Insurance is a unique industry. Many insurance operations involve complex actuarial algorithms and detailed workflows. This brings many challenges to the IT departments when transforming these functions to applications. Another big challenge is that these actuarial algorithms can change frequently, making it extremely difficult for IT departments to keep up with developments in a timely manner.

These challenges often force insurance companies to think about alternative approaches. If the process is internal and there are fewer users, they are usually developed in Excel by the business users themselves. They can update and maintain the applications without any IT support. While it appears to work in many situations, in time several issues arise that cause organizations a tremendous amount of time and effort.

Many of these Excel tools have complex User Interfaces. It is common to have an insurance pricing tool with a user interface consisting of hundreds of input controls spread over dozens of pages. Creating an interface like this in Excel is not difficult for an experienced user. Excel’s grid layout and various formatting features make this a relatively simple process. Using various worksheet formulas and conditional formatting features to create dependencies between input controls is also simple. But programming this user interface along with its rules for a web application is extremely difficult and time consuming. What an Excel user can develop in days will easily take months to code.

Most of these Excel tools include complex actuarial algorithms. Implementing and maintaining these algorithms in Excel is not hard for actuaries. Almost every actuarial department maintains such tools because there are no other technologies in the market with the capabilities Excel offers.

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