Applying Digital Transformation to the Insurance Sector

Posted on August 18, 2021

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Digital transformation is “a holistic concept involving a radical reconsideration of how companies harness technology, people, and processes”, with benefits ranging from streamlining processes and driving insights from data, to facilitating collaboration and improving data security. 

Lately, we have seen a huge rise in digital transformation across various industries, from retail to manufacturing. However, not all sectors have been so quick to embrace digital transformation, such as the insurance industry. According to McKinsey, although technology is used to develop products and assess claims, a “startling number of application landscapes across the industry continue to rely on decades-old technologies”. This leaves insurers with “parallel or redundant systems” that not only waste money but also pose a significant threat to the industry.

Applying digital transformation may seem expensive, time consuming, and risky for insurance businesses, but the benefits significantly outweigh the risks. In many cases, real progress can be made without making radical changes; a good example is modernizing existing processes rather than replacing them completely. 

In this piece, we look at a specific “digital weakness” prevalent in many insurance companies – namely, the reliance of Excel to underpin critical processes. We also suggest a pragmatic, inexpensive approach to digitally transforming spreadsheet-based processes.

The worrying reliance on Excel in the insurance industry

Although antiquated technology of many types is still being used in almost every industry, the prolific use of spreadsheets within the insurance sector is particularly notable. A survey of insurance professionals by Milliman revealed that 67% of respondents stated that spreadsheets had “critical importance to their team” and 25% stated that they were of “medium importance”. 

These spreadsheets are applied for all kinds of purposes, including building raters and pricing tools, actuarial and risk-modeling calculations, data sharing, predictive modelling, and aggregation management. While some companies have attempted to move away from Excel, it remains entrenched in the industry, and if mitigating steps are not taken, can cause major problems for insurance businesses.

The major problems associated with using Excel

Data security issues 

Although Excel is still used by around half a billion people worldwide—and is created by tech giant Microsoft—the software is renowned for its lack of serious security capabilities, that make it easy to hack. Excel-based passwords alone aren’t enough to keep important company data and intellectual property out of the hands of cybercriminals. Furthermore, users often share spreadsheet files with each other using potentially insecure methods, such as email or network drives, which makes them even more vulnerable to being intercepted and abused by outsiders.

Version confusion and errors

Sharing spreadsheets between users can also lead to version confusion. There is often uncertainty regarding which file is the master copy and frequently, incorrect versions are distributed across companies, or even to customers, clients, and suppliers, potentially leading to disastrous consequences. There is also a high probability that formulas may be overwritten, leading to more mistakes. Human error is another problem; there have been cases where a simple input error due to a typo dramatically affected the results, which could lead to incorrect information shared across departments, and incorrect decisions made.

Incompatibility and accessibility problems

Another major issue with Excel is incompatibility. Running on users’ desktops, the software relies on correct versions of both the operating system as well as Excel itself. Security settings also must be correct, otherwise users may not be able to run Excel properly – especially if macros and VBA have been used by the spreadsheet author.

 

Limited or nonexistent audit history

Determining the usage and update history of a particular Excel model is often critical within the insurance sector, but Excel does not lend itself to this type of auditability. 

How EASA can help insurance companies embrace digital transformation 

Understandably, insurance companies are often reluctant to move away from Excel, fearing data loss, reduced functionality, and the costs involved in learning new systems. But it turns out that there is actually no need to replace Excel entirely, but instead change the way it’s used. This is where EASA comes in. 

EASA facilitates digital transformation of processes that are reliant on spreadsheets by automatically creating browser-based web apps, while the Excel files are retained to act as the “logic-engine” behind the web apps. Accessible through a browser, the underlying spreadsheets and logic remain secure within the corporate network (or cloud), meaning users can only edit the input data and get the resulting outputs. There is no way of accessing the actual Excel files. Using EASA to access spreadsheets, instead of directly via Excel, offers many benefits for businesses, including:

Increases data security 

Because EASA only provides a browser window for users to edit inputs and obtain outputs rather than the actual Excel file, it becomes impossible to extract confidential data and logic built within those spreadsheets. Furthermore, as Excel files are no longer circulating, they cannot be copied or emailed, eliminating another major source of potential exposure. This ensures that intellectual property is protected.

Eliminates version confusion and errors

With EASA, only the current and correct version of a given Excel model is accessed via the web app. Multi-user access permits each user to perform operations on their individual data sets. In this way, the risks of version confusion and errors emerging in the master copy are completely eliminated. Only the administrator can edit this template file, uploading new versions to the EASA system when required.

Ensures compatibility and accessibility

Because EASA runs Excel on dedicated, secure servers, users only need a web browser. There are no requirements for any specific operating systems or software. In addition, multiple individuals can access the same version of a spreadsheet simultaneously, with no risk of overwriting another person’s work, as users’ data is saved back to a database, not to flat Excel files.

Provides audit history

Not only does EASA ensure that the correct version of the spreadsheet is always used, but it records the update and usage history, greatly facilitating the auditability of the most important spreadsheet models within the organization.

If you want to learn more about EASA software or make an inquiry, please feel free to contact us.