Monday, June 17, 2024

EXCLUSIVE: “Playing Catch-Up” – Piers Williams, AutoRek in ‘The Insurtech Magazine’

Whilst other industries have sprinted towards automation, the insurance sector has been more of a tentative participant. AutoRek’s Piers Williams says that transformation is coming, albeit slower than many would like

Without question, the insurance sector has lagged behind others in the financial services industry when it comes to automation. Most insiders readily acknowledge that they have much ground to make up, pointing to the as-yet-unfulfilled potential for technology to address core issues, such as improving efficiencies and reducing costs.

However, recognising there’s a problem – or opportunity – is one thing, executing a plan to address it is entirely another. As Piers Williams, global sales manager at reconciliation software company AutoRek, says: “There are many insurance businesses out there sitting on large volumes of unallocated cash that struggle to reconcile effectively. This is due to a lack of granularity in their data.”

In an information-rich sector such as insurance, it’s improved use of data that holds the key to unlocking efficiencies in day-to-day operations, says Williams, whilst also assisting with compliance and informing longer-term strategic decisions, as operations scale. AutoRek was founded in 1994 to ‘help firms get in control of their data to save time and costs through intelligent automation’. And it does that by providing clients with no-code reconciliation software with self-sufficiency at its core.

“Enabling self-sufficiency has been a priority of ours for a number of years now,” says Williams. “And it really comes down to allowing our business users to evolve their processes in line with ever-changing requirements.

“Because business isn’t static, it’s constantly evolving.”

The relationship between the insurance industry and the wealth of data it sits on is frustrating. There’s no hiding that

AutoRek’s software is used by more than 100 businesses across the asset management, payments, banking and insurance sectors, and it has a wider application than the low-hanging fruit of simple document management.

“The relationship between the insurance industry and the wealth of data it sits on is frustrating. There’s no hiding that,” says Williams. “There are a number of reasons for that frustration. These include having multiple different sources and formats of data, data quality issues, a lack of confidence in that data, and different levels of detail across datasets.

“Our solution is really flexible and can take data from any source and in any format. We go through a series of data transformations, validation, and enrichment operations. This gets the data into a state where we can process it as efficiently and effectively as possible, downstream.

“Ultimately, it gives a business valuable insight into its performance and health through management information and reporting outputs.”

According to Williams, there are five key areas in a traditional reconciliation process: data sourcing (gathering information from around a business, and also external sources); data transformation (working with that data and getting it into a state in which it can be processed); data matching (comparing two or more records and identifying the possibility of them belonging to the same entity); investigation (for example, looking into any breaks or queries); and, finally, reporting (creating information and recommendations for management).

Challenges posed by multiple different sources and formats of data, quality issues, and a lack of confidence in the data, may take up to 50 per cent of a business’s time spent on reconciliations, says Williams.

Matching could use up a further 20 per cent – implying there’s relatively little time to investigate, resolve items and provide reporting. But this formula changes dramatically when automation is brought into the mix, as AutoRek has demonstrated.

“Of those five steps in a reconciliation process, our solution completely automates data sourcing and transformation,“ says Williams. “We would expect to get at least a 75 per cent match rate, too. So that workload, for users of our software, has largely disappeared.”

A BREAK FROM THE PAST

Empowering clients to code their own software is sound business strategy, says Williams – for both parties.

“Technical skills are in very short supply and in very high demand, which commands high salaries,” he says. “I think every client we talk to highlights the recruitment squeeze they’re feeling. So the no-code feature enabling client self-sufficiency is a key part of our solution.

“It’s all part of being flexible to suit changing needs. If a user has a process that no longer works, they’ll likely stop using it. Obviously, that might lead to them  not using our solution at all. So, if they can make changes to keep them working efficiently and effectively, that benefits us, our client, and our relationship with them.”

It is likely that many of those companies will have been using Excel for 10, 20, or even 30 years and have fully developed a skill set in the process. Indeed, a recent study by AutoRek showed that more than a third of respondents in the insurance industry still rely on spreadsheets for their reconciliations.

AutoRek therefore employs a substantial amount of Excel-based logic in its solution, helping to build on the experience that clients already have. In short, firms can adapt to changing conditions, without having to ‘bring the experts in.’

As Williams says: “Some of the feedback we get from clients about other vendors is that they’re constantly hit with consultancy engagements after go-live for further changes. So, they never really get the full cost-benefit of automation.

We’re a software vendor, not a consultancy. We want to give clients the skills they need to be completely in control of

“If we can allow them to make those changes, we remove that burden entirely. We’re a software vendor, not a consultancy, and we want to give clients the skills they need to be completely in control of their operations.”

AutoRek’s intelligent data acquisition functionality allows it to onboard any kind of file-based data, including Excel. And, let’s be honest, despite its popularity, Excel does have its limitations.

“I remember one particular client had an incredibly complex Excel-based macro,“ says Williams. “The person who created it had long since moved on. But the business was adamant the macro was correct and they needed it for core business calculations.

“We had to unpick exactly what was going on with it and when we replicated it in AutoRek, the results were found to be wrong. So, we went back to the business and asked what they were looking to achieve and they couldn’t really answer the question.

“We realised that the process wasn’t right and the output they had been relying on probably wasn’t what they needed, either. We find those issues that are challenges for clients, that perhaps they hadn’t even realised were there.”

The insurance industry has a particularly wide range of data sources and formats in which that data is presented. One of the key issues for Williams here is PDFs.

AutoRek has an inbuilt optical character recognition (OCR) capability that allows it to overcome some of the challenges associated with PDFs.

“We also have more automated mechanisms, such as APIs and webhooks, which are powerful when we’re looking to work with external payment providers, for instance,” he says. “Database connection, SQL Server, OLEDB, ODBC drivers can also be easily utilised. We already have a mailbox integrator and are looking at Teams integrators for the future.”

Across the many sectors in which AutoRek is active, the largest organisations tend to reap the most value from its solution, says Williams. That’s because they typically have higher volumes of data, will often have more complex business structures (such as multiple entities across multiple countries), and provide a greater number/variety of products, often through third parties. But the exception to that rule is insurance, where smaller insurtechs find

AutoRek’s solution just as helpful, says Williams. “That’s because those businesses are often looking to build very scalable architecture that can grow limitlessly, no matter how big they become.”

Large or small, everyone in insurance wants to mitigate financial and operational risk. And AutoRek is essentially a financial control solution that allows users to monitor data throughout its lifecycle. A full audit trail is maintained on a transactional level, including any automated or manual action that’s applied, with date and time stamps.

In 2021, McKinsey Research forecast that, by 2030, more than half of current insurance claims activities could be replaced by automation. Given this process is likely to accelerate over the next seven years as AI continues to develop, the race to win better efficiencies and cost savings is well underway. And AutoRek is determined to be leading that field.


 

This article was published in The Insurtech Magazine Issue 10, Page 7-8

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