Prevalence of spreadsheets in the insurance industry

In the insurance industry, spreadsheets are used for financial analysis, reserve calculations, pricing, experience studies, simulations, documentation, ad hoc projects, etc. A study conducted by Ernst & Young shows that insurance companies use 100s to 1000s of spreadsheets to close a quarter.

That quantity in itself establishes how much actuaries rely on Excel for even the most important tasks. At the same time, the industry is admittedly drowning in a pool of spreadsheets. More and more insurance companies are seeing the need to converge their Actuary and IT departments in order to systematically manage the growing complexity of their business needs.

Marriage of Excel’s strengths and IT standards

At CalcFusion, we recognize both the actuary’s need to use spreadsheets as well as IT’s struggle to manage it.

Spreadsheets have the flexibility and power that actuaries need for rapid development of financial models and calculations. As compared to pre-built systems, solutions built with CalcFusion are open and parameterized. This means calculations are completely transparent, no black box. Using Excel also means actuaries can keep up with the demands of the business, so no outdated assumptions. At the same time, CalcFusion offers and environment that can be managed and controlled by IT for performance, data integrity, and security.

Improve data integrity through spreadsheet integration

CalcFusion is focused on the calculation capability of Excel. Instead of using spreadsheets as a database, CalcFusion utilizes the mathematical functions of Excel. CalcFusion connects with 3rd party systems and uses its data as parameters for formulas defined on Excel.

CalcFusion offers a way to utilize spreadsheets within an environment that gives IT the capability to control versions and accessibility of users. Rights can be defined for users at different levels, and at the same time open the calculation capability of the spreadsheets to anyone who needs it through a web interface or any 3rd party system.

Stay on top of spreadsheet versions

Spreadsheet versions can easy multiply in number as users are in the habit of saving a new version for every minute change. CalcFusion saves IT and actuaries from time consuming analysis by providing a list of all the changes made on the data or formulas at the cell level between two spreadsheets. CalcFusion’s versioning and archiving capability also allows actuaries to re-run calculations to reproduce results using previous versions of their models, and easily go back to the active model.

Reinforcement of a Model Steward

The insurance industry has established the need for a model steward.

By definition, a model steward is responsible for introducing “standards for model coding and ensuring the use of a common language through the management of models, assumptions, testing and validation. Model stewards would allow the IT and actuarial groups to work together more effectively by having the steward manage and mitigate the impact of the struggles around model control, inter-departmental politics, difference in preferred tools and the language barrier created by technical terminology.“

CalcFusion would give model stewards the environment and tools that they need to efficiently do their job. At the same time, having a model steward would help in the implementation of CalcFusion as a solution for the insurance industry as much of the initial setup and maintenance entails consistent format of the Excel spreadsheets.