Five Ways Small Insurance Companies Can Increase Efficiency and Compete Successfully with the Giants

by Allen Gavlak and Laurel Sanders, Optical Image Technology, Inc.

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Being a small fish with lots of big fish in the pond can present unwelcome challenges. Just like big fish, large insurers seem to have all of the advantages when it comes to business. However, the ability of the small insurer to provide customized services as well as to respond and change directions quickly creates a distinct advantage and an unmatched opportunity.

Since the marketing resources and corresponding name recognition of a large insurer are tough to match, the small insurer has to be ready to act quickly when opportunities present themselves to get ahead. Fortunately for them, small insurers are usually more agile and can change directions swiftly. Since fewer people are involved in making major decisions, they can respond more readily to implementing changes after a course of action has been decided upon. In addition, their tendency toward delivering high-quality customer service based on personal interaction with clients often causes customers to remain loyal, as long as they continue to be served well and costs are kept in check. This article presents five basic ways that a small insurer can use electronic document management to take full advantage of his differential advantages, increase operational efficiency, improve service, build on existing customer loyalty, and ultimately compete successfully with the giants in a challenging marketplace.

1. Provide quicker access to data by storing paper files electronically

Small insurers may not acknowledge the need to scan and store information electronically if their paper-based system works well for them. Yet if they ignore the marketplace changes and simply watch their competitors as they move toward digital business operations, they are missing a distinct opportunity to get ahead. A small insurer does not have to make a major investment in multiple technologies in order to see dramatic improvements. Simply scanning all of a company’s paper documents into a system where they are stored and accessible electronically enables them to improve performance and service.

Enhancing services that are already strong builds on existing customer loyalty that can become fragile quickly if competitors gain a reputation for faster or less expensive services. From underwriters to claims processing staff and agents to adjusters, the permission-based security system provided by a Web-based electronic document management system ensures that the right people have access to all of the information they need. Better still, they can access it wherever they are and whenever they need it through the convenience of their desktops, laptops, PDAs, and other mobile devices.

Storing documents and data digitally dramatically increases efficiency. Data that is already stored somewhere electronically, such as contact information, no longer has to be re-keyed or copied for every new form, thus reducing errors. Systems can be configured to demand consistent and complete records, putting an end to costly searches for missing information. Manual searches for paper files are completely eliminated, as well as time consuming crosschecks to make sure that all of the required supporting documents are in place to issue a policy or make a claim decision. Duplicate copies of documents such as policies can be sent electronically to the home office and to adjusters without fear of missing a page, reducing the cost of printing, shipping, and postage as well as paper. Paper production can be reserved for copies that are sent to the customer or that are otherwise required to be printed. Instead of waiting for documents to arrive in the mail for review or processing, workers who have been given the rights to access and view information digitally can conduct a search for everything they need right from the desktop.

Imaging paper documents allows insurers to relinquish office space that was previously dedicated to storing paper files and reallocate it for better use. This is a major benefit for any insurers, especially if the company is planning to grow. Instead of chasing after paper files, more staff time can be spent giving the stellar service the insurer strives to provide, and customer questions about policies and claims can be answered instantly from workers’ desks. Electronic files are also significantly easier to back up in a secondary location than paper files. In the event of a disaster or other unforeseen circumstances, the insurer can access what he needs and ensure that business continues. Although creating a digital filing system is just the beginning of what you can do once you have your information stored electronically, the ability to provide faster service and timely, accurate information to more customers with your current staff is reason enough to consider it carefully.

2. Eliminate paper at its source with online capture of information

Opening mail, as well as copying and collating incoming documents, can be a huge expense for a company, and it slows the turnaround time of policy underwriting and claims considerably. After an insurer has back files scanned into an imaging system, even more savings can be realized by eliminating paper production at the source. Companies seeking to take proactive steps to eradicate paper at the time forms are created and make the data immediately accessible for further action should consider online forms.

By posting electronic forms on your company’s website and giving your customers and staff the ability to complete them online, you can immediately ensure that information is uniform and complete. Policy applicants and policyholders have more control over their personal information and can check or verify their data instantly, resulting in greater accuracy. As subsequent materials from a policyholder arrive in the office, data that you configure to automatically pre-fill (such as customer addresses and other contact information upon entry of a unique identifier or other pre-determined information) reduces the chance of duplicate or conflicting information in the files, such as characters that are inadvertently miscopied. Online forms eliminate the need to scan the majority of incoming information, reducing the paper flow to a trickle and making materials available to the appropriate persons on staff much more quickly than a paper process allows.

Another way to tap into the power of electronic forms is to facilitate electronic insurance quotes with an online quoting system. Your company’s Web page is a logical place for your customers to look for and take advantage of this opportunity. In addition, information that is captured electronically can be stored in your electronic document management system, or its location in the quoting software can be pointed to from the system so that needed data can be found quickly. For insurers who do not yet have a Web page or are ready to take advantage of the opportunity but are unsure how to begin, the National Association of Mutual Insurance Companies ( NAMIC – www.namic. org ) offers a series of technology services to help its member insurers get started.

Online service delivers convenience to your customers, enabling them to apply for insurance, add coverage (such as an additional driver for a vehicle, or sinkhole coverage to a property), or update information when they have time, and at their convenience. In a society where many people may not have time to come into the office for needed services as quickly as they should, or don’t take the time to make a call to update their files, Web access to forms and their files will encourage some to take action sooner rather than later. If convenience for the customer is defined as midnight or 3 a.m. on a Saturday, Web access ensures that the customer can be served. The insurance company, agent, adjuster, and client all benefit from this expediency.

3. Ensure easy access to information by developing a company-wide indexing plan

Like searching for information in an encyclopedia, indexing information thoroughly is the key to finding it when it is needed. People in different positions search for the same information using different methods and terms, and the fact that individuals’ minds also categorize information differently doubles the challenge. Insurers that allow one person to operate as a mastermind and create an indexing plan for the company are shortsighted. The time that is saved by not involving all types of workers in the indexing plan process will be wasted manifold as people search for items and can not find what they need, even when the file is already in the system and only a click or two away from their fingertips.

When creating an indexing plan for the paper documents that are scanned into your electronic repository and those that enter the system online over the Web, each member of staff (in the case of a very small office), or at least a member of each department and type or level of position, should take part in the discussion. Each type of worker should disclose the documents that worker needs to access, which information he requires from other areas of the company, and how staff at his or her level typically organizes and searches for it. Not even the best informed manager or executive will know all of the different ways that people choose to search for files or all of the details relating to their jobs, so it is best to get all of this information on the table from the beginning.

If you choose to begin the imaging and indexing process for just one or two areas of the business instead of company-wide, bringing together staff from other areas of the organization to discuss their indexing needs is still vital. Once an indexing system has been established, making changes to accommodate other areas of business can be challenging, especially since insurers may deal with hundreds of document types. An enterprise-wide indexing plan should be created for all types of forms, documents, and images that are used by the insurer (including internal documents such as contracts, human resources documents such as personnel files, and financial information). By taking the time to do this from the outset, the company will be well equipped to expand a departmental implementation when the time is right, and will face far fewer challenges.

Given the importance of creating a well-conceived and thorough indexing plan, small insurers may believe that the challenge to convert to digital storage is too great to engage in. This is especially true in cases where work volumes are already challenging for the existing staff to manage and they lack time and resources to dedicate to the project. Many vendors offer qualified and experienced services staff who can help you through the conversion and indexing plan process, facilitating discussions, documenting and analyzing the types of files used in the company, making recommendations, and putting the system in place. If your chosen vendor’s services staff has experience creating indexing schemes and working with insurers, you can confidently place the burden of the project on them and turn to other critical business needs while they make the indexing magic happen.

4. Get more from your underwriting, policy admin, and claims software by effective integration

After you have created a document imaging system and effective indexing scheme for your company’s documents, the next logical step forward is to integrate the system with one or more key business applications and to leverage the valuable information stored within them. Most insurers begin by integrating their document management system with their underwriting, policy administration, or claims processing software. Integration of each of these business systems with document imaging further reduces data redundancy, as it enables existing information to be pushed and pulled where it is needed by those who have been granted access.

Communication between software applications also enables pre-filling of data fields in accordance with your unique business rules, reducing manual keying of information and helping your staff to locate materials more quickly. Furthermore, by integrating the systems and electronically associating the various underwriting, policy admin, and claims documents, executives and managers gain a much more thorough overview of the materials that are on file and the work that is being processed within the company. Communication between departments improves, turnaround is quicker, and everyone benefits.

Integration doesn’t have to be restricted to any particular area of the company; accounting departments, human resources, and other areas of the business also benefit by assimilating their software systems so they can communicate with an electronic storage repository. A good document management system will provide a solid audit trail of each and every person who accesses a document, image, or record, noting when and where changes are made and actions are taken. In an atmosphere where strict compliance is king and the insurer sometimes plays the role of humble servant to regulatory requirements, an electronic audit trail leaves nothing in question. When and if anyone on staff tampers with records due to an oversight in the planning of who should be granted access, there remains a clear audit trail, and solid proof rather than speculation.

5. Communicate change to your customers and tell them how they’ll benefit

When your company has made the decision and commitment to take advantage of electronic document imaging, it is important to communicate to your customers what improvements have been made and how they will benefit from the changes. In the case of very small insurance offices in small towns, where face-to-face meetings are still prevalent, document imaging does not need to replace human interaction; rather, it can enhance it. However, the insurer is wise to communicate this clearly since people initially can be reluctant to embrace change.

Helping customers to support transformation so they can benefit from it can be challenging, so clear communication is vital. Although a Web-based policy application or claims page can be made available to applicants who prefer to conduct business online, others might still prefer to come to the office. When they do, they can be offered the choice of completing their forms online in your presence, or they can still fill out paper forms that are subsequently scanned into the system by staff after applicants or policyholders have finished their paperwork.

As a small insurer whose differential advantage hinges in large part on customized service, it is important for your clients to know that they can still interact with you however they choose. Yet, it is equally important for them to understand that regardless of which choice they make, they will benefit from quicker and more accurate information; faster and fairer decisions; and their sensitive information will be better protected by the electronic security requirements that you put in place.

After all of this is in position, what comes next?

Putting a solid and well-organized document imaging and electronic storage system in place is the right place to start, as it lays the foundation for future efficiencies. After it is in place, a wise manager will recognize the potential for additional productivity gains, and the vision will typically grow. The capabilities are limited only by the vision and dreams of the project champion within the company and the chosen vendor’s ability and willingness to partner with the insurer to fulfill them.

There are a variety of steps that the insurer can take to build on the efficiencies established by the creation of a document management system. Next steps will often include using barcodes on outgoing policy, claims, and other documents so that returned documents can be scanned and logged into the system and the next appropriate action can be taken. Companies that are searching for ways to incorporate all of their corporate information into the storage system should consider products that enable them to archive, search, manage, and create audit trails for emails, faxes, voice mails, and more.

Although a document imaging system enables a small insurer to push electronic documents and images quickly wherever they are needed, digital workflow software enables companies to automate tasks in hierarchical order so that work is prioritized appropriately and pushed through the decision-making system as quickly and consistently as possible. Electronic signatures, combined with workflow, bring documents full circle, ending the chase for signatures on reviews, approvals, and denials. Finally, materials that are no longer part of the active document lifecycle can be archived and preserved in an electronic records management or hierarchical storage management system, with instructions to purge documents in accordance with records retention schedules. This helps a company to further facilitate compliance.

Summary

Being a small fish in a big pond is not easy, but it does have its advantages. Make the most of your company’s client relationships and your ability to turnaround decisions and take action. You don’t have to invest in an enormous solution with a lot of bells and whistles in order to get results. You need only to examine your organization’s goals and project objectives carefully, and then choose a solution that is right for now as well as being scalable to grow and adjust to your changing needs. By making the right decisions early in the game, you may not only survive the larger fish in the pond; you may become one.

Visit our website to learn about Optical Image Technology’s solutions for small insurers. If you would like to learn how one mutual insurer benefited from going paperless and gained an edge in a short period of time, please read the article “Panhandle Farmers Mutual Insurance Company Gains a Competitive Edge with Paperless Processing”. To receive links to additional reference and educational articles such as this, please subscribe at our website.

Share your business challenges with us. We will listen and help you find solutions. Call us at 800-678-3241, email us at info@docfinity.com, or visit our website at www.docfinity.com.

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