Stored-Value Cards to Pay Insurance Claims

Several insurers have begun collaborating with Visa to deliver insurance claim payments to policyholders via stored-value cards. The idea originated with insurers who were seeking to reduce the cost of issuing, handling and delivering checks to claimants. Visa saw an opportunity to develop an entirely new market and, more importantly, boost consumer familiarity with the concept of a stored-value card.

Here is how the product works for Hartford Financial Services Group. When Hartford approves a claim from one of its homeowner policyholders, the customer can ask that some or all of the payment be issued on a stored value card. Hartford transfers the money to the card issuer (Citibank, in this case), which loads it onto a co-branded card and issues it to the customer. The card is activated by calling an "800" number. Cards can be replenished as needed, and can be used anywhere a Visa card is accepted, including ATMs. Rick Pileggi, director of stored-value cards for Visa U.S.A., told the American Banker that the card also carries the same guarantee as a credit card. "If it is lost or stolen, the customer has zero liability, and the card can be replaced."

Hartford Insurance initiated a nine-month pilot test in January. Cards are available to homeowners insurance customers in the 25 states served by Hartford's Tampa, San Antonio and Phoenix claims centers. In the future, the company intends to issue a claims payment card automatically with a policy so that, when a claim is approved, the insurer can load the settlement onto the card rather than issue a check. Standard Insurance of Portland, Oregon and Amica Mutual of Lincoln, Rhode Island are also using stored value claims payment cards from Visa.