Life Insurers Could Pay Death Benefits Through Virtual Credit Cards
An insurance claim payment company has worked out a deal with Mastercard.
Life insurers could soon be paying more claims through virtual payment cards.
Traditionally, many life insurers have been so conservative that they have resisted accepting payments made through credit cards or debit cards, let alone pushing cash into cards.
But One Inc., a Folsom, California-based insurance payment company founded in 2006, recently formed a relationship with Mastercard, a Purchase, New York-based payment card giant.
MasterCard will work with One to combine Mastercard’s Mastercard Send payment program with One’s ClaimsPay benefits payment program.
One has marketed the ClaimsPay program heavily to issuers of personal property and casualty protection products, such as homeowners insurance, but one of One’s relationships is with John Hancock.
At this point, One helps Hancock only with collecting payments from customers, not with making payments. But, in theory, it’s possible that life insurers could eventually join P&C issuers in using virtual payment cards to make benefits payments as well as to collect premium payments.
A Claim Payment Shift?
Today, typical life insurers pay death benefits mainly through checks, an online checking account or electronic fund transfers.
Even on the P&C side, where many issuers make a point of promising customers rapid payment, U.S. issuers still pay about 75% of claims by sending paper checks, One reports.
With the new One-Mastercard program, a life insurers could also pay life insurance benefits, annuity benefits or other benefits through online payment cards.
The new approach could be especially useful to younger beneficiaries who are unused to checking accounts, or to beneficiaries outside the United States, who may be in countries with different electronic funds transfer conventions and no remaining check processing operations.
One cites estimates from an outside data firm, Juniper Research, indicating that the world’s companies and consumers made about $1.7 trillion in payments through virtual cards in 2020.
Juniper is predicting virtual card volume will increase to $5 trillion by 2025.
One
One already processes about $18 billion in premiums and claims per year for about 200 insurers.
Great Hill Partners, an investment company, acquired One in early 2020.
One recently announced that Christopher Ewing, the company’s co-founder and CEO, would give up the CEO post to become chief strategy officer.
One brought in Ian Drysdale, the former leader of the payments division at Zelis, a health care technology company, to serve as its CEO.
The company then hired David Thayer, who previously worked for Elavon, a card transaction processing business owned by U.S. Bancorp, to become its chief financial officer.
Correction: An earlier version of this article gave an incorrect description of Ian Drysdale’s work experience. He has experience with in the payments sector.
(Photo: garmoncheg/Shutterstock)