As the world evolves, so should cash management and the insurance sector needs to take an interest in interest, says Investec Bank’s Jack Sirett
With driverless cars and holiday’s to the moon becoming a reality, it is safe to say that the world is moving at an incredible rate of knots yet many things still remain the same. As both firms and the markets as a whole evolve, the question again needs to be asked as to why cash management within the insurance sector remains static. The traditional approach of cash management within the industry is somewhat outdated and in a world of ever increasing costs, the importance of using deposits as a tool to add to the bottom line is becoming even more pressing.
Moving away from current accounts and into CASS compliant deposits has been a strategy adopted by my current client base within the insurance sector and the success has been evident. With deposits giving you the opportunity to earn 2.75%pa *(subject to change), the tangible benefit is evident. Clients are now seeing strong gains in the level of interest that they receive despite being confined by the CASS rulings and are beginning to recognise that deposits are a viable revenue stream that add to the firm’s bottom line.
To highlight this tangible benefit we can look at a case study. Investec will give an insurance broker the opportunity to earn 2.75%pa on their deposit so for every $1,000,000 placed, you have the opportunity to generate $27,500pa in interest. The client previously had funds held on a current account earning minimal interest so instantly sees a strong uplift in the interest received whilst of course remaining CASS compliant.
With the above in mind, I would argue that it is indeed time for the insurance sector to take an interest in interest and be open to the idea to a move away from the existing inefficient approach to cash management.
To discuss your requirement in further detail please contact Jack on 0207 597 3601 or email@example.com. Or visit our website for further information: https://treasury.investec.co.uk/products-and-services/deposits-and-cash-management.html
Please note: case study is for illustrative purposes only