Insurance payment reconciliation

That bank statement has 47 transactions. Which policy does each one belong to?

If you work in MGA operations, you know the feeling. You open the bank feed and there are dozens of transactions. Some have a policy reference in the description. Some don't. Some cover a single policy. Some cover twenty. Some are for the wrong amount. And your job is to figure out which payment goes where before anyone can generate a bordereaux, settle to a carrier, or even tell the broker their premium has been received.

The problem

Insurance payment reconciliation is the process of matching incoming payments to outstanding policies. It sounds simple, but in practice it's one of the most time-consuming tasks in MGA operations. Here's why:

• Vague references: bank transfers arrive with references like "PREM Q1" or just the broker's company name. No policy number. No indication of which policies the payment covers.
• Partial payments: a broker sends $50,000 against a policy where $75,000 is due. Is it a partial payment? A different policy? An error?
• Combined remittances: one bank transfer covers fifteen different policies. The broker may or may not have sent a remittance advice listing the split. If they did, it's in a PDF attached to an email from three weeks ago.
• Multiple channels: payments arrive via bank transfer, but the supporting information comes via email, PDF, phone call, or sometimes not at all.

The traditional approach

Most MGAs reconcile payments manually. The process typically looks like this:

• Download the bank statement or feed
• Open the policy register (usually a spreadsheet)
• For each transaction, try to identify the broker from the bank reference
• Search emails for a matching remittance advice
• If found, cross-reference the remittance against the policy register
• Check amounts match, accounting for commission splits, taxes, and multi-instalment payments
• Mark policies as paid in the register
• Flag anything that doesn't match for follow-up

For a busy MGA, this process can consume 2–3 days per week. That's 2–3 days that your ops team isn't spending on underwriting support, broker relationships, or anything else that actually grows the business.

Payment matching: what it actually involves

Payment matching insurance is more nuanced than just "find the policy number." Insurance reconciliation software needs to handle:

• Reference parsing: extracting policy numbers, broker references, or batch identifiers from free-text bank descriptions
• Amount comparison: matching payment amounts against expected premium, accounting for commission deductions, stamp duty, and instalment schedules
• Broker identification: determining which broker sent the payment, even when the bank reference is the parent company name rather than the broker entity
• Confidence scoring: not every match is certain. A good system provides a confidence level for each suggested match, so humans can prioritise their review
• Cash allocation: for combined remittances, splitting a single payment across multiple policies based on the accompanying remittance advice

The human-in-the-loop principle

Good insurance reconciliation software never auto-allocates. It suggests matches and lets a human confirm. This is critical for several reasons:

• Incorrect allocation flows downstream. It affects bordereaux, carrier settlements, and commission calculations
• Insurance trust account reconciliation has regulatory implications, and you need an audit trail of who confirmed each allocation
• Edge cases are common. Partial payments, overpayments, and disputed amounts all require human judgement

The goal isn't to remove humans from the process. It's to do the heavy lifting (parsing, matching, scoring) so humans spend their time confirming and resolving exceptions, not searching through spreadsheets.

What changes when reconciliation is solved

When insurance payment reconciliation is automated, everything downstream accelerates:

• Real-time outstanding: you know exactly what's been paid and what's overdue, without building a report
• Automated BDX: bordereaux can be generated as soon as premium is confirmed, not weeks later
• Faster carrier settlement: net premium can be calculated and settled to carriers on time
• Credit control: ageing reports are accurate, chase communications can be triggered automatically
• Insurance accounts receivable: your outstanding balance is computed from the ledger, not manually tallied