Why insurance carriers shouldn’t be afraid to surcharge

In a competitive market where customer expectations are evolving rapidly, insurance carriers are under increasing pressure to deliver more value, more convenience, and more personalization—often without adjusting their pricing models. Surcharging, when implemented transparently and tied to real value, can be a strategic tool. They support innovation, improve operational efficiency, and enhance the customer experience. As highlighted in The Paypers’ recent analysis, payments have become a strategic lever in the insurance industry, with policyholders demanding fast, flexible, and secure interactions that mirror their everyday digital experiences.¹ Surcharging, when clearly communicated and tied to real value, can help insurers meet these rising expectations while sustaining the infrastructure needed to deliver modern, customer-centric services.

According to the newly released 2025 ACI Speedpay Pulse Insurance Trend Report, consumer expectations around billing and payments are not only rising—they’re diversifying. The report reveals that nearly one in four consumers would consider paying a small surcharge if it meant their payment would process faster.² This signals a clear opportunity for insurance carriers to reframe a surcharge as part of a premium experience, especially when tied to speed, convenience, and digital flexibility. With digital-first channels, such as mobile apps and online portals, now dominating payment preferences across all age groups, insurers can confidently introduce surcharging that reflects the added value of modern, streamlined interactions.

Beyond core coverage, insurance carriers are increasingly investing in services that enhance the customer experience, such as claims support, digital tools, and personalized risk management. These services require significant infrastructure, regulatory compliance, and operational resources. Surcharges help insurers maintain and improve these offerings, ensuring customers receive more than just a policy—they gain access to a suite of valuable, ongoing services. In states like Texas, agents are permitted to charge fees for activities such as claims handling, issuing certificates of insurance, and loss control services, provided they disclose these charges transparently and reasonably.³ This reflects a broader industry trend where fees are not just administrative; they represent the real value delivered to policyholders.

Surcharges in insurance aren’t arbitrary—they’re a response to the evolving demands and costs of delivering modern insurance services. Rising expenses due to inflation, litigation, and reinsurance, as noted by the National Association of Insurance Commissioners (NAIC), have reshaped the economics of insurance operations.⁴ By implementing surcharges, carriers are able to offer lower premiums and introduce new technologies that improve customer experience and satisfaction. These tools not only improve transparency and responsiveness but also help reduce risk and improve outcomes—deciding to surcharge is a fair and necessary exchange for the added value customers receive throughout the policy lifecycle.

This shift toward service-based value is especially relevant in today’s digital-first insurance landscape. Customers expect seamless experiences—from mobile policy management to real-time claims updates—and delivering on those expectations requires continuous investment in technology, cybersecurity, and skilled support teams. A surcharge will help fund these capabilities, ensuring carriers can meet rising consumer demands while maintaining operational resilience.

According to the 2025 ACI Speedpay Pulse Insurance Trends Report, 78% of insurance executives say that service-related investments—such as digital servicing and customer support—are now essential to maintaining a competitive advantage.⁵ Rather than viewing fees as a burden, policyholders can help carriers manage costs, allowing for a more transparent and personalized insurance experience, one that evolves with their needs and adds measurable value throughout the customer journey.

This investment in digital-first experiences also depends on a resilient payment infrastructure – one that can support the speed, flexibility, and reliability today’s consumers expect with the peace of mind that comes from never missing a payment. Outdated or fragmented systems can lead to delays in claims payments, billing errors, and customer frustration, undermining the very services insurers aim to enhance. As insurers modernize their payment operations, they’re not only improving efficiency and reducing risk—they are also reinforcing the foundation for effective surcharge strategies. A resilient payment system ensures continuity during high-stress events, supports seamless customer interactions, and strengthens trust throughout the entire insurance experience. In this context, payment resiliency is more than operational; it’s a strategic pillar of delivering consistent, high-value service.

Today’s insurance consumers value clarity over cost-cutting. They’re willing to pay for convenience – whether it’s faster claims processing, flexible payment options, or digital self-service tools – but they expect transparency in return. According to the 2025 ACI Speedpay Pulse Insurance Trends Report, nearly 70% of policyholders say they’re comfortable with a surcharge if they understand the purpose of the charges.⁵ This underscores the importance of clear communication: when insurers position fees as part of a premium experience and explain the value behind them, they build trust and loyalty. In a market where customer retention is increasingly tied to perceived value, transparency isn’t just good practice; it’s a competitive advantage.

Precise data support the adoption of a surcharge. According to the 2025 ACI Speedpay Pulse Insurance Trends Report, a growing number of carriers are integrating a surcharge into their pricing strategies to support long-term sustainability and customer-centric innovation. This shift is driven by rising operational costs, increased demand for digital services, and evolving consumer expectations. Supporting this trend, the Council of Insurance Agents and Brokers reported that 62% of agents and brokers observed client fatigue due to rising premiums and administrative burdens, prompting insurers to rethink how they structure and communicate costs.⁶ As generational preferences shift and digital-first experiences become the norm, a surcharge is emerging, not as a hidden charge, but as a transparent component of a modern insurance model.

Surcharging is not merely a revenue tool – it’s a strategic lever. When used thoughtfully, they enable insurance carriers to modernize their offerings, meet evolving customer expectations, and remain competitive in a rapidly shifting market. As data shows growing consumer acceptance and industry adoption, the opportunity is clear: insurers that communicate value transparently and align fees with meaningful services will not only justify the cost, but they’ll also strengthen trust, loyalty, and long-term growth.