The Philadelphia card marketer InsurCard announced Thursday that Visa Inc. would be the preferred payment network for the debit cards it offers to pay insurance claims.
Insurers favor reloadable debit cards because they shift some of the risk, and a lot of the paperwork, away from themselves and to companies like InsurCard, it said. The advantage to consumers is a faster payment.
"If you have damage to your home, you'd receive a card on the spot, and you would have money loaded on the card for hotel or car," said Richard Meek, vice president of sales and marketing for InsurCard. "That card would be reloaded as many times as it took to actually close your claim."
Bancorp Bank issues the InsurCard card, which can also bear MasterCard Inc.'s brand.
About 1,000 InsurCard cards are in circulation throughout the United States. They are primarily used to pay out workers' compensation claims, though they also pay for catastrophe relief and auto claims.
InsurCard, a three-year-old subsidiary of Service Network Design LLC, is distributing its cards through several third-party administrators that handle insurance claims for big companies. Meek said InsurCard is in the "implementation phase" with a top-five insurer.
"The business case for insurers needs to be clearly spelled out, and in some cases, [automated clearing house] is a very viable alternative," Zilvinas Bareisis, a senior analyst at Celent, said in an e-mail.
Analysts said the cards would grow more pervasive over time.
"The only limit on a prepaid card is imagination," said Brian Riley, a research director in the bank cards practice at TowerGroup. "When it comes to distributing funds, they can't be beat."
