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June 16, 2011updated 13 Apr 2017 8:48am

Direct credit could save UK insurers a packet

While the Association of British Insurers reports insurers paid out in excess of £84bn ($135bn) for insurance claims around £231m each day Bacs data shows only £25.6bn of this was paid through Bacs Direct Credit

By LII editorial

Insurance companies in the UK appear to be missing out on considerable savings that can be achieved by adopting direct credits to pay claims and benefits to customers.

This is the view of Bacs Payment Schemes, the not-for-profit organisation responsible for managing Bacs Direct Credit in the UK.

While the Association of British Insurers reports insurers paid out in excess of £84bn ($135bn) for insurance claims – around £231m each day – Bacs data shows only £25.6bn of this was paid through Bacs Direct Credit.

The remaining £58.7bn, noted Bacs, may have been paid out by less efficient and more costly alternatives, such as cheques.

“There is clearly a significant opportunity here for insurers to improve their payment practices and benefit from the efficiencies and cost savings associated with Bacs Direct Credit,” said Bacs market sector manager Dawneth Perry.

“Many companies have put the emphasis on the efficient collection of monies, which is clearly an essential action, but in doing so they may have overlooked outgoing payments.”

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