Remember checks? Printed paper checks that you rip open the envelope, review the payment, endorse, deposit, and invariably, could get lost in the mail, created work for both the issuer and the payee and could sometimes take days or even weeks to reach its final destination? This is an aggravating, outdated, and inefficient process even in the most ideal circumstances. But now imagine that the payee has been in an accident or affected by a natural disaster and needs funds fast. Or that the payee needs their deposit money back to place in a new location and does not have financial flexibility to complete the task without a return of funds. Those disbursement funds are now critical and time-sensitive.
That’s why digital disbursement technology is not only imperative for industries like property and casualty insurance, but critical for utilities and overall biller efficiencies.
The True Costs of Disbursement for Insurance and Utility Providers
Property and casualty insurance companies know that speed is the biggest key to getting disbursements to policy owners when disaster strikes. But let’s first take a look at how disbursements have traditionally been handled before digital payment technology revolutionized this often-antiquated legacy system.
Once a policyholder files a claim and it has been approved, the insurance company must cut a physical paper check payable to the policyholder. This means that the insurance company is paying for the physical printing of the check, which, according to the Wall Street Journal, can cost issuers between $5-20 or more per check.
In addition to cost, this batch printing slows down the disbursement process. And that’s before the policyholder also faces issues like slow mail transit, having to deposit the check into their account and waiting for the check to clear. In even the best of circumstances, using checks for disbursements costs the issuer money and the policyholder time. If the disbursement is in direct response to an emergency situation, this could lead to further problems.
Disbursements Should Move at the Speed of Life
Recent research shows that policyholders face a major life event, emergency repair needs or disaster relief, on average, once every 11 years.
Let’s say that Susan is a homeowner and severe storms in her area have caused roof damage to her home and her insurance claim has been approved. In years past, Susan would have to check her mailbox every day for a paper check before she could even start the process of repairs.
Now, with digital disbursement technology, once Susan’s claim is approved, her property and casualty insurance carrier can initiate either an ACH transfer to her bank account or even push her digital disbursement funds directly to her preferred card or payment method almost instantly. That means Susan can get her roof repaired sooner and with far less hassle. And when Susan’s happy with her insurance company, she repays them with her loyalty.
The same scenario can be applied to utility bills, which we all have to pay. Utility providers are sometimes tasked with issuing refunds for overpayment of bills or offer cash back rewards to loyal customers. The value of these disbursements can vary widely but there is one thing that is certain – it is far more cost effective for the utilities to digitally disperse the funds rather than issuing and mailing a physical check. And it does wonders for customer satisfaction when those funds are available in seconds, not days or weeks.
Digital Disbursements as a Customer Service Tool
It’s not just the insurance industry which is utilizing digital disbursement technology to up their customer service game and boost brand loyalty. Disbursements, or “outbound payments” as they are sometimes called, are used regularly in industries as diverse as legal services, retail, customer loyalty programs and more.
With competition becoming more fierce in almost every industry, differentiating factors such as fast and easy digital disbursements can be the deciding factor when a consumer is choosing to whom they want to give their business. These key switching behaviors are becoming even more critical for customer loyalty, retention and growth.
So, if your organization still uses outdated paper check disbursements, it’s time to start thinking about how much it is costing you. Not just the obvious costs of check production and mailing but the longer-term effects of utilizing an inefficient system of outbound funds distribution. When it’s time for your customers to decide whether they want to stay with their current provider or seek out a new one, the speed of disbursements, particularly in an emergency, may be one of the biggest factors in that decision.
Are you confident that your disbursements process will pass the consumer loyalty test? If not, let us help you with seamless integration and Best in Class award-winning payment technology.