Getting it right the first time became a goal worth pursuing for this Hastings, Mich., P&C insurer.
A few years ago, Hastings Mutual Insurance Co. experienced a big problem with undeliverable mail. At one point, the number of policies with incorrect address information approached 30,000—nearly an eighth of the company’s total. Direct costs to the carrier were around $80,000 annually for additional labor, printing and postage to correct and resend documents. But the indirect costs—delays getting policies out to customers, slowed invoices, even incorrect ratings on some personal lines—thanks to inaccurate ZIP codes-were potentially far more damaging.
“A big problem for us was that cancellations and restatements could be delayed or not mailed,” Krista Loftus, Hastings Mutual’s underwriting processing manager, says. “If there was a substantial delay in getting an invoice to an insured, sometimes we’d go into cancellation.” Further, Hastings Mutual’s system might cancel a policy due to non-payment of an invoice that the customer had never received, she explains.
Customers would complain to agents, and agents would complain to the carrier. “It makes for a tough relationship when you’ve got your insureds yelling at your agents and, of course, your agents are upset with you. You have some real issues when you have mail being delayed,” Loftus continues. Even incorrectly addressed mail that somehow makes it to the insureds can leave a bad taste. “If the first document the insured gets from you doesn’t have the address right, that doesn’t leave a very good impression,” she says.
Hastings Mutual began life as the Michigan Mutual Tornado, Cyclone and Windstorm Insurance Co. in 1885. In 1880, and again in 1882, tornadoes caused heavy damage to the southwest Michigan town of Hastings, and local farmer and founder D.W. Rogers saw a need — and an opportunity — to protect his neighbors from the twisters.
In 1959, the carrier reorganized as the Hastings Mutual Insurance Co., and though still based in the small town where it was born, it currently offers 18 insurance lines, mostly P&C, to individuals, businesses and farms. It sells its lines through independent agents in Michigan, Ohio, Indiana, Illinois and Wisconsin.
CAUSE AND EFFECT
Sources of the incorrect address problem varied, according to Loftus. Sometimes an agent or even an insured might enter inaccurate information. A data entry person at the company might transpose numbers in a ZIP code. Part of the problem, Loftus says, was new technology at the U.S. Postal Service. At one time, letter carriers knew everyone on their routes, and mail would reach the addressee even if there was an error in the address. Today, Postal Service systems are more likely to kick back invalid addresses.
Whatever the cause, over time the problem grew worse. Hastings Mutual adds more than 40,000 new policies annually and, as the company grew, so did the number of incorrect addresses in its files. The problem got bad enough that Loftus and her colleagues decided something had to be done to fix the inaccuracies for good.
As a first step, the company required all of its new policy processors to verify addresses against information on the Postal Service’s Web site, or that of another vendor. “We had about one-and-a-half full-time people reading these reports, researching addresses and making sure they were right,” Loftus recalls. Each address had to be entered twice, once for verification and a second time into Hastings Mutual’s system.
But that only solved part of the problem. When the bad addresses topped 30,000, thanks partly to a software change, the carrier knew a broader effort was needed, and assigned five to seven of its employees to work part-time on the clean-up effort. “We spent about six to eight months of manually working through the reports part-time, just to get us to the point where we had a reasonable number of bad addresses-where we had fixed our portfolio,” says Joe Sacco, Hastings Mutual’s project manager. “That’s when we started looking at point-of-entry address verification as a way to prevent these from being inaccurate in the first place.”
The decision to use an address verification system began almost serendipitously. “Krista [Loftus] brought me into a meeting one day with a representative for QAS [a Cambridge, Mass., developer of address verification software],” Sacco says. “We were somewhat intrigued.” The product, QuickAddress Pro, “looked like it might help us on the front end.”
The carrier hadn’t budgeted for an address verification system, or even considered implementing it in the current year, Sacco notes. “Krista and I both knew about the problems we were having, and we thought this was an interesting opportunity to look at something that could help us.”
CONSIDERING THE OPTIONS
Sacco and Loftus brought in three or four other vendors of similar systems and “went through a complete vendor selection process,” Sacco recalls. “We used a lot of heavyweight project management on this, maybe more than it needed. We researched possible vendors; we scheduled demonstrations; we took our requirements, turned them into evaluation criteria and had a scoring mechanism. We actually did financial checks on the vendors to make sure they were viable, and determine if we wanted to do business with them.”
Toward the end of the process, Hastings Mutual issued requests for proposals to two finalists and performed a proof of concept. QuickAddress Pro scored well for ease of installation. “No one from QAS came to Hastings Mutual,” Sacco says. “And that tells you a little about how easy the software is to install. They shipped me a CD, and we were able to install and configure it over the phone. We had a couple of key people walk through an evaluation, and it was very successful. We knew this was the right product for us.”
Apart from the ease of installation, Sacco and Loftus were impressed with the simplicity of configuring QuickAddress Pro against their mainframe screens. The ability to update the product’s database (QAS sends an update every two months) with no downtime was another feature that played a big role in Hastings Mutual’s final selection of the product.
Loftus notes that QuickAddress Pro ensures greater accuracy and simplifies data entry. Users start by typing a ZIP code on the product’s screen. That automatically fills in city and state fields while verifying ZIP information. When users enter street names and numbers, the system verifies their validity against its database, then automatically fills the mainframe screens. This completely eliminates typos, she says. “If I get a phone call that says an address is wrong, that means someone did not use QuickAddress Pro. But people use it gladly because it’s such a time-saver.”
Hastings Mutual implemented QuickAddress Pro late in 2006, and with more than a year’s experience with the product, the carrier has been able to document some impressive returns. Sacco reckons the software is saving his company more than $80,000 a year in labor, postage and printing costs.
“We also have some intangible benefits such as improved customer service and company reputation, a better relationship with our agents, fewer cancellations because invoices go to the wrong addresses and better customer retention,” Sacco says.
Apart from licensing and maintenance fees, there’s not much cost associated with running QuickAddress Pro, he notes. “We don’t make any changes; there’s no coding. If anything, we could change a keyboard mapping, but the truth is, after more than a year now, we haven’t had to do that, either. It’s almost maintenance free from an IT standpoint.”
Currently, there are 54 QuickAddress Pro users at Hastings Mutual, but Loftus observes that the company still hasn’t exploited it fully. “When we started, I was really looking at it for my department. Once we got going on it, we started thinking of other areas where we could use it, such as customer service and accounting. We have an employee in quality service who uses it. Thirty-six of the 54 users are in my department, but it’s had a positive impact in just about every department we have that deals with addresses.”
In the future, the company plans to implement a Web version of the product on its agent portal, Sacco says. “We’re doing some auto and homeowner’s business out there with our agent portal right now, and there are a fair number of addresses being entered. Some of them are incorrect, and we still have to deal with that,” he says. “Once we do, we’ll have pretty much closed the door on entering bad addresses across the organization.”
Bob Mueller is a business writer based in Grand Beach, Mich.
To find out more about billing challenges search “Billing Systems—New Technologies, Opportunities” at www.insurancenetworking.com.
(c) 2008 Insurance Networking News and SourceMedia, Inc. All Rights Reserved.
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