Insurance claims are one of those tough to crack payment categories, where paper processes linger despite ample options from technology vendors.
"A lot of carriers have legacy systems that have a longer lead time execute transactions," said Matt Miller, head of product and innovation for KeyBank. "This is a way to take advantage of new payment capabilities to build on top of the legacy systems and customize workflows for the carriers."
KeyBank is collaborating Snapsheet, a virtual claims technology provider that serves mostly personal and auto insurance carriers, to sell a digital payments product to carriers. Instead of carriers sending a check when a claim is settled, Snapsheet and KeyBank will provide a gateway to issue claims and payments through online and offline channels.
The carriers will access the gateway, called Snapsheet Transactions, through a web-based deployment for a direct implementation through an application programming interface. Neither option requires changes to backend systems at the carriers.
"Carriers still struggle with getting payments out of the door," Miller said. "We saw immediate inefficiencies."
Insurance claims are more complex than other types of payments, and as such checks are still used most of the time. Like health care payments, there's often a two-way data exchange that predates a payment and there's a wide range of ways the payments get delivered to consumers.
For example, not all consumers have a bank account tied to their insurance policy, which necessitates a system such as Snapsheet to accommodate multi-channel payments, Miller said, adding much of the technology in the insurance industry automates how a claim is received or processed, but not resolved.
"There's a good front end process for claims, but it's inefficient on the back end," he said.
The inefficiencies in claims payments are attracting payment companies, which are taking different approaches to the automation gap, an important goal since most insurance claims are not instant at the time of need, such as an accident, creating an opportunity for a product than can gain traction.
Mastercard is using its network and partnerships with national debit networks to process claims disbursements, and has also aligned with the Federal Reserve's faster payment processing guidance to speed payments to claimants. Bank of America is using the real time P-to-P rails of Zelle to speed transactions, and Zelle has long had a goal of using its P-to-P system for other payment types such as insurance claims or government disbursements.
Key, which is part of Zelle, does not envision Snapsheet Transactions as a sole insurance claims payments provider for carriers. It is not requiring exclusivity and anticipates carriers would want options
"We hope this becomes the main payment engine for the carrier, but if a carrier wants to parse this as an option for their clients that can happen," Miller said. "But our system is customizable and multichannel and our intent is to have it used across all of a carriers' clients."
Key is also turning to a technology startup to build out its insurance claims payments business, following a trend among banks to work more closely with technology startups, often to add ancillary support for digital financial services such as payments. In this case, Snapsheet has a preexisting claims processing engine that fits in with Key's payments technology, Miller said.
"Banks are looking at broadening product portfolios and potential partnerships with fintech firms," said David Albertazzi, a senior analyst at Aite Group. "Fintech companies are increasingly filling gaps in bank product portfolios."