Friends Cove Mutual Insurance Company: Revolutionizing Services Across Pennsylvania through Effective Automation

Friends Cove Mutual Insurance Company, located in the historic town of Bedford, Pennsylvania, has served Pennsylvanians for more than 130 years. Originally established to protect farm properties, today the company handles property and casualty insurance for homeowners, mobile homeowners, dwelling and commercial properties, personal property, and a small number of farms. Staff ed by ten full-time employees, Friends Cove serves more than 8,000 customers through licensed agents who are dispersed across the state.

Competing with large insurers can be challenging. However, by implementing the right technologies and leveraging those they own, smaller companies can outperform competitors in the most important area of all: customer service. Friends Cove’s recent implementation of a document management and workflow solution integrated with their policy administration software enabled the company to:

• allow for 30-35% annual growth in policy volume with the same staff;
• save thousands of dollars in paper and paper-related expenditures through digital access and processing;
• give their staff instant and secure desktop access to real-time data that enabled smarter decision making and better service.

Read on to learn how.

Embracing change to become more competitive

Friends Cove grew steadily for decades. As the company expanded across the state, staff had to collect and distribute considerable paperwork to geographically dispersed agents and clients. This made it increasingly difficult to serve constituents quickly and efficiently. As the client base grew and regulatory requirements increased, files became challenging to manage.

Although the company’s reputation for service suggested there were ample opportunities for continued expansion, Friends Cove had to find ways to be more efficient in order to manage growth effectively. The company’s faithful and hardworking staff had become accustomed to the volume of paper and the cumbersome processes. This made it difficult to recognize the mounting inefficiencies and address them.

By 2004, the insurance industry had become more competitive than ever, and the Board knew changes were needed for the company to remain viable. Stepping forward into growth was one option; stepping back into safety was another choice. They knew the latter would cause the company to stagnate, a choice the Board could not support.

At this critical juncture, the company leadership position became vacant. Board members seized this unique opportunity for the company to change its course and become more competitive. No one knew what the changes would look like, but they knew there would be a meaningful transformation, and that their new leader was fit for the charge.

The discovery process: How can we become more efficient?

Dan DeArment stepped away from the Board after eight years of service and assumed the presidency of Friends Cove in November of 2004. In order to pinpoint exactly where changes should be made, he spent the first six months studying existing business processing routines and considering how they could be improved. DeArment was convinced there were opportunities for continued expansion if the company could manage its policies and claims more efficiently. An attorney by background, he was used to digging for details, so he went diligently about the task of discovering where the inefficiencies were hiding.

Unlike other insurance companies with file rooms that were bursting at the seams, Friends Cove had a well-organized file room with ample space. Although storage was not an issue, the staff still struggled to keep pace due to inefficient access to documentation. Friends Cove handled each of its active insurance files at least once per year. On an average day, about thirty-five files were pulled by hand, worked on, and filed again according to regulations and security practices. Policy renewals required three copies to be processed for each renewal: one for the company, one for the agent, and one for the insurer. Often, more than one person on staff needed the same file; time was wasted trying to find out who had it and when it would be available. Document creation, duplication, shuffling, and filing ruled too much of the day.

From scattered files to accessible resources: digital storage

DeArment helped the company take its first step forward toward automation by scanning policy and claim-related photos into Microsoft Windows folders so they would be accessible electronically. This eliminated hours previously spent pulling and filing documents in the storage room. Although the images were digital, they were still not easy to find due to the lack of indexing and retrieval capabilities. DeArment quickly began looking for a true document management solution.

In 2005, DeArment attended a user conference offered by the company that supplied their policy administration legacy system. There, he was introduced to Optical Image Technology’s DocFinity® document management suite, which had revolutionized service, increased productivity, and trimmed costs at a colleague’s company. DeArment’s vision for what could be achieved was expanded when he witnessed the results of the integration of DocFinity with the same legacy system at his colleague’s site. He had already closely examined two other leading products, and decided DocFinity was the best fit for their needs. “We valued OIT’s willingness to work with other vendors to ensure successful third-party software integration,” DeArment commented upon reflection. “This made a huge difference in our ability to implement quickly and successfully.” With technical support and professional services to ensure their third-party integration would go smoothly, he was ready to begin.

Getting more from existing systems: third-party integration

In 2006, Friends Cove began by scanning active as well as archival policies into DocFinity. Files were thoroughly indexed so diverse workers could search for files directly from their desktops. After all policies, supporting documents and images were gathered into the central repository, DocFinity was integrated with the policy administration system. This proved to be a major step forward in operational efficiency. Data from the policy file titles was imported directly into the document management repository and associated with relevant images. This allowed staff to perform centralized searches and view entire portfolios instantly so they could make informed decisions. Simultaneous retrieval meant underwriters no longer needed to wait their turn to access needed files, dramatically shortening turnaround times for both new applications and renewals.

As a result of the integration, policies now are automatically indexed and transferred into DocFinity for retrieval when they are needed. The legacy system generates a daily list of policies that are eligible for renewal. Hard copies of declaration pages are created for the insured, and PDFs of those pages are mechanically indexed into DocFinity using data from the file titles.

Old habits die hard: controlling paper flow

Scanning and indexing policies for instant desktop retrieval made work more efficient. However, DeArment realized there was still room for improvement. Digital storage had made information secure and readily available to those who needed it. Still, the staff continued to print documents after they were scanned – in order to work on them – before rescanning them into DocFinity after their paperwork was completed. DeArment realized that the company had the potential to complete tasks more efficiently, as well as save thousands of dollars in paper-related consumables, if they could embrace full process automation.

Riding the information continuum: process automation

DeArment realized that he and his staff needed to establish clear goals for the project in order for it to succeed. Manual processes continued to function well for the company, but they were cumbersome, and had not been examined for efficiency or streamlined for a long time. As an experienced businessman, he knew it would become increasingly difficult for the company to stay viable unless it could continue to offer first-rate products, information, and service to its clients. By automating routine processes, DeArment hoped to eliminate errors, expedite processing, and free his staff so they could continue to deliver the kind of service that created their strong reputation throughout the state.

Since homeowners’ policies comprise 70% of the company’s business, he decided to start by focusing on that area, streamlining the underwriting of new policies. The staff became adept at using the new system fairly quickly. As DeArment realized the company was handling more work with the same staff, he had the confidence to roll out the solution to other areas of the business. Within a year, underwriting for all of the other lines was fully automated. Closed claims were then added to DocFinity in 2008, further facilitating searches for information and completing the histories of customers with active policies.

Looking ahead: developing strategies for future improvements

DeArment and his staff see many other opportunities to increase operational efficiency. These include providing more information to their agents, creating more of a self-service environment for clients, and using DocFinity to facilitate financial audits and market conduct exams. One of the areas where he expects to see major efficiency gains is automation of the quoting process used by their staff’s underwriters.

Currently, when an application comes through the quoting system and is sent to the underwriters to create a new policy, several laborious steps are involved. The underwriter must gather information about the history of the home, procure a list of electrical and other updates, get a quote from the replacement cost estimator, and collect photos and other related paperwork. PDFs of the documents and images are emailed to a person whose sole responsibility is to compile multiple PDFs into one single PDF for each underwriter to view.

In the future, Friends Cove plans to use DocFinity Workflow, together with newly developed insurance processing software to capture and compile all of the needed documents and automatically render a single PDF that flows directly to the underwriters. As documents are captured electronically and stored in DocFinity, the workflow software will inform the appropriate underwriter when the portfolio is complete and making it available to that person for processing. This will save each underwriter considerable time, as well as the frustration of manual information gathering.

Ultimately, Friends Cove wants to make appropriate information available to their agents and insurers, which will help them to compete with larger national insurers. Since self service is increasingly important to customers and their agents, eventually the company plans to make it possible for them to log in, pull up declaration sheets and other pertinent documents, and initiate the appropriate action electronically. Currently, customers can apply for insurance through Friends Cove online (and most do), but self-servicing of policies is not yet possible. However, it’s not far away from becoming reality.

Using the reporting tools that are built into DocFinity to facilitate future audits is another major goal for the company. Currently the financial exams, which take place every five years, are done on site. When the company’s next scheduled exam takes place, DeArment plans to provide remote access to the auditors, allowing them to query the system for the data they need, while freeing his staff to stay concentrated on their clients. Automated reporting will also facilitate future market conduct exams, which can be very expensive for the insurer’s staff when employees have to perform time-consuming manual searches to produce requested data.

Adapting to change

Friends Cove has managed to increase productivity significantly for each of the past two years, increasing the company capacity to write new business by approximately 30% without increasing staffing. The efficiencies provided by integrating DocFinity document management and process automation with the legacy system has enabled the company to manage growth effectively using existing resources, while eliminating most of the costs inherent in a paper-based system. Desktop automation has made files more accessible and has standardized processes and information while reducing stress for employees, resulting in a better work environment.

Friends Cove was able to bring itself to the forefront of 21st century efficiency by a combination of candid procedural analysis, a willingness to change, a guiding hand to help the staff embrace changes, strong technology, and commitment. Although DeArment knows the business overhaul will never be complete, his outlook for the future is bright. He summarizes the situation well, stating, “DocFinity’s modular suite lets companies like ours start small and work gradually toward a comprehensive enterprise solution. It helps us to grow, and is flexible enough to grow and change with us.”

Change is inevitable. Friends Cove is invigorated by the transforming business landscape, confident that the company will be well poised and ready for whatever challenges the future may bring.