By Marcin Glogowski, SVP Managing Director for Europe and UK CEO, Marqeta
When it comes to insurance claims and payouts, efficiency and convenience are not just desired, they’re increasingly becoming expected. Whether it’s reimbursing customers for repairs after an accident or covering expenses for roadside assistance, insurance companies face increasing pressure to streamline their processes.
Mastercard estimates that the global addressable volume for claims and assistance disbursements is $250 billion per year, with Europe alone accounting for $100 billion of that figure. Traditional methods of payouts rely heavily on manual processes, including bank transfers and issuing cheques, which are time-consuming, cumbersome, expensive and frustrating for both consumers and insurers. Managing large volumes of transactions in this way left the industry vulnerable to inefficiencies and delays.
By modernising, digitising and automating the claims payout process, insurers can leverage enhanced data and insights to optimize risk management and detect fraud, while providing a more personalised customer experience, allowing consumers to receive instant or near-instant payouts to their chosen payment option, including directly to their bank account, debit or prepaid card or mobile wallet. Modernizing payouts turns a slow, paper-based process into a fast, transparent, and customer-friendly experience while also reducing costs and operational friction for insurers.
Given that streamlined and efficient claims processes foster trust and loyalty – why aren’t all insurers offering this?
Payout challenges
The disbursement process is rife with inefficiencies that can lead to delays and customer frustration. In a world where consumers are used to real-time solutions and fast issue resolution, slow and outdated payment processes can significantly impact trust and loyalty.
Many insurers still rely on manual processes, cheques, slow bank transfers or cash and vouchers that are handled by third parties, adding an additional layer of friction. This leaves customers who are already frustrated or dealing with a stressful situation waiting even longer for a solution.
In the travel sector, this problem is particularly acute. Flight cancellations or medical incidents often demand immediate payments and, without real-time disbursements from insurers, customers are left to pay hefty sums out of their own pockets before being reimbursed later. Considering insurers paid out £472 million in travel claims in 2024, the impact of this inefficiency on consumers is vast.
Another challenge is the complexity of managing reconciliation and regulatory compliance. The lack of transparency in traditional payout processes can make it more difficult for businesses to track and manage payments, leading to errors and compliance risks. Insurers must not only ensure that payouts are accurate but also that they adhere to regulatory requirements, adding a significant operational burden.
While tackling these challenges can seem like an uphill battle for a sector that has typically relied on slow, manual processes, those that get it right will help themselves stand apart from the competition. Prioritising quick payouts and smooth user experiences will not only build loyalty and satisfaction but also generate additional revenue and set insurers apart from competitors who are still stuck in the past.
Solving the payout problem
Marqeta’s 2025 State of Payments report found that 32% of consumers are interested in AI-powered wallets as they seek smarter and more innovative solutions to manage their finances. With over half keen to try biometric payments and 31% interested in voice-activated payments, offering cheques or slow cash transfers in the disbursement process is simply no longer enough. So, what should insurers be looking to deploy?
Speed is the most important factor to get right first. Payouts need to be real-time, but that isn’t all. Insurers need to marry this with secure, reliable and low-cost solutions, and this can be achieved through widespread digitisation of the process.
With modern solutions, insurers can request tokenised versions of physical cards, linked to a specific digital wallet or device. These branded cards can be issued instantly upon approval of the claim and used immediately without requiring a physical card or dedicated mobile app. Customers simply have to verify themselves, add the virtual card to their digital wallet and they can make a real-time payment, such as for roadside assistance or for medical treatment.
The digital nature of this process also gives insurers greater control, with visibility over where and when the payment is spent, as once the payment is made, they can either authorise it via a prefunded balance or Just-in-Time funding.
The benefits of digital payouts
Digitising insurance payouts directly benefits both the customer and the insurer. The virtual nature of this process means that compliance can be built in and cross-border disbursements can be made significantly more efficient, regardless of the currencies involved. Fraudulent behaviours are also easier to spot and manage.
Furthermore, cost savings can be made by moving away from manual processes rife with inefficiencies that will impact the bottom line, and operational efficiencies can be gained through simplified procedures and a reduction in errors. Digital cards, assigned to a merchant, can also unlock benefits such as volume-based discounts for insurers.
There is clearly an opportunity to modernise in this sector, and an opportunity that has countless benefits for all involved. Businesses that adopt digital disbursement processes now will not only meet today’s customer demands but also position themselves as industry leaders, delivering faster, more secure, and cost-effective payouts in the future.