Author : Apoorv Chaturvedi
COE-Insurance Engagement
09/Sep/2021

Apoorv heads the Insurance Engagements COE for Espire. With an rich experience of over 13 years in the insurance domain across Life Insurance, P&C and Reinsurance, he ensures rapid development of frameworks and meticulous implementation of digital transformation & CX processes for businesses in the insurance industry.


Mitigating the problem of Unallocated Cash in Insurance Industry with Digital Transformation

Unallocated cash simply refers to the collections received by the service provider on the date of contract termination, which has not been evidenced as a particular receivable and is pending investigation. It has been a persistent challenge for insurance companies over the years, as it not only hampers customer experience and relationships but also leads to many compliance and audit issues.

As per UNCTAD's World Investment Report, millions of dollars' worth of unallocated premium is trapped in the insurer books globally.

With rising focus on fund applications, credit positions and contractual obligations, insurers must deploy disruptive technology to devise agile solutions & transform the insurance/reinsurance cycle.

In this blog, we will discuss the top ways how Espire has been helping leading insurance brands manage unallocated cash with scalable digital solutions.

1 . Leveraging Data & Analytics tools to drive Positive Outcomes

By leveraging the power of data and advanced analytics, insurance providers can analyze historical customer data and trends, measure delinquency levels and inventory to optimize workflows and devise a scalable credit control and collections strategy. Key data insights can help business leaders take informed decisions to streamline roll-rate and flow-rate visibility while driving positive business outcomes.

2. Mapping Unallocated Cash by Debt Age

The kind of account or policy and the age of debt are two significant factors which form the bedrock of collection processes. By mapping unallocated cash by debt age, various complex processes like customer behavior, contact-to-settlement ratio, query and dispute ratio, can be efficiently identified and addressed.

Creating Super Engaging Digital Experiences in 2021 to Unlock Greater Growth

3. Simplified Report Generation

Meticulously mapping inventory performance and month-on-month delinquency ratio is critical for insurance companies to stop financial leakage and efficiently manage cashflows. From time immemorable, reinsurance companies would depend on their employees for drawing up the paperwork, checking and validating invoices to mitigate the perils associated with unallocated cash.

By deploying automation and cloud-based solutions, Espire is helping leading insurance brands simplify the complex report generation process, reduce the dependence on manual efforts, streamline inventory management and reconciliation while reducing operational costs.

Let's understand how Espire can help mitigate the challenges of unallocated cash with an example.

This success story depicts how Espire helped a leading Insurance run-off claims business in London design and implement a centralised reinsurance & accounting system to streamline all claims and related financial movements.

Key Business Bottlenecks

  • The customer was leveraging legacy technologies like AS400, Cobol etc, which required regular maintenance and enhancements
  • They were dependent on excel sheets for complex calculations, which sometimes led to financial leakages due to incorrect cash/ledger entries
  • Inefficient reporting system led to mismanagement of important business data
  • Required a user-friendly cloud-based accounting and reporting solution to support reinsurance & accounting processes

Espire's Business Solutions

Our team at Espire, carefully analyzed the pain points faced by the customer and designed scalable technology solution to mitigate key challenges of unallocated cash and deployed an automated reinsurance & accounting system to carry out complex commutations for run-off businesses.

  • The system supports end-to-end inward and outward data with all possible business use cases
  • We developed the cash ledger module where existing unapplied cash items can be enquired upon from different angles like item type receipts/payments, ledger type, broker code etc. this makes ledger technician tasks easier to process and reconcile it.
  • We also incorporated cash maintenance processes like de(reconciliation), write-off, restore and transfer to allow ledger technician to work upon and permanently git rid of organizational unapplied cash issue.
  • Our solution has an inbuilt ledger control reporting functionality which validates the data regularly, if everything is properly reconciled (including unapplied cash) or not, allowing stakeholders to take actions accordingly
  • With a well-controlled user access management system, all required policies, claims and ledger data would be readily available in the reporting module for easy access to the administrators

Legacy Transformation in Insurance with low cost, low risk cloud-based systems in record time

 

Top Business Benefits

  • Espire's automated reinsurance & accounting system allows the administrators to get auto calculated liabilities out of the system for a creditor
  • It provides easy access to critical business data and ensures faster generation of reports
  • It mitigates the problem of unallocated cash with increased automation accounting processes, outward/inward closings and ledger enquiries and maintenance processes with enhanced control frameworks
  • It stops financial leakage arising due to human errors and helps reduce operational costs

Espire is helping leading insurance companies automate claims handling and management, streamline reinsurance processes and drive greater growth. Read more in our case study>

Businesses in the insurance sector need to deploy agile technology solutions to reinvent complex operational processes and adopt an aggressive strategy for the efficient management of unallocated cash, to strengthen their credit position and build lasting customer relationships. To discover how we’re assisting businesses accelerate their growth & build resilience, visit> https://www. espire.com/industries/insurance or get in touch at marketing@espire.com



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