Dani Rosser, head of Broker Services, Pro Global examines why operations risks cannot be ignored despite a rapidly changing risk landscape.
In an industry focused on managing emerging risks, cyber, climate and geopolitical instability, it’s often the operational risks that grow quietly in the background, only to cause outsized damage when left unchecked. One under-reported risk lurking on balance sheets is unallocated or unmatched cash: for some brokers it can grow into a black hole in accounts that silently erodes profitability, impairs governance and reputation, and increases exposure to regulatory censure.
This article is shared with the kind permission of Emerging Risks.
At this year’s British Insurance Brokers’ Association (BIBA) Conference, CEO Graeme Trudgill highlighted the regulatory, political, and technological developments expected to influence insurance brokers in the coming year. Trudgill reflected on the fact that the FCA made it clear that we’re entering a “new era of regulation” for insurance intermediaries, one where operational resilience, financial hygiene, and governance aren’t just hygiene factors but regulatory priorities. In this climate, the question is no longer whether you can afford to fix your operational inefficiencies. The question is whether you can afford not to.
As we look ahead to 2026, with topline growth stable but slow, broker margins depend increasingly on brokers’ ability to drive internal efficiencies and tighten operational control.
Yet for some brokers, the greatest threats are still internal, and invisible until they reach a critical point.
Unallocated cash often stems from legacy migrations and reconciliation issues, poor data hygiene, or a lack of process alignment between technical and Insurance Broker Accounting (IBA) teams. These issues may not make headlines, but if left unchecked over time, they quietly accumulate into material financial risk. And in a tightening regulatory climate, they also raise red flags for auditors and watchdogs alike.
Tens of millions in Premium is Unallocated
In one broker cash project we advised on, over 7,900 transactions were identified, involving premium and claims funds spread across more than 100 clients and insurers – with no single value assigned, only mounting complexity. In another case, we supported a broker with £30 million in aged debt and unallocated cash, tied up in more than 70,000 transactions.
As re/insurance businesses grow, merge, or undergo system migrations, the volume of unmatched transactions tends to grow, not shrink. And the effects are cumulative: older records become harder to trace, skilled resources become scarcer, and legacy data becomes increasingly unreliable.
These numbers aren’t outliers; they’re emblematic of the systemic nature of the problem.
Without robust controls and dedicated reconciliation strategies, the backlog grows – not just in volume, but in regulatory exposure, client trust, and missed commercial opportunity.
Many brokers face common root causes: incomplete remittance data, manual reconciliation processes, staff turnover eroding institutional knowledge, and a lack of standardisation across accounting and reporting practices. The knock-on effect is a build-up of cash entries that cannot be easily applied or explained, impacting liquidity and creating operational drag.
Turning Risk into Opportunity
Despite the complexity, there are encouraging signs of progress. Best practice across the market is evolving to tackle unallocated cash more proactively and holistically. A number of brokers are taking steps to embed systematic solutions, combining data interrogation, governance, and process transformation.
A successful approach typically begins with securing access to historical data and integrating technical accounting insight into cash reconciliation workflows. Leveraging cross-functional teams spanning finance, technical and IBA operations, and credit control is critical to developing a full picture of both the causes and solutions. Prompt query resolution and the use of data-matching tools are increasingly standard, especially when dealing with legacy ledgers.
Structured reconciliation programmes, especially those that incorporate digital tools and project management oversight, can transform what might seem like a burdensome clean-up exercise into a value-enhancing activity. Brokers who have implemented robust IBA protocols and introduced straight-through processing technologies are now reporting measurable improvements in matching rates and operational transparency.
A Future-Proofed Approach
The industry is moving away from fire-fighting legacy issues and towards building resilient systems. Preventative strategies include the standardisation of broker bordereaux and client remittance formats, automation of routine matching, and regular monitoring of aging cash positions. Where once the issue was tackled intermittently, leading firms now treat cash allocation as a continuous improvement process, not a one-off fix.
Importantly, brokers that address their unallocated cash proactively are better positioned to unlock trapped capital, improve reporting accuracy and strengthen client relationships. They also significantly reduce the likelihood of costly remediation projects in the future.
Technical cash management may not be the most headline-grabbing topic in insurance, but its importance is growing fast as a hidden emerging risk for the sector if not proactively tackled. It’s time to close the cash black holes, and close them for good.
Can we add a market-wide estimate? Pro Global estimates there is over £500 million and counting in unallocated cash across broker balance sheets? We have made some estimates in the past – source of $60 million: https://pro-global.com/millions-in-unallocated-premium-sitting-on-re-insurers-books/
Meet our expert
Name: Dani Rosser
Job title: Head of Broker Services
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