Prepaid Makes Insurance Payouts Easier and More Cost-Effective
If your house is damaged in a storm, you don’t have time to wait around to settle your insurance claim or wait for a payment–you need help now. Previously, insurance companies would send paper cheques in the mail, but cheques are expensive, time-consuming, and undependable. Thanks to alternative payment methods, there are now easier, faster, cheaper, and more accessible ways to handle payments. One option is prepaid.
According to People’s Trust, in 2013, Canadian insurers paid out an estimated $24 billion in home, auto and business claims, with the majority of payments distributed via cheque. However, as we showed you in our recent #KillTheCheque ebook, cheques are expensive. This is especially true for insurance companies and their clients. According to Scotiabank’s Cheque Cost Issuance Model, after administration, printing, mailing, overhead, reconciliation and fraud management, the cost to create a single cheque can be $15-25, and in some instances go high as $50!
By comparison, it costs an insurer less than $3 to issue a prepaid card, and a fraction of the cost to reload it. In an insurance claim that involves multiple payments, the average savings of paying via prepaid card vs. cheque can be 85 percent, according to John Barbella, a senior vice president with Bancorp Bank. Examples of this include workers’ compensation claims, or when the owner of a ruined house is compensated by their insurance company for hotels, home repairs, or construction bills. Instead of sending out an additional cheque every time a new payment is required, the insurance company can have recurring payments automatically loaded onto the prepaid cards.
“Insurance companies can save money, but one of the biggest drivers is they can control the process and have a better solution providing consumers with immediate access to funds,” Barbella says.
Benefits of Prepaid Cards for Insurance Claims
With a prepaid card, insurance payments and settlements can be made instantly, enabling on-the-spot emergency funds to disaster victims. Insurance companies save time and money by setting up reloadable payment programs to load funds on cards at the click of a button, putting money in the hands of their customers faster than ever before, and with the flexibility to use funds anywhere, including ATMs and online. Claimants no longer have to waste time waiting for cheques, or have to deal with banks to cash or deposit their funds, which is especially helpful for those without access to a bank account. Insurance companies can control exactly when funds are transferred, and they have up-to-the-minute reporting on programs, card usage, and more.
When disaster strikes, people want to know that their insurance company has their best interests at heart. A simple, speedy, secure, and cost-efficient payment like prepaid is the choice to handle insurance payments.
Ready to make the switch? Click the image below to check out our new ebook, “Transitioning to Electronic Payments for Canadian Businesses,” where we #KillTheCheque and show you the benefits of switching from cheques to electronic payments, as well as the Top 5 Benefits of Outsourcing Your B2B Payments.
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