If you had to pick an industry to go paperless, insurance might seem an unlikely choice. Core processes for insurers typically are paper-intensive. What's more, as a whole, the industry has been somewhat slow to adopt new processes and technologies.
Yet, going paperless was a primary goal of Embrace Pet Insurance. Headquartered in Beachwood, Ohio, a suburb southeast of Cleveland, Embrace was launched by co-founders Laura Bennett and Alex Krooglik, a pair of freshly minted Wharton MBAs, as an all-digital enterprise right out of the gate.
"We've always been paperless," Bennett says proudly. "When I worked in life and health, there was always so much paper. We just couldn't have people tied to a physical location and having to lug files to and from work. So we thought, why shouldn't we go paperless-after all, everybody is moving toward that goal."
At the heart of Embrace's paper-free mission is a set of core paperless processes, including paperless policy and paperless claims management. For example, 95 percent of claims forms are submitted via fax, with incoming faxes digitally recorded in the company's Microsoft Dynamics customer relationship management (CRM) system, which, in effect, serves as Embrace's document management system. The remainder are mailed in and scanned into the CRM by an employee, kept for a few months, and then shredded.
A typical Embrace policy has a $300 yearly deductible, an 80-percent reimbursement rate, and an annual maximum payout of $10,000 for dogs. About 85 percent of the company's policies cover canines. Premiums typically range from about $32 per month for a mixed-breed dog, and run higher for purebred pets. By contrast, the average cat owner pays about $21 per month. The five-year-old firm has more than 12,000 customers who choose to insure 17,000 pets. To keep matters simple, Embrace covers only dogs and cats-in other words, owners of hamsters, parrots, frogs, salamanders or anacondas are excluded. But that doesn't mean the market is in any way limited-less than 1 percent of dogs and cats are insured in America, compared to 25 percent in the United Kingdom.
Customers can apply for the pet policy online at Embrace's
Once a policy is issued, the customer then can print the policy at home. This relieves the company of the paper burden of mailing a copy of the policy and its coverages and exclusions.
Along with the policy, customers receive barcoded claims forms they can use when seeking reimbursement for an animal's medical care costs. The barcode contains each customer's (not the pet's) identification. Among the key pieces of technology supporting Embrace's paperless effort are Inlite Research Inc.'s ClearImage barcode recognition system, enabling automated document image processing, and NitroPDF Inc.'s software for processing PDF-based claims.
The Embrace coverage is basically an indemnity against the cost of various pet illnesses or injuries. To file a claim for the reimbursement of a pet's medical bills, the insurer typically asks the veterinarian to fill out the claim showing the procedures performed and the costs, and then fax the form to Embrace.
Vetting the claims for irregularities is Embrace's staff of animal care-seasoned, veterinary technicians who have pet medical claims experience. "They know all the conditions and can spot the inconsistencies," Bennett explains. All worked in a veterinary clinic, but the physical hardships and risks eventually outweighed the benefits, she says. Not only are the working conditions appreciably better, but the vet techs often work from home.
Tossing the Filing Cabinets
Unfortunately, many business partners and customers remain paper-dependent. "In the pet insurance world, there are no PPOs, no HMOs, no standard rates that vets charge," Bennett says. "There are no e-medical records. And most vets are not paperless." One way to deal with this, she says, is to encourage the vets to submit claims via fax.
To smooth claims payments, Embrace added the Microsoft Great Plains accounting system, part of the broader Great Plains enterprise resource planning (ERP) package. "It allows us to control paying claims better," Bennett adds. Credit card-based payments by customers are handled through a merchant account manager. "We plan to add our own billing system, because we have a large number of small payments," Bennett says.
Okay, so just how successful has the company been in meeting its paper-free challenge? By one old-school measure of paper profligacy-the number of four-drawer filing cabinets in the office-the paperless drive has hit a pair of grand slams. The company initially purchased two cabinets, with Bennett and Krooglik thinking they would be needed regardless. But when employees started using them to store their purses and other objects, "We decided it was time-they had to go," Bennett says. "We sold them, and we used the money to pay for our staff Christmas party."
Embrace is a bit different than most insurers in that although the company processes applications, issues policies, processes claims and handles customer inquiries, it doesn't underwrite the policies. Instead, it acts as a pet insurance program manager, handing off the insurance risk to RLI Corp. "We do everything an insurance company does regarding interacting with customers," says Bennett, whose background includes experience in asset-liability management, strategic planning and business development at The Canada Life Assurance Company.
Bennett offers some advice to other insurers considering a paperless strategy, cautioning against making inefficient paper-based processes paper-free. "If you just copy what you did in the paper world, you could be wasting your time."
Instead, she recommends taking a broader view. "Being paperless is just a step in the process. It's a great way to make your processes more efficient, because things like barcoding and faxing save time. There's a lot of inexpensive technology out there that can help. For instance, we took a barcode reader and put it onto our CRM system as an interface" to speed up the processing of incoming claim forms.
It's not surprising that Embrace is expanding at a greyhound's pace. One reason is that the pet insurance business overall is growing at a 25-percent annual clip, according to an estimate by consumer goods market research firm Packaged Facts.
To help meet that growth, Embrace recently conducted a search for a full-time IT staffer. Although resumes are important, for the sharp-eyed Bennett, who is in her second term as Chairman of the Board of the North American Pet Health Insurance Association, choosing employees often has as much to do with how candidates behave as how they look on paper.
"I knew this one candidate was the right fit for Embrace when I saw him waiting in the lobby," she says. "He didn't think anyone was watching when he pulled dog biscuits from his suit pocket to feed our employees' dogs that were in for the day. He's a dog lover, and he happened to have some treats handy. He also has a cat, a turtle and a guinea pig."
Doug Bartholomew is a freelance business writer based in Berkeley, Calif.
