In the past, smaller insurance companies did their bookkeeping using traditional accounting software like Sage or QuickBooks. These solutions work very well from an accounting point of view after some customization adjustments have been made. However, now there may be one more movement towards a comprehensive solution.
Insurance agencies need to track a lot of information; perhaps more than your normal company. They need information on premium payments, claims, and commission rates from insurance representatives. Unfortunately, not all of this information can be traced in a normal accounting package.
In the past, this meant that insurance agents would go and talk to accounting or management when they needed information on expense allocations or special sales offers. Additionally, accountants have had to communicate with agents before entering key accounting information, such as sales or travel expenses. This leads to a lot of redundancy, as well as wasted time, not to mention a greater chance of data entry errors.
Insurance companies may want to look for a more comprehensive insurance accounting software package. This type of thought process is known as enterprise resource planning (ERP). An ERP system approaches a business organization from a broader perspective of the entity rather than individual silos or modules. In the past, accounting was very separate from the sales team, which was very separate from management. Each of these different modules, in turn, uses its own software to manage the information.
In an ERP system, all data is compiled into a centralized database. This leads to several advantages over traditional insurance accounting software:
(1) Data is easier to keep safe and accurate. When important data or information is stored across the business, there is a greater chance that this data will be stolen or mishandled. Data stored in a centralized database behind firewalls that only a database administrator can directly access is much more secure than data stored on a sales rep’s cell phone.
(2) Redundant processes are avoided. Instead of sales sending the information to accounting, who then enters it into the system, the sales team can directly enter the sales data into the system. This leads to a lower probability of an error when entering data because only one person enters one data rather than two.
(3) Better communication flow. With a centralized data management system, you can assign rights and privileges to people so that they can access information that is relevant to them. This means that sales can interact with the database to view special offers and travel expenses. Accountants can interact with it to view expenses and income, and managers can access it to view important management information.
Insurance accounting software is important and it may be time for your agency to think about an upgrade from traditional software to a more comprehensive solution.