By Max Pell - I’ve always found it paradoxical that the Global P&C (Re)Insurance industry, who’s lifeblood is providing access to risk capital, is so inefficient in the way it manages its own capital - both in the way it manages the cash flows inter-company, and between its principal trading counterparties.
The industry is notorious for its high amounts of unreconciled cash, highly manual processes for agreeing and settling counterparty trades, and millions of dollars held in multiple bank accounts in multiple jurisdictions to act as a buffer for outgoing cash flows because the central finance and treasury function lack the sufficient timely data to forecast accurately. Just between trading counterparties there are over $5Tn of premium and claims payments flowing between the major players in the Global (Re)Insurance ecosystem. Only relatively small improvements in the process have the capability to free up millions of $ from working capital requirements.
Yet this is an area that still seems to fail to ignite much interest at a “C” level within the Broker and Carrier community. Is it because the potential upsides are not deemed to be material enough, or is it just considered too hard to fix?
It is noticeable to date that the existing core Insurance ERP business applications claim to deliver an “start-end” process but actually the platform process ends once the policy is issued or the claim agreed. The actual movement and reconciliation of cash often falls to a manual process as businesses try to reconcile the individual transactions on the AP and AR ledgers with the aggregated cash movements on their bank accounts.
Fennech was created to address exactly this problem. To help automate outgoing payments, reconcile incoming payments, and bridge the gap between core business applications and the banking system. We can help remove operational cost, automate cash allocation and reconciliation, and significantly improve liquidity management within the Group. Fennech has all the functional capabilities of a clearing house to net settle cash flows for both internal and external networks of supply and distribution chains.
If you would like to find out more about how we could help you transform your cash management please contact Max Pell.