Meet Joshua Peterson, Chief Product Officer, ePayPolicy
Joshua Peterson is the Chief Product Officer for ePayPolicy, a digital payment solution pre-integrated with Cogitate DigitalEdge Policy. He began his career at Marsh in their Affinity group, focusing on property and casualty and benefits. Joshua later co-founded an insurtech company that leveraged data to match brokers with underwriters of carriers that shared an appetite for commercial risks, which was acquired by Applied Systems in 2016. Over the next several years, he worked on enhancing relationships among brokers and agents, managing general agents (MGAs) and carriers, and emphasizing data exchange and efficiency in distribution.
Can you define chargebacks, specifically as they pertain to digital payments of insurance premiums?
Chargebacks allow policyholders to dispute transactions with card issuers (known in the industry as “schemas”) within a certain timeframe after purchase – 30, 60, or even 90 days. While many associate chargebacks with unauthorized payments, fraud, or stolen cards, they can also arise from valid transactions where the policyholder disputes the amount or terms, such as unexpected charges or policy cancellations. This can be surprising for insurers new to digital payments. Working with the schemas can be an overwhelming effort, especially if the chargebacks result in a volume of new work.
What is the biggest problem for the insurers with respect to managing chargebacks?
Time and Complexity: Chargebacks can become problematic for insurers because each card issuer (“schema”) has unique processes, document requirements, timeframes for response, and more. Further, each reason for a chargeback requires a separate set of documentation, often unique to the schema. Often, there is a lack of transparency with the schemas, and navigating the process can be both frustrating and time-consuming. This is an area for potential financial loss for an insurer without internal expertise and staffing.
Addressing chargebacks is urgent, as once a dispute is filed, there is often a limited timeframe—sometimes as short as thirty days—to provide necessary documentation, and a limit on the number of times information can be exchanged. This time constraint can create significant pressure, especially for internal staff that may already be overwhelmed with other tasks. If they fail to respond promptly, even minor disputes can accumulate, leading to more significant financial losses.
Cashflow: When a charge is disputed, funds are immediately withdrawn from the insurer’s account, with no resolution period. The financial impact can be significant, as entire premiums may be reversed, leading to substantial losses if the unwarranted chargebacks are not recovered.
Based on ePayPolicy’s experience, can you quantify this problem?
Within the insurance industry, 2-3% of transactions are disputed by policyholders primarily due to dissatisfaction of service, unclear policy terms, and cancellation. This is substantially higher than overall chargeback rates of 0.6% for all credit card transactions. For an insurer doing $20M in DWP a year, this can be equivalent to $600k/year in disputed premiums. Additionally, on average, merchants win 20% of those disputes, creating a net loss of $480k annually. Comparing this to the ePayPolicy experience, our customers see an average dispute rate of 0.23% (10x less than the insurance industry average) and a 38% win rate. For that same carrier doing $20M in DWP, they would see a net loss of $28k with ePayPolicy vs. $480k without.
It’s clear that insurers may leave money on the table if they lack a trusted partner to navigate the chargeback process effectively. Without expertise in understanding various payment schemas and dispute types, insurers can struggle to provide the necessary documentation to resolve disputes successfully. This knowledge gap can lead to financial losses and missed opportunities for recovery.
How is ePayPolicy making a difference in the industry?
Having a trusted partner to manage chargebacks is not just beneficial—it’s essential. A trusted partner in chargeback management brings expertise and resources that insurers may lack internally. A knowledgeable customer support team is one of the most critical components of this partnership. Our team acts as the frontline defense in handling disputes, providing clear communication and swift resolutions. Our expertise ensures that each case is handled with precision, reducing the likelihood of errors that could lead to financial loss where the chargeback is not warranted.
Because of the volume of work we do, our knowledge of and regular interaction with the schemas, and our familiarity with the various types of chargebacks, we are highly effective at addressing the chargebacks fairly and accurately.
Moreover, a knowledgeable support team is adept at identifying patterns and trends in chargeback data, offering insights that can help prevent future disputes. We work closely with insurers to understand the root causes of chargebacks, whether they stem from fraudulent activities, customer dissatisfaction, or misunderstandings. By addressing these issues proactively, insurers can improve their processes and reduce some of the root causes of chargebacks over time.
ePayPolicy extends this service as a component of their digital payment services so that insurers can focus on what they do best—serving their policyholders, providing excellent coverage, and fulfilling their promises in the event of loss—while leaving the complexities of chargeback management to the experts at ePayPolicy.
What are your recommendations for preventing chargebacks?
Although taking additional steps to prevent chargebacks can be intricate and time-consuming, implementing proactive strategies now can significantly reduce their frequency and ultimately save more time than addressing disputes after they happen. You can do this by implementing:
Transparent Policy & Cancellation Information: Ensure all terms, coverage details, and pricing are clearly displayed and explained before purchase. Provide downloadable copies of policy documents.
Comprehensive Purchase Confirmation: Send detailed confirmation emails with policy numbers, coverage details, and contact information for support.
Secure Payment Processing: Use PCI-compliant payment gateways like ePayPolicy to protect customer information.
Proactive Customer Support: Offer 24/7 support and a clear refund process to address customer concerns quickly before they escalate to a chargeback.
Recurring Payment Reminders: To avoid disputes, send multiple reminders before charging the customer for policies with automatic renewal.
Customer Consent Verification: Verify customer and consent before processing any payments to prevent unauthorized transactions.
Have Clear Billing Descriptors: Billing Descriptors appear on a client’s statement. Having recognizable billing descriptors aligned with your business name can prevent your customers from disputing a charge from a company they aren’t familiar with.
Maintain Detailed Records: Keep thorough documentation, including signed policy agreements, correspondence, and proof of delivery of policy documents. Utilize a Credit Card authorization form signed by the cardholder.
Using a strategic approach combined with the suggestions above can help insurers protect revenue and maintain customer trust.
How do you fight chargebacks?
Contesting a chargeback once it’s been issued can feel like an uphill battle, requiring meticulous documentation and persistence with negotiation. Nonetheless, your funds can still be reclaimed through avenues such as:
Leveraging your Payments Partner: Seasoned Payment providers like ePayPolicy can help you navigate the dispute resolution process giving you the best odds for a favorable resolution.
Responding Promptly: Submit detailed responses within the required timeframe, including all relevant evidence to dispute false claims.
Including a Cover Letter in your Defense: You should generally use a cover letter – also known as a rebuttal letter – when fighting a chargeback, as it acts as a concise summary of your case, highlighting key points and referencing the supporting documents you are submitting to argue against the chargeback claim effectively.
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