New report shows why insurers are struggling under an avalanche of complex transactions
AutoRek, a leading software provider to companies in the global financial services sector, today released the findings of their insurance industry report that says two-thirds of firms contend with at least 10 data sources or inputs to their premium payment process. The report also finds that more than half of insurance firms will adopt a software as a services (SaaS) solution within the next two years to deal with disparate data, alongside investment in artificial intelligence (82%).
The report surveyed 250 decision makers in insurance and healthcare insurance organizations across the U.S. The new research shows that more than half of all firms surveyed process over 10 million transactions annually, with an average of over 16.77 million.
Although tried and tested systems like spreadsheets are being used to process these transactions, outdated systems simply cannot keep up. This results in lengthy settlement periods and hinders efficiency throughout the insurance sector. In fact, a fifth (21%) of firms report that their premium receivables and allocation processes are currently ineffective.
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“Our research has identified a concerning trend. The volume and complexity of transactions is increasing at an unsustainable rate. With multiple sources and data formats, ensuring data quality becomes more and more difficult. The insurance industry is reaching a point where if they do not modernize and streamline their systems now, the cost and complexity of future upgrades will only grow as the pressure to adapt intensifies,” comments Piers Williams, Global Insurance Lead at AutoRek.
The main objective for more than half (55%) of those surveyed is to improve operational efficiency. The good news is that 90% of firms are exploring new reconciliation platforms to do just that. And it starts in the back office.
The back-office “engine room” has long been overlooked in favor of front office investment, leaving insurers struggling with inefficiencies and complexity. Automation and innovative SaaS solutions can help improve data accuracy and the speed at which reconciliation can be conducted. Without adopting automation and standardized processes, firms risk being outpaced by more agile competitors, such as InsurTechs.
These findings show the insurance industry must follow suit with the rest of the financial services sectors and embrace technology to aid, enhance, or even replace their outdated systems.
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