Five years ago, Security Insurance Co. was suffocating under the weight of paper files. The company's file room was packed to the point where the company had to place file racks in hallways, consuming office space that cost $20 per square foot.Space constraints weren't the only problems that the Alpharetta, Ga.-based carrier's paper filing system created. Call center representatives had to put customers on hold and ask a file room clerk to retrieve the caller's file just to answer routine questions. Moreover, only one person at a time could work on a customer's file during the underwriting process, a situation that didn't foster high worker productivity.
Now, all information pertaining to underwriting and claims is scanned and digitally stored. Security Insurance has cut its office space by 33%, closed the doors to its file room and cut $100,000 per year in rent costs, thanks to its document imaging and management system.
"When we started out, people were really skeptical," says Chip Craze, a senior vice president with the carrier, which specializes in nonstandard automobile policies. "But the more we used the technology, we began to understand different areas where savings could occur."
Document imaging and management technology has quickly spread in the insurance industry. Currently, 77% of carriers have implemented electronic document imaging technology, according to a joint study conducted by Gartner Group and the Association for Information and Image Management International, Silver Spring, Md.
Find That File
Document imaging and workflow/process management tools have improved carriers' ability to quickly compile and locate customer information. It's now common for insurers to electronically scan all forms, faxes and letters as soon as they arrive, eliminating many of the inefficiencies created by paper filing systems.
Currently, 53% of carriers have implemented workflow and process management technologies, while 23% say they plan to implement the technologies shortly, according to the Gartner/AIIM study released in 2001. In fact, carriers' use of workflow and process management tools is greater than the average for all industries (36%) included in the study.
Security Insurance implemented a system developed by Advanced Solutions, Conyers, Ga. Called ImageRight, the system supports underwriting and includes workflow software so that when new documents are scanned into the system, such as renewal notices and endorsements, the information is automatically routed to the appropriate person.
"Instead of waiting for someone to finish a batch of files, the information is automatically routed to the next person," Craze explains. "We started with underwriting because it provided the biggest bang for the buck quickly."
The company now stores digital images of all incoming and outbound documents, including policy applications, endorsements and payments.
Standard Insurance isn't a large company; it has 30 employees and averages $15 million annually in written premium. However, the document imaging and management system that supports underwriting was so successful, executives decided to extend the process to claims.
All claims files are now electronically stored. When a call center representative receives information about a claim, it is automatically assigned to an outside appraiser. The appraiser's report, complete with digital photographs, is then automatically routed to the appropriate line of business or to an adjuster, depending on the sender's email address.
Standard also has tied its policy management system into its electronic document storage systems. Using Computer Output To Laser Disk (COLD) technology, the system automatically stores a copy of every document that's outputted from the system.
"We had to print a company copy of these documents, and now the company copy is sent directly to the customer's file," Craze explains. "That step has helped us save a lot of money in paper printing costs."
Standard Insurance is exploring other options for its document management systems. One innovative feature that's been added enables the system to digitally capture voice recordings from phone calls and attach them to a customer's file. The carrier is also considering ways to enable users to access digital files stored in the system via the Internet.
"The benefits go beyond the savings we realized by cutting our office space that was devoted to the file room," Craze says. "Our customer service representatives now have all of our customer information at their fingertips, rather than waiting for someone to locate a file."
Supporting growth
One significant benefit of document imaging is that it virtually eliminates the need to manually enter data, enabling carriers to growth their business rapidly without the need to hire support staff.
Indeed, without the technology, Balboa Life & Casualty would not have been able to provide its insurance tracking service for collateral protection insurance. The Irvine, Calif.-based carrier, which was purchased by Countrywide Credit in 1999, provides co-sourcing for more than 2.5 million loans.
The process requires Balboa to collect and track documents that verify that a consumer has insurance to back an automobile loan. The carrier implemented an imaging and document management system from Costa Mesa, Calif.-based FileNet Corp., which uses optical character recognition technology to "lift" information off paper documents and store it electronically.
The system, called Rembrandt, enables Balboa to process 32,000 documents a day. "With Rembrandt, we've been able to reduce our staffing costs by two-thirds," says David Grundy, Balboa's vice president, information systems division. "We would not have been able to scale for that amount of business without this automation. It has allowed us to grow and handle a much larger volume of business."
Balboa also has implemented workflow/imaging and document management systems to support claims for life policies and underwriting for auto insurance. The claims system gives adjusters simultaneous access to a claim, which enables Balboa to start the recovery, salvage and subrogation process much earlier than if a claim was on paper.
"By converting paper claims to images, we've eliminated the cost needed to manage and transport paper files and we've reassigned our file managers to work in other areas," Grundy says.
The PIC-ART system for claims scans more than 4,000 documents per day and it handles about 11,000 open claims at any given time. The system also stores between 90 and 120 days' worth of documents in its magnetic cache, a storage area on optical disk that enables users to retrieve documents in seconds.
Balboa spent almost $4 million to develop the three systems, which is used by 320 employees. The three workflow/imaging and document management systems are saving at least several million dollars annually in actual costs, Grundy adds. "More importantly, we've improved our ability to answer our customers' questions quickly."
