Insurance’s digital pivot is about payments infrastructure
For years, the insurance industry’s profitability insulated it from the need to modernize. Steady premiums and dependable investment returns made up for dated technology and distribution models. That buffer is now gone, and the pressures are structural rather than cyclical: an aging client base, younger customers comfortable buying coverage outside traditional channels, inflation that pushed US liability claims costs up 15% in 2022, and bond market volatility that has made investment income less predictable.
The result is that insurers can no longer stand still. The industry is responding with a broad shift online, visible both at incumbents and startups. Aon sells embedded insurance through gig economy marketplaces and SaaS platforms; brokers like Cross Agency offer digital commerce options; and disruptors such as Lemonade and Luko have rebuilt the broker-client relationship as a direct-to-consumer experience. What ties these efforts together is financial infrastructure capable of handling complex, multiparty payments behind a seamless customer experience. Stripe’s role across these businesses—via Connect, Billing, Issuing, and the Optimized Checkout Suite—reveals several clear trends shaping the industry.
Insurance is moving into other platforms
Embedded insurance lets carriers present relevant policies inside high-traffic third-party environments. Chubb, for instance, sells driver-income protection to rideshare drivers through Grab, a popular Southeast Asian delivery app: if a driver is sick or their car is in the shop, they can file a claim and receive payment to cover the gap. The insurer gains market reach, better conversion, and partner data that improves underwriting; the partner earns referral income and gives customers more value.
The bottleneck is financial operations. Managing fund flows across multiple parties in these settings typically requires heavy treasury infrastructure. Stripe Connect automates the splitting, routing, and reconciliation of premiums within any third-party environment, removing that burden and shortening time to market. CoverWallet, an Aon subsidiary, uses Connect to programmatically split every collected payment across parties with no manual intervention, which the company credits with higher conversion and lower costs.
Direct-to-consumer finally has a usable checkout
Direct-to-consumer insurance distribution promises low costs, but carriers have historically tripped over payment technology. Poor UX, limited payment method support, and high decline rates undermined the experience. Stripe’s Optimized Checkout Suite addresses these issues: Stripe Checkout uses card account updaters, network tokens, and adaptive card acceptance to minimize failed payments, and it presents customers with their preferred payment methods at both purchase and renewal. In some cases, transactions complete in as little as six seconds.
Lemonade, Pie, and Luko are using Connect and the Optimized Checkout Suite to sell products ranging from pet insurance to life and commercial lines. A frictionless payment experience is what lets them pursue the direct-to-consumer model’s long-promised economics.
Claims cards turn a cost center into a revenue line
Claims are insurers’ biggest source of losses, and inflation is making them worse. Compounding the problem, claims leakage—paying more than necessary to settle a claim—costs the industry $29 billion annually on auto policies alone. Automation has helped control expenses, but until recently carriers had few tools to directly reduce claims losses.
Stripe Issuing supports physical and virtual card programs that give insurers more control over claims fulfillment. After approving a claim, an insurer can issue a prefunded virtual or physical card that the claimant uses to pay select vendors; virtual cards arrive in the customer’s digital wallet immediately. Beyond the improved claimant experience, payout cards let insurers earn interchange revenue on every swipe—a modern income stream across commercial, pet, auto, and home renovation claims.
Automating the billing maze
Insurance distribution runs through agents, brokers, government agencies, employers, franchises, and embedded experiences, each with its own billing and invoicing demands. Stripe Billing automates the collection, reconciliation, and settlement of recurring premiums along these channels. Cuvva, a UK provider of short-term auto policies, uses Stripe to split payments at the moment of collection—the company keeps its commission and sends the net premium to one of three underwriters—eliminating manual batching and reconciliation.
Failed premium payments also accumulate over a policy’s life, often from temporary problems like insufficient funds on a particular payment method rather than deliberate churn. Stripe’s Smart Retries automatically retries failed payments, improving revenue and liquidity and preventing involuntary customer loss.
Built for multiparty networks
Insurance was designed in the analog era, but its structure—global, multiparty product and payment networks—turns out to fit the online economy well. That is exactly the model Stripe’s infrastructure supports, and the company continues to develop features for insurers, including simpler claims payouts.
