Why Spreadsheets Still Run Insurance Accounting

Spreadsheets are everywhere in insurance accounting. They exist in small agencies and large MGAs alike. They appear during month end close, commission reconciliation, trust accounting, and bordereaux preparation. Most teams know spreadsheets are risky. Yet they remain essential.

This article explains why spreadsheets still run insurance accounting, what problems they are compensating for, and how modern insurance accounting systems eliminate the need for them.

Spreadsheets Are a Symptom, Not the Problem

Spreadsheets do not appear because accounting teams prefer them. They appear when systems cannot model reality.

Insurance accounting involves policy changes, partial payments, commissions, trust balances, and external reporting. When accounting software cannot represent these workflows, spreadsheets fill the gap. The problem is not discipline. The problem is structure.

Where Spreadsheets Are Used in Insurance Accounting

Payment Allocation and Installments

Installments rarely match invoice schedules. Payments arrive late, early, or partially. Premium finance adds another layer. Accounting systems built for simple invoices cannot allocate these payments correctly. Spreadsheets are used to track balances that the system cannot calculate.

Commission Reconciliation

Commission often moves independently of cash. Direct bill commission is earned based on policy activity, not payment timing. Carrier statements rarely match system totals exactly. Spreadsheets reconcile expected versus paid commission outside the ledger.

Learn how this should work: Direct Bill Commission Reconciliation

Trust Accounting

Trust balances must be accurate at all times. Many accounting systems cannot track trust movements at the policy level. Teams maintain shadow trust ledgers in spreadsheets to satisfy audit and regulatory requirements. This creates risk rather than reducing it.

Endorsements and Return Premium

Policies change after issuance. Endorsements, cancellations, and return premium create retroactive accounting impact. Generic systems do not adjust prior balances automatically. Spreadsheets are used to correct historical numbers.

Bordereaux Preparation

Bordereaux reporting depends on accounting accuracy. When premium and commission are not allocated correctly by program and period, bordereaux must be rebuilt manually.

Related reading: Bordereaux Accounting

Why Generic Accounting Systems Fall Short

Most accounting systems were designed for retail businesses.

They assume:

• One invoice equals one transaction
• Payment timing matches revenue timing
• Adjustments are rare
• External reporting is minimal

Insurance violates all of these assumptions. When systems cannot adapt, spreadsheets take over.

Why Adding More Controls Does Not Fix It

Many organizations respond by adding controls. More reviews. More checklists. More reconciliation steps.

This increases effort without fixing the underlying issue. Manual controls do not scale with volume or complexity. The result is slower close and higher risk.

Why Spreadsheets Get Harder as You Scale

Spreadsheets work when:

• Volume is low
• Complexity is limited
• One person understands the logic

As organizations scale:

• Files multiply
• Logic becomes inconsistent
• Knowledge becomes tribal
• Errors become harder to detect

At that point, spreadsheets stop being a safety net and become a liability.

How Modern Insurance Accounting Replaces Spreadsheets

Modern insurance accounting systems are built around policy driven financials.

They:

• Apply rules automatically based on policy events
• Allocate premium and commission correctly
• Track receivables and payables by policy
• Automate journal entries
• Maintain a complete audit trail

Instead of exporting data to spreadsheets, accounting teams rely on the system itself.

Explore this approach: Premium Accounting Built for P&C MGAs and Wholesalers

How Premium Accounting Fits In

Premium accounting systems act as insurance specific subledgers. They work alongside agency management systems and synchronize insurance ready outcomes to the general ledger. This removes the need to recreate logic manually.

Learn more: Insurance Premium Accounting Software

The Impact on Close, Audit, and Carrier Relationships

When spreadsheets are removed:

• Month end close accelerates
• Audit preparation improves
• Trust balances remain accurate
• Carrier reporting stabilizes

Accounting becomes predictable instead of reactive. Stop Using Spreadsheets

Key Takeaways

• Spreadsheets compensate for missing system logic
• Insurance accounting complexity drives spreadsheet usage
• Manual controls do not scale
• Spreadsheets increase risk as volume grows
• Policy driven accounting eliminates spreadsheet dependency
• Modern premium accounting replaces manual reconciliation

What to Read Next

• P&C Insurance Accounting for MGAs and Wholesalers
• Why MGA and Wholesale Insurance Accounting Breaks at Scale
• Agency Bill vs Direct Bill Accounting Explained
• Introducing Selectsys Premium Accounting for MGAs and Wholesalers

FAQs

Why do insurance accounting teams rely on spreadsheets?
Teams rely on spreadsheets when accounting systems cannot support insurance-specific workflows such as partial payments and commission tracking.

Are spreadsheets acceptable for insurance accounting?
Spreadsheets may work as a temporary solution but introduce audit, control, and scalability risks.

Can spreadsheets be fully eliminated?
Yes, with insurance-specific premium accounting systems designed around policy activity.

What replaces spreadsheets in modern MGA accounting?
Policy-driven premium accounting systems that automate allocation, reconciliation, and reporting.