There's much to be said about the way insurance companies send settlements to customers. Paper settlement cheques for example, the most common form of payment against claims, face numerous limitations that can hinder a customer's experience and cause insurance companies unnecessary costs and time.
Call Me Old-Fashioned
For the customer, cheques fail to provide instant access to funds: even after depositing the cheque, customers have to face holds on funds until the cheque clears. Not to mention the need for cheques to be mailed (which is slow and costly), that cheques are easily lost or stolen, and difficult to re-issue. Plus, for people who don't have easy access to bank accounts, banks, or ATMs, payday loan shops charge high fees to cash those cheques, making it abundantly clear that there is a need for a new solution for the customer.
But it's not just the customer that this 50+ year old payment method causes grief for. Insurance companies face their own bevy of difficulties.
Cheque issuance and the associated functions for reconciliation and fraud management are costly.
Just look at Scotiabank's Cheque Cost Issuance Model which shows that, including administration, postage, and overhead, costs can be anywhere from $15-25 per cheque. In some cases, it's as high as $50 per cheque. That's the cost to issue ONE customer their payment. And what if the cheque is lost or stolen? Now the insurance company faces a potential fraud issue and has to pay out to re-issue the cheque again.
At the end of the day, is it worth having that much personal information and money pass through an innumerable amount of hands before it reaches the customer? Is it really worth the risk?
Insurance companies are finally seeing the light at the end of the tunnel, and looking to alternative payment methods that make funds more accessible and reduce the cost of running a payment program.
The Saving Grace
One such payment methods is instantly issued Visa or Mastercard prepaid cards or virtual cards.
Wouldn't it be nice if you could arm your in-field claim disbursement officers with a tool that allows them to issue on-the-spot emergency funds to disaster or property damage victims?
With instantly issued prepaid and virtual cards, insurance companies can see significant time and money savings due to the elimination of cheque mailing, can configure programs with reloadable options to load funds on an ongoing basis, and receive comprehensive reporting on programs, loads, and card usage.
Plus, the customer now has a means of receiving money faster and can spend sooner with the flexibility and security of using funds anywhere in the world including ATMs and online.
So, How Does Instant Issuance Work?
For insurance companies, instant issuance is required when customers need financial assistance at very short notice (fire, car accidents, acts of God etc.) When these incidents occur, adjustors need tools to provide a portion of their settlement in advance, to cover the costs of additional living expenses (ALE).
Instant Issuance allows for prepaid Visa or Mastercard card ordering, disbursement, management, and remote loading of funds instantly and on-the-spot.
For example, an adjustor will arrive on the scene of a damaged home. They will assess the costs and the claimant's needs. From there they can submit the claim in real time and can then issue a prepaid card to the claimant and activate it on-the-spot, providing them with instant access to much needed funds.
Regional office and field users can perform the following actions:
- Manage total funds available for payment disbursement programs
- Allocate cards to agents or adjustors in the field with different permissions
- Set limits on how much can be loaded on the card, and where cards can be spent
- Load funds and issue cards quickly and easily in real time (with the required approvals)
- Produce reconciliation reports detailing payments made by agent, time period, or location
- Manage card inventories by location/agent and get automated inventory replenishment
Want more details, use cases and case studies? Check out our Instant Issuance page here.