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More and more consumers are using credit cards to pay recurring bills, and the insurance industry is beginning to offer buyers the opportunity to pay their premiums that way, too.

Agents, brokers and insurers can improve their customer relations and attract new business by offering policyholders the option of paying by credit card, according to Gregory Holmes, director of recurring payment industries at VISA U.S.A. in San Francisco.

During the past year, VISA has seen rapid growth in the use of credit card payments for recurring bills, such as insurance premiums, utilities and cable television, he said.

VISA's cardholders paid nearly $10 billion in recurring bills via credit cards in 1997, of which all lines of insurance accounted for slightly more than $1 billion. The insurance segment was a 62% increase from the year before, and so far in 1998, the credit card company is seeing overall recurring payment growth of 32% since last year, he said.

"We're expecting the entire recurring payment marketplace to grow to $20 billion by the year 2000, and insurance would be a major part of that," Mr. Holmes said.

There is "more demand on the part of customers. A recurring bill is one of those bills that consumers want alternative means to pay for," he said. "Insurance companies, to their credit, are looking at offering options to their customers. Offering payment options is a customer-friendly tactic."

Research VISA has conducted shows the top reasons behind marketing-oriented programs are to attract customers, boost customer retention and increase sales, Mr. Holmes said.

Independent research in 1996 found that one-third of U.S. consumers wanted the option of using credit cards to pay insurance premiums with a VISA or MasterCard, Mr. Holmes said.

"Insurance companies have told us that agents are very supportive," he said. Offering premium payment options "helps agents close more business and attract customers."

Businesses across the United States increasingly are using purchasing cards, or credit accounts issued to a corporate holder, as a way to streamline the purchasing process and automate the reporting of company expenditures, Mr. Holmes explained.

In addition to convenience for the customer, credit card premium payments also can help an agent or broker's cash flow, because the transaction provides a quicker turnaround of funds, Mr. Holmes pointed out.

While checks often take several days to process and can be misplaced, businesses accepting credit cards typically receive money from the issuing bank within 48 hours, Mr. Holmes said.

From a consumer standpoint, agents recognize that offering a credit card payment option is a valued service, said Madelyn Flannagan, manager of information services for the Alexandria, Va.-based Independent Insurance Agents of America.

"It goes along with the '24, seven' service mode that agents need to work toward," Ms. Flannagan said.

She estimates that 35% of independent agents now offer a credit card payment option, and that figure is growing. Agents offering the option have received a good response from customers and are very happy with it, she said.

However, not all agents and brokers are embracing the concept.

A spokeswoman for the Washington-based Council of Insurance Agents & Brokers, which represents many large commercial agents and brokers, said a credit card payment option is relatively common for personal lines policyholders but unusual for businesses, which often use premium finance companies to make large payments.

For example, Southfield, Mich.-based Meadowbrook Insurance Group, a mid-sized commercial insurance broker, does not accept credit cards and has no plans to do so in the near future, a spokeswoman said. Meadowbrook has a premium finance unit.

"It's been our policy not to. We don't feel the need; we really haven't had any requests to convert to credit card payments" for premiums, the spokeswoman said. "We do accept checks, money orders and finance contracts, but credit cards, no."

Still, agencies with customers that would like the option may want to explore credit card payments.

For an agency interested in offering a credit card payment option, the process is "quite straightforward," Mr. Holmes said.

The agency must first select a bank to handle the transactions; the company's current bank might be able to do it, too, he said. Then the agent would choose a preferred type of card transaction: in person, by mail or by automatic billing authorized by the customer. Once a method is chosen, the agent can obtain the necessary hardware and software.

"An agent can get up-and-running card acceptance literally within 24 hours," Mr. Holmes said.