Insurance is a financial product. Every policy represents a promise of future claims paid for by premiums collected today. While underwriting and risk management often receive the spotlight, the daily reality of running an insurance business depends on billing and payments. Premiums must be collected, partners must be paid, and balances must be reconciled.
For most insureds, billing is the only touchpoint. The majority will never file a claim, but every one of them will pay a bill. If the bill is clear and the payment process is simple, trust deepens. If it is confusing or inaccurate, trust erodes.
Agents and wholesalers evaluate carriers in the same way. They place business with the partners who pay commissions on time and provide transparent statements. One late or incorrect payment can be enough to shift distribution elsewhere.
Capacity providers judge insurers on reporting. If remittances are delayed or do not reconcile, confidence is reduced and capacity is pulled back.
Billing is not a hidden administrative task. It is the bloodstream of insurance. It defines the customer experience, sustains distribution, and enables growth.
Despite its importance, most insurance financial operations are outdated. Billing, payments, and reconciliation are still performed with heavy reliance on spreadsheets, manual reviews, and outdated processes.
The scale of the problem is clear:
These inefficiencies cost billions of dollars. More importantly, they create real risk. Agents stop placing business when commissions arrive late. Customers don’t just cancel coverage when refunds are delayed or bills contain errors — they switch to competitors who get it right. Regulators step in when cancellations are triggered by misapplied payments. And capacity providers question the reliability of their partners when reporting fails to reconcile.
“Manual financial operations are not minor inefficiencies. They are structural risks to customers, distribution, and capacity.”
Most insurers rely on Policy Administration Systems to define products, set premiums, and manage endorsements or cancellations. These systems are critical, but they stop short at money movement.
Once a policy is bound, the vast majority of Policy Administration Systems stop short of handling billing and financial operations. They don’t reliably send invoices, collect funds, apply cash, pay commissions, or generate treasury reports. Even the few that claim to, often do it poorly. The result is a structural gap: underwriting may be modernized, but finance still runs on spreadsheets, emails, and manual reconciliation.
That is where Functional Finance takes over.
Functional Finance was built to automate money movement in insurance.
The platform is designed around five essential capabilities:
Functional Finance supports every major billing model, including direct bill, agency bill, installment plans, and premium finance. The platform also handles flexible cadences such as monthly, quarterly, or annual billing. It supports both pay before bind and bind before pay workflows, as well as usage based billing and bundled products with unique refund or cancellation rules.
Built-in communications include automated reminders, receipts, and cancellation warnings. These messages are tailored to insureds, agents, and wholesalers, which reduces delinquency and strengthens compliance.
When billing is clear and accurate, every other part of the operation works. When billing is messy, every other part of the operation suffers.
Functional Finance provides multiple ways to collect payments. Options include a branded hosted checkout page, an embedded payment library, and a branded pay form. Supported payment methods include credit cards, debit cards, prepaid cards, and ACH, with lockbox integration on the way.
Every policy has a live ledger. This gives the Policy Administration System a clean and reliable trigger to issue cancellations only when balances are truly unpaid.
Cash application is one of the most time intensive aspects of insurance finance. Payments often need to be manually matched to policies, consuming hours of staff time.
With Functional Finance, cash application is automatic. Payments collected through the platform are applied instantly to the correct policy. Remittance files are ingested and reconciled, with exceptions flagged for review. Staff only review edge cases. What once took days now happens in real time.
Functional Finance broadens the definition of commissions into Distribution Partner Payables. This category recognizes that payments to partners include more than simple commission percentages. They can involve fees, incentives, and multiple payout structures.
The platform supports payables based on written or collected premium, upfront or installment schedules, and combinations of commissions with fees. Automation delivers real time accruals, current account statements, and direct deposit into partner bank accounts.
Distribution is built on trust. Paying partners correctly and on time strengthens that trust and drives growth.
The payoff of automation is reporting that can be trusted. Functional Finance provides live, granular, and auditable reporting across all financial operations.
Treasury management ties every dollar to the correct account. Market payables show what is owed to carriers and reinsurers. Distribution partner payables reflect current balances. Data is GL ready, ensuring seamless journal entries. Every transaction is traceable back to a policy event.
Companies no longer need to wait until month end. Reports are available instantly, providing clarity across finance, operations, and leadership.
Billing complexity is increasing. MGAs and carriers are scaling programs across multiple states and products. Each expansion adds layers of billing rules, commissions, and reporting needs.
Capacity providers are also raising expectations. Fronting carriers and reinsurers now require accurate, real time reporting before extending support.
The industry has experienced this type of inflection before. Two decades ago, carriers knew their COBOL based core systems were unsustainable. Replacement seemed too risky until Guidewire reframed modernization as inevitable. Today, billing is the same wedge. Manual processes are no longer a nuisance. They are an existential risk.
Functional Finance does not attempt to cover every capability. It does not replace the general ledger. It does not calculate surplus lines taxes. It does not act as a bank.
It does one thing exceptionally well. It automates money movement in insurance.
The platform collects funds, applies them automatically, manages partner payables, and provides real time reporting. For companies that do not want to scale their finance operations teams, Functional Finance Services can also run the back office directly, using the same tools.
The transformation is visible. Processes that previously involved endless email chains across multiple companies now run automatically. Manual reconciliation disappears. Finance teams focus on strategy instead of chasing down payments.
“All of our FinOps processes were manual. Now it is automated. It is real time, and we can rely on it.”
— David Janusz, Head of Accounting and Finance, Obie
“Functional Finance was the right partner to integrate with due to their 100 percent configurability and utilization of the latest technology.”
— Cole Riccardi, Founder and CEO, Authentic
The cost is not only financial. When billing lags, producers lose confidence, customers question the relationship, and capacity providers reconsider their commitments. Clean, automated money movement does more than save time. It protects the very networks insurance companies rely on to grow.
Functional Finance is the billing and payments engine purpose built for MGAs and carriers. By automating money movement, it eliminates reconciliation headaches, protects distribution, and unlocks scale.
If these challenges sound familiar, it is time to talk.
Ready to replace tedious tasks with fast, accurate workflows? Book a free live demo of the #1 insurance financial operations platform today.
Functional FInance is a financial technology company, not a bank or FDIC-insured depository institution. Banking services are provided by Grasshopper Bank, N.A.; Member FDIC. The FDIC's deposit insurance coverage only protects against the failure of an FDIC-insured bank.