How smaller insurers can avoid spreadsheet paralysis with digital
Back in 2016, Microsoft reported that more than one billion people used its Office suite of applications, which includes the Microsoft Excel spreadsheet. Roughly one in every six people on earth use it, Microsoft said. There is no doubt that when Microsoft first developed this application, they were on to something important, and it still has its place within the Office suite for many users. Of course, Microsoft is not the only company that has produced and promoted spreadsheet programs; there are literally hundreds of similar programs, typically sold as single-seat, stand-alone applications not tied to any common database.
For some companies, spreadsheet programs are chosen for their lower cost, ease-of-use and routine reporting. In fact, over the years, employees have become so familiar with spreadsheet applications that they simply don’t want to work any other way. Some call this “spreadsheet paralysis,” which references the insurer’s common argument that 'it’s always been done this way, so why change?' This seems especially true with smaller insurers, self-insured groups, public risk pools and their agents, all of which use spreadsheets to calculate and process data. It’s easier to simply continue on; no extra training is required, and no changes are required in how workflow is managed.
But what happens when a spreadsheet error is found that affects an entire book of business and puts routine financial and regulatory reporting in a state of instant jeopardy? How long does it take to backtrack, examine the various versions of the spreadsheet’s values, calculations, source data and file history, and correct the error?
In another example, consider what happens when the policyholder demands something that spreadsheets can’t produce. These demands can arise within the customer service, claims or billing areas, and we know these demands are increasing, leaving many smaller insurers in a scramble to shorten steps, access more information and respond in real time to customer requests.
Let’s look further at billing. The complexity of this functional business unit requires access to data points on all things related to the customer, their demographic information, policy history, premium, invoice amount and payment. When working in a common spreadsheet application, only one person at a time can access and edit this data, making real-time collaboration with other members of the billing department—much less the other pertinent business units that also touch the customer—impossible.
The irony here is that if the application resides within the insurers’ intranet, the data being manipulated by the last individual to touch the file most often represents data that was generated by multiple other sources and users, making accurate reporting difficult and delayed. For public entities and other self-insured groups, this could play forward to an audit disaster.
Even if reporting is fully accurate, this approach does not take into account the critical importance of secure storage or backups of the data, which, as part of the organization’s core business applications, are typically kept onsite, putting the entire system in harm’s way should a natural disaster occur.
Like larger insurers, smaller carriers, self-insured and public entity groups have an opportunity to take a proactive approach to being able to process data collaboratively, respond faster to customer and auditor demands, and operate in a secure environment where data is controlled, available and safe from compromise. Since this method takes into account the importance of software as a service over a hosted cloud platform, data encryption (in transit and at rest) is employed to ensure comprehensive compliance and quality assurance.
This method also gives users greater control over calculations, and provides audit trails to document every aspect of data access manipulation. The result is an immediate reduction in formula error, improved ability to perform all the routine tasks that a spreadsheet once did, as well as the ability to perform sophisticated risk analysis based on accurate, real-time information. And because it’s a hosted application, output of the right information to the right audience is guaranteed when and where they need it.
Yes, there will be some hesitancy among users who are comfortable with the spreadsheet status quo. But the reality is that spreadsheets were never intended to be used to run the business, only support it. New technology enables insurers to do exactly what they had been doing with spreadsheets… and more. From the insurers’ point of view, having modern technologies is a great enticement to the hiring of new technology workers who are looking for the latest solutions in order to competently do their jobs.
At a time when smaller insurers, self-insured and public risk pools are feeling the pressure to become “digitally transformed,” the move away from stand-alone spreadsheets to a collaborative cloud-based enterprise solution is a great first step.