Time to Retire Retro Reconciliation Tools? As data and compliance needs change, carriers are looking to automate one of the last bastions of manual processing.(Back Office)

Byline: Bill Kenealy

Despite being one of the most fundamental business processes an insurance company performs, reconciliation retains a relatively low-tech reputation. This seems especially true if reconciliation is held up against other core systems such as policy administration and claims systems, which have been the beneficiaries of much new technological blood in recent years. Even with new reconciliation technologies available, many companies cling to manual methods of assuring that correct and legitimate data is posting to their financial systems.

Addison, Texas-based Trintech Group PLC estimates that as of 2004, more than half of all reconciliation processes were done with spreadsheet tools, semi-manual and manual processes, or partially by systems of record. As of 2007, Trintech estimates that only 20% of these manual activities had been converted to automated systems.

Yet, this may be changing. According to Trintech, spending on reconciliation and transaction process management solutions by insurance companies is growing faster than overall IT spending.

Two large forces may be behind this trend. The first, largely external, force is the advent of tougher compliance regulations for insurance companies. If the passage of the Sarbanes-Oxley Act, which mandated more stringent requirements for sign-off and reporting, didn't convince insurers that the time is right to leave manual reconciliation processes behind, pending solvency requirements in Europe, and tightening accounting standards both here and abroad, may well do the trick.