Back in early 2002, the office environment at World Insurance Co. resembled a noisy beehive with workers faxing, printing, copying, retrieving documents from warehouse storage and chatting while carrying out those tasks.

Today, the office environment resembles a seated symphony quietly performing the essential tasks of the day with a high level of efficiency. The nostalgic office sounds of buzzing, whirring, churning and humming office machines and the distractions they caused have given way to the orderly execution of work. "When I take people on office tours now, the physical noise (of office equipment) and of people doing what used to be their jobs-printing, faxing, copying and retrieving documents-is gone," says Ron Safarik, vice president of budget and process improvement at World Insurance Co., Omaha, Neb.

"We no longer have that kind of noise or distraction," he adds.

Looking to reduce its reliance on paper documents, increase staff and organizational efficiency and produce cost savings, the health insurance carrier researched document imaging and management technology.

"We performed an internal cost-benefit analysis and looked at imaging systems from a document storage and workflow efficiency standpoint," Safarik explains.

The carrier wanted to achieve several lofty goals. It desired a decreased turnaround time for underwriting and new business processing. For staff members, it wanted to create what Safarik calls "one-touch processing."

Moreover, it wanted to change from a faxing to an e-mailing environment while decreasing the warehousing requirements for document storage.

One-touch processing

"We wanted to create a business process where all of the data necessary for a decision (one-touch processing) would (simultaneously) be at the fingertips of each decision-maker," says the vice president.

In its former paper-based environment, information was scattered. To retrieve information, copy it or print it, staff members were constantly in motion-not at their desks. Before the document management system was installed, "there was a lot of wasted physical energy," says Safarik. "Staff had to physically leave their chairs and go to a printer to make copies. And of course, while they were gone, their phone would ring so they would miss the call.

"That (leaving their desks) interrupts the workflow," says Safarik. "We wanted our staff to have all the information necessary to perform their work tasks available to them while they were seated at their desks. So one of our major goals was 'posteriors in the chair' processing. My rule of thumb is: Any time a staff member hits the print button on the copy machine, it costs the company $5."

To achieve these business goals, World Insurance in May 2002 began implementing a system developed by Cleveland-based Hyland Software Co.

Called OnBase, the software is an integrated document management solution that combines imaging, enterprise report management, electronic document management and workflow into a single, Web-enabled application.

The stand-alone application runs on the carrier's Windows platform and the imaging and workflow implementation took about 16 months.

Industrywide, document imaging initiatives were underway in 2003 or a high priority for 2004 at about 25% of property/casualty insurers and more than 60% of life/health carriers, according to a recent survey by Celent Communications Inc., Boston.

Improved workflow

At World Insurance, OnBase has virtually eliminated the physical routing, storing and retrieving of paper documents across the organization. Today all incoming applications, policyholder correspondence and documents to support medical claims are scanned and stored in the OnBase system.

In fact, the carrier's record management center scans more than 6,000 documents or 28,000 pages a week, and they are electronically routed to the next logical business department.

Thus, the system gives the insurer a controlled workflow process and a critical means of auditing and tracking the work of departmental staff.

There are 150 licensed OnBase users at World Insurance, 120 of whom use the system on a daily basis. Companywide, mailroom or records management center personnel, call center representatives and business departments-including claims, new business, underwriting, marketing, accounting and legal-view more than 15,000 electronic documents each day.

The system also has drastically changed the organization's workflow. Documents arrive in either a hard-copy form or electronically.

Paper documents are scanned at the rate of 80 pages per minute. Then, they are identified and indexed, as a claim form, for example, or a refund check or cancellation, and routed to the appropriate department.

With the system, "I'm able to predict the next user. I know what department gets a document after it is received and scanned," Safarik says. "We are able to electronically sort documents very quickly and after they are identified, they go to a worker's queue (an electronic in-basket)," says Safarik.

There, the work is performed and the staff member saves and archives the document. The carrier can even identify the critical work that needs to get done and transfer it from the work queue of a vacationing staff member to a staff member on duty.

The system gives management "time control," so if a document is more than 24 hours old, it can automatically be jumped to the front of the processing line. "I can also prioritize what work gets done first, second, and so forth," says Safarik. "For example cancellations come first and refund checks are second in priority."

The beauty of the system is that it enables the company to track every touch of every document and it time stamps each document, Safarik adds.

"That has value because it builds in accountability. Nobody can consistently pass the more difficult tasks off to other people."

As such, the workflow information automatically gathered by OnBase is one element of each worker's performance evaluation.

Hard-dollar benefits

The carrier's budget for printing has been reduced by 50% in the last year because of a reduced need to made paper copies of documents.

And, although no exact numbers are available, postage costs for mailing documents to agents have also been reduced because they are mostly sent via e-mail, and the corporate phone bill has been reduced because communication between the carrier and customers takes less time and is more productive.

"We have recovered all fixed expenses and we were able to generate a 100% return on our investment within the first year," says Safarik.

"Cost reductions in printing, postage, phone calls and improved speed of processing and more operational efficiencies all together helped us exceed our ROI expectations."

Moreover, "we underestimated some of the soft-dollar savings related to improvements in accountability, the ability to prioritize work and the productivity increases due to switching to operating as a more electronically-focused company," he adds.

For example, because the document management system keeps staff members in their seats, it has added value as a customer service tool. OnBase helps customer service representatives answer customer questions within minutes because they have electronic access to all customer information and don't have to search for files, according to Safarik.

"Document imaging has been a big area of investment for insurance carriers," says Matthew Josefowicz, manager of the insurance group at Celent Communications. "When you stop moving paper around, it's a good thing because it cuts costs."

In fact, according to Celent's recent survey of insurance industry executives, document imaging is one of the top three IT initiatives that have delivered the best return on investment in the last 24 months. (The other two are policy administration and data mastery.)

At World Insurance some benefits are difficult to fully link directly to the OnBase system.

It is, however, estimated that the turnaround time for the carrier's underwriting process has decreased by about a week. "Now, about 80% of our in-house processing for new business and underwriting is less than 30 days old vs. 40 days old in the past," explains Safarik. "During the course of a year-long implementation, other processes changed also."

Mind-set change

The carrier has reduced the amount of space occupied by archived files in a leased warehouse by 50%, although it has not actually benefited from cost savings yet-because the lease runs until 2005.

World Insurance also underestimated how switching to a more electronic focus would cause the company to make other decisions more quickly, Safarik points out.

In the past, if the insurer needed to get a paper document to an agent, it would either mail it or fax it.

"Now we (as an organization) think about how we can get a document to an agent electronically," Safarik says.

"It will get there faster and cheaper. In the old days, people were paper-focused. There has been a corporate mindset change that goes along with the technology change," he adds.

World Insurance did face an unexpected challenge as a result of the OnBase implementation. "It opened our eyes to the (unexpected) training needs of our staff. People weren't used to using their PCs to cut, copy, paste and toggle," says Safarik.

About two-thirds of the 150 active users went through a one-day computer skills training session over the course of one month.

"We were well into OnBase and we were wondering why some people were struggling. So we did the PC training," adds the vice president.

Bringing in the big guns

World Insurance called in four of the top guns in the field of document imaging and management in order to make presentations.

"We wanted self-sufficiency. We didn't want to rely on a software provider for maintenance or support," says Ron Safarik, vice president of budget and process improvement for World Insurance Co. "Most imaging systems are still maintained by the traditional MIS department." With Cleveland-based Hyland Software Inc.'s OnBase product, "we can use a system administrator rather than a programmer to make changes that we need."

Other providers of software for document imaging and management were more programmer dependent, in the opinion of Safarik. "Programmers often don't understand the business needs while system administrators are usually able to grasp the desired outcome more quickly because they have a business background," says the vice president.

One of the vendors made it clear that World Insurance would be effectively renting the system. "But with Hyland's OnBase product we are truly owners of the system and therefore we have more flexibility. This way our destiny is in our own hands," Safarik says.

The other vendors didn't really want us to look under the hood, according to Safarik. "If we had wanted to make changes in the print management system, we had to hire the software provider," he says. "It was like a maintenance contract-and it meant we would have had to translate our business needs for someone who isn't in our business line."

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

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