Panhandle Farmers Mutual Insurance Company Attains Competitive Edge with Paperless Processing

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In the insurance business, only the strong survive. How, then, can small or midsized insurance companies compete with the giants? Panhandle Farmers Mutual Insurance Company is a small company, but by any measure, also typical. In 2003, Panhandle employed 8 people; four years later, their workforce consists of just five. Nonetheless, with this 37% reduction in staff, Panhandle Farmers Mutual Insurance Company generates more premium volume than in 2003, with less of a burden for each of the remaining employees. The company anticipates growing by 35% over the next several years without having to add new staff.

What secret weapon keeps them competitive? Electronic document management. Art Meadows, President and CEO of the company, spearheaded an initiative to embrace technology at Panhandle. Optical Image Technology, Inc.’s (OIT) DocFinity® suite has been the key component of the company’s transition to paperless processing. The results have been significant.

In just a year and a half after DocFinity implementation, Panhandle was able to go entirely paperless with the following processes:

• A+ Claim reports
• Faxes
• Operating System reports
• Agent commission statements and checks
• Mortgagee notifications
• Cancellation/reinstatement notices to agents
• Reinsurance Contracts
• Quarterly and Annual Financial Statements*
• Reinsurance Recovery Payments
• Reinsurance Premium Submissions
• Actuarial Opinions
• Annual Financial Audits*

* Panhandle has printed copies only because they are required to by law.

DocFinity has also helped Panhandle dramatically reduce paper with respect to the following practices:

• Change requests: 80% paperless submission
• Claims reporting: 97% paperless submission
• Online Payments: 14% electronically submitted
• Credit reports: 65% paperless submission
• Applications: 65% paperless submission

History

Panhandle Farmers Mutual Insurance Company offers a variety of property and casualty insurance products primarily designed to meet the needs of the small rural communities of West Virginia. The company presently offers dwelling fire, allied lines, homeowners, mobile homeowners, farms, small commercial and liability coverage. For more than a century, claims, contracts, policy files, invoices, and other processes were entirely paper-based. Previously, Panhandle relied on more than 20 fireproof four-drawer filing cabinets for storage of clients’ records and files. Each empty filing cabinet weighed 735 pounds.

When Meadows took the helm in 2003, his primary objective was to change the focus and direction of the company’s operations. He recognized that Panhandle could significantly increase efficiency by incorporating technology into their office processes. In his first three years with Panhandle, Meadows implemented more than 100 different procedural changes.

Panhandle uses INSPRO™ by Town and Country Computer Services, a policy management system for small to mid-sized insurance firms. Meadows’ first endeavor was to increase the efficiency of that system. Later, he streamlined the company by implementing electronic transfer, incorporating electronic mailing to reduce paper mailing, and instituting direct deposit for payroll and commission. Overall, though, he recognized that a fundamental component of increasing efficiency would be to create a paperless office.

Meadows says, “When we decided to go paperless one of my goals was to not only make our files paperless, but to change the process to control paper flow into our office. I have seen and talked with so many insurance companies that have had paperless files, but did not design or develop controls to reduce the flow of paper coming in to their office. Many of my peers told me, ‘Yes, we are paperless now; but we are handling more paper than we ever have.’ I was determined to create an environment within our office to become as paperless as possible.”

The DocFinity Solution

Meadows contacted several different vendors to find a document management system, and chose DocFinity for its ease of use, flexibility, cost effectiveness, and the short turnaround time from planning through implementation. He had considered using a competing imaging provider that was specific to the insurance industry, but decided that DocFinity was a better fit. DocFinity software was able to address all of Panhandle’s needs at a much more competitive price, without losing any of the functionality that Panhandle required for their software solution. Panhandle is using the DocFinity Core, which includes both a scanning and imaging solution, as well as the IntraVIEWER® module. IntraVIEWER enables them to view and annotate their documents using standard internet browsers.

In addition to providing quick and easy access to clients’ files and improving their disaster recovery capabilities, Meadows anticipates that DocFinity will simplify Panhandle’s auditing process. State laws require regular auditing of insurance companies, and considerable man-hours are required to search for and locate the documents that auditors require. Now, auditors will have immediate, convenient access to electronic documents and images, eliminating the need to expend valuable company time and resources locating paper files.

Panhandle is further streamlining efficiency by creating query-based retrieval so that agents can use DocFinity to view their files remotely. Agents will have access to only those policies and claims that they have written. Viewing of personal policyholder information—Credit Reports, Reinsurance Reports, Claim Work Forms, Medical Records, Attorney Letters, etc. — will be restricted.

Ultimately, Panhandle’s plan is to eliminate as much paper storage as possible in all business areas within the company. They will gradually expand their use DocFinity beyond storage of policy and claims files, and include invoices, documents for agents’ manual rates, agent and vendor contracts, and even board meeting minutes and information.

Integration

DocFinity integrates seamlessly with INSPRO™, Panhandle’s policy management system. When policies and claims are called up, employees have direct access into the documents using a VCR button. They can immediately choose which documents they wish to view without having to log in to DocFinity first.

Panhandle was able to transition to DocFinity shortly after DocFinity’s two-day training. Since they were able to integrate DocFinity with their existing system, employees had no new programs to learn and could continue to work within their familiar software environment. Overall, the process took about two months.

Return on Investment

Meadows is adamant that because the insurance business changes daily, it is imperative that small companies keep up with technology if they hope to survive and remain competitive. He elaborates, “It is extremely difficult for small companies such as Panhandle to remain profitable unless they have the tools in place to work efficiently.” Historically, the company’s expense ratio had been 46%-47% of its total volume. After Meadows assumed leadership, the company was able to reduce its expense ratio to 29% in 2004, which is extremely rare for a company their size. Meadows attributes this dramatic decrease to the fact that Panhandle is able to process more work without having to replace staff. By implementing DocFinity, his company is assured of maintaining this level of efficiency. Meadows says “DocFinity allows us to hold our expenses down and enables us to compete in the marketplace.”

In the future, DocFinity will continue to enable Panhandle to significantly reduce its file storage space. Employees are in the process of imaging active files and moving them out of the fireproof filing cabinets. Meadows researched a popular online auction site, where the average rate of resale for these cabinets is approximately $700. He anticipates that by selling their fireproof cabinets, Panhandle will recoup more than 90% of DocFinity’s cost.

Meadows discloses, “It’s a must that we keep up with technology. The DocFinity imaging system has brought us to the position that we want to maintain in the insurance industry. We are extremely satisfied with DocFinity.”