Auditors Don’t Like Spreadsheets – A New Solution for Employee Benefit Actuaries

As every employee benefit (EB) actuary knows, pricing employee benefits is inherently complex. Spreadsheets are the predominant tool used by EB pricing actuaries, which can create challenges at audit time.

Why spreadsheets dominate employee benefit pricing

While individual insurance plans can rely on standard quotation tools – input age, gender, risk class, and other variables to get a quote with benefits and premiums – employee benefits (EB) require much more flexibility.

For insurance carriers offering EB, every client wants a customized plan and that custom plan likely changes every year. Insurance carriers win business by having flexible benefit designs and working with clients to create multiple pricing models – what happens to the price if I add more physical therapy or mental health coverage? – until they find the right one.

EB pricing actuaries need to be able to manipulate models, run scenarios, and make updates quickly to satisfy the needs of each client during the purchase and/or renewal process. And the need for such a high degree of flexibility with quick turnaround times is exactly why they turn to Excel.

The challenges with Excel-based quotes – and why auditors hate them 

The typical security protocol with Excel-based models is putting them on a shared drive with a password so they can’t be altered. At renewal time, an EB pricing actuary will populate the standard spreadsheet with new benefits, member information, claim experience, etc., and then run multiple scenarios.

With multiple spreadsheets for every client and every EB actuary working on multiple clients, the number of quote-based spreadsheets can multiply very quickly and introduce multiple challenges:

• How do you record changes made to each version of the model?
• How do you sign off on an Excel spreadsheet?
• If a quote is approved via email, how do you ensure you are tying the right email to the right spreadsheet?

In other words, an auditor's nightmare. EB actuaries can spend countless hours trying to fulfill auditor requests and track down the right version of a spreadsheet.

A better solution for actuaries and auditors 

Modern actuaries need a solution where they can maintain the flexibility of Excel, but add control, trackability, and governance. Coherent Spark does exactly that. Actuaries can convert spreadsheets to cloud-based workflows in minutes – without any programming skills. Once spreadsheets are in the Spark platform, actuaries can manage, control, and modify models in Excel or directly in the Spark platform with capabilities such as:

• Control spreadsheet versions  – know who uploaded what version, when, and with what changes
• Download Excel spreadsheets from Spark with inputs defined in an API call to conduct calculations, create new versions, or send them to other parties
• Create scenarios and simulations
• Conduct sensitivity tests with different inputs and assumptions
• Track changes and approvals
• Connect models to other spreadsheets and applications 

Version control and approval status are instantly solved.

The next generation of model collaboration 

EB models tend to be very large, complex models with numerous interrelated parts. Coherent Spark can help insurance companies modularize their models with connected components. For example, having separate models for manual and experience rates can make it easier to update one without impacting the other. The XCALL function of Coherent enables actuaries to easily use the outputs of one model as inputs for another. 

And everything is cloud-based with traceable changes so visibility and collaboration across the organization increases. Individual model components can be easily shared with other actuaries to ensure consistency, save time creating logic, and drive greater business insights.

Ready to meet audit requirements with ease?

Coherent Spark enables EB pricing actuaries to maintain the flexibility of Excel while adding control and governance to meet audit requirements with ease. To learn more, download our Actuarial Transformation Guide: How to spark innovation with Excel in the cloud or watch our most recent webinar around actuarial transformation.