From Manual to Machine

Direct bill reconciliation is one of the most manual back-office processes facing an insurance agency.

Each instance demands hours of work as accounting teams fetch and reconcile carrier commission statements, which are often unique to each carrier, and compare the statements to what is recorded in the agency management system (AMS). Any discrepancy costs even more time to resolve, and there are often roadblocks in the process.

Chris Peabody, director of partnerships for payments and accounting software provider Ascend, says the most common complaint from agencies is getting the statement from the carrier in the first place. “The biggest challenge is just how labor intensive it is for the agency to get the statement. Not every carrier uploads their statements to an Ivans network, for example, so an agency has to go to a carrier site, enter credentials, download the statement, start entering in premiums and taxes policy by policy, and so on.”

Compounding the issue is the shrinking talent pool for this work—employees with decades of experience in the process are beginning to retire, and new generations of insurance professionals are looking toward automation so they can focus on more strategic work. On top of that, the industry’s continuing consolidation creates further obstacles as agencies integrate; buyer agencies must account for their acquisition’s revenue during reconciliation or employees must track down which credentials they should be using to access certain statements.

As Peabody puts it, “Is this the most productive use of someone’s time? Definitely not.”

The AI Advantage

As AI takes center stage in business and society, insurtechs are racing to find practical applications for this new technology. Many are seeking breakthroughs in processes such as direct bill reconciliation as a starting point, and Peabody recognizes this as well: “Given how technology is evolving so quickly across a variety of different industries, the one thing that [Ascend is] really leaning into is how we can apply artificial intelligence to the equation.” The way he sees it, the most recent AI models enable agents and brokers to automate many of the manual parts of direct bill reconciliation, including retrieving carrier commission statements, ingesting those statements into an agency’s AMS, and sifting through any changes in those statements or discrepancies between the statements and AMS data.

Ascend is already putting these new AI models to work in its accounting  offering, according to Peabody. For example, the company’s direct bill automation solution leverages AI to ingest commission statements in any format and parse out the necessary information for an agency’s bookkeeping. “Because we’re using the latest models, we’re able to onboard these agencies in less than a week in some cases and start ingesting their statements and begin that reconciliation process for them. We’re trying to help agencies realize a higher return on investment as quickly as possible.”

The return on investment from automating parts of direct bill reconciliation could be business-changing for an agency. When AI handles the time-consuming manual parts of the work, an agency can reduce the number of employees working on reconciliation and direct them toward initiatives that drive more revenue, says Peabody.

The cost to reconcile the statements also comes down significantly, according to Peabody, since fewer work hours are needed. Agencies working with Ascend have reduced time spent on the manual reconciliation process by 90%, leading to savings across the board. Peabody explains that “[Ascend is] able to leverage software and then close the books in a matter of days, compared to having to wait until the end of the month, go through a fire drill, and then close the books out.”

Still, Peabody cautions that agencies must ensure that any tech solution is right for them: determine what the problem is, its significance, and the return on investment for mitigating it—and if they can even make effective use of the tech solution with its current team size and composition.

“Ultimately, one of our greatest resources is our time,” Peabody says. “If you’re spending time doing due diligence on something that’s really not going to move the needle, you need to reprioritize sooner rather than later.”