Database or spreadsheets to manage your insurance and risk information?

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Four years ago I wrote an article entitled ‘When a spreadsheet is simply not enough’ extoling the virtues of using a database instead of  spreadsheets to manage your insurance and risk information. With the new Insurance Act due to take effect in August it is worth reviewing that article to ascertain what might be even more relevant.

What I said in 2012

“Spreadsheets are wonderful tools; beloved of actuaries, accountants and IT virtuosos, and with a little knowledge can grow into highly complex and powerful data management tools. Therein however, lays the problem. What happens when the creator/owner of the spreadsheet leaves the company and someone else needs information, wants to make changes to the spreadsheet or simply needs to understand what it does and how it works. Such a case recently happened to a risk manager friend of mine who inherited a premium allocation spreadsheet impossible to unravel and literally had to start again from scratch. Spreadsheets also have the Darwinian habit of evolving, breeding and creating a nightmare of version control. This leads to headaches when it comes to data consolidation from numerous different spreadsheets and raises a whole security aspect.

A database on the other hand is a centrally held beast that brings data and information together from numerous sources into one always latest version environment. This eliminates duplication of data and allows essential information to hang off core data fundamental to the business.
A standard example is to build into the database the business and asset profile, link this to policy, loss and risk monitoring and assessment data and create a suite of reports that look across the whole. Such a database can also be made available on-line, especially if hosted, so that anyone involved in the insurance and risk management process can have access. This can include senior management, local management for renewal data gathering, insurers, brokers, TPA's, surveyors and even to the point where staff in situ can log incidents. The whole experience can even be personalized to reflect your business culture.”

What has changed since?

In the past four years I am delighted to say that a large number of corporate risk managers have moved to having a fully integrated RMIS, and a great many of these have selected Webrisk as their preferred solution.
As far as the Insurance Act 2015 is concerned and in particular the ‘duty of fair presentation’ as outlined in section 2, one key benefit an RMIS provides you with is evidence. In an ideal situation and as far as renewal data gathering is concerned this will include the following:

  • An intuitive and tailored data entry form for local business managers to complete that identifies the person actioning the form, assists with completion of the form by reducing anomalies and automating much of the process, and records when each data field has been completed. The RMIS will also track any required validation trails within the organisation and once again identify who has done what to the data.
  • Once a final submission has been made to the central database by each business manager the data can be locked with only the insurance risk manager having the ability to make changes if required.
  • The RMIS will provide on-going reports as to the status of each forms’ completion and a full audit trail of all activity associated with the data gathering process.

The Act also goes on to encourage ‘structured and signposted’ presentations of the risk to insurers. To support this:

  • The RMIS will contain in its database the business hierarchy of the organisation, and to as detailed degree as deemed necessary by the insurance risk manager.
  • The RMIS will then provide the insurance risk manager with a suite of structured reports to present to the insurer with the assurance that any queries from the market can be satisfied through a simple ‘drill down’ process into the database itself.

This structured approach to renewal data gathering is proven to improve accuracy of data, reduce the time it takes to gather information and submit the same to the market, improve relationships with business managers having to provide the data by making it a far less painless exercise, and provide evidence that reasonable steps have been taken to ensure the accuracy of data being submitted to underwriters. The streamlining of the entire process also provides the insurance risk manager with more time to analyse the data and identify any shortcomings. Compare this to the provision of unstructured reports accompanied by a myriad of confused spreadsheets often leading to the ‘data dump’ scenario that the Insurance Act is looking to prevent.

In addition, the system can be used to record and evidence submission of data and reports between the various parties to the renewal including brokers, insurers and any other parties that need involvement, and copies of emails and other supporting documentation can be stored alongside the associated reports.
Whereas there can never be a hand on heart guarantee that everything shared with insurers is a 100% fair presentation, utilising an RMIS to manage the process can at the very least provide convincing proof that all reasonable steps have been taken to ensure accuracy and openness, and provide easy-to-access and readily available evidence of the complete data and information trail.

There is enough to worry about in today’s turbulent world without letting the completeness and accuracy of your market data submissions add to the stress. In the past you may have gleaned some comfort from relying on your broker to handle your renewal process for you, but from August your broker’s knowledge will now be treated as part of your ‘actual knowledge’. It is important to ensure you have a clear agreement as to who is responsible for searching for and storing the information that will need to be disclosed to insurers. It will be your ultimate responsibility.

If you are still struggling to justify utilising an RMIS over spreadsheets, the demands of the Insurance Act offer an ideal opportunity to revisit the situation. If you would like to find out more about how an RMIS can help your particular scenario, we are always happy to meet or provide a web-based demonstration even if this is purely for the sake of awareness.

Tags: audit trailcompliancerisk2016


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