Business and technology
Fragmented data and outdated processes have led to inefficiencies and lengthy settlement periods across the insurance industry, according to a study by AutoRek.
Two-thirds of insurance firms juggle at least 10 different data sources in their premium payment process, the report showed, with 52% of firms still using excel and 21% of firms reporting that their premium receivable and allocation processes are ineffective.
Key issues concerning premium payments and settlement data are:
- High volumes of data (60%).
- Varying payment terms (51%).
- Different formats and structures (48%).
Ninety percent of firms are now considering a new reconciliation solution to assist with these concerns.
“The volume and complexity of transactions is increasing at an unsustainable rate,” said Piers Williams, global insurance lead AutoRek.
“With multiple sources and data formats, ensuring data quality becomes more and more difficult,” he added. “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.”
Multiple payment types remain the biggest challenge for insurance companies when receiving premium payments, with ACH/wire bank transfer accounting for 82% and cash comprising 64% of payments.
The top three objectives for insurance firms and premium payment processing over the next two years, according to AutoRek, are improving operational efficiency at 55%, accelerating cash flow and revenue recognition at 50% and reducing errors and enhancing accuracy at 48%.
Meanwhile, a rise in global insurance claims and streamlining claims procedures will help push the insurtech market to $20.26 billion in 2025.
The sector is also predicted to reach 958.85 billion by 2034 at a compound annual growth rate of 53.5%. More than 45.80% of global revenue for insurtech was generated in North America.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.