Paper checks remain deeply embedded in insurance claims operations, but their continued dominance is creating measurable operational strain, higher fraud exposure, and growing friction with policyholders. What once served as a reliable default in a fragmented financial system now functions as a bottleneck in a claims environment defined by rising severity, tighter margins, and customer expectations for speed.
For adjusters, paper checks are not just a payment method. They shape workflow long after coverage decisions are finalized. Mail tracking, stop payments, reissues, stale-dated items, escheatment processing, and uncashed check follow-ups add administrative layers that increase loss adjustment expense and extend cycle times. At scale, these tasks divert staff from higher-value claim resolution activities and create avoidable operational drag.
Fraud risk compounds the issue. The 2025 Payments Fraud and Control Survey from the Association for Financial Professionals found that 63 percent of organizations experienced attempted or actual check fraud in 2024, making checks the most frequently targeted payment type. For property, auto, liability, and workers compensation claims, that exposure affects both indemnity and vendor disbursements. Recovery efforts, bank coordination, and internal investigations consume resources that claims teams can ill afford to lose.
Despite persistent concerns about digital risk, modern payment platforms often reduce exposure by shifting sensitive data entry and verification to secure, encrypted environments. Claimants and vendors input their own information, limiting internal handling of account data while providing real-time visibility into payment status. That transparency can reduce inbound calls, eliminate lost-check disputes, and shorten payment confirmation timelines.
Industry data from CB Insights shows that checks still account for approximately 55 percent of insurance payments, compared with roughly 20 percent across other sectors. This gap highlights how insurance has lagged in payment modernization even as fraud trends and operational costs intensify.
Customer expectations are also reshaping the equation. Policyholders accustomed to near-instant transactions in other industries increasingly view multi-day or multi-week check delivery as a service breakdown. Payment experience now directly influences satisfaction scores and overall perception of the claims process.
Checks will not disappear overnight. Certain legal settlements and regulatory scenarios still require original instruments. The larger issue is default reliance. As fraud pressure, cost scrutiny, and service expectations rise, claims leaders face a strategic decision: continue absorbing the hidden costs of legacy disbursement methods or modernize payment workflows to align with current risk, operational, and customer realities.
