5 Trends Shaping the Future of Insurance Through Payments
Insurance turns uncertainty into predictable cash flows by pricing risk, influencing behaviour and managing money in and out to create stability, trust and long-term return.
Whilst it’s natural to focus on risk, the day to day managing of money in and out can easily be overlooked as a ‘solved problem’. If it’s been a while since you looked closely at your payments architecture, you might find growth and productivity opportunities waiting to be discovered.
Here, we take a closer look at how five key concepts in payments innovation are evolving to meet the expectations of the digitally native insurance consumer.
Agentic commerce
Agentic commerce is shaping up to be the hot topic of 2026, with a flurry of announcements anchored around new open standards that facilitate agentic payment experiences both with and without humans in the loop.
For many consumers, e-commerce is the preferred channel for researching and purchasing health and general insurance, making the sector well suited for agentic disruption. Agents have been capable of researching product features for some time. These new announcements add a robust framework for completing the transaction once the right product has been surfaced.
Industry leaders are leaning into this opportunity, making sure their product set is readily accessible for agent discovery and making sure early adopters can complete transactions autonomously using agents. For many, agentic commerce may feel like a distant emerging technology. However, there are strong indications that agentic commerce may be one of the fastest moving payment trends we have seen for some time.
In Australia, brands like Woolworths and Bunnings are already adopting consumer facing artificial intelligence, whilst Google is funnelling Australian consumers into its AI Search function today. Alongside this, OpenAI and Perplexity have launched the ability to make purchases directly from their conversational interface, starting with the USA.
These movements suggest that agentic commerce looks set to cut into the $40B card-not-present transaction volume processed in Australia each month, making it an important development for insurers to include in their strategic roadmap.
Real-time payments
Many insurance companies are aware of the availability of real-time payments thanks to the now-abandoned target date for the decommission of Direct Entry, Australia’s legacy batch payment system. In December the payments industry self-regulatory body AusPayNet announced the decommission date would be dropped.
Many insurance companies may be relieved to hear the 2030 deadline is no longer applicable. However, there are many good reasons to adopt the new payments platform, including:
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A modern customer experience – In today’s digital economy, customers have come to expect rich digital experiences and instant gratification. Real-time payments present the opportunity to service clients immediately, unlike direct debit which runs on a batch-based process that delays finality.
Whether it’s purchasing travel insurance in the departure lounge of an airport or signing up for reoccurring health insurance payments on a Saturday morning, your customers can benefit from immediate cover with real-time account to account payment. -
Supporting your customers in their time of need – Trust is hard earned and easily lost. In their time of need, customers expect their insurance company to respond fast. Real-time payments provide that capability, allowing insurers to make funds available immediately.
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Reducing customer related administration – Australia’s real time payment system supports ‘simple addressing’, allowing account holders to establish an alias they can take with them in the event they move banks.
Under the legacy Direct Entry system, customers often discovered they hadn’t transferred their direct debits after payment was missed, creating administration for insurance companies and potentially leaving the customer uninsured. Furthermore, NPP payment mandates are visible to consumers in their banking app, providing visibility where previously there was none. -
Reduced operational risk – Direct Entry allows for a three-day returns process, meaning a transaction could be returned days after it was posted. This does not apply under the NPP.
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Rich reconciliation data – Unlike Direct Entry which carries an 18-character lodgement reference, NPP supports up to 280 characters of free text description and is built upon ISO 20022 messaging allowing for more robust reconciliation processes.
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Improved treasury operations – The immediacy of real-time payments and the associated data present the opportunity for insurers to run more efficient treasury operations through improved visibility over money movements.
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Ability to mitigate the impact of card surcharge changes – The Payment Systems Board is due to publish its conclusions and an implementation timeline for any regulatory changes related to surcharging in March. We anticipate changes will likely result in a cost impost for insurers who surcharge card payments today. Solutions like PayTo present an opportunity to offer customers an alternate payment method to cards.
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Usage-based payments – Real-time payments enable new business models such as pay-per-mile or pay-per day, which may have been complicated by batch-based processing of Direct Entry.
Embedded insurance distribution
Increasingly, platforms are gaining ground across several industries. They aim to fulfill the disparate needs of consumers and business users, offering everything from payment processing through to insurance and more. For some insurers, embedded offerings have been a key plank of their strategy for some time. Life insurance presents a good example. Australian consumers often bundle life insurance with superannuation products.
If there is a lesson we can learn from the payments industry, it is that ignoring growth in platforms provides opportunity for tech savvy start-ups. Fast moving fintechs have seen rapid growth through the integration of their payment services within platforms.
Forming regulatory changes in the Australian payments industry look likely to increase the pace of change, potentially allowing platform operators to broaden the scope of services they deliver, potentially offering new opportunities for embedded insurance. Insurers should think carefully and be deliberate in their platform strategy.
Payments orchestration
The term ‘orchestration’ is often used interchangeably to cover a broad range of payment solutions.
Let’s consider a tech stack that enables a consumer to choose their payment method whilst allowing the insurer/merchant to switch the transaction out to any number of acquirers. This model maximises the addressable market and minimises the cost of acceptance through intelligent routing, popular in Europe where the Single Euro Payments Area and land-based borders simplify cross border trade.
Orchestration in the Asia Pacific is nuanced by fragmented payment systems punctuated by pockets of interoperability. As a result, orchestration has less appeal domestically here in Australia but becomes much more compelling for multi-national organisations seeking to collect payments across the broader APAC region.
Data analytics, anomaly detection and fraud and scam mitigation
Of course, all these advancements in technology not only present opportunity, but also come with a degree of risk. Whilst established fraud detection applications still dominate in the payments industry, artificial intelligence is driving increased experimentation in fraud detection thanks to its ability to ingest large amounts of industry-specific data. This might include telematics data related to car insurance, weather, climate and satellite data related to property insurance, or payment related data that can provide insights on financial hardship.
Using this data, insurers are better positioned to support their customers in need, whilst mitigating risk associated with fraud. Whilst Australia’s fraud statistics are alarming, the figures pale in comparison to scam losses which exceed $2 billion. The shift from fraud to scams is reflective of the success of fraud mitigation tools.
Increasingly, the weakest link in the chain is now the consumer. To combat scams, insurers should review how they interact with consumers. Outbound outreach that asks the consumer to identify themselves does not protect the consumer and entrenches a behaviour that can be exploited by criminals.
Looking ahead
Consumer expectations continue to evolve, heavily influenced by their digital experiences across platforms they engage with regularly. Whether it be banking apps, social media, health, food, travel, or logistics and transit, a shift towards real-time, on-demand services seems inevitable.
Endava has extensive experience helping enterprise business modernise technology to compete in the emerging digital economy, including real-time payment adoption, platforms and embedded technologies, payment orchestration, UI & UX, AI and fraud mitigation, data and analytics. Reach out to our insurance experts to understand how we can leverage this experience to realise your business objectives.
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