When it mapped out a test-pilot strategy to use e-signature software and digitize its Medicare supplement insurance forms, Banker's Life and Casualty Co. set some very lofty goals."We wanted to reduce non-value added activities, increase productivity, improve service to our policyholders, decrease unit costs, reduce cycle time and improve both compliance and suitability," says project manager Jason Uyder, a black belt in process excellence for Banker's Life and Casualty Co.

In October 2003, the Chicago-based insurance company began a cutting-edge program aimed at replacing the historically common wet-ink signature on paper documents with an electronic signature on digitized insurance forms. The aim was to automate field procedures, reduce agents' sins of omission and errors on forms, and diminish the turnaround time on open enrollment policy applications.

About 50 Banker's Life agents in Alabama, Colorado, Florida, Indiana, New Hampshire and North Carolina started using laptop computers and DigiPads last fall to write Medicare supplement new business. The e-application process captures the e-signature of a senior at the point of sale using the eTransaction platform technology provided by NxLight Inc., Orem, Utah.

A DigiPad that plugs into the agent's computer records the customer's signature. Once the agent leaves the customer's home, the agent can upload the digitized application to Banker's Life mainframe computers in Chicago in a 90-second process.

Banker's Life targeted Medicare supplements and some life and annuity products because the insurer believes that these two areas hold the most promise for cycle-time reduction.

Cost, time savings

In addition to improving the accuracy and turnaround time on open enrollment policy applications, the e-application initiative has the potential to:

* Reduce, perhaps by 50%, the $1 million dollars Banker's spends annually on paper and printing for policies.

* Dramatically reduce the $750,000 it spends annually on overnight mail.

* Greatly diminish the data entry activities for processing. (Banker's writes an estimated 76,000 Medicare supplement new business contracts annually).

* Decrease the number of applications delayed due to missing or incomplete information.

* Create a competitive technical edge for Bankers Life and Bankers' agents by lowering customer unit costs.

"There's a tremendous cost savings potential-on paper, postage, data entry, and revising paperwork because it is incomplete," points out Uyder. "The benefits are huge but at this point in the pilot program they are hard to quantify," he adds.

Along with the e-signature application, Banker's has digitized all the necessary forms needed to complete the Medicare supplement application.

A customer needs to sign electronically only one time. After the agent uploads the data, the policy is produced and then mailed.

"The record time-from the moment a customer signs the documents to the time a policy is produced-is 59 minutes," Uyder states. "Prior to the test-pilot procedures, cycle time averaged six days and some cases took up to 30 days. With e-signature, the cycle time has been reduced to one to two days," he adds.

The project required the services of 12 home office personnel working part time over a 12-month period.

"This has been a major initiative for us, and it has required a lot of people to get into a lot of new areas," says Ed Berube, president and CEO, Banker's Life and Casualty Co.

The initiative "required the application of new technology, but I couldn't be more delighted with the success we've had to date. It's a credit to everyone who's been involved in the project. My vision is to have a fully automated field force the next three-to-five years," he adds.

The e-application required a change in Banker's internal IT architecture in order to accept a data file and have it populate forms to produce policies in its mainframes. "In the Old World, the policy would arrive in the mail and data entry personnel would key it in. We no longer do that so we needed the IT capability to accept a file and directly populate the mainframe file," Uyder explains.

To accomplish that, Banker's uses the ACORD XML standard for life insurance and SEEC Mosaic Studio software that enables Banker's legacy system to easily accept the new data.

In addition, the system's new IT architecture will enable Banker's to comply with the upcoming HIPAA privacy regulations (See "Health Insurers Prepare for Privacy," page 1).

"We can blank out certain information so an underwriter will only see what he or she needs to see. When working with paper documents, it's hard to do that," explains Uyder. "This way private medical information won't be floating around mailrooms."

Ten agents in a Charlotte, N.C. branch office have been involved in the pilot program since early October. "It's a highly efficient way to process new business and saves us the data-entry time on the front end," says branch manager Jon Scheil, CLU, ChFC, who is in charge of 72 Banker's agents.

"Mistakes or omissions are identified almost before the agent can make them because it's a self-correcting application process. The cycle time is reduced because agents can write up an application for new business faster," adds Scheil. "I think e-signature will save Banker's money, make us more competitive, and get commission checks out to agents more quickly."

But the culture change might not be easy. "Agents must buy a computer in order to use the e-application. But we can't part company with our agent force just because they don't buy into using computers," says Scheil.

Agents for change

Agents taking part in the pilot didn't want to give up the application when the test period was scheduled to end at the close of 2003, according to Uyder. So Banker's kept the pilot alive while continuing to build a more robust application that will be ready for rollout starting in the second quarter of 2003.

The next step, according to Uyder, is for agents to replace their laptop computers with Tablet PCs. With Tablet PCs, the customer can write directly on the computer screen, eliminating the need for the DigiPad.

Eventually, Banker's hopes that 50% of its 5,000 agents will be using the application by the start of 2004. After that, Banker's will expand the application to include life and annuity products in 2004 and in mid-2004, it will introduce e-signature to long-term care polices.

Brian Moskal is a business and financial writer based in Chicago.

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