In a move that has clear potential in other sectors and lines of business in the insurance industry, New York-based JPMorgan ($1.8 trillion in assets) has launched a prepaid debit card for workers' compensation payments. The Chase Workers Compensation Card is designed to help insurance companies gain efficiencies and provide an alternative payment method for individuals entitled to workers' compensation.
According to Greg Kerwick, managing director, treasury services/emerging payments products, with JPMorgan, the card was launched as a logical way to expand its payroll card business. "We have a large market in the payroll debit card space that we issue to companies of all sizes. The concept of workers' comp has a strong correlation to payroll," Kerwick explains. "It was just a natural extension to issue the workers' comp card as a complement to our payroll card."
Chad Hersh, an Austin, Texas-based principal at research and advisory services firm Novarica, says that he foresees greater use of card technology in the insurance industry. "It's a two-way street in which payments can optionally be provided to claimants in a safe and convenient way, especially for those claimants without bank accounts who would otherwise pay a check-cashing fee," Hersh comments. He adds that carriers could also form partnerships to offer customers - particularly those without checking accounts - prepaid debit cards that could be used to make online payments.
The Chase Workers Compensation Card is a prepaid Visa debit card that is branded to the issuing insurance companies. JPMorgan operates the issuance and processing on the back end. The cards are accepted at any ATM or point-of-service (POS) device that accepts Visa. "This offers a convenient alternative to checks for insurance companies and individuals," JPMorgan's Kerwick says. "The funds are immediately available and the reload is done in the same manner as a direct deposit. Once you have the card, there's no waiting for a check to arrive in the mail."
For JPMorgan corporate clients enrolled in the bank's payroll card program, there isn't much to implement, Kerwick notes. "You're just adding volume," he says. "The client sends us an enrollment file, and we issue the cards. It's just a regular payment run."
To further enhance the product, JPMorgan is providing its insurance clients with a set of reporting and administration capabilities. According to the bank, program administrators use an online managing and reporting tool to enroll cardholders, ensure that cards have been shipped to new cardholders, electronically deposit funds into card accounts, track payments and produce nearly 20 types of reports. New cardholders also can be enrolled via batch file processing. However, adds Kerwick, "Insurers do not have access to the card behavior data. We maintain cardholder confidentiality."
Although the workers' comp card isn't the solution to insurance companies' paper woes, Kerwick asserts that it's certainly a step in the right direction. "This is just another way to help them," he says.
Streamlined Claims Processing
Central Mutual Insurance Company (Van Wert, Ohio) is now offering the Chase Workers Compensation Card to claimants who receive repeating payments. "Having the ability to provide an additional payment option to our claimants provides us with a competitive market advantage and enables us to streamline our claims paying process," said Thad Eikenbary, assistant VP - treasurer, with the insurer, in a statement.
According to figures from the Insurance Information Institute, Americans collected $42 billion in workers' compensation payments in 2006. About nine out of 10 people in the nation's workforce are protected by workers' compensation insurance.
-With additional reporting by Nathan Conz
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