Can you give a brief overview of what Stripe does?
Stripe provides technology infrastructure for the movement of money. Stripe was originally known for enabling online businesses to accept payments. Now the company has created a full suite of payments software and banking capabilities that enable companies to accept payments, optimise business processes around payments and make payments. Stripe views itself as a technology provider for payments services rather than a payment provider.
Calogero, what is your role at Stripe?
I joined Stripe in 2021 to focus on the company’s commercial development in the UK insurance market and build teams to support and understand the insurance industry’s needs. Payments is a core element of insurance, but has not historically been treated as such. My role is to help the insurance industry understand how payments can become a strategic differentiator.
Why are payments strategically important for the insurance industry?
Calogero: Fundamentally, insurance is a promise to pay. The lifecycle of an insurance policy involves several transactions between multiple parties, from customers and intermediaries to insurers and reinsurers. In the past, these payments have been fragmented. There is a different way to manage payments that can bring value to all parties.
Stripe is trying to help the industry improve the payments experience across premium payments, mid-term adjustments, renewals and claims. Stripe can also automate complex multi-party payments.
What problems is Stripe solving?
One problem is customer acquisition. Most insurance customers do not have an optimal digital payments experience. When customers struggle to make payments online, either they decide not to buy the product or call customer service. A better payments experience leads to higher customer conversion rates and lower overall costs.
Another problem is reconciliation. For example, one broker may sell multiple types of insurance products and work with several different underwriters. After they have sold a number of policies, they must identify which policy was associated with which underwriter and how much they need to be paid. In many cases, this reconciliation is being done manually in batches. This is inefficient for the broker and inconvenient for the underwriter, because there is a delay in the underwriter receiving the premium.
In addition, insurers have historically created their own billing software to track invoices and payments. The lack of agility of this software can become a constraint to the business. Every time the insurer starts selling a new product or using a different currency, the billing software needs to be updated. This especially applies to products which require a different billing logic, such as usage-based or parametric insurance.
What companies is Stripe working with in insurance and what have you achieved with them?
Stripe has longstanding relationships with many digital-native companies in insurance such as Zego, Cover Genius and Lemonade. When these companies have expanded to new countries, Stripe has managed the integration of the different payment methods. Stripe also automates payments processes that many insurers perform manually, which can help these companies scale up quickly.
Recently Stripe has begun working with larger insurers to modernise their payments infrastructure as part of their digital transformation strategies.
What aims do insurers have for improving payments within their digital transformation strategies?
For payments there are three key objectives.
The first is to reduce the friction of collecting premiums by delivering a better payment experience for the customer.
The second objective is to reduce churn, the rate at which existing customers cancel or fail to renew their policies. This involves optimising the payments process for renewals or mid-term adjustments.
Third is improving the claims process. Partly this means paying claims faster, but it can also involve changing how a claim is paid. If the claim payment is designed to fund a service for a customer, such as repairs to their vehicle, paying for that service directly can be more valuable than simply transferring money.
Stripe has the capabilities to support all these objectives.
What has Stripe learnt from working with incumbent insurers on payments?
Many insurers have done a lot of work on understanding and improving customer journeys but have not yet considered the associated movement of money. We have seen companies create customer journeys that are fully automated until the payment. Onboarding is automated through an app, but then payment is required by phone, for example. You cannot dissociate the payment experience from the customer experience.
Another problem is that insurers’ approaches to payments tend to be siloed. One team works on customer acquisition, another on claims and another on reconciliation, and their approaches to payments are disconnected.
Stripe has well-known clients outside insurance, what do you provide to them?
Deliveroo, a food delivery service, is one of Stripe’s customers. Stripe helps Deliveroo collect payments. When a customer makes an order, Stripe distributes the money between the restaurant, the rider and Deliveroo. Stripe helped Deliveroo develop the necessary workflows to identify the businesses and individual riders and make those payments.
Stripe also works with software-as-a-service companies such as Shopify and Lightspeed to embed payments capabilities into their platforms for their customers.
What areas of insurance innovation are of most interest to Stripe?
Parametric insurance is a key area of interest. Companies that use APIs to automate claims payments can make that a core part of the parametric insurance proposition. All Stripe’s products are available through APIs and can be implemented quickly.
We are also interested in embedded insurance. The multiple parties involved in delivering embedded insurance creates payments complexities which Stripe can help manage.
Stripe is co-sponsoring InsTech’s upcoming event in London on 24 May, “Making Payments Pay: Making the Most of Payments Technologies”. Why should people register and attend the event?
Payments in the insurance industry is the elephant in the room; it is always present, but rarely addressed. This event will be a good opportunity to hear from companies that are addressing payments strategically and learn how it could be applied to your business. It is impossible to imagine how insurance could transform itself without rethinking how money moves.
Why has Stripe joined InsTech as a corporate member and what kind of companies would you like to connect with?
InsTech is a good forum for Stripe to keep up to date with key insurance trends, understand more about the challenges faced in the industry and connect with companies to discuss payments.
Stripe works with start-ups and large enterprises in insurance as well as software companies that can embed payments solutions into their offerings. We would like to connect with companies of all sizes.