Once a preferred tool for managing accounts and assessing the health of a small to medium-size insurance company, spreadsheets have gone the way of the floppy disk and Walkman radio in favor of insurance management software that just does a better job.
There are several reasons why companies that may still be relying upon spreadsheets should rethink this method of accounting and business analytics. The first reason is time consumption. It takes time to set up a spreadsheet and make sure that the rows, columns, calculations, pivot tables and other aspects are all functioning correctly for the desired output and display.
The second reason is the risk of data entry errors. The most diligent employee is not immune to transposing a number or failing to include an important character such as a plus or minus sign. While the initial error may seem innocuous, the resulting impact can be disastrous to the company’s bottom line.
Third, the generic formatting and calculating capabilities of a spreadsheet can bring about horrific results. While these aspects of the spreadsheet may make the application initially desirable, the truth is that formulas and calculations must be set up correctly and maintained by persons knowledgeable in the process. And, even having such persons on staff does not guarantee that the formulas will always carry through as desired to the proper cells and sheets.
Fourth, unlike insurance management software designed by specialists who know the business, spreadsheets are not automatically designed with self-checking applications to prevent errors and preserve data integrity to the highest degree. They are dependent upon company personnel to continually monitor them for errors and are still susceptible to human error.
The fifth reason to avoid spreadsheets lies within the old archenemy of technology: the threat of obsolescence. It can be expensive to always have the latest version of the spreadsheet software installed, and some versions may not be compatible with all devices used by staff members.
Lastly, spreadsheets are not automatically equipped with security features to protect data from being accessed by unauthorized users. While most do allow for password protection of certain aspects of the spreadsheet, these restrictions are easily bypassed by those who are familiar with these programs.
Small insurance companies that are still relying upon spreadsheet programs should consider upgrading to insurance management software designed for the most efficient and accurate processing and delivery of the data needed to stay competitive.