In the highly competitive insurance sector, customer experience is a critical differentiator. While insurers focus on policy features and premiums, the claims payout process is often overlooked, creating a significant point of friction. Traditional disbursement methods—such as bank transfers and cheques—are slow, costly, and fail to meet the real-time expectations of modern consumers.

For an industry managing a global addressable volume of $250 billion in claims, according to Mastercard, relying on outdated processes is a competitive liability.

By modernising claims payouts, insurers can gain a substantial competitive advantage. Digital disbursements not only enhance customer satisfaction and loyalty but also create operational efficiencies, reduce costs, and improve data transparency. Those who lead this transformation will set a new industry standard. 

The competitive risk of outdated payouts

The claims disbursement process is filled with inefficiencies that directly impact customer retention. In an era of instant solutions, delays caused by manual processing and slow payment methods lead to frustration and erode trust, particularly during stressful events like travel disruptions or accidents.

Many insurers still depend on manual processes or third-party cash and voucher systems, adding complexity and friction. In the travel sector, where immediate payments for medical incidents or flight cancellations are often required, this problem is especially severe. Customers are frequently forced to cover significant costs out-of-pocket and wait for reimbursement, a poor experience that damages brand loyalty.

Furthermore, traditional payout methods create significant operational challenges. A lack of transparency makes payment tracking, reconciliation, and regulatory compliance difficult, increasing the risk of errors and non-compliance. While transitioning from these legacy systems may seem daunting, the rewards are significant. Insurers that prioritise rapid, seamless payouts will not only improve customer satisfaction but also generate new revenue streams and distinguish themselves in a crowded market.

Gaining a competitive edge with digital disbursements

Consumer expectations for payments are evolving rapidly. Marqeta’s 2025 State of Payments Report highlights this shift, revealing that 32% of consumers are interested in AI-powered wallets and over half are keen to try biometric payments. Offering slow, traditional payouts is no longer a viable strategy.

To gain a competitive advantage, insurers must deploy solutions that are fast, secure, and cost-effective. The key is widespread digitisation of the claims payout process. Modern card issuing platforms enable insurers to instantly issue tokenised virtual cards upon claim approval. These branded cards can be provisioned directly to a customer's digital wallet without requiring a physical card or a separate mobile application.

This process offers a superior customer experience:

1. The customer verifies their identity.

2. A virtual card is added to their digital wallet.

3. They can make an immediate payment for approved services, such as roadside assistance or medical treatment.

This digital-first approach also provides insurers with greater control and visibility. Using features like pre-funded balances or Just-in-Time (JIT) Funding, insurers can authorise transactions in real-time while controlling where and when funds are spent.

The strategic benefits of a modern payout infrastructure

Adopting digital disbursements provides direct, measurable benefits that strengthen an insurer's competitive position.

  • Operational Efficiency and Cost Reduction: Automating manual processes eliminates inefficiencies and reduces errors, lowering the operational costs associated with traditional payouts. Insurers can also secure volume-based discounts from merchants through the use of digital cards.
  • Enhanced Compliance and Security: With a modern platform, compliance protocols can be built directly into the payment flow. Cross-border disbursements are simplified, regardless of currency or local regulations, and fraudulent activity is easier to identify and prevent.
  • Improved Customer Retention: A seamless, real-time claims experience fosters trust and significantly improves customer satisfaction. This is a powerful differentiator that drives loyalty and reduces churn in a competitive market.

The opportunity to modernise claims disbursements is clear. Insurers that adopt digital payout solutions now will not only satisfy the demands of today’s consumers but also establish themselves as industry leaders. By delivering faster, more secure, and cost-effective payouts, they can build a sustainable competitive advantage for the future.