Streamlining the Insurer Statement Reconciliation Process
Insurer statement reconciliations are a necessary and key activity for all insurance brokers. In the vast majority of cases, the reconciliation process is very labour intensive and prone to errors. The broker reconciliation team are often dealing with a multitude of different insurers, each with their own unique statement formats provided in both electronic (Excel, CSV and PDF files) and paper formats.
Insurer statements are received at various times throughout the month. Some statements contain a handful of transactions, whereas others contain hundreds of transactions to wade through. In the vast majority of cases, the statement reconciliation is a completely manual process, with a little help from Excel.
Once received, the broker reconciliation team will need to manually “tick and tie” items present on the statement against the data in their brokerage system (E.g, Acturis, OpenGI etc).
Matching of transactions is carried out using a combination of criteria, but some of the standard information that needs 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)
The majority of transaction matches are on a “one to one” basis, but often there are “many to one” or “many to many” matches, which are not so easy for someone to manually identify. In addition to confirming which transactions do match, the reconciler will need to make comments alongside each unmatched/queried transaction and then return the statement (comments and all) back to the insurer.
When subsequent statements are received from the insurer, these will include exceptions that were present on the previous statement, but they will not always 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.
Disadvantages of Manual Insurer Statement Reconciliations
With the best will in the world, no matter how thorough and diligent a reconciler is, the fact that this is primarily a manual/Excel based process means that it is prone to some distinct disadvantages:
Prone to Human Error
While human beings are creatures of immense talent and skill, it is 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.
Dealing with such large volumes of data, it is inherently a very time-consuming process when carried out manually.
In what is predominately a manual process, there is often no standard method of recording comments against queried transactions for the insurer (and no guarantee that this information will be provided by the insurer on the next statement). With no clear accessible audit trail of previous queries and comments, it is inevitable that there will be a duplication of effort when new statements are received.
As the adage goes, "time is money." Having individuals manually managing all aspects of statement reconciliations means it will take longer to complete, using up time which could be better spent on more value added activities.
How to Streamline Insurer Statement Reconciliations
It is clear from the above that there must be a better way to reconcile insurer statements. This is where Eclipse and BlackLine comes in. But first, a little on how BlackLine works.
BlackLine is a cloud based enhanced finance control and automation (EFCA) suite. One of the main strengths of the BlackLine solution is its ability to improve efficiency by automating the majority of the transaction matching and insurer statement reconciliation processes.
- Import insurer transactions from the brokers system (E.g. Acturis, Open GI) into BlackLine via a scheduled process.
- Import and transform statement files received from insurers 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.
Transaction matching “pass rules” are then created which identify and match transactions that:
- Match and are due for payment to the insurer.
- Match and are not due for payment to the insurer.
- Do not match (providing 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.
- User defined tolerances can be defined that will allow rounding/other variances to be taken into account.
Once the reconciler has reviewed the exceptions, comments can be added to each queried 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 for payment
- Unmatched transactions includingdetails of the query
The key point here is that any comments added to a queried statement transaction will form part of a comprehensive audit trail and will continue to be present on statements going forward. This will eliminate the need for the reconciler to keep comparing past statements.
Advantages of using BlackLine for Insurer Statement Reconciliations
By automating the tedious, repetitive parts of the matching process, the reconciliation team can focus on managing exceptions and queries.
Reduce Risks and Errors
By reducing the potential for human error, plus providing a fully auditable process, there is significant risk reduction, which like time-saving, ultimately results in a cost-reduction.
Better Utilisation of Human Talent
Having valuable team members tied up carrying out manual, repetitive data reconciliation tasks is a terrible waste of talent. Make the most of their skills by freeing them up to work on other important value added activities within your business.
Enable 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 increased overheads and hiring costs.
Flexibility and Ease of Use
BlackLine is a system which focuses on empowering the end users to improve and streamline their day to day processes. As users become more acquainted with its functionality, they will be able to write additional rules themselves to meet specific criteria that will deliver higher match percentages.
Want to Know More or Would Like to Discuss?
If you have any questions, or would like to discuss your requirements in person/arrange a demonstration of the solution, please click on the button below. Alternatively please contact Gary Waylett or Linda Scott directly on +44 (0)203 866 8800, or drop us an email at email@example.com. We would welcome the opportunity to speak with you.