“Your Cheque is in the…Morgue!”

Sometimes revolutions start off quietly and build and build until you wake up one morning and find that everything has changed…almost overnight.

This is the case with Insurcard, a relative new comer to the insurance business that will revolutionize the way claims are paid and settled, whether they be single payment or long-term payment formats. Brainchild of Bob Mendte and Roy Schwartz, Insurcard is a serious, intelligent means of paying insureds for losses in a number of different lines and having a number of incredible benefits to the insureds themselves, to fraud watchers and to agents and brokers in the process. Insurcard is not a complicated concept, but it is times taking to put into place for carriers despite the fact that their acceptance of it is almost immediate once the logic is set out—hence the steady, but gradual drum beat to which this process is moving forward. The partners are swinging hard and scoring regularly with industry pros, so you may expect this brand to appear on your desk and in your insureds’ vocabulary before long.

The Company’s founders and creators are quick to point out that a claim check typically costs insurers $7 to $14 per issued check and add to that production and handling costs, quality control, SOX audit, fees and so much more including postage, mailing, errors and the like and the number can climb as high as $25 per check. It does not stop there either. Post issuance costs are another thing entirely, where voids, stop payments, reissues, and other processing problems come into play. Last but not least, there is the question of insureds ever receiving payment and feeling satisfied with the process – a matter that reflects upon all of the players on the insurance side, notably the agents and brokers who become the nearest targets for clients’ dissatisfaction. According to Bob Mendte “It’s not complicated if you see it as we do. On our end, a card packet costs $2.75 plus postage; there is a small service charge load and 10 payment average of $1.78 per payment. In other words, for under $5 for the entire process with all of the controls available in using a simple debt card, the cost comes way down. When there are multiple payments for workers comp claims and where the insured simple has the card replenished again and again instead of receiving checks, the efficiencies and scale are indisputable. In fact, it is in workers compensation where we have had almost immediate acceptability of our Visa prepaid card for indemnity payments to injured workers,” Mendte adds, noting further, “We have been able to use our virtual card, as well, for healthcare providers with equal success.”

Roy Schwartz, co-founder of the company, relates that the Insurcard marketing team is finding again and again that all of the cost advantages are multiplied in insurers’ eyes when the fraud control benefits that insurers work so hard to manage are factored in: “In fact, having this card in a carrier’s toolbox can limit the fraud exposure immensely and limit the risk of check issuance in such matters as the question of being traceable from loading time to redemption, the misappropriation of checks, the clarity of expiration dates and the redemption points where the merchants are electronically identified,” Schwartz stated underlining added incentives for all parties on the insurance side: “Using a debit card includes MasterCard’s protection for fraudulent use that does not touch upon an insurer. In other words, where a check reverts back to the insurer to resolve, in the case of the credit card, the bank if the backer of the transaction once the monies have been processed from the carrier to the bank card issuer. The benefits are obvious: funds are available immediately, there are no deposits to the banks, no payment and remittance advice delivered, a very easy reconciliation to PMS, no lost checks and, last but not least all of it is faster then snail mail.” According to Mr. Mendte, the Insurcard debit card system has been found to be even more effective then EFT because it utilizes existing provider technology and there is no enrolment required and payment and remittance advice is delivered all together. He alos stated that the process takes an insurer a period of about 14 weeks to roll out including a piloting period. “The effect is simply amazing once this is implemented,” Mendte stated, adding the experience of Liberty Mutual and other substantial providers as proof. “We find that insurers are finding it hard to resist because claimants like it so much. The fact of the Visa zero liability policy backing up the Visa card, the fact that most merchants accept Visa, the added benefit of access to over 400,000 ATMs and 40,000 surcharge free ATMs in the U.S., in almost ever major national retailer and service provider in the country provides claimants’ funds immediately and conveniently with no clearance delay and no charge for bank transactions,” Roy Schwartz is quick to note.

“In short, the insurer’s and agent’s principal benefit is the customer’s hassle free satisfaction together with the costs, bank responsibility in the process and fraud controls, he concluded.

As an example of how this works, we followed a typical sequence in workers compensation; here’s how it works: an adjuster authorizes a claim payment; next, the insurer tells the bank to issue the Insurcard payment to the insured. The bank sends a personalized card and loads the payment to that very card. The claimant receives the card and activates it by phone, ATM or by web and may use the Insurcard at ATMs or any merchants accepting Visa. The bank provides 24/7 card holder support. The adjuster may offer additional payments to the claimant which would involve reloading and starting the process over again, very simply and directly. At the end, the bank will provide the insurer with a reconciliation and statistical reporting.

All in all, it is simple but revolutionary when you think of it and, so far, 38 states agree. New York thus far has expressed tacit approval, i.e. no objection to the use of the cards.

“It is kind of a revolution, in fact,” concludes Mendte, “we believe it simplifies everything and betters the system, giving insurers a new, modern look and feel instead of the old format of difficultto- deal-with, gigantic and slow moving enterprises. This is fast, clean, accurate and effective and we believe we have started a new way of seeing the process claims settlement and control with Insurcard.”

J. ROBERT MENDTE

President, InsurCard

With more than 30 years as an insurance operations executive and management consultant, Bob is the founder of InsurCard. Bob’s early career was as Operations Officer for CIGNA International Claims and Zone Operations responsible for nine CIGNA field offices. Then, in 1997, Bob founded Service Network Design LLC, a consultancy specializing in insurance operations and service centers. As a management consultant, Bob led the restructuring of Claims operations at CIGNA, Prudential, OneBeacon, and NJM. Bob managed the offshore outsourcing of Prudential’s claims operations to Ireland. Bob also managed the installation of re-loadable debit cards for a major credit card company. The concepts behind InsurCard grew out of Bob’s work in the debit card industry.

ROY SCHWARTZ

VP of Operations, InsurCard

Roy’s 30 plus years as an insurance IT executive and management consultant have been brought to bear since he joined InsurCard at its inception in 2007. He had been working at Service Network Design LLC since 2003. Previously, Roy served as Vice President, Information Systems at Prudential. His experience in Life and P&C insurance companies, as an executive and as a management consultant, include such top industry brands as CIGNA, Connecticut Mutual, Mass Mutual, One Beacon, and several major insurance agencies and brokers.

The New Virtual Card Process…

1. The insurance company or TPA transmits their check payment file (including checks and Explanation of Payments/Benefits (EOP/EOB)) to the InsurCard Virtual Card processing center.

2. The InsurCard Virtual Card processing center runs the check file through a conversion program.

3. Each payment is transformed into an InsurCard Virtual Card payment in the image of a fax or an email to the designated provider.

4. The InsurCard Virtual Card fax or email is then sent to the provider. It contains the payer’s name, EOP/EOB, a one-time use virtual prepaid debit card, and instructions for use.

5. Upon receiving the fax or email, the provider keys the card number into their merchant terminal and matches the payment to the customer bill based on the EOP/EOB included on the fax or email.

6. Use is monitored by the InsurCard Virtual Card processing center which also takes calls and answers questions from providers.