A year ago, faced with stiff pressures to reduce costs and increase production, Penn National Insurance began searching for a robust solution to handle its document management functions for its different business lines."It wouldn't become our enterprise solution overnight, of course," says Timothy Caskey, senior systems analyst for the Harrisburg, Pa.-based insurer. "But ultimately it would become our print engine-the document composition and printing tool for the company."

Penn National, which provides property and casualty insurance to businesses and individuals through a network of independent agents in nine eastern and mid-Atlantic states, is following the path of many carriers hoping to cut costs by moving to a single platform.

In Penn National's case, the move from a mainframe and client-server platform to an exclusive client-server environment was paired with a secondary cost initiative-shedding its dependence on three vendors for its document composition needs to one. Finally, the carrier hoped to boost efficiency by slashing labor and paper costs and by adopting a tool that was easy enough to use that both non-technical people and IT experts alike could create physical documents faster-thereby speeding time to market.

Penn National ultimately decided it needed something that would enable it to migrate from its web of solutions to one product in order to automate the management of policyholder and agent communications.

After an intense search, the company chose Dialogue, a single comprehensive infrastructure for its batch and real-time document applications from Lexington, Ky.-based Exstream Software, Inc.

While Caskey notes that Penn National's conversion to a single technology for document composition will enhance simplicity and convenience, the firm expects numerous other concrete benefits.

"We will only have one repository for documents, and instead of paying for three software solutions we are going to pay for one," notes Caskey.

The solution also enables Penn National to send its underwriters in various states policy worksheets for review and approval online. The underwriter can then remotely drive the production process by authorizing the policy to be printed only after it has been approved.

The carrier plans to use the software to print Explanation of Benefits (EOB) and vendor payment checks in one print stream and mail material in one envelope. Consequently, the firm's staffers will no longer need to manually match the EOB with the check, and the carrier's postage costs will be cut.

Intuitive And Easy To Use

Penn National's focus on reducing labor costs will be realized by using Dialogue to automatically generate and index images for archiving as documents are created. Previously, humans drove the process, because after printing documents, staffers had to manually scan them and then archive them at night, which was very labor-intensive.

Michael Charest, group vice president of insurance solutions for Exstream, claims that Dialogue lowers insurers' costs in part because it can process as much as 2.5 million pages per hour, allowing firms to see a five-fold increase in their throughput capability (that is, they enjoy a much quicker processing capability).

Caskey says Penn National needed something intuitive and easy to use. "Since we have had the product in-house we have had non-technical people creating documents very fast and very easily. These are business people creating static documents," he explains.

Insurance companies expect a 50-75% reduction in the time it takes to develop new policies when using Dialogue, claims Charest. For instance, he explains, if a firm wanted to develop a new auto insurance policy, the time it would take the company to develop all the contract language and put it into specifics for clients could be reduced from a year to four to five months. Charest also says that insurers expect to recuperate the costs of implementing the product in less than a year.

Penn National's adoption of Dialogue is emblematic of insurers' search for a solution that they can use for all of their different business segments and product lines, Charest says. "Insurers want to eliminate point solutions across the enterprise. They don't want a software product that only does policy issuance or correspondence."

Indeed, the increased migration by insurers from mainframe to client-server environments is triggering numerous insurers to adopt document composition technology, says Craig Weber, a senior analyst at the Boston-based research firm, Celent, LLC. "Generally speaking, as you move from mainframe to client-server and even to Web-enabled systems you are putting more functionality in the hands of users," Weber explains.

Caskey agrees. "I see a lot of insurers moving off the mainframe environment to the client-server environment-at least companies of our size are." However, some insurance firms-especially larger ones-he says, are hanging on to their homegrown systems.

Inherent Challenges

But the trend in the next five to seven years will be for insurers to replace custom-built solutions with packaged ones, maintains Weber.

"Insurance is a paper-intensive business," he says. "So carriers either have to support their own customized solutions to produce that paper or look at packaged solutions. And typically we see carriers replacing 30-year-old, custom-built solutions with packaged ones."

The promise of document management also holds potential obstacles, especially for those carriers focusing on changing platforms, migrating data, and reevaluating business processes.

"Many carriers want to change their business processes to be able to improve client communications," Charest says. "They want to build processes that are more efficient and effective and respond to market trends much more quickly."

Celent's Weber says some factors may even curb the adoption of document composition solutions. "It is hard to unplug a working system, even if that system is expensive to maintain," he says. "And the reason for that is that document systems are tightly integrated to policy administration claims and billing systems. Putting ink on paper is easy, but integrating data across systems is hard." Weber says for good reason he has observed only a "slowly rising tide" of insurers adopting such solutions.

In fact, Penn National's principal challenge, admits Caskey, is less related to its document management solution; rather it's been the actual move to a single system. "The problem is getting us off the other systems, converting from the other systems, getting data out of those systems," he says. "These systems are proprietary and the data is not easily extracted."

Nonetheless, Caskey says this is a mere transitional cost that needs to be accepted, and he, Weber and others see the technology's ample benefits outweighing its costs. For instance, on the correspondence side (including sending letters to customers), insurers benefit from the technology due to their compliance concerns-making sure that their correspondence is using approved language, according to Weber. And on the statement side, Weber says the emphasis is on improving the look and feel of the documents to provide greater customization. "That can be as easy as using nicer fonts or incorporating graphics, which are very difficult to do with 30-year-old systems," he says.

Daniel Joelson is a business writer based in Arlington, Va.

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