Insurers Scale the Many Steps to Paperless

Insurance Networking News, March 1, 2009

Carrie Burns

Good, but not good enough. That's not usually what insurers striving for success want to hear. But, it can work in some cases. Take, for example, paper-free operations. Completely paperless processes may not always be possible, but many insurers are inching toward eliminating paper with each small step they take. Some insurers start in the claims department; some start in the underwriting department; some start by eliminating paper sales and marketing materials. But most know it can't all be done at once.

"Carriers have already done a pretty good job of getting rid of the internal paper process," says Jeff Goldberg, senior analyst in the insurance practice of Boston-based Celent. "The days when companies would print out documents to store are fewer." Now, though, the challenge may be convincing outside parties to adapt to paperless activities. "Even companies that have significant investment in online applications still have paper coming in the front door," he says.

The insurance industry has a long history of paper use, but paperless is possible. "In terms of processing transactions, they certainly can be done without paper," says Phil Hargrove, insurance technology adviser at Conyers, Ga.-based ImageRight Inc. "Straight-through processing is still in its infancy, which means there are still paper documents. But once those are entered into an imaging process and can be converted to electronic, you're not dependent on paper."

Using an imaging system on the front end to scan in documents can start the paperless process. But, to become truly paperless, you need more than just technology, says Adrian Brown, CIO, Greenville, S.C.-based Canal Insurance Co. "You need a structure for filing, and you need a process," he says. Canal implemented ImageRight's document management and workflow solution more than four years ago in its underwriting department, which employed 28 people just to manage filing. From the fourth day with the system, all new policies and anything that was pulled from the files would be scanned, cleaned up and sent through the system, and documents would route electronically.

Canal's paperless underwriting department quickly caught the claims department's attention. "The claims department paid claims on policies, which meant they had to use ImageRight to look at the policies," Brown says. "The claims department is now using a brand new system as opposed to paper cards."

OUTSIDE INFLUENCES

Canal's work was done on the front end, imaging incoming and existing documents. "While a completely paperless environment should always be the industry's ultimate long-term goal, the industry can achieve a largely paperless environment over the next three to five years," says Scott Morrison, VP of product strategy and market development for Sircon Corp., Okemos, Mich. "The key to achieving a completely paperless operating environment is adoption and use of technology throughout the producer lifecycle - from carriers, to agents, to state departments of insurance and all stakeholders in between - and setting realistic expectations."

But what does an insurer do if those third parties don't want to adapt? Goldberg agrees that the reluctance of third parties is much more daunting that the technology issues. "When you think about what technology is available today, insurers could have entirely paperless processes," he says. "However, the question is whether you want to force people to be paperless or allow other options. Insurers are stuck making that decision in a number of areas. Some are making the decision that they've built an online application channel, and are not going to accept policy applications unless they come through that channel because that may be the only way to make the business profitable. We'll be seeing more of that in the future when it's more accepted than it is now."

Chubb Group of Insurance Cos. started its first paperless initiative with the personal lines division in 2003, turning off paper copies to the agent. It started with Download, according to Judy DeLaRosa, VP, Cross Commercial eBusiness Manager at the Warren, N.J., insurer. "We were already downloading policy detail to our agents. In order to really go paperless, you have to send more information than you ever thought you needed to. So we went through a massive undertaking to recertify all of our personal lines downloads with all of the agency management system vendors." Chubb then built the capability to notify agents via e-mail when paper was issued. After receiving the e-mail notification, agents can go in and look at the paper and, for those agents who want a copy, they can do a real-time inquiry through their agency management system and save a PDF version.

Because Chubb's personal lines were so successful going paperless, its commercial and specialty lines divisions are looking to follow suit. Specialty lines, though, has been difficult, due to a lack of ACORD XML standards, says DeLaRosa, who has worked closely with ACORD to get standards implemented. "We've got a number of lines sent so far, and are working to implement them,"she says. "It's a progressive effort."

The insurer is going to build a system for commercial lines on its extranet and provide agents the option to enroll, "so they can tell us they want to turn off the agent copy," DeLaRosa says. "We're still going to send the insured copy to the agent's office and send the agent's copy via activities and notifications."

Penn National Insurance's paperless efforts also included agent participation. The insurer began its paperless efforts almost seven years ago within its claims department, creating electronic workflows to mimic paper workflows and backscanning files through ImageRight. Commercial underwriting soon went paperless, followed by the bonds division and Penn National's TPA. "Most recently we got our HR division to back scan all our HR documents," says Tim Caskey, senior applications development at the Harrisburg, Pa., insurer. "The only division that hasn't gone paperless yet is accounting/finance. That may come some day."

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