The insurance industry is changing. Customer expectations of their insurance providers are changing too. In this article, Chris Ponton Dwyer looks at lessons from Lismore, recent reports, and how real-time payments are shaping the insurance offerings of the future, today.
I don't think anyone loves insurance.
Needed. But not liked, as they say.
When it comes to paying premiums, the flow of value can feel like a frosty one-way street. A grudge purchase, if you will. Further, you are likely making a decision on your provider without a clear picture of what the customer experience will be like when you need it. And by that time, its too late to change.
If you've ever had to make a claim in a stressful situation, you'll know how a positive outcome delivered well — a swift assessment and payment experience — can make you feel. It's lifesaver territory. When the chips are down, policy-holders pray their coverage is sound, and that their insurers will step up and deliver.
Zepto's Byron Bay headquarters sit in the Northern Rivers region of New South Wales.
In 2022, catastrophic floods inundated nearby Lismore, and other parts of the Northern Rivers. Floodwaters peaked in Lismore at a terrifying 14.4 METRES, more than two metres above the previous records set in 1954 and 1974. Byron itself was spared the worst of it, but almost everyone at Zepto knew someone directly impacted. Some of my colleagues found themselves assisting hazardous rescue situations, and joined the brigades leaning into the physically daunting, emotionally delicate clean-up process.
Zepto's Jurone Sullivan, was in the thick of it.
"As a Northern Rivers local, Zepto gave me the time I needed to help my community. I had the heartbreaking task of delivering essential supplies by boat to stranded communities. Navigating up the Ballina River from Broadwater to isolated Coraki, I saw scenes of devastation I’ll never forget. Whole neighbourhoods submerged, homes destroyed, lives upturned in an instant. It was a heavy, harrowing experience," Jurone recalls
"Yet, amid the loss and sorrow, the resilience of our community was evident. Civilian rescuers braved floodwaters, volunteers stepped in to clear debris, and strangers opened their doors to offer emergency accommodation. Donations poured in, and mental health support reached those battling unseen struggles. We united in the face of despair, offering whatever we could to help each other make it through."
Jurone Sullivan
Even now when I talk about it with Zepto's Byron crew, I can see the impact on their faces. Drive through Lismore today and there's still evidence of the devastating deluge that drowned the city. The work that many organisations, public and private, did in the immediate and longer term aftermath has been enormous. To support them in a small way, team Zepto uses its PayID and PayTo payments demo platform to raise real-time funds for Disaster Relief Australia.
A conference hot topic: Climate
The changing climate and its impact on natural disasters was a major topic at the Insurance Council of Australia’s annual conference 2024 that I attended in Brisbane. The Sunshine State's capital is another city that felt the brunt of a record-breaking flood in its recent past. The 2011 floods tragically took 33 lives. Nearly 6000 people were evacuated from 3600 homes, and some 28000 homes were in need of rebuilding. The Insurance Council of Australia estimates the 2011 damage at $2.38 billion, and the final report of a judicial inquiry into the event was published in March 2012.
Beyond climate and natural disasters, the Insurance Council's conference agenda was wide-ranging. It reached into regulatory issues, public liability insurance and contact sports — another hot topic of our time — fraud and, notably, trust and reputation. I say notably, because the Flood Failure to Future Fairness report into the 2022 floods that obliterated Lismore was due for release the day after conference. The industry's trust and reputation were about to be tested.
Reports and responses
The report was the result of a Parliamentary inquiry led by Dr Daniel Mulino MP, who happened to be on-panel for the conference's Insurance Reviews - What are we learning? session with Helen Rowell, Code of Practice Review Independent Panel Chair, and Ella White, Partner, Deloitte.
The Flood Failure to Future Fairness report evaluated the insurance industry’s response to Australia’s 2022 floods, which saw more than 300,000 claims. The inquiry highlighted problems in insurers' claims handling, particularly long delays, inadequate cash settlements, and insufficient support for vulnerable policyholders, which worsened the post-disaster recovery for many families. The report painted a grim picture of the industry's lack of preparedness to handle claims at scale, and highlighted the need for a more resilient, customer-focused industry response to future catastrophic events.
A report prepared by Deloitte for the Insurance Council of Australia (ICA) to evaluate and improve catastrophe preparedness following the 2022 floods made similar findings. The review highlighted systemic challenges, such as resource constraints, communication gaps, and claim-processing vulnerabilities.
It outlined seven key recommendations for insurers, including enhancing disaster preparedness, improving customer communication and claims handling, refining resourcing strategies, and fostering better coordination with government agencies. The ICA has committed to implementing these changes.
I believe the industry's response to both reports will be transformative. Legacy thinking, tech stacks and processes will be re-engineered from the ground up to enable delivery of service when it really counts. It will take time and a lot of heavy lifting. But new paradigms of timeliness of communication, speed of assessments and response, accessibility and transparency will be the norm for insurance providers looking to meet the rapidly changing expectations of their customers.
Global trends
Things aren't only changing in Australia. The 2023 Bain report on Customer Behavior and Loyalty in Insurance: Global Edition 2023 also revealed shifting consumer expectations, in particular how they now expect seamless digital experiences. Despite some progress, the report noted that insurers face challenges in scaling these solutions and meeting rising digital service expectations. Enhanced digital tools and partnerships with service providers are key to improving customer engagement and loyalty.
As insurers map out transformation roadmaps to meet the needs of the future, they're investing heavily into optimising the assessment and processing of claims. Despite their best efforts, many remain hampered by the underlying, soon-to-be-retired, BECS payments infrastructure. The limitations of that legacy infrastructure mean that for 114 odd days a year — weekends and public/bank holidays — insurers cannot pay their customers their claim benefits. In emergency and urgent situations, literally every day, hour and second can count. Real-time, all-the-time payments on the New Payments Platform [NPP] can help optimise the existing transformation investments being made by insurers now, while delivering a better customer experiences and outcomes.
Real-time impact
With payments fundamental to the business model — premiums in, claims out — insurers can address the payments experience today. The tools are available. They're real-time. They're trusted and secure. Not only can they accelerate payouts so approved funds hit a policyholder's bank account in the time it takes to spell h-e-l-p, they can help insurers meet their future customers where they are.
This recent article highlights that 61% of Millennials want real-time payments in finance and insurance, underscoring a demand for faster, reliable transactions. It argues that delays in payment systems, especially after crises, have driven customers to seek providers with quicker disbursement options. Notably, more than 25% of policyholders reported switching providers to access faster payouts. That's huge.
Real-time payments can bring several possible advantages to the insurance industry:
- Faster Claims Settlement: Immediate payments allow insurers to settle claims quickly, enhancing customer satisfaction and reducing the financial stress on claimants after incidents.
- Improved Customer Experience: With faster, predictable payments, customers gain confidence in their insurer’s reliability, potentially boosting loyalty.
- Reduced Operational Costs: Real-time payments decrease administrative costs associated with traditional payment processing, manual checks, and follow-ups.
- Competitive Differentiation: Real-time capabilities can set insurers apart in a competitive market, meeting growing expectations for speed and convenience.
The business of insurance is complex. With modern solutions available now, 'payments' doesn't have to add to the complexity.
If one thing's certain in this sunburnt country, it's more droughts and flooding rains. Challenges for insurance providers will likely become more complex. But with future-ready solutions available now, 'payments' doesn't have to add to the complexity.
The author
