With the Federal Reserve hiking interest rates by 0.75% for the third time in a row to fight inflation and fears of recession, this economic climate’s impact on the US consumer contrasts past climates due to the difference in response across age groups, income levels and purchase behaviors. One common behavior, however, is the rise in consumers adopting a “buy now, pay later” approach to their purchase patterns.
Although this specific analysis focuses on consumer shopping behavior, it would be short sighted to not look into whether these similar sentiments carry into decisions made by business owners.
Over the past 2 quarters, we’ve seen the percentage of financed policies hit the highest share that we’ve seen to date - two thirds of insureds opting into financing their policies - an indicator to us that businesses are also shifting their priorities to also ensure they prioritize cash flow during volatile periods.
What does this economic impact mean for the future of insurance payments and businesses?
This change in business owner behavior is even further exacerbated when we look at key markets (ex. Florida, New York, California, etc.). Earlier in the year, we saw about half of insureds opt into premium financing across these markets. In August, we’ve seen that number leap to nearly three-quarters of businesses deciding to premium finance their policies. This increase was also observed across all policy types, another sign that this shift is reflected across all businesses, regardless of industry.
Economists can debate whether we’re in a recession or not, but it’s clear that US businesses are changing their buying behavior and it’s key for agents to recognize and adapt to these trends.
In the past, it might’ve not been worth the effort to offer financing options for every quoted policy. Businesses were booming and cash was flowing freely as we experienced the longest bull run in US history. Today, however, an agency not providing this level of payment flexibility to insureds misses out on a huge opportunity that we clearly see businesses are asking for.
The demand in payment flexibility will continue to rise
Now more than ever, customers expect a modern checkout experience with flexible payment options and customer-first experiences. This sentiment is now being felt in insurance. Agents need the tools to easily meet their customers needs without the legacy processes that have made this difficult and slow in the past. With technology driving modern businesses, there is an opportunity to tailor to purchase behavior trends that will impact how our industry moves forward. What we’ve seen directly at Ascend and what others are seeing across the industry translates into both agents and insureds wanting and expecting payment flexibility in order to make the best decisions for their businesses.
With Ascend, agents can offer premium financing for policies large and small - with no additional investment from the agency. A simple integration of Ascend into your existing process allows agents to not only provide payment flexibility to their clients but also drives revenue growth as it drives higher conversion and financing rates.