Where Insurers stand in their autonomous finance journey
In our Global Autonomous Finance Benchmark study – which surveyed over 1,600 Finance Functions in the areas of data, automation, reporting and people & culture – nearly 70% of surveyed Insurers placed their finance function at the two earliest stages of Traditional or Integrated. Most Insurers have a long way to go to reach Autonomous Finance and Fynapse can play a critical role in this journey.
What is Fynapse?
Fynapse is the finance data management platform with accounting and subledger capabilities that unlocks the power of the finance function by transforming it into an AI-powered, strategic and trusted value creator. Fynapse provides a singular and trusted view of all granular business and finance data, automates manual and complex processing and enables AI to power strategic insights and improve decision making.
Insurance use cases
To progress their journey, Insurers are exploring use cases that will help them build out Autonomous Finance competencies to unlock data, unlock teams, unlock insights & AI and unlock results. We’ve broken down the top use cases for our Fynapse Insurance clients.
Automate Industry Accounting Rules
To generate the required accounting and reporting, Insurers must run complex calculations on data from disparate systems and transform hundreds of different business events into accounting entries reflecting standard business activity.
Fynapse automates this process at every step. First, Fynapse can connect to any system within a client architecture. It eliminates the need to transform the data to fit a pre-defined structure and instead uses a data fabric approach that allows the finance team to bring in any event or data object as is using an API. This dramatically reduces the time and cost of moving data.
Next, Fynapse applies pre-defined accounting and calculations for standard Insurance business activity. This includes but is not limited to the following:
- Premiums (and Premium Expenses) – Policy Admin and Underwriting Systems
- Reserving and Claims Processing
- Actuarial Systems and Claims Systems (integration with customer service?)
- Reinsurance
- Proportional and Non-Proportional
- Internal Reinsurance and Tax/FX Exposure
- Expense Management
- Cost Allocations and Shared Service Model FTP
- Acquisition Expenses and Commission Processing
- Producer Compensation, Variable Commission Tracking, Settlement Triggers, Payroll vs AP
- Investment Activity
- Hedging Strategies, Whole/Universal Life with guaranteed returns and Market Risk Benefits
- Surrender Benefits/Separate Account Activity
- Policy Loans
- Tax
Finance Data Management
For Insurance companies, effective financial data management is crucial for bringing together and controlling information from different systems. But for many Insurers, traditional financial controlled data entities reside only in the General Ledger(s) meaning organizations with a multi-ERP architecture may not have a true primary record store, have data duplication across systems and rely on IT for data updates.
Fynapse provides centralized and controlled finance primary data management for distributed system environments. It delivers control, versioning, auditability, security, role based access control, workflow approval and the API framework for other systems to subscribe to the financial data store.
Carrier Statement and Payment Matching
Carrier statement and payment matching is a process used in the insurance industry to ensure that the payments and financial transactions recorded by an insurance agency or broker align with the statements and records provided by the insurance carriers.
For many Insurance companies this is a fully manual process – one Insurance broker had over 50 people working on this! Fynapse automates the payment and settlement matching process – even when they arrive in many different formats – and then automatically generates the accounts receivable accounting and closes accounts out with the case settlement process.
Producer Compensation Accounting
Producer compensation accounting refers to the financial management and reporting of compensation paid to insurance producers, such as agents or brokers, for selling insurance policies. This compensation can take various forms, including commissions, bonuses, or other incentives. The accounting process involves tracking, calculating, and reporting these payments accurately in the company’s financial statements.
Fynapse automates the accounting for Producer Compensation commissions and events, eliminating what are often highly manual workstreams and ensuring producers are paid correctly and quickly. Fynapse holds all policy details, including AR adjustments and can apply the correct percentage allocation for each involved party. Fynapse can be easily integrated with a third party producer portal allowing the Insurance Brokerage to set percentages at the deal level, resolve disputes, and execute producer payouts.
IFRS 18
IFRS 18 was issued in April 2024 in response to investors’ concerns about the comparability and transparency of entities’ performance reporting. It will apply to annual reporting periods beginning on or after Jan 1, 2027. The standard replaces IAS 1 Presentation of Financial Statements and introduces a defined structure and specific disclosure requirements for the statement of profit or loss.
Insurers will be looking for low risk adoption of IFRS 18 without costly impacts to General Ledgers, FP&A tools and ERP systems. Fynapse’s interoperability and extensible data model allows for rapid configuration to support new data and aggregation requirements without impact to core systems like those mentioned above. New reporting categories and management-defined reporting measures can be implemented in parallel while AI tools can help support the generation of notes to support financial statements.
M&A Integration
M&A activity can create major challenges for an acquisitive insurance company, especially in managing financial systems and data. Combining different financial systems, aligning accounting methods, and merging large amounts of data from various sources can be cost and resource intensive.
Fynapse supports the rapid adoption of an acquired company’s financial data into acquirer’s environment with minimal time and effort required. The acquirer is able to retain the legacy Chart of Account (COA) structure while remapping to new COA structure, allowing for auditability and transparency in the migration.
Conclusion
With the right tools and strategies, Insurers can significantly accelerate their transition to Autonomous Finance and reap the benefits that will come with it. Fynapse stands out as a critical enabler in this process, offering powerful automation, seamless data integration, and AI-driven insights that can revolutionize how insurers manage their financial operations. As the industry continues to evolve, Fynapse will be instrumental in helping insurers unlock the full potential of their finance functions, paving the way for a more strategic, efficient, and autonomous future.
For more information on the Insurance-sector findings in our recent research, please download our eBook!
