So, you work in home or auto insurance. And you want to make your books more profitable. It’s time for a look at payment processing: let's talk about your options for achieving a better expense ratio.
Option one: Pay less for processing
Card processing fees can really add up. Have you ever run the numbers on it? If not, you might be surprised at what you find. For example, let's say you have a $100 million book. Let's say 25 percent of your premium is paid by credit card, a typical scenario. Now, let's say you're paying a 2 percent transaction fee on that amount.
Long story short, you're losing $500,000 to payment processing – big price tag for a little piece of plastic.
Bottom line, it pays to find a billing partner who charges less. If they can process your money faster at the same time, you reduce your cash delay while you’re at it: win / win.
Option two: Pass the fee on
If you prefer not to absorb credit processing fees, can you pass them on to your customers? The answer is yes, maybe. One can do it in two ways: by adding a percentage-based surcharge (passing on the same fee the credit card company is charging you) or by charging a flat fee.
It’s fair to say, however, that 11 out of 50 is not a majority. If you operate in any of the other 39 states, you might consider adding a surcharge for credit card processing.
Whether or not your state law allows you to consider adding a surcharge, you still have the flat fee option. Since 2013, credit card companies have allowed merchants in the United States to charge customers "a convenience fee" for transactions.
There are stipulations, however: a convenience fee is only permissible in online purchases, and only if you offer alternative ways to pay.
There's also a bit of deeper problem with the flat fee approach: since you can't charge different customers different convenience fees (based on the size of their purchase), you'd have to set an average fee, which is difficult to do with insurance given the range of premiums out there. "Since even personal lines premiums can vary from $500 to $10,000, an average fee is unlikely to cover all the costs," IIAT said.
Option three: Speed up funding
Getting faster access to your money is a good thing: It’s good for building bank account interest and good for your AR team’s efficiency. It’s much easier to match premium payments that arrive the next day than it is to match them when they arrive a week later.
Get a side-by-side cost comparison
We're excited to announce that Silvervine offers fast, affordable payment-processing services – available as a stand-alone solution or as a solution that is fully-integrated with your Silvervine policy administration system. This is great news, because it removes an extra layer of effort and cost for you. If you happen to want a one-stop shop, you can have that. And if your goal is simply to lower the cost of payment processing? We think you’ll like what you see.
The FedNat Insured Web is a great tool for our insureds!
They like having a centralized location to view policy info, make payments, upload policy documents, and elect to become paperless to receive a discount.
The insureds also can file a First Notice of Loss for a claim and access exiting claim info. Silvervine recently enhanced the site which allows insureds to upload policy documents directly to their policy. The uploaded docs go directly into our workflows and save a lot of manual effort on our part.
From my visits with agents, the agents appreciate the app for the amount of time saved on having to download and attach photos directly to the policy.
The app can also reduce the amount of staff required for a busy office to fulfill underwriting requests for photos.
When training agents they are amazed at how quickly the photos attach directly to the policy. After taking photos using the app and before they make it back to their desk, the photo is already attached to the policy. They also like the ability to attach additional photos for pre-existing damage.
Customer Service is seeing an improvement with retention as the text message definitely triggers phone calls from insureds to make payments.
The insureds love the fact that we notify them on their phones because they state that sometimes they don’t receive their mail for various reasons.
The insureds are paying more attention to the texts then to their actual mail. We try to set all of our customers up on that option if we notice that they are not currently enrolled, as it builds great customer relations as well as retention.
As a company we have adopted the use of Policy Scan for all our policies, and our agents have adopted the use of the app as well.
Not only is it easy to use, there is also no more worrying about losing photos, having to store photos or photos being attached to the wrong policy.
With Policy Scan we have increased efficiency in our workflow and reduced our exposure on the risk.
Silvervine’s core administration solutions easily handles multiple carriers within multiple states, including accounting, payment processing, immediate policy issuance and endorsements.
What started out writing one product, one line in one state has now grown into mulitple products, multiple lines and writing in multiple states. We have over $95 million in annualized premium in-force and we expect to grow by 20% during the next year all serviced by Silvervine.
Silvervine was our insurance software system of choice when we started the company in 2006. Silvervine enabled us to begin business within a few months of licensing the company. Today, we are one of the top 20 homeowner’s writers in Texas and SIlvervine’s solutions have been an integral part of our success.