it’s a complex environment, it’s also one full of opportunity. Where can international health insurers look to bring more value to their businesses and customers in 2024?
No. 1: As inflation increases premiums and more competition enters the market, minimize the impacts of other fees that add to the cost.
IPMI premiums increased in 98 out of 100 locations studied in a Pacific Prime report5. On average, individual premiums went up by 12% and families by 14%, according to data from the international insurance brokerage firm.
For international payers and the businesses collecting their premium payments, managing cross-border payments adds cost, conversations with those in the industry have shown. Many insurers price policies in only a few currencies and leave it to their members to figure out how to send payment in that same currency. Depending on what payment method they decide to use, members could face:
- Uncertainty of the actual cost of the policy in their local currency until they read it on their card or bank statement
- Foreign transaction fees and currency conversion fees when using credit cards
- Intermediary bank and sending fees with wire transfers, affecting the receipting process and potentially creating a lapse in coverage
These fees can tack on as much as 6% to the payers’ premium bills – which either has to be assumed by the insurer or passed on to the payer.
A closer look at your payment ecosystem can help save money here. Here are a few questions to ask:
- How easy is it to onboard new payment methods and rails – and how much does it cost?
- Are you losing money on cross-border payments? How often do you receive short payment for premiums or have to write off unpaid invoices as bad debt?
- Does your current payment partner support, for instance, digital wallets like AliPay, or do you have to maintain those relationships on your own?
- Are there savings to be had with going with a payment partner who will have achieved economy of scale?
No. 2: Focus on ways to drive customer retention
Two of the biggest reasons global insurers lose customers is that customer payments fail and policies lapse, and the insured seek other, less expensive options.
Consolidation will further entrench the view of insurance as a commodity. A focus on the customer is one way to stand out.
Consider that 74% of customers expect to be able to do anything online that they can do in-person or by phone, according to the 2023 Salesforce State of the Connected Customer report6, which surveyed 14,300 consumers and businesses globally.
Still, even the most advanced insurance carriers globally often still rely on manual PDF form fills and phone calls for payment via some distribution channels.
On top of that, policyholders generally have to reach out directly to the insurer when there are payment failures and they have questions. That information isn’t easy to access. It often sits in multiple systems, and takes time to decipher. Many times, the insurer may not even have the answer or the solution, and has to referee and make sense of finger-pointing between its technology vendors.
It’s all a lot of back and forth that ultimately results in a poor customer experience, and that can even delay coverage or drive customers to look elsewhere for it.
Here’s the thing. Customers don’t just want their needs taken care of. They want the businesses they chose to anticipate their needs. But only 33% surveyed by Salesforce say that most companies address service issues proactively. The upside to better service is huge. 47% of consumers Salesforce surveyed are willing to pay extra for better customer service (that number increases to 59% for millennials) – with 88% saying good customer service makes them more likely to purchase again.
Can you become an industry leader by focusing more on customer experience? Here are a few questions to ask:
- Can your customers complete a full payment online?
- If they have problems, can they access support in local time zones and languages?
- How is your refund process? Is there room for improvement in the way your business manages refunds and chargebacks?
No. 3: Prioritize reporting on where around the world business is coming from
It’s surprising how many insurers globally are basically guessing at where their customers are coming from because:
- they can’t easily access the data because it sits with different providers in different platforms
- they sometimes have to pay an additional cost to access data on where cross-border payments are coming from
Someone on your team is spending time trying to collect this data – and you may not realize how onerous the task really is.
Having access to additional data around the cross-border payment opens up new doors – and makes the accounting team a strategic partner to the business. Data on cross-border payments origination can help inform or validate geographic presence and expansion – as well as inform areas that may present risk.
If your team was asked, could it easily provide information on where payments are coming from? And that includes:
- Do reports have to be created manually?
- How detailed can you get? Can you drill into payments received, initiated, aging, refunds and more by payer, country, and region?
- Are you spending so much time collecting data that you have very little time to tell a story with it?
No. 4: Reduce risk around payment security
Across industries, finance leaders agree that among their top concerns for 2023 are the increased level of risk presented by cyberattacks and fraud, as well as geopolitical events. Data breaches damage customer relationships and trust. That’s a lot of complexity lumped into a couple of sentences – but at a high level, global businesses are prioritizing ways to reduce exposure.
For international health insurers, cross-border payments improvements present two clear ways to reduce risk.
First, consider that having a high level of compliance failures is associated with increasing the cost of a breach by a factor of 50%, according to IBM’s Cost of a Data Breach survey7. Fines for noncompliance get passed onto businesses and organizations, and ultimately, trickle down to consumers.
In pursuit of stronger payment security, you’ll need to comply with more stringent and tougher standards in PCI compliance8 when PCI DSS v4.0 goes into effect in March 2024. Enhancements to the gold standard in payment security are critical for ensuring secure transactions in today’s increasing threat landscape. But for organizations managing environments within its scope, the burden for achieving compliance with the standard will be significant.
When you’re doing business around the world, navigating regulatory requirements, laws and changes to industry standards is complex. Insurers hold a lot of data that is valuable to bad actors, and the cybersecurity threat landscape is only increasing.
Are you doing enough to mitigate risk from cyberattacks and fraud? Ask questions such as:
- Is your business ready for PCI v4, which will go into effect on March 31, 2024?
- How will you remain compliant/achieve compliance with regulations like PSD2 SCA? Can you implement 3D Secure (3DS) 2 authentication and deliver secure, seamless customer experiences?
- Do you understand the high bar that your vendors will be subject to when it comes to ensuring compliance with PCI v4?
- How much of your payments process is digitized? Do you still accept checks? Where is there paper floating around?
No. 5: Add local currency options without introducing FX exposure
Global insurance is a lower margin business, conversations with those in the industry highlighted, where FX risk can matter a lot. A common strategy for global insurers is to: Invoice in your preferred currency and have your policyholder handle FX conversion on their own and make payment in that choice currency. That provides a natural FX hedge, but definitely not the best experience for your customer, or for your business. For one thing, your billing team is spending time managing inquiries from customers about why “you charged them $200 more,” or chasing down short payments due to fees.
More than 90% of the 301 financial professionals surveyed in a recent Flywire research report said that global expansion efforts could accelerate if they could find an easier way to deal with FX rates. Some 88% said the complexities of collecting cross-border payments impacts their ability to grow – with a full 40% saying it does so “significantly.”
Is this common billing and collections strategy working for your business? Here’s a few questions to ask:
- How long is it taking you to settle payments using your current process? Is that acceptable?
- What does the payer’s experience actually look like? Can they manage it online?
- Can you easily onboard customers in new countries – or is managing FX an obstacle?
- Is FX a high return risk? Can you free up capacity by offloading it?
A true payment partner should remove complexity – not add to it
There are many opportunities to remove cost and risk from the cross-border payments process that benefit your business and your customers.
Are you patching together payment gateways, payment processors and ultimately taking all the risk and responsibility to build a payments functionality yourself?
Process global insurance payments securely with lower wire and card processing fees, and achieve faster settlement speeds with Flywire.
1Pierre-Olivier Gourinchas “Resilient Global Economy Still Limping Along, With Growing Divergences,” (IMF Blog)
2Ian Youngman, “International Health Insurance 2023,” (IMPI).
4Graham Simons, “IPMI Summit: More mandatory PMI across Middle East opens up IPMI opportunities,” (Health & Protection)
5“Cost of Health Insurance Report 2023,” (Pacific Prime)
6“State of the Connected Customer Report,” (Salesforce).
7Cost of a Data Breach Report 2022,”(IBM Security conducted independently by the Ponemon Institute).
8David King, “CTO point of view: Less than one year to go before PCI v4.0, are you ready?” (Flywire)