This is the first part of a three-part series. In upcoming posts, we’ll provide more information that we hope will prove helpful in the RMIS selection process. Part 2 weighs in on additional topics to consider, including who to involve in the process, budgeting, and initiating the process of working with a RMIS vendor. In Part 3, we’ll take a look at what many cite as a major concern or roadblock when considering the move to a RMIS–implementing a new system.
It’s 2018, and the RMIS industry is well into its fifth decade. RMIS vendors continue to develop and refine tools that give users the ability to integrate data from multiple sources, automate workflows, and improve analysis & reporting.
So, who’s still using spreadsheets to collect, analyze, and report on risk, claims, and insurance data? Plenty of people, it turns out.
According to the recently released 2018 RMIS Report, 26.8% of RMIS Report User Survey respondents indicated that they do not use a RMIS. Asked to specify the primary reason for not doing so, 23% cited the use of spreadsheets. Assuming the likelihood of at least some “non-RMIS users” opting out of responding to a RMIS survey altogether, it’s safe to assume that the actual number is probably even higher.
For some smaller organizations, using spreadsheets instead of a RMIS may still make sense. Perhaps the process of pulling together data and calculating a business’s total cost or risk is straightforward and easily accomplished. Maybe the annual volume of claims or the number of properties for which exposure values must be collected is small enough that investment in a RMIS isn’t warranted.
For those still using spreadsheets, what are some of the inherent risks? How might use of a RMIS address concerns and streamline processes? And when should an organization begin to ask if it’s time to move on from spreadsheets for collecting, analyzing, and reporting on risk, claims, and insurance data?
Why Move On: the (Potential) Problem with Spreadsheets
“Stop Using Excel, Finance Chiefs Tell Staffs“, a Wall Street Journal article published late last year, details why CFOs at growing number of companies that include Adobe, Inc., ABM Industries, P.F. Chang’s China Bistro, and Wintrust Financial are switching from use of Microsoft Excel to tailored, cloud-based solutions for financial planning, analysis, and reporting.
The reasons cited are very similar those laid out against the use spreadsheets to compile and analyze risk, claims, and insurance data.
- Wasted time and reporting lags – For businesses with numerous departments and data that is managed or stored across multiple systems, collecting data in spreadsheets typically means a lot of copying and pasting (or worse, rekeying). If you or one of your clients has a large number of employees, locations, and/or claims, the result is too much time spent manually working with data.
To compound the issue, depending on the amount of data and the frequency of reports, manually populating spreadsheets can also mean that reports and analyses aren’t based on real-time data.
- Increased likelihood (and proliferation) of errors – An issue with a single formula or the mis-keying of data into an individual cell has the potential to affect the accuracy of analyses businesses depend on when making critical decisions. Over time, as a corrupt spreadsheet is shared, edited, and shared again, errors can be exponentially amplified.
Studies show that nearly 90% of all spreadsheets contain errors and up to 50% of spreadsheets used by large companies contain material defects. Lack of an audit trail makes it impossible to identify the point at which errors were introduced, thus limiting any chance of quickly making corrections.
- Restrictions due to data limitations – Though it may take some time to get to the point where it becomes an issue, spreadsheets were not designed to handle large amounts of data. This can become a factor as a business expands and the amount of risk, claims, and insurance data needed to run increasingly complex calculations grows.
- Inability to collaborate with stakeholders – The ability to collaborate with multiple users, in real-time, is becoming increasingly important to operations. The ability for several collaborators to work in a spreadsheet simultaneously is limited. The result can be inefficiencies and confusion when multiple users are required to update data.
- No single point of truth – When spreadsheets are stored on different computers, it can be difficult to ensure that the latest version is always backed up.
How a Cloud-based RMIS Will Help
A cloud-based RMIS can prove helpful and offer numerous improvements over the use of spreadsheets for managing and reporting on risk, claims, and insurance data.
- Time savings and access to real-time data – Cloud-based solutions like Origami Risk offer flexible tools that allow for integrations with virtually any third-party system, including TPAs, insurers, and HR, payroll, and other internal systems. Automating these feeds not only reduces the amount of time spent manually entering data, it also means that reporting and analysis is performed using current data.
- Improved data quality – Direct feeds of data from vendor systems eliminates the error-prone process of transferring data into spreadsheets. Analyses and reports are based on data that is more accurate. In addition to system checks based on defined business rules and the ability to protect designated fields from being updated, the system also stores audit trail of changes.
- Data accommodation and scalability – Unlike spreadsheets, cloud-based RMIS solutions are designed to handle vast amount of data and complex calculations. Not only can the amount of data storage available be scaled to grow along with your business, additional users and functionality can also be added as the needs of a business expands.
- More collaboration and data sharing – The rapid expansion of RMIS technology–and cloud-based RMIS technology, in particular–means far more than simply allowing multiple users being able to update or report on data simultaneously. In many instances, it is fostering collaboration across departments, breaking down silos of data that previously existed. This also extends to collaboration outside of the organization. For example, data can be shared with brokers and carriers to ensure that policies are renewed on time and, in many cases, contribute to renewal at favorable rates.
- Streamlined workflows – A cloud-based RMIS like Origami Risk offers users the ability to collect and update data quickly and efficiently. For example, take the traditionally problematic process of collecting exposure values across multiple locations. Rather than relying on emails and multiple spreadsheets, users can easily update values, while administrators can view collection status and schedule automated follow-ups, as necessary, from within the system.
- Enhanced security – In a cloud-based RMIS, role-based security can be applied to ensure that members logging into the system only have access to the data needed for their jobs.
When is it the Right Time for a RMIS?
In “RMIS or Excel? It depends”, Origami Risk’s Earne Bentley provides some helpful suggestions for deciding whether or not it’s time to consider investing in a RMIS. Ultimately, it’s the speed and accuracy with which an organization can work in its risk, claims, and insurance processes that should be taken into account.
Bentley cites the difficulty level of the renewal process as one measure that may help to determine if a company might be ready for the move. Additional questions to ask include the following:
- Is risk, claims, safety, and insurance data spread across multiple vendors?
- How much time is spent on the manual entry of risk data?
- What are the complexities of an organization’s exposures?
- How much time is spent on the collection and analysis of data to capture total cost of risk, negotiate premiums, or guard against coverage gaps (or overlaps)?
- How much time is spent creating monthly/quarterly/annual reports for management as well as various departments and locations?
While considering the answer to these questions, see the “The Provider’s Perspective” in the 2017 RMIS Guide for some additional tips to consider. The recently released 2018 RMIS Review is an excellent place to begin research on RMIS vendors.