How to Pay Insurance Claimants Faster: A Guide for Carriers, MGAs, and TPAs
When a claim is approved, the claimant expects payment to follow promptly. In practice, the interval between approval and settlement is often measured in days — sometimes longer when cross-border payments or manual reconciliation are involved. During that interval, the claimant is checking their account, contacting their broker, and forming a view of their insurer based almost entirely on that wait.
This gap between approval and fund receipt is not primarily a speed problem. It is a structural one. Payment infrastructure built for corporate treasury has been applied to a very different operational context — one defined by high claim volumes, complex delegated fund flows, specific regulatory obligations, and claimant expectations shaped by instant payment experiences elsewhere. Standard banking rails were not designed to accommodate all of this simultaneously.
This guide examines why claims payment speed has become a priority for carriers, MGAs, and TPAs; what structural factors create delay; and the strategies that modern insurance payment infrastructure makes available.
Why Claims Payment Speed Has Become a Strategic Priority
The connection between payment speed and claimant satisfaction is well established. For personal lines products — travel, pet, parametric, and embedded insurance — the claims experience is often the first substantive interaction a policyholder has with their insurer's operations. How quickly that interaction resolves shapes renewal decisions, Net Promoter scores, and broker referrals in ways that underwriting terms alone cannot.
The dynamic extends into commercial lines. A business awaiting a property damage settlement is operating with constrained working capital until payment arrives. Delay has a direct operational cost, and the underwriting relationship is coloured by how efficiently the carrier fulfils its obligations at the moment that matters most.
Competitive dynamics have accelerated this shift. MGAs and TPAs making capacity decisions increasingly factor in the payment experience their carrier partners enable. A carrier capable of settling claims in hours rather than weeks offers its delegated partners a differentiator they can take to market. As Michail Chopra, CEO of Mayfair We Care, has observed, the payment infrastructure Vitesse provides gives his organisation a direct competitive advantage — one that is visible to end claimants and distribution partners alike.
Regulatory expectations have followed the same trajectory. The FCA's Consumer Duty framework in the UK establishes an obligation to deliver good customer outcomes, of which timely claims settlement is a central component. In the United States, state-level prompt payment statutes impose specific timelines for settling claims, with non-compliance triggering financial penalties and regulatory scrutiny. The direction of travel across jurisdictions is consistent: timely, transparent claims settlement is increasingly a baseline expectation, not an operational aspiration.
The Structural Causes of Slow Claims Settlement
Understanding what delays claims payments is a precondition for addressing it systematically.
Standard bank payment rails — domestic wires, ACH, and international correspondent banking networks — were designed for corporate treasury operations. They were not designed for high-volume claims environments. Standard wires settle in three to five business days. ACH, at best, settles the following business day, and many insurers still process ACH in weekly batches. International payments through correspondent banking chains can take longer still, with each intermediary bank adding processing time and fees. The infrastructure operates within its original design parameters; those parameters simply do not align with modern claims requirements.
Manual reconciliation compounds the delay. Before a claims payment is released, it must be matched to the correct claim file, deducted from the appropriate reserve, and recorded across the relevant systems. In many organisations, this matching is performed manually or semi-manually, with finance teams cross-referencing payment files against claims records. The process adds days to the payment cycle, and when errors occur — misapplied payments, duplicate disbursements, missed deductions — the exception-handling workflow extends the cycle further. Some carriers find that reconciliation consumes more operational capacity than payment execution itself.
In delegated authority structures, a third constraint emerges: funding gaps. Claim accounts held by delegated partners must be sufficiently funded before payments can be released. When balances run low, delegated partners issue cash calls to the carrier requesting additional funds. The carrier reviews the request, approves it, initiates a transfer, and waits for settlement. This cycle can add three to seven days to individual payment timelines, and it recurs regularly in organisations that lack real-time visibility into account balances.
Cross-border complexity introduces further variables. A domestic UK payment through Faster Payments may settle the same day. The same payment routed to a claimant in Brazil through traditional correspondent banking could take a week. Different markets operate on different payment rails, local compliance requirements, and FX conversion steps — all of which must be coordinated within a single claims payment operation.
Five Strategies to Accelerate Claims Payments
1. Transition to Real-Time Payment Rails
The most direct structural change available to carriers and their delegated partners is migrating claims disbursements from legacy batch rails to real-time payment networks. The UK's Faster Payments Service, SEPA Instant across European markets, same-day ACH in the United States, and local instant networks across other jurisdictions settle payments within minutes to hours rather than days.
Access is the operative challenge. Most insurers connect to these networks indirectly through banking partners, and those partners may not offer real-time settlement options or may charge premiums for faster execution. A dedicated insurance payment platform provides direct connectivity to multiple real-time rail options across markets through a single API integration, routing each payment through the optimal network based on destination, speed, and cost.
2. Establish Real-Time Fund Visibility Across Delegated Accounts
Many payment delays originate upstream of payment execution itself. When a carrier has limited visibility into the real-time balance positions of its delegated partners' claim accounts, it cannot anticipate shortfalls before they occur. Accounts become underfunded. Cash calls go out. Payments pause.
Real-time fund visibility addresses this at the infrastructure level. Treasury teams gain a live view of every claim account across every delegated relationship — which accounts are adequately funded, which are approaching thresholds requiring attention, and where capital should be directed. Organisations operating with this capability have implemented automated top-up triggers that replenish accounts at pre-defined thresholds, removing cash calls from the process entirely.
3. Automate the Reconciliation Cycle
Automated reconciliation removes one of the most time-intensive steps in claims payment operations. Modern payment platforms reconcile each disbursement against the corresponding claim record in real time as payments are initiated and settled — no post-hoc matching, no end-of-week batch processing, no manual cross-referencing.
The accuracy benefit is substantial. Manual reconciliation carries an inherent error rate, and each error triggers an exception-handling workflow that extends the payment cycle further. Automated reconciliation is both faster and more consistent, reducing the operational burden on finance teams while improving payment accuracy across claim portfolios.
4. Offer Payee Choice at the Point of Settlement
Claimants have different preferences for how they receive payment. Some prefer direct bank credit. Others use digital wallets. Business claimants may find virtual card disbursements more operationally convenient. Payee choice enables the claimant to select their preferred settlement method at the point of claim resolution.
This serves two functions. First, it improves the claimant experience by delivering funds through a channel the claimant has already confirmed. Second, it reduces failed payment rates — incorrect account details and returned items become less frequent when the payee has actively specified their preferred method. Some platforms integrate payee preference collection into the claims notification process itself, so the selection is captured before payment is initiated.
5. Deploy Purpose-Built Insurance Payment Infrastructure
General-purpose payment processors are designed for broad commercial use. They handle transaction execution effectively, but they do not accommodate the structural specifics of insurance operations: delegated authority fund flows, claim reserve deductions, regulatory safeguarding requirements, or connectivity to a network of existing insurance partners. Each of these requirements typically demands a separate solution.
Purpose-built insurance payment infrastructure consolidates these functions. Payment execution, fund management, treasury visibility, reconciliation, and regulatory compliance operate within a single platform — one designed specifically for the operational context of carriers, MGAs, and TPAs. Because this infrastructure already serves over 550 insurance partners globally, carriers integrating new delegated relationships can reduce onboarding friction considerably.
The Capital Efficiency Dimension
The fund visibility discussion above has implications that extend beyond payment speed. Insurance organisations often hold significant capital in claim accounts to ensure they can meet obligations as they arise. Without real-time visibility into account balances, the natural response is to hold more capital in reserve than is strictly necessary — because the cost of an underfunded account is a delayed payment, and that risk is managed through over-reserving.
When real-time visibility is established, that rationale weakens. Treasury teams can see exactly where capital is deployed, at what level, and when replenishment is required. This precision allows them to hold capital more efficiently, releasing funds that were previously held as a buffer against uncertainty.
The scale of this effect can be substantial. Treasury teams operating with real-time fund visibility have released up to 80% of the idle capital previously locked in over-reserved claim accounts. In aggregate, across large claims operations, this represents significant liquidity that becomes available for deployment elsewhere. Some organisations have recovered in excess of $100 million in previously illiquid capital by transitioning to infrastructure with real-time fund visibility.
This is the dimension in which payment infrastructure operates at a strategic level beyond operational efficiency. Faster claims payments are a visible improvement to the claimant experience. Improved capital efficiency is a structural improvement to how the organisation manages its balance sheet — and it compounds as the fund visibility capability is applied across a wider portfolio of delegated accounts.
Case Study: Faster Claims Payment in the Lloyd's Market
The Lloyd's of London market provides the most fully realised example of insurance payment modernisation at scale.
Before the introduction of Faster Claims Payment (FCP), settlement in the Lloyd's market followed a multi-week cycle. Payments moved through a chain of brokers, managing agents, and syndicate accounts, with each step contributing processing time. Capital remained in transit across multiple holding points. Administrative overhead was considerable.
FCP replaced this with centralised payment infrastructure enabling same-day or next-day settlement for Lloyd's claims. The results are demonstrable:
- 100% of Lloyd's managing agents have contracted onto the FCP platform
- Up to 80% of idle funds returned to carriers through weekly top-ups, replacing the previous quarterly settlement cycle
- Cash calls eliminated for participants using automated fund management
- Claims Initiative of the Year recognition for the impact on market operations
As Dave Hausch, President of Hausch and Company, observed: "FCP is a significant move for the future of Lloyd's… decrease the time to pay claims and increase financial accuracy."
The Lloyd's FCP model demonstrates what becomes possible when payment infrastructure is aligned to the structural requirements of insurance operations rather than adapted from general banking tools. The same principles — centralised fund management, real-time visibility, automated settlement — are available to insurers operating outside the Lloyd's market.
Frequently Asked Questions
How long should an insurance claim payment take?
With modern payment infrastructure, domestic claims can be settled within hours of approval. Real-time payment rails — including Faster Payments in the UK, same-day ACH in the United States, and SEPA Instant across Europe — settle in minutes to hours rather than days. Cross-border claims typically settle within one to two business days when routed through optimised rail selection. The industry norm of five to ten business days reflects the constraints of legacy banking infrastructure, not a technical necessity inherent to insurance.
What is real-time claims payment?
Real-time claims payment refers to the ability to settle a claim within hours of approval by routing disbursements through instant payment networks rather than standard bank rails. It requires a payment platform with direct connectivity to real-time networks, automated reconciliation that matches disbursements to claims as they execute, and pre-funded claim accounts that eliminate upstream funding delays from the payment cycle.
What is the most common cause of insurance claims payment delays?
The three most frequent causes are legacy payment rails operating on batch settlement cycles, manual reconciliation processes that add several days of matching work after payment initiation, and funding gaps in delegated claim accounts that require cash calls before payments can proceed. In most organisations, fund visibility is the highest-leverage area: when treasury teams can see account balances in real time, they can prevent the shortfalls that cause downstream payment delays.
What is FCP (Faster Claims Payment) in the Lloyd's market?
FCP is a market-wide infrastructure initiative in the Lloyd's of London market that replaced the legacy multi-week claims settlement process with same-day or next-day payment capability. All Lloyd's managing agents have contracted onto the platform. The initiative has been recognised with the Claims Initiative of the Year award and has demonstrably returned significant idle capital to carriers through automated fund management and weekly account top-ups.
What is payee choice in insurance claims?
Payee choice gives claimants the ability to select their preferred payment method at the time of settlement — direct bank transfer, digital wallet, virtual card, or other available options. It reduces failed payment rates by ensuring funds are delivered through a channel the claimant has confirmed, and it improves the settlement experience by removing the mismatch between the claimant's preferred method and the carrier's default disbursement approach.
How does automated reconciliation improve claims payment speed?
Manual reconciliation — matching each payment to the correct claim record, deducting from the appropriate reserve, and updating the relevant systems — can add two to five days to the payment cycle in organisations that handle this process in batches or spreadsheets. Automated reconciliation performs this matching in real time as payments are initiated, removing that delay from the timeline entirely and reducing the error rate that generates exception-handling workflows.
What distinguishes purpose-built insurance payment infrastructure from general payment processors?
Insurance payment infrastructure is designed around the specific operational structure of delegated authority arrangements: fund management across multiple claim accounts, reserve-level reconciliation, regulatory safeguarding, and connectivity to a network of existing insurance partners. General payment processors handle transaction execution well, but they do not accommodate these requirements natively. Purpose-built infrastructure consolidates all of these functions within a single platform designed for the carrier, MGA, and TPA context.
Infrastructure Alignment as a Long-Term Advantage
Faster claims settlement is a measurable operational improvement. Its effects are visible in claimant satisfaction scores, complaint volumes, and the competitive positioning carriers can offer their delegated partners. These are legitimate and immediate benefits.
But the deeper value of modern payment infrastructure lies in its structural effects: the capital released from over-reserved accounts, the administrative overhead eliminated by automated reconciliation, the cash calls that no longer interrupt payment timelines, and the regulatory confidence that comes from operating within a platform that maintains FCA, NYDFS, and DNB authorisations alongside SOC 1, SOC 2, and ISO 27001 certifications. These gains compound across a claims portfolio over time.
The shift toward real-time payment infrastructure is proceeding across the market. Regulatory expectations are becoming more specific. Delegated authority relationships are increasingly evaluated on the quality of the payment infrastructure they enable, not just the terms of the capacity agreement.
Explore how modern insurance payment infrastructure supports faster claims settlement, real-time fund visibility, and capital efficiency across delegated authority structures. Learn more about Vitesse for carriers and MGAs, or speak with our team about the infrastructure requirements specific to your operation.
