Common Challenges with Chargebacks in the Supplemental Insurance Sphere

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Common Challenges with Chargebacks in the Supplemental Insurance Sphere

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Randolph Bunnell is an experienced copywriter and marketing consultant. He has a deep knowledge of digital marketing and SEO. Randolph also has a medical background and enthusiastic about healthcare technologies. He shares helpful tips and info about health problems treatment in his blog Skin Answer.

Chargebacks in the supplemental insurance sphere are complex, and if not managed appropriately, can negatively impact the providers.

The supplemental insurance industry has come a long way since its inception. It plays a significant role by chipping in where basic health insurance plans don’t cover. Supplemental insurance is an additional medical coverage purchased to help customers pay for services and other out-of-pocket expenses that are not covered by regular insurance. It can be in the form of deductibles, co-payments, co-insurance, or cash benefits, to cover lost wages, transportation, food, or any other unexpected costs related to your health condition. However, despite the many ways supplemental insurance benefits customers, some customers are displeased with the cover. As a result, they file a chargeback on their supplemental insurance payments. Chargebacks in the supplemental insurance sphere are complex, and if not managed appropriately, can negatively impact the providers.

A chargeback ratio of more than 1-2% of total sales leads to a provider being terminated by their payment processor. The provider will be added to the Terminated Merchant File or classified as “high risk.” It is a blacklist file that prevents the provider from accepting credit cards again in the future. Here are common challenges with chargebacks in the supplemental insurance sphere and how to deal with them

Coverage Offered to Fail to Satisfy Customers

Many supplemental insurance plans are facing a chargeback challenge due to customers claiming that they are not receiving the medical or prescription cover they are expecting. Data collected by recent research states that 51% of consumers who requested a chargeback expected more savings on their medical billings. The supplemental insurance sphere can avoid this challenge by educating their customers about the insurance plan. Doing this will help the clients to understand the amount they can expect to save, what is, and what is not covered by the plan.

Unsatisfactory Mode of Payment

Apart from receiving fewer savings than what they expect, some customers file chargebacks because they are dissatisfied by the mode of payment in which they receive their medical billing. Most supplemental insurance plans pay a lump sum or scheduled payments if a customer meets particular conditions, and is not usually immediately. Again, communication with the customer can prevent this dissatisfaction.

Lack of Clear Understanding of the Service and Its Benefits

According to the study, 29% of the chargeback requested by customers was because they felt they didn’t understand the service or its benefits. If supplemental insurance providers want to deal with this difficulty, they should clearly explain the service and benefits of the plan to the clients. They can create strategies that address key concerns raised by consumers and should explain to them the benefits of insurance products before enrollment. Carry out a customer satisfaction survey after that to find out the issues they faced during the enrollment process. Supplemental insurance providers should also read reviews of their services to get the opinion of the customers. It will help keep chargebacks as low as possible.

Unclear Cancelling and Refund Policies

Supplemental insurance plans have complex cancelling policies. As a result, 11% of customers ask for chargebacks because it is not easy to cancel a policy or get a refund. The providers should, therefore, implement steps that make it easy for customers to cancel an insurance plan at any time. State the cancelation or refund policy and ensure customers read it before enrolling.

Fraudulent Transactions

Issuing banks also file for a chargeback when they receive a written complaint from a customer stating that the customer didn’t authorize or participate in the transaction appearing on a customer’s billing statement. This occurrence is common with phone orders. It leads to losses and lack of business trust. The best way to deal with this chargeback is to ensure phone orders have a secure validation system and call off suspicious orders. Verify the customer name, phone number, and address with the card-issuing bank to act as proof in case they dispute authorization. Ensure the customer signs any acknowledgment of payment or service. Use fraud services such as AVS and CVVS offered by the payment processor.

Canceled Recurring Billing

It is another reason why the issuing bank might file for a chargeback. It occurs when a customer writes a claim to the card-issuing bank that the supplemental insurance provider billed the customer despite having notified them to cancel the recurring services. It also occurs when the billing amount exceeds the pre-authorized amount range.

Service Not Received

A chargeback will occur if a customer sends a written claim to the card-issuing bank stating that they didn’t receive the expected service or canceled the order when the service delivery delayed. A supplemental insurance provider can avoid a chargeback from this type of claim by providing proof of delivery of the service to the processing bank. To avoid this, don’t process your customer credit card until you deliver the service.


Supplemental insurance sphere faces many chargeback challenges and many solutions have been written on how to deal with them. The providers should ensure customers read and understand the service and the benefits offered by the insurance before enrollment. Use the tips above to reduce the potential of chargebacks. If it happens, respond to the dispute as quickly as possible to prevent the matter from getting out of hand. In the meantime, practice due diligence while closing any policy and ensure you are providing your consumers with excellent customer experience and satisfaction. You will be retaining your hard-earned money instead of giving it back.