New York, New York- The Office of General Counsel of the New York State Insurance Department recently issued an opinion confirming that Property and Casualty insurance claims may be paid out using prepaid debit cards.
In OGC Opinion Number 09-12-01, the Office of General Counsel rendered an opinion, answering the following question:
May an insurer issue debit cards to claimants on a voluntary basis in accordance with the Program in lieu of issuing settlement checks to pay property/casualty insurance claims?
The opinion was triggered by a request from an insurer that wanted to expand a prepaid debit program. The program was originally designed to be used to pay workers compensation claims using a prepaid Visa card, and the insurer wanted to expand the program for use in paying all property or casualty claims.
The Office of General Counsel approved the program, concluding:
An insurer may issue debit cards to claimants on a voluntary basis in accordance with the Program in lieu of issuing settlement checks to pay property/casualty insurance claims, provided that the insurer: i) makes the funds accessible to the claimant within the applicable timeframes for paying settlements; ii) fully explains all aspects of the Program, including the disclosure of any potential fees to the claimant; iii) makes clear that the claimant’s participation in the Program is voluntary and that the claimant must opt into the Program; and iv) ensures that the claimant has easy and ready access to the funds.
The full Opinion is available here.