2025 was supposed to be the breakthrough year for payment modernisation across financial services, including insurance. The architecture existed, instant-payment rails matured, regulators pushed forward, and customer expectations surged. Yet many organizations, banks, and insurers alike, found themselves stuck halfway.
Projects lagged, legacy systems balked, and cultural resistance kept “modern payments” from becoming the default. For carriers focused on treasury, billing, claims, and finance, these bottlenecks are particularly significant: a stalled payment upgrade may mean slower claims payouts, inefficient cash flow, compliance risk, and reduced competitiveness.
Below are the six biggest areas where payment modernisation stalled in 2025, and why 2026 must be the year of decisive execution.
1. The Insurance Promise vs. Reality Gap: Many Firms Still Haven’t Fully Adopted Available Technology
Despite a broad consensus on the need to modernise, actual adoption lagged. According to a 2025 industry-wide survey by ACI Worldwide, although 69% of executives consider their firms “payments leaders,” fewer than half (44%) said payments innovation was a C-suite priority. More than half admitted they were not fully using technology already available. Legacy platforms remain the biggest single obstacle to modernization.
Only 36 % of organizations in that survey say they have a long-term roadmap for payments transformation. A mere 25% are actively phasing out ageing payment platforms.
For carriers, this means that while they may talk about “modern payments,” many still rely on outdated systems, limiting their ability to offer instant payouts, flexible billing, or multi-method premium collection.
2. Legacy Insurance Infrastructure, High Cost, and Technical Complexity Slowed Upgrades
Modern payment rails, real-time payments, ISO 20022-enabled messaging, continuous 24/7 operations, cloud-native gateways, all require robust, scalable infrastructure. But many institutions found the cost, engineering demands, and risk of integration too high to move quickly.
Smaller banks or divisions, especially, hesitated: a 2025 report found that roughly 30 % of small financial institutions that did not offer instant payments lacked a pricing or business model to support them, and many cited resource constraints, security concerns or integration costs as barriers.
Carriers relying on smaller or regional banking partners, or who have legacy billing/claims systems, may still be disadvantaged. Without investment, modern payment capabilities remain theoretical.
3. Insurance Cultural and Organisational Resistance Slowed Adoption
Even when technology was available, adoption was often hampered by internal resistance. Over half of payments executives in the ACI-Worldwide survey found cultural factors as a major hurdle to transformation.
Without internal alignment (among treasury, finance, billing, claims, operations), payment modernisation projects often stalled or failed to deliver value. Where payments were not integrated as a strategic business function, efforts to modernise remained superficial or inconsistent.
For insurers, this inertia undermines potential gains, from faster claims payouts to smoother premium billing, because payments remain siloed rather than embedded into the core customer lifecycle.
4. Regulatory, Compliance, and Fraud Concerns Created Friction
Although demand for instant payments increased, implementing and operating them posed compliance, security, and fraud-risk challenges. According to the 2025 ACI-Worldwide study, 77% of respondents cited fraud and cybersecurity risk as top barriers. Regulatory complexity was also flagged by 63%.
These concerns discouraged some firms from fully deploying or enabling faster, real-time payment rails, especially those involving open banking, always-on availability, or cross-border flows.
Carriers exploring payment modernisation need to balance speed and convenience with compliance, data security and fraud risk. Without robust governance and risk-control capabilities, the shift may expose them to operational or reputational harm.
5. Real-time P&C Insurance Capabilities Remain Uneven
Even as major institutions invested, many smaller banks and credit unions did not.
This uneven adoption has broader implications: if many smaller or regional players stay on legacy rails, the network effects of real-time payments such as ubiquity, reliability, reach, remain unrealized. The delays and outages become systemic rather than isolated.
For insurance carriers, especially those operating across many banks or markets, this fragmentation undermines the value of “instant payment” because not all counterparties (customers, agents, partner banks) may support it.
6. Insurance Innovation Priorities Shifted
While many financial institutions flagged payments modernisation as a priority, 2025 saw an increasing focus on new frontier technologies, above and beyond payment rails. For example, in the 2025 industry survey from The Payments Association, respondents listed AI, cyber-security, and compliance as rapidly rising priorities; interest in payment-method innovation, embedded commerce, or open-banking growth slipped slightly. (The Payments Association, “PAY360 2025 – Key Findings Shaping the Future of Payments, 2025)
This suggests that firms are increasingly focused on “what’s next”, like fraud detection with AI, regulatory compliance, risk, etc., sometimes at the expense of completing fundamental payment infrastructure upgrades.
For carriers, this may mean that even if they intend to modernise payments, actual delivery could continue slipping because other, new, and maybe more glamorous projects (AI, data, compliance) absorb budget, leadership, and focus.
Why This Matters—and How Insurers Can Modernize Payment Systems in 2026
Carriers operate at the intersection of retail, risk, and operations: they need P&C insurance payment systems that handle premium billing, third-party payments, claims disbursements, and agent commissions. The stalls in 2025 mean many insurers may still be running on legacy, slow, rigid payment systems, which affect customer experience, cash flow, operational efficiency, and competitiveness against fintech-driven players or embedded-insurance models.
But 2026 presents an opportunity, perhaps the last before payment modernization moves from competitive advantage to baseline expectation. As banks, PSPs, and FinTechs accelerate adoption of real-time rails, ISO-20022 messaging, and API-first architectures, and as regulatory pressure and customer expectations mount, carriers can’t afford to wait.
To succeed in 2026, overcoming payment modernization challenges in insurance is a priority:
- Treat payments as a strategic business function, not just a back-office process.
- Invest in modular, API-driven insurance payment orchestration platforms, decoupled from legacy core systems.
- Ensure cross-department alignment (billing, treasury, claims, operations) around payment strategy.
- Account for compliance, fraud, cyber-security, and regulatory risk from the start.
- Evaluate and plan vendor partnerships with a future-proof mindset.
If they act decisively, insurers can turn 2026 into the year payment modernization finally delivers: real-time, flexible, customer-friendly, secure and efficient.
Want to see how modern payment orchestration transforms billing, claims, and commissions? Explore our blog on end-to-end P&C insurance payments and discover why it matters now.
