Our bank converts our US dollar premiums. How do we know if we are paying too much?
Compare the rate on each conversion with the market mid at the same moment. The gap in basis points is your markup, and it is what you paid on top of the market.
markup (bps) = |your rate − mid| ÷ mid × 10,000
cost ≈ amount × markup (bps) ÷ 10,000
One basis point is one hundredth of one per cent. The mid is halfway between the price at which the market will buy a currency and the price at which it will sell it. No provider converts at mid all the time, so some markup is normal. The question is whether yours fits the size, the currency pair and the timing of your conversions.
The difficulty for most insurance firms is that the markup never appears on an invoice. A statement shows the dollars received and the sterling credited. The rate in between carries the margin, and when premiums are converted automatically on arrival nobody chose the moment or saw a quote.
| Item | Figure |
|---|---|
| Premium received | US$1,000,000 |
| Market mid at the time (GBP/USD, dollars per pound) | 1.2500 |
| Rate applied by the bank | 1.2550 |
| Difference | 0.0050 |
| Markup: 0.0050 ÷ 1.2500 × 10,000 | 40 bps |
| Sterling at mid: 1,000,000 ÷ 1.2500 | £800,000.00 |
| Sterling credited: 1,000,000 ÷ 1.2550 | £796,812.75 |
| Cost of the markup on this one premium | £3,187.25 |
An illustration of the arithmetic with round numbers. It is not a client conversion, a current market rate or a view on what any bank charges.
Which market rate do you compare our conversions against?
The mid-market rate at the time of each conversion. How precisely we can fix that mid depends on the data source, and your report names the one we used.
Free daily reference rates are useful but blunt. The European Central Bank publishes euro reference rates at around 16:00 CET each working day, from a concertation between central banks at around 14:10 CET, and says they are published for information purposes only. The Bank of England publishes daily spot rates against sterling and says they are not official rates. A premium converted at 10am can be some way from a rate taken in the afternoon, so a review built only on daily rates gives an estimate, which we show as a range rather than a single number.
For timestamped intraday mids we use a licensed market data source or a provider's transaction cost analysis, and we name the source in your report. Where a statement gives only a date and no time, we say so and widen the range.
What do you need from us?
A list of conversions for the last 6 to 12 months with the date and time, the currency pair, the amount, the rate, any fees and the value date. Redacted bank statements or an export from your provider's platform both work.
- Date and time of each conversion, with the time zone if you know it
- Currency pair, and which currency you bought and which you sold
- Amount, and which currency the amount is in
- The rate applied, as shown on the confirmation or statement
- Fees and charges, including receiving fees and any intermediary bank deductions you can see
- Value date
- If it is easy, the flow each conversion relates to: a premium, a claim, a reinsurance settlement, commission or an expense
Redact before you send. Remove insured, claimant and policy details, account numbers and counterparty names. No policyholder data is needed or wanted, and we never need your due diligence documents. We will never ask for bank log-ins, passwords or client payment instructions. If you would rather test us first, start with one redacted conversion and we will work it through with you.
If your binders or slips set a rate of exchange for bordereaux or for settlement, that is a contract term. The review compares only the rate your bank or provider actually dealt at with the market mid. It does not interpret contract wording, which you should check with your own advisers.
Files go through our secure upload page after you accept a short confidentiality undertaking. Spreadsheet, CSV, PDF and text exports all work.
What does the review show?
A short written report with your estimated markup by currency pair, ticket size, flow and quarter, the fees and deductions on top, and what a better-fitting setup could look like. It does not promise savings and it does not recommend products.
| Section | What it tells you |
|---|---|
| Summary | Number of conversions reviewed, total volume, the data source used for the mid and the estimated markup range across all conversions |
| Markup by pair and size band | Where the margin is high or low, for example small claims payments in a less common currency |
| Markup by flow | Whether premium receipts, claims payments and reinsurance settlements are priced differently, and which are converted automatically on arrival |
| Markup by quarter | Whether your pricing has drifted across the year |
| Fees and deductions | Receiving fees, payment fees and intermediary bank deductions on top of the markup |
| Round-trip conversions | Currency converted into sterling and later converted back to pay a claim or remit to capacity, so the markup is paid twice |
| Service issues | Late payments, missed cut-offs or reporting gaps you tell us about |
| What could fit better | The kind of provider setup that suits your flows, for example whether currency received is converted on arrival or held, and whether a blind quote is worth running |
Why does the same bank give us a worse rate each year?
Usually because the margin drifts after the account is won, a few basis points at a time, and nobody checks. Plotting your markup by quarter for the same pair and size shows it.
Pricing tends to be keenest when a provider is competing for the account. Afterwards conversions are booked at standard rates or out of habit, relationship managers move on and nobody asks for a fresh price. Because the margin sits inside the rate rather than on an invoice, a rise of a few basis points a quarter is easy to miss, even for finance teams that scrutinise every other line of the expense ratio.
| Quarter | Dollars converted | Markup to mid | Cost of the markup |
|---|---|---|---|
| Q1 | US$9,000,000 | 15 bps | US$13,500 |
| Q2 | US$9,000,000 | 18 bps | US$16,200 |
| Q3 | US$9,000,000 | 24 bps | US$21,600 |
| Q4 | US$9,000,000 | 30 bps | US$27,000 |
| Year | US$36,000,000 | 21.75 bps average | US$78,300 |
Illustration only. Assumes US$3 million of premiums converted each month at the markups shown. Had the markup stayed at 15 basis points all year the cost would have been US$54,000, so the drift added US$24,300.
Our guide to FX rate creep explains why it happens and how firms stop it happening again.
What is a fair FX margin on a $1m premium conversion?
There is no single fair number. It depends on the currency pair, the size and the moment you convert, so measure yours in basis points and compare it with quotes for the same conversion today. On $1 million each 10 basis points is about $1,000.
- Size: larger conversions usually attract tighter margins, so compare like with like. A $1 million premium and a $20,000 claims payment will not be priced the same way.
- Pair: US dollars, euros and sterling trade in deep markets. Claims in less common currencies cost more to convert and to pay.
- Timing: liquidity is deepest when the main markets overlap and thinner late on a Friday or around holidays.
- How it is converted: an automatic conversion on arrival at a standard rate can differ from the same conversion dealt on a platform or by phone.
- What is bundled in: some providers build fees into the rate and others charge them separately, so compare the all-in cost.
Figures quoted online vary widely. When we asked an AI search tool on 2 November 2026 what banks and specialists charge and what a fair margin is, its answers ranged from 0.05% to 3% with no sources given. One published reference point does exist for the Lloyd's market: Lloyd's says it adjusts rates on its own FX services to recover up to 5 basis points. Those services are for Lloyd's managing agents within central settlement, but they are a useful sense check on what large, regular market flows can cost.
The most useful comparison is your own markup against quotes for the same flows today. That is what a blind quote gives you.
What do a few basis points cost over a year?
On 25 million converted a year, every 10 basis points of markup is 25,000. Type your own annual volume below to see the same table for your firm.
| Markup to mid | Cost a year |
|---|---|
| 5 basis points (0.05%) | 12,500 |
| 10 basis points (0.10%) | 25,000 |
| 15 basis points (0.15%) | 37,500 |
| 25 basis points (0.25%) | 62,500 |
| 50 basis points (0.50%) | 125,000 |
Arithmetic only: volume × basis points ÷ 10,000. These are not InsuranceFX findings or a view on what any firm pays.
Where else do FX costs hide in premiums and claims?
In forced conversion of currency receipts, receiving fees and deductions by intermediary banks. None of them shows up as a markup on the rate, and a review looks at each.
| Cost | How it shows up | How we check it |
|---|---|---|
| Forced conversion on receipt | A US dollar or euro premium paid into a sterling account is converted by the receiving bank at its own rate, often with no separate line on the statement | Compare the amount the payer sent with the amount credited and the mid at the time of receipt |
| Round-trip conversion | Dollars received are converted to sterling, then converted back to dollars to remit to a capacity provider or pay a claim, so the markup is paid twice | Match receipts and payments in the same currency across the period |
| Receiving fees | A charge on each incoming international payment, which adds up across many small premium receipts | List every receiving fee on statements and set it against the number of items and the volume |
| Intermediary bank deductions | Correspondent banks take fees on the way, so a claim arrives short of the agreed settlement or a premium arrives short of the debit note | Compare amounts sent with amounts received and the charge option used on each payment |
| Conversion at the other end | A claim paid in dollars to an account held in another currency is converted by the beneficiary's bank at its own rate | Look at where claims in less common currencies are converted and by whom |
| Payment fees | A fee on each outgoing payment, which can outweigh the markup on small claims | Total payment fees by currency and set them against the number of payments |
| Timing and standard rates | Automatic conversions can use a standard daily rate, and conversions late on a Friday or around holidays can be wider | Group markups by time of day, day of week and how each conversion was made |
On every international payment the sender chooses who bears the charges. OUR means the sender pays them all, SHA shares them and BEN leaves them with the beneficiary. A claim sent with SHA or BEN can arrive short of the agreed settlement, leaving a claimant or a cedant chasing a balance. A premium can arrive short of the debit note in the same way, which then has to be reconciled or written off.
Quick markup check: what did one conversion cost?
Enter the rate you were given and the market mid at the same moment. The check uses only your figures. Nothing is sent to us and nothing is assumed.
If one conversion looks expensive, the full review shows whether it is a one-off or a pattern.
How long do you keep our conversion data?
Only as long as the review needs. Files are encrypted when they arrive and deleted within 90 days, or sooner if you ask.
Conversion data is used only to prepare your review. It is never shared with a provider in a form that identifies your firm, and access is limited to the people preparing the review. If you want a signed non-disclosure agreement before sending anything, ask us and we will send one.
How do we ask for a review, and what happens after it?
Upload your conversions, or one redacted conversion, on our secure upload page. After the review you decide whether to renegotiate, run a blind quote or do nothing for now.
You can use the report as evidence to renegotiate with your current bank or provider, or to show a board or audit committee that FX costs have been tested. If you want to compare, we can put your main flows to several providers without naming your firm. If you decide to move, our guide to switching FX provider keeps your current provider running until the new one has proved itself, with a staged plan built around settlement due dates and claims payments.
Upload your conversions securely
Sources
- European Central Bank, Euro foreign exchange reference rates, checked 2 November 2026.
- Bank of England, Daily spot exchange rates against sterling, checked 2 November 2026.
- Lloyd's, Foreign exchange (Currency Conversion Service and FX service for managing agents), read 2 November 2026.