Failing to adopt modern payment methods is costing the insurance industry as much as £22m according to the UK's automated clearing house, BACS.

The figure represents the costs associated with using cheques, rather than paying money directly into companies' and individual's accounts using direct credit.

More than 17 million cheques a year are issued by the industry – about 40% of all its payments.

"The insurance sector has made great strides in automation over the past few years," said Peter Blake, BACS direct credit marketing manager.

"But with 17 million cheques in circulation, the industry still has a long way to go," he said.