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Mastercard and Dream Speed Up

Insurance Payments

February 27, 2018

Josh O'Kane and Sean Silcoff

Posted with permission from The Globe and Mail

Dream Payments Corp. is teaming up with MasterCard International Inc. to speed up the long wait for insurance-claim cheques and clearances faced by people making claims.

The partnership will use Dream's technology to send disbursements to claimants' accounts within an hour of the payments being approved, MasterCard said, beginning in Canada with a subsidiary of Fairfax Financial Holdings Ltd.

Dream, whose secure-payment cloud platform helps merchants quickly process debit and credit transactions in person and online, has linked with the MasterCard Send money-transfer service to create the Dream Payments Hub, which lets companies push funds directly into a customer's debit-card account.

The companies will announce on Tuesday that Fairfax-owned Northbridge Financial Corp. will be the first insurance company to use the Hub to pay policyholders, with the option rolling out to its customers in phases over several months.

The program will circumvent some of the lengthy steps associated with insurance disbursement.

Among them, the sometimes weeks-long wait for disbursement cheques to arrive in the mail and subsequent bank-account holds on funds once cheques are deposited. Canada, through Northbridge, will be the first market for the partners' platform, followed by the United States, as it expands through other Fairfax insurance properties – then, potentially, other markets worldwide.

"It puts Dream, a Toronto-based tech company, at the centre of revolutionizing insurance reimbursements globally," said Janet Bannister, a Dream board member and general partner at Real Ventures, which invested in Dream's Series A round of financing. While Dream has had a historic focus on retail, Ms. Bannister said its expansion into insurance "demonstrates the capacity and flexibility of the Dream Payments platform."

Last year, Dream partnered with banking giant JPMorgan Chase to power Chase Paymentech's mobile-payments service across Canada. It also provides point-of-sale payment services to more than 10,000 small-business customers through its own offering, which is sold through Telus retail outlets, with back-end processing handled by a Canadian bank.

Fairfax invested in Dream's $10-million Series A financing round nearly a year ago and, at about the same time, introduced Dream to the team at Northbridge, which handles commercial-property and casualty insurance. MasterCard, meanwhile, had been eyeing entering the insurance-payments world, but wanted a partner, Zahir Khoja, its senior vice-president of innovation, said in an interview. In Dream, it saw insurance-world connections and secure cloud technology, though with payment processing on a next-day basis; with Send, MasterCard offered global reach and near-real-time processing.

Canadian property and casualty insurers paid out $32-billion in claims in 2016, according to the Insurance Bureau of Canada. If someone is filing an insurance claim, their life tends to already be filled with stress. While instant bank-account deposits would be more cost-effective than mailing out cheques, they also make the process significantly smoother for policyholders, said Ilda Dinis, Northbridge's senior vice-president of customer experience and innovation.

"It's especially critical to be able to pay our customers electronically after an event like the Fort McMurray wildfires – a catastrophe," Ms. Dinis told The Globe and Mail. "Relying on a paper cheque that you need to send to a home address, if that's been evacuated, is a real challenge."

The standard, slow model of insurance-claim payments is a subject Dream chief executive Brent Ho-Young is deeply familiar with. Several years ago, he said, his family spent months fighting with an insurance company for an urgent critical-illness claim, then had to wait weeks for the cheque to arrive, only to have it held another few days by the bank.

"We had a startup, and we had a new baby at home, and when we needed funds the most to help with our lives ... we were stuck waiting for these funds," he said. Now, he continued, "this is really exciting for us to have a seat at the table with Fairfax and MasterCard, and its Send capability, and completely eliminate that – and get funds to people when they need it most."

Mr. Ho-Young said Dream may raise another financing round later this year to further commercialize the Dream Payments Hub, expanding to other markets and potentially other uses with its MasterCard partnership.

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