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Electronic Solution to the Paper Chase

Joe McKendrick November 2006

Liability Insurance Administrators (LIA), Santa Barbara, Calif., was drowning in paper and all the costs associated with generating it, filing it and keeping it around. With an average of 15,000 to 20,000 active existing insurance policy underwriting files, the firm, which provides error and omissions policies to real estate appraisers, found itself having to hire new clerical staff to handle processing, as well as finding new space for all the documents.

"In the beginning, we just had one clerical person who would answer phones, do the filing, issue quotes, and do all other clerical work," says Robert Wiley, LIA assistant vice president. "As the company grew year after year, we had to start divvying up those duties to stand-alone positions, receptionist, clerical staff and filing staff. Eventually we had to keep increasing our filing staff, and we're now at the point where we're an office of about 29 people. And we have four full-time file staff and three part timers."

The firm designed a series of clever mechanisms and processes to expedite the handling of paper files, but recognized that it needed, urgently, to move to electronic forms. Wiley points out that many of LIA's customers are firms with up to 20 to 30 appraisers. "So the files get pretty big, especially after you've been renewing them year after year," he says. "The largest room in our office was dedicated to filing. However, we were even running out of that space. We either had to find more physical space or move to electronic storage."

Industry statistics bear out the magnitude of the challenge, as well as the opportunities presented with electronic forms systems. For example, one PricewaterhouseCoopers (PwC) study estimates that 90% of all corporate records still exist on paper, and the automation of office tasks with PC technology hasn't improved the situation. Many documents stored on local hard drives still need to be printed out as paper-based documents.

PwC also conducted a test in which researchers sought out 20 select documents through 20,000 filed; it took 67 hours of searching to find 20. This time can be cut down to three seconds if documents are stored on an optical imaging system. It is estimated that a typical five-file filing cabinet costs $5,000 a year to manage and maintain.

LIA overcame many of the time lags in retrieving paper files through a series of rollaway filing cabinets that enabled quick access to account histories. Still, a glitch in physical searches of files often would slow down the process.

"When an appraiser called with a question regarding their file, we'd have to send a request to the file room, to send a file up," says Wiley. "That could take anywhere from 10 minutes to maybe two hours if they have trouble finding the physical file."

TRIPLE THREAT

Dealing with paper documents and the physical space they require is but one concern; "documents actually can represent a triple threat to businesses," says James True, vice president of marketing at Cabinet NG. "First, there's the bottom line, the amount of wasted time spent looking for documents, materials, toners, printers-and the space that's storing those documents. Compliance also demands document retention. Then there are security issues around documents."

LIA contracted with Madison, Ala.-based Cabinet NG to develop and install a solution that would help reduce actual stored paper documents, as well as improve the process of underwriting complex policies for the firm's real estate and environmental consultant clients. Liability's customer files typically have many sub-folder categories, (such as quotes and policies) and the company wanted to ensure that these documents could be easily converted to a searchable electronic format.

LIA's new system consists of records management software that was installed on its current servers, along with an electronic fax system and scanning stations with which active accounts are captured and stored. The company receives about 1,000 letters a day, all of which are automatically stored into pre-specified electronic folders. Under- writers can then see the entirety of a client file by using the subfolder tabs to locate the correct documents. The system's workflow feature also indicates the status of the documents in terms of their production and dissemination. As a result, underwriters can see at a glance when a document is printed and ready to be mailed.

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