With policy retention for auto insurance clients that have automatic payments deducted
from their checking account significantly higher that other clients on direct bill, many insurance companies are offering more competitive payment plans, lower initial payments, and reduced billing fees to entice consumers to enroll in automatic payments.
This has been a growing trend in the last couple of years. The percentage of clients that have automatic payments has been increasing significantly. Insurance companies are offering multiple ways for clients to enroll. Many insurance companies will let the insured have the payments taken directly out of their checking account or have them deducted from a credit card.
Having the payments taken out of a credit card may not always be the best idea. Many times the insured will lose the card or it will expire and have a new card ordered. In this case the information that the insurance company has to withdraw the monthly installment will no longer be correct. Often the insured will not remember to notify the insurance company of the change of cards. When this happens the next installment will not be honored by the bank because the card is no longer valid.
Although the client is getting a savings on the monthly billing fee when a payment is returned due to a change of credit card numbers the insurance company will place a fee on the policy for the payment being returned.
Many times insurance policyholders request to have the installment taken from the credit card automatically simply because at the time of the purchase of the policy they did not have the checking account information available. If this is the case the client can usually update the policy to having the payments taken out of the checking account at a later time using the account number and routing number rather than continuing having the installments deducted from the card.
