International Health Insurance Premium Payments Frequently Asked Questions

This iPMI Global Insurance Payments Insights article examines current frequently asked questions about how international health insurers may streamline their premium payments workflow whilst improving the customer experience using the latest payment technology.

What are the biggest challenges facing international health insurance providers when it comes to collecting international health insurance premiums?

Several pain points emerge when discussing the collection of premiums in the international health insurance market. For insurance providers, key challenges include:

• Currency Fluctuations and Conversions: Dealing with various currencies, managing exchange rates, and navigating currency controls in certain countries pose significant challenges.
• Regulatory Compliance: Complying with varying international laws and regulations related to insurance, financial products, sanctions, and anti-money laundering practices adds complexity.
• Fraud Prevention: Protecting against fraudulent activities, such as sanction-busting, individuals or groups purchasing policies with the intention to commit fraud, and illegitimate refund requests.

For customers, the pain points revolve around:

• Lack of Payment Flexibility: Difficulty paying in their preferred currency or using their desired payment method.
• Hidden Costs: Facing unclear or high foreign transaction and FX fees that are tacked onto their premium payments.
• Payment Failures: Experiencing lost payments and encountering challenges in recovering funds.
• Poor Customer Service: Difficulties getting support in their local language and time zone, especially when issues arise with payments.

How can the customer experience be improved when paying insurance premiums and receiving claim payouts?

Improving the customer experience in international health insurance payments requires a multifaceted approach:

• Personalized Payment Options: Offer a wider range of payment options, allowing customers to pay in their local currency and utilize preferred methods like debit cards, credit cards, digital wallets, and bank transfers.
• Transparent Pricing: Provide clear breakdowns of costs, including any applicable fees, to prevent confusion and build trust.
• Automated Processes: Implement automated payment reminders and receipts to streamline communication and reduce the risk of missed payments.
• Streamlined Claims Payouts: Offer fast and efficient claims payouts, ideally directly to the customer’s bank account or credit card in their local currency.
• Multilingual Customer Support: Provide easily accessible customer support channels (phone, email, chat) in multiple languages and across different time zones.

How can the international health insurance industry mitigate the risk of fraudulent payments?

The insurance industry can implement several strategies to mitigate fraudulent payment risks:

• Robust KYC and AML Procedures: Enforce strict Know Your Customer (KYC) and Anti-Money Laundering (AML) policies to verify customer identities and scrutinize transactions for suspicious patterns.
• Suspicious Activity Reporting: Establish clear procedures for filing Suspicious Activity Reports (SARs) to relevant authorities.
• Advanced Fraud Detection: Partner with payment technology providers that offer AI and machine learning-powered fraud detection systems. These systems can analyse vast amounts of transaction data to identify and flag potentially fraudulent activity.

What regulations must international health insurers be mindful of when it comes to cross-border payments?

Cross-border payments in the insurance sector are subject to a complex web of regulations. Some key areas include:

• Data Privacy: Compliance with data protection laws such as the General Data Protection Regulation (GDPR) in the European Union, the Health Insurance Portability and Accountability Act (HIPAA) in the United States, and similar regulations in other jurisdictions.
• Payment Services: Adherence to regulations governing payment services, such as the Payment Services Directive (PSD2) in the EU and the Payment Card Industry Data Security Standard (PCI DSS).
• Sanctions: Diligent screening of customers and transactions against international sanctions lists to prevent dealings with sanctioned entities or individuals.
• Anti-Money Laundering: Implementation of robust AML controls to detect and prevent money laundering activities.

How can international health insurance providers manage foreign exchange (FX) risk effectively?

Managing FX risk is crucial for insurers operating in the global market. Strategies include:

• Partnering with FX Specialists: Collaborate with payment providers that offer competitive exchange rates and manage currency conversions on the insurer's behalf.
• Dynamic Currency Conversion (DCC): Implement DCC to allow customers to view and pay premiums in their local currency, while the insurer receives payment in their desired currency.
• Hedging: Utilize hedging strategies to protect against adverse currency fluctuations. This can involve forward contracts, options, or other financial instruments.

Are traditional payment methods failing in the global health insurance market?

Yes, traditional payment methods, such as manual bank transfers and paper checks, are increasingly inadequate for the global health insurance market due to:

• Slow Processing Times: These methods often involve lengthy processing times, leading to delays in premium collection and potentially coverage gaps.
• Lack of Transparency: They offer limited visibility into payment status, making tracking and reconciliation difficult.
• High Fees: Traditional methods often come with high transaction fees, especially for cross-border payments.
• Inconvenience for Customers: They require manual effort from customers and lack the convenience of digital alternatives.

How can international health insurers better manage overdue premium payments and reduce associated costs?

Insurers can better manage overdue premiums and their associated costs through:

• Proactive Communication: Implement automated payment reminders via email, SMS, or in-app notifications to prompt timely payments.
• Flexible Payment Plans: Offer customers the option to set up payment plans or recurring payments, making it easier to budget for premiums.
• Early Detection and Intervention: Utilize data analytics to identify customers at risk of missing payments and intervene early to offer support or alternative payment solutions.

What does the future hold for insurance payment experiences in the global health insurance market?

The future of payments in global health insurance is trending towards:

• Personalization: Tailoring payment options, currencies, and experiences to the individual preferences of each customer.
• Embedded Payments: Integrating payment processes seamlessly into various customer touchpoints, such as websites, mobile apps, and customer portals.
• Real-Time Payments: Enabling instant premium payments and claims payouts, enhancing efficiency and convenience.
• Enhanced Transparency: Providing customers with greater visibility and control over their payment history, status, and associated fees.
• Increased Security: Leveraging advanced technologies, such as tokenization and biometrics, to strengthen payment security and reduce fraud.

Conclusion

The global health insurance market needs to prioritize modernizing its payment infrastructure and processes to stay competitive and meet evolving customer expectations. By embracing digitization, offering flexible payment options, and collaborating with specialized payment partners, insurers can improve customer satisfaction, reduce administrative costs, and mitigate risks.