| A longstanding problem in the surety industry is the lack of standardization of financial statements and WIP formats. This problem is exacerbated by the inability to automatically and securely transfer data from one system to another and the end result? Time consuming hand-offs with a lack of security and no auditability; costly, duplicative, error prone hand-keying of financial statement and WIP data; and inconsistent standards and processes. However in recent years, surety industry leaders have been making strides towards data standardization and automating the collection and entry of financial information. Technologies like XBRL provide standardization options and innovative product and service offerings are emerging to promote these technologies. We will discuss how data standardization and automation are quickly becoming the industry norm and things that you can do today to take advantage of these emerging technologies.
In 2015, XBRL US, which is a nonprofit standards organization, was approached by members of the surety industry who were interested in improving efficiencies in data collection during underwriting. They were aware that XBRL is a financial data reporting standard that is an open, free standard, used widely throughout the world, most notably here in the US for public company reporting to the Securities and Exchange Commission. Just as the SEC receives this information from 6,000 public companies every quarter and is able to begin analyzing this data in seconds, sureties will be able to receive contractor data in computer-readable format, automatically bring that data into their internal financial systems and begin analyzing it in seconds.
A working group of Surety industry stakeholders, including sureties, agents, CPAs and software vendors was brought together by XBRL US and created a pilot to standardize and most importantly, automate the work in process report. One of the group’s primary goals is to make financial information, including the WIP, computer-readable, and automatically consumed by a surety’s system, eliminating the need for manual data entry.
In years past at this conference, this group demonstrated how a surety company was able to incorporate these standards into their system and automatically consume a computer-readable WIP report. It used to take from 20 minutes to several hours to manually hand-key data into their system; with automation, that same task now takes 3 seconds.
This year we are particularly excited about the Crowe LLP solution, Financial Data Automation for insurance (“FDAi”) which automates the creation of the XBRL version of the WIP report. Contractors, bonding agents, or underwriters easily and efficiently create a computer-readable WIP report starting with the more familiar PDF file format. In a production scenario, an agent can send the WIP schedule to a surety company at the click of a button and the entire WIP appears in the surety’s system without any hand-keying at all. This is possible for all agents and sureties using Crowe’s automation tool, FDAi. More info here FDAi.
Currently the working group is completing the balance sheet and income statement taxonomy. Watch for the public comment and review period beginning shortly. We expect to be ready to convert these files with Crowe FDAi later this year.
Crowe participated in the development of the FS Taxonomy for the surety industry, so that the same process that’s now implemented for job schedules can be utilized for financial statements. Our goal is to be able to standardize and automate the collection and delivery of all financial information into agent and surety software systems which will not only free the time of agents and sureties and anyone else who’s consuming financial information, but benefit contractors in receiving bonding decisions faster and based on completely accurate information.
Kristen Sharpe, CPA