Why You Should Consider Outsourcing Insurance Accounting Services For Your Business

Maintaining accurate and compliant financial records is crucial for your insurance business’s success.

However, managing these tasks in-house can be challenging due to overworked staff, outdated technology, and continuously evolving regulations. The unique financial complexities of the insurance industry can strain internal resources, diverting your focus from core business activities.

Enter insurance accounting outsourcing services. Outsourcing offers several benefits to insurance firms, from cost savings and regulatory compliance to improved operational efficiency and strategic insights.

This article will dive into the importance of outsourcing insurance accounting, highlighting key situations when it becomes necessary, the top qualities to look for in an accounting service provider, and the leading companies in the field. 

What Is Insurance Accounting?

Insurance accounting is a specialized field that deals with the unique financial transactions and reporting requirements of the insurance sector. It involves tracking premiums, claims, commissions, and other financial activities specific to insurance operations. 

Insurance accounting tasks can encompass a wide range of activities, including:

• Premium accounting: Recording and managing premiums received from policyholders
• Claims processing: Tracking and settling insurance claims
• Commission accounting: Calculating and paying commissions to agents and brokers
• Reinsurance accounting: Managing financial transactions related to reinsurance contracts
• Financial reporting: Preparing financial statements and regulatory reports in compliance with industry standards
• Tax preparation: Ensuring compliance with tax laws and regulations
• Investment accounting: Tracking and managing the investment portfolios of insurance companies
• Regulatory compliance: Staying up to date with and adhering to insurance-specific regulations

These tasks can be complex and time-consuming, requiring specialized knowledge and experience. This is why outsourced finance and accounting services have become an attractive option for many insurance firms.

When Should You Outsource Insurance Accounting Services?

Outsourcing insurance accounting services can be a strategic move for insurance organizations facing various operational challenges. Here are key situations when outsourcing becomes a beneficial option:

Overworked staff

According to one study, workplace stress costs US companies an estimated $125 billion to $190 billion annually in healthcare expenses. 

If your in-house team is overwhelmed with financial tasks, resulting in errors and inefficiencies, outsourcing can alleviate this burden. By outsourcing, you can reduce burnout-related health costs and ensure high-quality work without overtaxing your employees.

Outdated technology

If your firm struggles with outdated accounting systems that hinder productivity, outsourcing to a provider that utilizes state-of-the-art technology can streamline processes and improve accuracy.

Lack of skilled employees

A shortage of experienced accounting professionals can impede your firm’s financial management. Outsourcing gives you access to a pool of skilled experts without the hassle of recruitment and training.

Regulatory compliance requirements

Keeping pace with evolving insurance regulations can be a challenging and time-consuming task for an internal team. Outsourcing providers stay abreast of these changes, ensuring your firm remains compliant and avoids costly penalties.

Need for scalability

As your firm grows, so do your accounting needs. Outsourcing offers the flexibility to scale services up or down as required without the hassle of hiring or laying off staff.

Limited budget

Outsourcing can greatly lower overhead costs related to salaries, benefits, and office space, offering a cost-effective alternative to maintaining a large in-house accounting team.

By outsourcing to locations outside the US, you can save considerably on annual salary costs. For example, nearshoring to Latin America (LatAm) enables you to cut salary expenses by over 30%—and sometimes by much more.

Focus on core activities

By delegating accounting functions to an external provider, your firm can concentrate on core competencies like customer service and business development, driving overall growth and success.

What Qualities Should You Look for When You Outsource Insurance Accounting Services?

When outsourcing insurance accounting services, it’s essential to choose a provider that meets your firm’s specific needs and maintains high standards of service. Whether you choose a staffing accounting firm, an individual contractor, or another type of accounting provider, here are the key qualities to consider:

Expertise in insurance accounting

Ensure the provider has a deep understanding of the insurance industry and its unique accounting requirements. They should be well versed in handling premiums, claims, commissions, and reinsurance transactions.

Regulatory knowledge

The provider must be up to date with current insurance regulations and compliance standards. This ensures your firm avoids costly penalties and remains compliant with all legal requirements.

Advanced technology

Look for a provider that uses cutting-edge accounting software and technology. This can improve accuracy, streamline processes, and provide you with real-time financial insights.

Scalability

Choose a provider that can scale their services to match your business growth. They should be able to handle increased workloads seamlessly and adapt to your evolving needs.

Security measures

Data security is paramount in insurance accounting. A breach can have devastating consequences, with the global average cost of a data breach estimated at $4.45 million in 2023. Ensure your provider has robust security protocols in place to safeguard sensitive financial information.

Proven track record

Examine the provider’s history and client testimonials. A proven track record of delivering high-quality services to other insurance firms is a strong indicator of reliability and competence.

Transparent pricing

Opt for a provider with clear and transparent pricing structures. Avoid those with hidden fees and ensure you understand the cost implications of the services offered.

Strong communication

Effective communication is crucial for a successful outsourcing partnership. The provider should offer clear channels for regular updates, queries, and feedback.

Customizable services

Your accounting needs are likely as unique as your business. Choose a provider that offers customizable services tailored to your specific business requirements rather than a one-size-fits-all approach.

Commitment to quality

The provider should demonstrate a strong commitment to quality and continuous improvement. This includes regular training for their staff and adopting best practices in accounting and finance.

What Are the Top 5 Companies for Insurance Accounting Outsourcing?

To streamline your search for an ideal insurance accounting outsourcing partner, we’ve curated a list of top companies known for their expertise and experience in this specialized field. 

Some focus solely on providing insurance accounting services, while others are broader recruitment firms with a proven track record of placing highly qualified insurance accounting professionals. 

This list is neither exhaustive nor presented in any particular order, but it can serve as a starting point for your due diligence.

1. Near

All right, we get it—including ourselves at the top of this list might cause a few eye-rolls, but hear us out! At Near, we help insurance companies hire top-tier, pre-vetted accounting talent from LatAm, including those from some of the best countries to hire remote accountants. 

By partnering with us, you can cut overhead by 30% or more while hiring highly skilled accountants who bring Big 4 and US GAAP experience to the table.

Our efficient hiring process allows you to interview candidates for free and typically make a hire in under 21 days. Trusted by companies like Hotjar, Expensify, and Deel, Near ensures you build a high-performing team that’s both cost effective and highly capable.

2. Bennett Thrasher

For over 40 years, Bennett Thrasher has been a trusted partner in insurance accounting, offering advisory, audit, tax planning, and operational solutions. With offices in Atlanta, Dallas, and Denver, it combines deep industry expertise with a commitment to integrity, family, and clients. 

3. Infinit Accounting

Infinit Accounting provides scalable insurance accounting solutions for insurance companies, brokers, and agencies. Its team is well versed in industry-specific accounting software and offers everything from bookkeeping and tax preparation to account reconciliation and financial reporting.  

4. Flatworld Solutions

Flatworld Solutions provides insurance accounting services, offering comprehensive support to manage expenses and accounts efficiently. With over 13 years of experience, it caters to a diverse clientele, providing bookkeeping, tax returns management, asset management, forensic accounting, and more. 

5. Magellan Solutions

Magellan Solutions specializes in outsourcing accounting and finance operations, helping businesses focus on their core activities. The company offers a range of services, including accounts payable processing, internal audit services, payroll processing, and debt collection. 

With global offices in the US, the UK, and Australia, it provides customized solutions tailored to meet the specific needs of each client, ensuring smooth and efficient operations. 

Top 5 Advantages of Outsourcing Insurance Accounting Services

Outsourcing insurance accounting services offers numerous benefits tailored to the unique needs of insurance firms. Here are the top five advantages:

1. Enhanced accuracy: Professional accountants reduce errors, ensuring precise financial records and reporting.
2. Access to technology: Your business can benefit from advanced accounting software without the need for costly direct investments.
3. Improved efficiency: Outsourcing can streamline accounting processes, leading to faster turnaround times and better resource management.
4. Risk management: Outsourced experts can identify and mitigate financial risks, enhancing overall stability.
5. Flexible support: With outsourced accounting, you can enjoy flexible support that scales based on your size and requirements, ensuring your accounting needs are always satisfied.

Final Thoughts

Outsourcing insurance accounting services enhances your firm’s financial management, reduces costs, improves accuracy, and ensures regulatory compliance.

By leveraging specialized expertise, you can focus on core processes, driving growth and delivering exceptional service to your insurance clients.

Interested in learning how to start transforming your insurance accounting processes with outsourced talent? Check out our guide on the steps to hire an outsourced accountant to discover a simple process you can follow to start building your professional accounting team.