This post is part of a series sponsored by Early Warning.
The insurance industry has become a prime target for criminals. Well aware of the money flowing between insurance companies and consumers, scammers continue to find ways to exploit vulnerabilities. Since the vast majority of transactions now take place via ACH, both for payables and receivables, the use of this channel requires insurance companies to take heightened precautions to effectively mitigate risk.
In today’s era of electronic payments, it is critical for insurance companies to protect their receivables processes by properly validating that funds are coming from the correct account that can be validated to the policyholder. Herein lies the primary challenge. Without the ability to determine exactly where received funds initiate, insurance companies are susceptible to fraud as well as the overhead associated with insufficient funds (NSF) and other administrative and authorized transaction returns.
This issue creates a significant burden for an insurance company’s receivables department. Not only does it need to verify accounts at the time of a policyholder’s ACH enrollment, it also needs to validate that funds coming in are “good funds” that can be used. This comes into play any time an organization is collecting either one-time or recurring payments; or, if an established customer changes his or her account, payments should be re-validated.
As insurance companies continue exploring new ways to safeguard their organizations and their customers from fraud, it is not sufficient to validate receivables in a one-off fashion. Rather, they need solutions that can consistently provide account status and ownership confirmation. Insurance companies should not allow instances of NSF or administrative tasks to take away from core business objectives or customer service or create fraud susceptibilities. Instead, they must capitalize on solutions that can seamlessly authenticate policyholders and accounts on the front end, before even giving high-risk payments a chance to occur.
Many insurance companies are looking to technology to ensure they are interacting with legitimate accounts and the correct policyholders. Early Warning understands that authenticating accounts and ensuring good funds is more than a common issue, but an everyday matter. Early Warning’s Real-Time Payment Chek® Service with Account Owner Authentication (AOA) is aiding insurance companies to quickly confirm account ownership and verify whether accounts are open and in good standing, leveraging the collaborative intelligence of the National Shared Database℠ Resource.
Real-time Payment Chek Service with AOA provides value to insurance companies by answering two key questions at the point of transaction to immediately match the account owner and signatory details.
As a result of using technology and taking a proactive stance, insurance companies can effectively mitigate risk and reduce ACH returns and unauthorized transactions. At the same time, they can provide their customers with a much better experience; ACH enrollment is faster and employees can dedicate more time to customers’ needs instead of managing back office returns and collections.
To learn more, click here to download the solution brief.
Watch for our next blog, October 5th, which will showcase how Real-time Payment Chek Service with AOA optimizes payables for insurance organizations by reducing claims payment fraud.
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