Insurers bear the brunt of billions of pounds in claims every single year. These companies make lots of small payments in huge volumes over the course of a typical day. Cash is the de facto method of settling these types of claims, and for good reason, too.
Cash is flexible; it gives someone the option of spending money whenever and wherever they like. Cash is very easy to transact (now via bank transfer) and settles claims within the space of a few working days.
If a claimant receives money to put towards replacing something that is lost, stolen or faulty, cash makes for an ideal way of resolving the case. Yet, only by going further into the process do you realise that cash is far from perfect, and can certainly be rivaled.
It’s our opinion that eGifting can make a huge play in the insurance industry: a space that has aimed to satisfy its customers through a process which makes little business sense.
We’ve all received or presented gift cards in the past. Still, modern-day gifting bears a very different face to the physical, B2C-led practice that some people might be familiar with.
Analysts believed the global gifting market to be worth $320 billion in 2017, thanks partly to adoption in the corporate sector (fuelled by the onset of employee rewards) and their inclusion in retailer customer acquisition strategies.
Research from technavio has scheduled market growth of 15% every year between 2018 until 2022. It views the trend of digitalization and rise in active online users as “important factors” in shaping a new gifting landscape.
That new era could be expected to feature a much greater reliance on eGifting due to the benefits around ordering, security and eco-friendliness, which is why insurers should monitor the situation closely.
Many brokers offer a service whereby someone pays for cover on their favourite possessions. If something goes wrong, they claim for money to pledge towards a replacement of that item, which tends to result in a cash settlement. Here’s where eGifting starts to edge into the game.
Leading eGift solutions offer a library of thousands of retailers, spread across all manner of industries. This almost guarantees that someone can find a supplier of the type of product they’re looking to fund. In some of the most popular categories (household goods, consumer electronics etc) they are almost spoilt for choice.
eGift orders are now much easier to fulfill – a point owed to the onset of new technology. Nowadays, you can order any card within a few clicks of a button and make them available for instant use.
eGifting is secure and moreso than transferring cash: something that analysts have criticised over a lack of security. It’s also worth mentioning about the large group of insurers that offer payout via cheque. These take 2-3 days to arrive and anyone is able to cash them in.
The points around time are pertinent in this arena, too. In a race against the clock, eGift Cards would beat some cash transactions by a number of days.
Delays are not conducive to the work of insurance replacement, used for the buying of items like TVs or beds. Insurers using eGift cards are able to finalise a claim within the space of their initial call with the customer. That means no waiting times; no cases delayed by payment; just a settlement there and then.
Furthermore, as not all customers will pledge their money towards replacing an item, we have to question whether cash is the best method of settling a claim.
To spell out the problems around cash, let’s use the example of someone receiving £1,000 to replace a broken TV. That money should go towards a new television. Yet, some customers will purchase a cheaper item and pocket the difference, or just avoid buying one altogether.
Insurers want to satisfy their customers. They serve real people who still value the freedom of cash. Still, there are questions over the lack of control they have on that money.
Customers should spend their product replacement cash in the right way, and insurers have the power to make this so. Thus, is it not better for the insurer to provide a gift card for a vendor of a similar item?
Lastly, we have the cost of transacting cash to think about. When any business makes a bank transfer of £1,000, they are paying exactly that to the customer, plus the value of transferring the amount. Now think about the hundreds of thousands of payments that an insurer makes every month or week. These will come at a huge cost and should not be accepted as the norm.
eGift cards are fulfilled at the cost of an email and purchased with a discount on the marked price. This ranges between 3-25%, depending on the retailer, and leads to a tidy saving after just a few claims. Over hundreds of thousands of replacements, it’s a figure that really mounts up.
Insurers run very successful businesses and eGift Cards will not change or reverse their fortunes. We’re talking more about tweaks to current processes which could make for a huge impact.
eGifting is ideal for insurers that want to a better way of settling their replacement claims. A change in approach sees them driving down the hefty cost of making payments and improving the security around each one. It also helps that the money will go to vendor who can actually supply the new product.
As for the speed of service – an area where cash has a lot to answer for – there is a clear argument for why e-gifting is ideal for insurers. They need to transact value as quickly as possible and cash is too slow for this purpose.
EGifting is available to any business or industry that needs a better way of fulfilling high volume, low-value payments. Insurers are top of the list for a number of very good reasons.