It's no secret that insurance statement reconciliations are not for the faint of heart. Necessary as they are, ask any broker about them and you're bound to get a sigh and an eye-roll. With brokers often dealing with many different insurance companies, each with their own method of statement generation and format, the statement reconciliation process can be an arduous task at best.
Brokers will receive insurer statements on a regular basis, in various different formats. Some contain a handful of transactions (if you're lucky), others contain hundreds of transactions to wade through. In the vast majority of cases, the statement reconciliation is a completely manual process.
The tricky part comes in when you consider the nature of the statements sent in and how a reconciliation needs to occur. Typically, each insurer provides statements in their own specific format, be that in the form of an Excel spreadsheet, CSV, PDF file or even paper statements. Once received, the brokers reconciliation team will need to manually “tick and tie” items present on the statement against the data in their brokerage system.
This is carried out using a host of criteria, but some of the standard data to be checked and matched includes:
- Effective date of the policy
- The policy number
- Policy holder name
- Insurer amount outstanding
- Other amount such as (gross premium including/excluding IPT/tax, commissions etc)
In addition to confirming which transactions do match, the reconciler normally makes comments alongside each unmatched/queried transaction and then returns the statement (comments and all) back to the insurer.
Unfortunately, when subsequent statements are received from the insurer, these will include exceptions from the previous statement, but typically will not include the comments/queries provided by the reconciler from the previous month. This results in duplication of effort for the reconciler as they have to go back to prior statements to check comments and re-enter these onto the new statement.
Current Insurance Statement Reconciliation Disadvantages
Besides being a somewhat mind-numbing experience for those manually checking through a myriad of different insurer statements with hundreds and hundreds of data fields, the fact that this is performed by individuals means it's prone to some distinct disadvantages:
1. It's Prone to Human Error
While human beings are creatures of immense talent and skill, it's unfair to assume that individuals reviewing multiple statements with hordes of transactions can complete this process without making a single error. For example, it is very difficult for an individual to consistently and accurately compare and check a policy number, policy holder name, amount outstanding and effective date 100% of the time.
2. It's Time-Consuming
With such a volume of data to deal with, it is inherently a very time-consuming process when carried out manually.
3. It's Inefficient
In a manual process, because there is no standard method of recording comments against queried transactions for the insurer, there will naturally be a duplication of effort when new statements arrive containing previously queried transactions.
4. It's Costly
As the adage goes, "Time is money." Having individuals manually managing all aspects of data reconciliations means it'll take longer to complete, using up time which could be best spent taking better advantage of the employee in question's skills.
How BlackLine Meets These Pain Points
It's clear from the above that there has to be a better way to reconcile insurance statements. This is where BlackLine comes in. But first, a little on how BlackLine works.
A Little Background on Blackline
BlackLine is a cloud based enhanced finance control and automation (EFCA) suite. One of BlackLine’s main strengths is its ability to improve efficiency and streamline transaction matching and reconciliation processes.
Using BlackLine’s standard matching and reconciliation functionality Eclipse has designed and configured a solution which is specifically aimed at streamlining the end to end insurer statement reconciliation process.
- Insurer transactions from the brokers system are imported into BlackLine via a scheduled process.
- Statement files received from insurers are transformed and imported (in a standard format) into BlackLine via a scheduled process.
- The statement transformation process enables specific fields in the insurer statement to be mapped into a set of “standard” fields in BlackLine.
- This process normalises statement transactions from each insurer by creating a standard format in which accurate data mapping to specified fields occurs automatically.
- Using BlackLine’s matching functionality “pass rules” are then created which identify transactions that:
- Match and are due for payment to the insurer.
- Match and are not due for payment to the insurer.
- Do not match (a list of exceptions for the reconciler to review).
- The matching process is run as a scheduled job at user defined intervals, or can be run manually at any time.
- Once the reconciler has reviewed the exceptions, comments can be added to each transaction and a report can be extracted and sent to each insurer showing:
- Matched transactions to be paid on next payment run
- Matched transactions not yet due
- Unmatched transactions including details of the query
The key point here is that any comments added to a queried statement transaction, will continue to be present on statements going forward, eliminating the need for the reconciler to keep comparing past statements.
The Advantages to Using BlackLine's Solution for Your Reconciliations
It's a Huge Time Saver
Naturally, it saves time to have a tedious process automated that completes its work in less than half the time it would take to complete manually while allowing for greater control and insight.
It Standardises Formatting Across Brokers
As a developed solution, BlackLine offers a standardised format that brokers can adopt.
It Reduces Risks and Errors
By eliminating human error, there is significant risk reduction, which like time-saving, ultimately results in a cost-reduction.
It Best Utilises Human Talent
Having two or more valuable staff members trapped doing manual, repetitive data reconciliation is a terrible waste of talent. Make the most of their skills by freeing them up to new opportunities within your business.
It Enables Business Growth
By automating a normally labour-intensive process, brokers can now look at growing their client lists and taking on new business without the added worry of overheads and hiring costs.
BlackLine is a system based on rules. As your end users become more acquainted with its functionality, they will be able to write rules that meet specific criteria that make their jobs easier or solve problems with greater ease. This is done by merely asking the solution to perform functions around rules that address the issue at hand.
Want to know more? We're hosting a BlackLine webinar, and we think you'd benefit from seeing just how great of a difference it can make to companies dealing with reconciliations in the insurance industry. If you'd like to join, just click here and register. We'd love to see you there!