Insurers and brokers are starting to see the benefits of electronic account reconciliation systems. Verity Adams reports
The painstaking task for brokers of manually reconciling accounts could become a thing of the past if insurers' efforts to introduce electronic systems for doing this takes off.
For some insurers, such as AXA and Fortis, and the more technology conscious brokers, the new concept of settling accounts at the click of a button is starting to save them time and increase efficiency.
Given the apparent success of these initiatives, more insurers are looking to follow suit. Allianz Cornhill and Norwich Union have both shown interest in offering electronic statements and are working to develop schemes to enable brokers to access and reconcile their accounts online.
AXA enrolled three brokers, including Stuart Alexander and Linaker, to test-drive its project. The one-year pilot ended last year and has been rolled out to a number of other eager brokers.
The system is internet based, allowing brokers to access their accounts as often as they like, tick off matched items, pay at the click of a button and track the status of any queries raised.
Frank Woods, premiere partner manager at AXA, says: "The aim was to say this is a new system and we believe we have got to change what we have got in place. It was unlikely that we would get it right first time but unusually it pretty much hit the mark straight away.
"We have just over 150 subscribing to it and are targeting the 650 premier and prime brokers."
He said the limiting factor has been rolling the scheme out as quickly as they wanted to because their 12 e-consultants have to spend time visiting the brokers and showing them how to use it.
The monthly accounts indicate that £11m worth of AXA's business is being settled online. The insurer says there has already been a 70% to 80% up-take from brokers who have been introduced to the system.
By the end of the year AXA aims to have 200 brokers on board.
Traditionally, the way brokers reconcile their accounts is by receiving monthly paper statements from the insurer. But according to brokers it takes up a lot of time and almost always triggers queries, which then have to be investigated. Most say it as a very laborious process that takes a long time to dig behind the scenes for a single accounts query.
Woods describes AXA's system as "completely transparent". He says there are efficiency savings to be made and the accounts queries process is faster so the settlements are more timely.
Terry Smith, group financial controller at Stuart Alexander, welcomed the e-settlement system, which he says cuts out the reams of pages that they would otherwise have to sift through. They can now tick off items online and the queries are quickly sent to the underwriter.
He says: "There's always resistance against change but as a company we're always ready to look at change. I'm surprised more brokers aren't embracing it, they need the courage to try it."
The company's chief executive, Stuart Reid, adds it was outlandish to have to otherwise go through the process in such an old-fashioned way.
Fortis has also started to offer 'auto-reconciliation' via an email system.
Shaun Astley, operations director of Fortis, says: "The clever bit is that the data is run through the accounts file and clears matching items. It then comes back to us with reconciled items matched off and loads into our system.
"It was rolled out to five other large brokers over the last 18 months and the feedback has been good. One broker claims it has saved them half the time, with 60% to 70% of the items matching immediately. They are saying there has been a big improvement in the quality, and there is less chance of human error."
He adds that more time is being spent on unreconciled items.
The insurer is currently carrying on research with the rest of their brokers to judge demand, and Astley says there is every intention to roll this out further and it could become web-based. The research should be completed by the end of September.
Allianz Cornhill is also looking at an electronic system. Tim Bunce, credit management manager at the insurer, says:
"In conjunction with Polaris, broker software houses and other insurers, we are currently working on the development of an electronic broker accounting solution.
"The intention is to agree a standard industry format for the input and output files in order to ensure that brokers will have a common format to interface with their systems. As part of this exercise the group is also working on the development of a web front-end to enable the broker to access and reconcile their statements on line."
He says the expected benefits of this exercise include "improved speed and efficiency of the reconciliation process for both insurers and brokers as well as a reduction in paper usage benefiting the environment as well as the insurers".
Brokers do seem keen on using the electronic approach. Steve Lynas, managing director of Business Insurance Solutions, is not using any of the online systems at the moment, but he is intrigued to learn more about them.
He says: "I can see how it would work. It's about making the system a lot slicker and, if it does that, I'm all for it. I particularly like the sound of the AXA principle. To be honest
I wouldn't mind giving it a try."
But he says there could be resistance from other brokers who may be less willing to change the habits of a lifetime. He suspects it could take another five years with the next generation of younger brokers to fully appreciate the system.
He concludes: "We are never really going to get away from the fact we have to do it [reconcile accounts] anyway." IT