Fast-Track Claims and Gift Card Settlements — What’s the Value?
Apr 21, 2022

Mary McGurn is GB’s Retail Practice Leader and has more than 30 years of retail industry experience. You can find her on LinkedIn.
Jack Baker is a Senior Analytics Associate with 11 years of retail industry experience. You can find him on LinkedIn





Fast-track claims offer a way to streamline and accelerate claim resolution for small- and medium-sized claims and provide the benefit of improving the customer experience after an incident.

For retailers, customer claims frequency is high; however, complexity is low. In fact, about 90% of all retail claims will settle for under $1,000, providing the perfect argument for maintaining a fast-track adjudication approach.1 Furthermore, customers’ demands continue to evolve each year, requiring quick resolution from consumers who do not have the patience for a full investigation. If it is possible to settle a claim during the first call (ideally with a gift card), this not only encourages returns to the store but also boosts customer satisfaction and prevents the claim from developing further.


Across the industry, retail business owners understand that using gift cards in fast-track teams effectively prevents an incident from evolving into a claim while also protecting brand reputation. But what is less understood is the most effective strategy to use when issuing gift cards in response to a customer’s claim.


At Gallagher Bassett (GB), we have leveraged our vast amount of retail data to provide you with an overview of comparison retailers using gift cards to settle claims and the outcomes they saw as a result. Additionally, we also pulled together the best of the best from these retailers to provide you with our recommendation for this fast-track claim handling tool.


Key Benefits of Gift Card Settlements for Retailers

  • Creating Added Value: Gift cards provide added value for retailers by increasing store traffic and providing point-of-sale matching since transactions are tracked.
  • Enhancing Brand Awareness: Word of mouth is one of the most powerful ways to advertise. Gift cards create a reason for customers to share positive experiences with friends and family, increasing brand awareness to new audiences.
  • Building Brand Affinity: Providing a gift card is a great way to show customer appreciation and build a relationship with the recipient rather than create a lasting negative perception.


Our study analyzed five GB clients from the retail industry. Clients in this study spanned different areas of the retail sector, including specialty and big-box grocers, personal care and beauty, and specialty retail. The retailers included in this study had all placed limits on the denominations of gift cards that claim handlers could issue without consultation, ranging anywhere from $100 to $2,000.


Although these firms may have had little in common aside from the retail industry classification, a few distinct strategies geared toward administering gift card programs were on display.


Optimistic Gift Card Strategy

Retailers A and D had a much higher gift card use rate than the rest of their peers. Consequently, gift card closures for these retailers made up a full one-fifth of their total claim closures. These retailers embraced gift cards as another tool in their toolkit to assist in driving claim closures and controlling costs and went to great lengths to make gift card use a part of their everyday claim handling best practices.


Discretionary Gift Card Strategy

Retailers C and E opted for a more constrained deployment of gift cards. These retailers understood the utility of gift cards to settle and close claims but chose to use gift cards on a case-by-case basis instead of instituting a strict rules-based gift card program. The average gift card issuance for these retailers was higher than that of retailers A and D, and the range of average gift card payments ($103 vs. $176) speaks to the discretionary nature of their strategy. However, the frequency of gift card usage at these retailers was lower than that of their peers and accounted for a smaller proportion of total claim closures than A and D.


Conservative Gift Card Strategy

Retailer B was the only retailer in this study that implemented a Conservative approach to gift card usage. Indeed, gift card closures for this retailer accounted for only 1% of its entire book. This retailer’s gift card program was prescriptive, with well-defined rules regarding the types of claims eligible for gift cards and the gift card amount available to use. It is no surprise that this retailer’s average gift card issuance was the lowest of the five included in this study.



Impact of Gift Card Strategy on Claim Durations

We took our study one step further and analyzed the impact of these strategies on claim durations. For all five retailers examined here, gift card claims, on average, settled quicker than traditional settlements for similar claims; three of the five retailers were able to resolve gift card claims in fewer than 40 days. Discretionary retailers C and E had the longest durations for non-gift card closures and, as such, the impact of reduced durations from gift card closures was even starker. Retailer C, in particular, closed gift card claims 78% faster than non-gift card closures!


What is Driving These Results?

Digging deeper into the claims handling practices of gift card (GC) claims of the selected retailers, we have identified several factors that affect overall gift card outcomes, including settlement authority for gift card cases, investigative requirements, release requirements, and claim handler denial authority. The implementation of these factors in conjunction with the overall gift card philosophy (Optimistic, Conservative, or Discretionary) will dictate overall gift card program results.

Retailers A and D had an Optimistic approach to gift cards. Gift card authority for these retailers ranged from the low to the middle levels, and investigatory requirements were limited (more so for retailer D). Each retailer required a release, and each retailer required an estimate for property damage (PD) claims. Retailer A had limited denial authority, while Retailer D did not have denial authority. Overall, the gift card programs of these two retailers were very similar and yielded similar results.

Retailers C and E had a Discretionary approach to gift cards, but their respective philosophies toward their gift card programs were quite different.

Retailer C had very high settlement authority for gift card claims ($2,000). Claim investigations were claimant-contact only, while individual stores were responsible for some of the investigatory burden for gift card claims. Release requirements were Discretionary and claims handlers had full denial authority. Under this methodology, average duration for GC closures for Retailer C were 78% better than non-GC closures, which marks the greatest differential in our study.

GC settlement authority for Retailer E was low at $250. Investigation was limited to claimant-contact only, but with no additional support from stores, as we see with Retailer C. There was no explicit guidance on whether an estimate was required for PD claims, and releases were required for all settlements. Lastly, Retailer E did not provide denial authority for GC claims. The results of its overall approach (Discretionary) and claims handling practices toward GCs led to low GC utilization, high average GC payments, and relatively long GC claim durations.

Finally, Retailer B was the only retailer with a Conservative approach to GCs. Settlement authority was limited to $100 for GC claims, the lowest in our study. However, due to this low settlement authority, this retailer was able to loosen the reigns on the rest of its GC claims handling practices. Investigations were limited to claimant-contact only, and an estimate was not required for settlements less than $250—meaning that GC settlements would never require an estimate. Additionally, no release was required on GC settlements, and claims handlers had full denial authority.


  Retailer A Retailer B Retailer C Retailer D Retailer E
Utilization 18% 1% 5% 19% 3%
GC Claim Phillosophy Optimistic - embrace the concept of repeat customers with good will offers Conservative - aggressively defends cart, AFBI, etc. Discretionary - choose to use on a case by case basis Optimistic - embrace the concept of repeat customers with good will offers Discretionary - choose to use on a case by case basis
Settlement Authority $500 $100 $2000 $250 $250
Obstacles to Settlement
• Investigation Requirements Modified investigation Claimant contact only Claimant contact only Claimant contact only Claimant contact only
• Release Required for GC Yes No Discretionary Yes Yes


If you are planning to institute a GC program as a part of your strategic approach to claims adjudication, take a moment to consider where GCs might fit into your overall claims strategy. On the one hand, a more rules-based or prescriptive approach may make sense if you are focused on a narrow subset of claims or are concerned about potential reputational harms or excess payments from lax GC oversight. On the other hand, an Optimistic GC strategy can endear you to your clientele and increase brand loyalty while also reducing claims inventory by expediting claim resolution.

From a claims perspective, implementing a thoughtful GC program strategy could help streamline your claims process, increase brand affinity, and retain customers to sustain your business for the long term. Contact our team to discuss your current needs and how we can help your retail business achieve superior outcomes in the future.


Mary McGurn is GB’s Retail Practice Leader and has more than 30 years of retail industry experience. You can find her on LinkedIn.

Jack Baker is a Senior Analytics Associate with 11 years of retail industry experience. You can find him on LinkedIn

  1. Settling Claims on the Fast Track (
  2. 19th Annual U.S. Prepaid Consumer Insights Survey
  3. 7 Reasons Why Your Business Should Offer Gift Cards


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