Adyen: Why Insurers Should Address Their Payments Blind Spot

InsurTech Digital speaks with Adrian Davis, Commercial Leader for Financial Services and Insurance at Adyen, about the overlooked potential of payment technology in insurance.

What has been the insurance industry's approach to digital transformation?

For many years, the insurance industry seemed impervious to the winds of change. 

Fintech has already disrupted much of the traditional financial landscape, but until recently we were yet to see a similar level of change in the Insurance industry.

Today, however, it is clear that the Insurance market is in the midst of grappling with digital transformation. 

Insurers are beginning to make the changes necessary to remain competitive against rapidly changing customer preferences and emerging new forms of competition.

Most Insurers we speak to are focused on delivering three key strategic objectives: cutting their operational costs; making better use of digital channels; and, reducing risk and fraud in their claims processes.

And when it comes to customers our research among 200 insurance professionals with EY found that 58% of insurance firms are prioritising customer retention.

Despite this clear focus on customers, we are often surprised that insurers don't consider payments as part of their digital transformation. 

This is despite how modern payments technology can help solve many of their most pressing business priorities… that's why payments can often be a blind spot for insurers.

No longer just a functional necessity, payments should emerge as a strategic enabler for insurers to modernise business models, improve customer experiences and unlock growth.

Why should insurers care about payments?

Payments are the first and last touchpoints of an insurance transaction, making them critical to customer satisfaction and retention. 

A seamless payment process enhances the overall customer experience but also plays a pivotal role in shaping how they perceive and interact with the insurer.

Nearly all of the 3,000 consumer respondents in our EY research (94%) said they want a choice of ways to pay using credit cards, debit cards or digital wallets to pay online, emphasising the growing importance of offering convenient payments. 

Flexible, real-time payment options appeal to a digitally savvy generation, with 35% of Gen Z consumers (aged 13 to 28) suggesting that ease of buying insurance influences their decision to purchase. 

These options can simplify access to insurance products, making them more attractive to a broader audience.

Payments also has the power to build brand trust and loyalty. When payment systems are secure, intuitive and hassle free, customers are more likely to have positive experiences. 

This could encourage them to stay with their current provider and recommend the business to a friend.

Modernising payment processes can also improve operational efficiency. 

Automated payment systems reduce the need for manual interventions, which enhances accuracy and reduces costs.

What are the barriers to adopting innovative payment solutions?

Despite these opportunities, there are two major challenges hindering the adoption of innovative payment solutions. Many traditional insurers are often restricted by outdated legacy systems. 

Research by Clearwater Analytics finds that up to 74% of insurance companies still depend on legacy systems for their core functions. 

This reliance on outdated systems carries significant risks and could be hindering their growth.

Many traditional insurers do not recognise the opportunity presented by payments and do not see the urgency for innovation, which delays progress. 

One insurance industry leader told us: “apathy is one of the scariest challenges in insurance today. There is a tendency among traditional insurers not to take innovation seriously”.

The World Life Insurance Report 2025 underscores the issue, revealing that dependency on legacy systems is the biggest hurdle for insurers. 

Alarmingly, over half (52%) of insurers admit to relying on outdated technology despite it being a major obstacle.

How can insurers take the risk out of payouts?

In the UK, cheques are still used for paying out insurance claims. Another common method is Bacs transfer. 

However, a report by the Association of Financial Professionals, found that “cheques and wire (Bacs) transfers continue to be the payment methods most impacted by fraud activity (66% and 39%, respectively)”.

Today, there are much better ways of facilitating payments in a secure way.

For example, virtual issued cards can provide the customer with an immediate payment, particularly useful in situations where money is needed quickly, e.g. travel insurance. 

Furthermore, cards can be restricted to be used only, for example, through the insurers network of car repair workshops, eliminating claim fraud in one fell swoop.

What does the future hold for insurance payment models?

The case is clear: Insurers that fail to embrace advancements in payments technology risk falling behind, as unnecessary friction builds. 

A significant 37% of insurers told us they reported policy cancellations due to payment issues, indicating that resistance to adopting new technologies is potentially leading to financial losses for these firms.

While these challenges are considerable, they are not insurmountable. Insurers don't need to make a change in one huge leap – small, impactful changes such as improving the customer experience with easier sign-up processes can deliver significant results without undergoing a complete system renovation.

To stay competitive, insurers must view payments innovation as a strategic growth driver by streamlining sign-ups, reducing fraud with tokenisation, and expanding payment options for customers.

Insurers can improve customer experiences and market position by challenging apathy and rethinking their technology stack. 

Acting now will shape insurers' futures and enable them to explore new growth opportunities.

With EY, Adyen gathered insights from 3,000 insurance customers and 200 industry professionals across the UK, Spain, and France to understand the latest payment trends and perspectives.

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