The COVID pandemic has driven significant digital transformation in the insurance industry and most Australian insurers are looking to modernise by investing in digital payment technology in the next 12 months, a new survey found.

Australia’s insurance sector is “on the brink of a new era in payments modernisation”, NYSE-listed technology firm FIS Global says.

According to the latest FIS Readiness Survey, close to three-quarters of local cover providers plan to invest in digital payment solutions in the next year.

“These firms will be especially well-positioned to not only retain existing clients but create new customer relationships,” FIS VP Product Management Insurance Martin Sarjeant said.

“With consumers paying via contactless methods including digital wallets, it seems antiquated for insurers to still be cutting and mailing checks to their policyholders.”

Digital payments improve client experiences, operational efficiencies, and fraud detection and security, Mr Sarjeant says, and this technology was the most popular for payments that Australian insurers plan to invest in over the next 12 months.

More than half were also considering mobile payments and real-time payments.

Australia’s insurance sector has been slow to embrace new technologies, with many firms relying on outdated legacy systems. This is “especially true when it comes to payments,” Mr Sarjeant says, with only 55% of Australian firms ranking their capabilities in digital payments as very effective.

“The global pandemic accelerated the digitalisation of the entire payments space, impacting all industries including insurance in specific ways,” he said.