As one of the last verticals of insurance to modernize, the group benefits sector still widely clings to the core technologies which have been used by the industry for decades.
Among the most devoutly used of these core technologies; spreadsheets.
But despite their widespread use in the industry, spreadsheets can create a number of costly problems for insurers due to their lack of modern functionality and integrations. So what’s the solution for carriers who rely heavily on spreadsheets?
Sharing their insight on the topic are Garrett Viggers, Co-founder, VP of Innovation and Product Evangelist at Limelight Health; a leading sales and underwriting SaaS solution for group insurance carriers, and Alex Terry, Director of Expert Services and Actuary at Limelight Health. Limelight Health was recently acquired by FINEOS; a leading provider of core systems for life, accident and health insurers globally.
How Did Spreadsheets Become a Go-To for Group Insurance Carriers?
A long-time core technology for many insurance carriers, Microsoft Excel has been around for over 30 years. The program once provided an unparalleled solution for complex rating and underwriting calculations, and was therefore adopted by group insurance carriers to perform these tasks.
Microsoft Excel can now be considered a legacy system, a technology which paved the way for the insurance technology innovations of today. In fact, Microsoft Excel won the first ever Codie award for best emerging technology, an award Limelight Health recently took in 2020 for our innovative, no-code actuarial rate product.
Why Carriers Should Re-Evaluate Their Spreadsheet Usage
According to Alex Terry, the group benefits industry as a whole has not re-evaluated the technology solutions being used in quite some time, relying on spreadsheet tools to fill the capability gaps of legacy systems.
“If you think about the group ecosystem…the last transformational change was the introduction of Excel into the group industry. [The group industry] has been kind of stagnant, using Excel primarily as [a] tool for the last 30 years.”
Stagnation and a dependence on spreadsheets have burdened many carriers with silo workflows, requiring extensive manual entry and in many cases duplicate entry. The result is increased errors, poor risk analysis, missed growth and profit opportunities, and a sub-par customer experience.
Garrett Viggers points out that this inability to share and maintain free-flowing, accurate data can be costly for insurers.
“It’s about getting the right product at the right time, for the right price….If you’re buried in spreadsheets and…you overprice, you’re charging too much all year long….If you underprice, then you’re going to get a really large increase at renewal….There’s a lot of dependency on those numbers to be accurate. There’s a lot of dependency on the price to be right.”
To complicate matters further, most information actuaries and underwriters deal with is dispersed across multiple systems, leading to time-consuming duplicate entry and increased room for error. Passing information between entities who must each collect, review, and input the data separately also adds a substantial amount of time to the enrollment process.
These cost inaccuracies and high quote turnaround times are then consequently passed on to the carrier’s end customers. “[Spreadsheets] are getting in the way of an employer and employee having the best experience,” says Viggers.
So why do carriers continue to use spreadsheets?
While they have their setbacks, spreadsheets also provide some highly useful functions to help carriers keep up with business. For example, spreadsheets are often used as a solution when the carrier’s IT department is backed up, and unable to build changes into the manual rating engine. However, there is a downside to this.
Viggers says, “It’s helping [carriers] keep up with business, but when we look at the actual negative impact on profitability and rating…that’s where you begin to see the inefficiency and the cost over time.”
Modernizing to Move Forward; How Spreadsheets Fit Into Digital Transformation
On the topic of digital transformation, Alex Terry bragged on Andrew Schafer, AVP and Actuary at Principal Financial Group, for being a Group Insurance Inspirational Leader who saw this change coming and got his organization ahead of the curve.
Because spreadsheets are so ingrained in the current group ecosystem, modern solutions that integrate with spreadsheets are key for carriers hoping to cross the bridge of digital transformation.
Terry says, “[Spreadsheets] are not going away, they do some things really well, and I think they’re always going to be a tool for actuaries and for brokers….They’re great for doing things like…develop[ing] a proof of concept for a pricing idea, but [they’re] not scalable.”
This scalability can come from API-driven, cloud-based insurance technology solutions which integrate what all those spreadsheets and silo processes did into a single platform, allowing for more effective risk analysis. From there, data can be shared freely for additional analysis or to aid downstream processes.
According to Terry, this type of integration benefits all stakeholders in the quoting and renewal process including the carrier, brokers, employers, and their employees.
“The more data we have and the more integrated it is, the more likely we’ll be able to provide that consistent customer experience from a price perspective.”
To hear more from Garrett Viggers and Alex Terry on spreadsheet usage in the group benefits industry, check out their GroupTech Talks Podcast episode.