An insurer can approve a claim and still leave the policyholder waiting because the body shop, contractor, medical provider or lienholder hasn’t been paid. That gap between payment approval and claim resolution is spurring the rise of vendor provider networks in insurance. The networks connect carriers with the businesses they pay during a claim, preserve vendor payment preferences and reduce the need for every insurer to establish the same relationships separately.
One Inc Chief Network Officer Eileen Carlin described the underlying issue as a large collection of isolated transactions.
“A vendor provider network essentially changes the fact that claims payments in their natural state are a series of one-off transactions between a large number of different carriers and all of the expense vendors that they need to pay,” Carlin said.
A network replaces some of that repetition with a shared operating structure. A vendor can identify how it wants to be paid, and participating carriers can use those instructions rather than locating, validating and enrolling the same business each time. Payment choices may include ACH and claims cards, depending on the vendor’s preference.
The practical value lies beyond the transfer itself. Claims often cannot progress until a third party receives funds. A delayed payment to a repair shop may hold up a vehicle’s getting back on the road. A delayed lienholder payment may prevent a borrower from clearing a title and buying a replacement car. The policyholder experiences those delays as part of the insurance claim, regardless of which company is waiting for money.
“Claims payments are not just payments,” Carlin said. “They are a core part of claim resolution for claimants.”
That connection makes insurance a clear candidate for payment digitization. Paper checks are slow, costly to support and vulnerable to theft and alteration in the mail. They also create exceptions, reissuances and status inquiries that consume staff time at carriers and vendors.
Yet adding an electronic payment method does not resolve the harder problem of persuading thousands of businesses to use it.
Digital Access Does Not Guarantee Digital Adoption
“The biggest challenge is that digital payment technology alone does not create digital adoption,” Carlin said. “You build it, and they don’t necessarily come.”
Carriers may have incomplete contact records, stale payment instructions and claims teams with little capacity to conduct vendor outreach. Vendors must recognize the payment, trust the channel, understand their choices and know where to update account details. A digital option that cannot clear those hurdles may remain unused.
Networks are meant to take on part of that operational burden through vendor validation, enrollment, communications, support and self-service tools. Carlin said the objective should not be to place every vendor on one payment method. It should be to give vendors a workable set of choices while reducing the checks, reissuances and inquiries handled by insurers.
The network model also depends on overlap. Each participating carrier adds payment volume for vendors already enrolled. Each participating vendor gives carriers another known payee whose instructions do not need to be collected again.
“A vendor should not have to reenroll and reexplain how they want to be paid every time a different insurer pays them,” Carlin said. “When they do that, it creates significant inefficiencies and friction for the vendor.”
The optimal policyholder experience is therefore partly indirect. Consumers may never see the vendor network or know which rail delivered the funds. They notice whether repairs begin, titles are released and providers stop calling about payment.
“Policyholders usually do not separate the vendor experience from their own experience,” Carlin said. “If the body shop, contractor, lienholder, medical provider is waiting for a paper check, the reality is that the policyholder is waiting for a paper check.”
The next stage of insurance payments will test whether these networks can do more than store preferences and transmit funds. Carlin said she expects artificial intelligence and advanced analytics to help carriers predict which vendors will accept digital payments, anticipate exceptions, improve routing and identify fraud or reconciliation problems before they require manual intervention.
That future also requires networks to treat the payee as a business with its own cash flow, reconciliation and administrative demands. The measure of progress will not be the number of electronic payments issued. It will be whether insurers and vendors can remove enough uncertainty from the payment process that a settled claim no longer remains operationally unfinished.
Watch the full interview with Eileen Carlin to learn more about:
- Why the same vendor may still be enrolled separately by several insurance carriers.
- How vendor payment preferences can be reused across a shared network.
- Where AI could predict payment exceptions, improve routing and reduce reconciliation work.
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