The Industry Is Playing Catch-Up In Integrated Document Management
By John B. Bennison
In contrast to manufacturing companies that transform raw materials into entirely new finished products, the raw material and finished product for insurance companies are one and the sameinformation.
A printed insurance policy is merely a representation of a pure information transactionalbeit with major financial implications. Because the industry is completely information-based, and information has historically been recorded on paper, terminology like “holding paper” or “writing policies” is still common today.
Given the benefits to be gained from automating information transactions, you would expect the insurance industry to be a leader in adopting modern electronic document management systems, yet others (like financial services) are clearly more advanced.
Signs are appearing, however, that this reluctance is now fading. This hesitancy may, ironically, provide late adopters some unique opportunities. As a result, insurance companies could soon remind us of the time-honored maxim, “He laughs best who laughs last.”
So, what has slowed information automation in the insurance industry?
First, insurance is heavily regulatednot just nationally, but by insurance commissioners and regulations that differ from state to state. This situation has created a cautious, conservative environment in which insurance companies are hesitant to embrace new approaches that could have a legal or regulatory impact, and regulatory review itself slows change.
Secondly, insurance is long-terma home insurance policy may last more than 30 years, and a life insurance policy lasts (obviously) a lifetime. The long-term nature of insurance has discouraged and delayed changes in business practices, and people have generally accepted a more paper-bound, slower pace of technological change than in other industries. New processes are constrained by the need to accommodate old transactions.
But the tide of change cant be stemmed for long. Although changes have been slow, the floodgates are opening.
The question is, why now?
Todays hypothetical, but typical, Amalgamated Universal Insurance Company often contains 30-year-old records from the myriad companies it purchased in the last decade. Locating, accessing, and managing documents in this Tower of Babel environment is expensive and the risk of lost transactions is high, so insurance companies are seeking better ways to manage their information.
The repeal of the Glass-Steagall Act is also forcing change. For more than 60 years the act separated the insurance and banking industries, but its repeal has removed the barbed wire fence between the cattle and sheep, so to speak. When the range skirmishes are over, those organizations with better IT infrastructures will own all the livestock and all the grazing rights, so insurance companies are fast improving their technology base.
Next, companies face a conflict between increased privacy legislation and increased information access.
Internet business models raise expectations for convenient access to information, but consumer-driven legislation protects information privacy. To serve this dual role, companies must invest in new technologies.
Finally, insurance companies have simply recognized that some of their business practices are outdated and expensive. A printer with a built-in shredder provides an appropriate image of how insurance companies often churn out paper on high-speed printers while downstream somewhere a high-speed scanner changes it right back into electronic data.
To meet these challenges, insurance companies are revamping their flow of information, both internally and externally, by realizing that electronic delivery is not an option, its the option. Insurance is all about information transactions, and the speed at which the transactions are conducted depends on efficient document delivery. Efficiency means you can begin collecting premiums sooner, managing risk more effectively, and saving on the bottom line.
So, by utilizing the Internet and other complementary technologies, automated document delivery may well prove to be the “killer application” for the insurance industry.
While electronic delivery can dramatically improve customer satisfaction and efficiency, customers want their documents ready and waiting. Plus, they want to return in an hour, a week, a year or whenever to view the information. This requirement leads us beyond immediate electronic delivery to deferred delivery, and ultimately, to some form of long-term storage or integrated document archive.
Thus, distribution and long-term archive are two sides of the same coin.
Making the commitment to an electronic document archive does not eliminate all your challenges, however. You should insist on the following in any solution:
–High fidelity copies that can be read forever. A policy approved by a state regulator in 10 point Times Roman type but then reprinted in Helvetica might not hold up as “best available evidence” if your company is taken to court. Now consider the challenge of reprinting with the right digitized signature and company logo, which may each have changed several times in the years since the document was issued!
–Efficient space utilization and delivery speeds. A scanned image in TIFF format passes the fidelity hurdle above, but even with advanced compression techniques, TIFF images often consume 45kb of memory per page. 100,000 TIFF images would consume more than four gigabytes per day. And with document delivery over a network, space is time. The larger a document, the longer it takes to travel.
–Data accessibility. What if two years after you write a million business insurance policies, legislators decide that donut shop operators are legally liable if they dont notify patrons of the health risks of obesitybut only in urban areas? Finding and using the product code(s) and zip codes on millions of documents requires machine-readable data.
These three criteria–Fidelity, Efficiency, and Accessibility–form the “golden triangle” of archival document storage. Choose carefully, as this is the key to building successful document archives.
An electronic document management system will be a valuable new addition to your technology base, but it isnt your only information asset, or even your most important. You still need to leverage other information resources, built up over time, that are critical to running a profitable insurance business, such as databases of customers, agents, policies and claims. Your challenge is to construct the document archive with close integration, and complementary functioning, to the databases and business processes that use them so that information is updated and in synch.
So, you want the archive and database to complement and cooperate, rather than compete? How can this be done?
One solution that is available links electronic documents in the archive directly to company databases outside the archive. This feature maps each record in the company database to a virtual folder capable of containing documents in the archive system.
This solution allows existing company databases to share their data model with the document archive system, and inextricably connects the two systems to stay in synch forever. So, even as your database tables evolve and are reshaped, the archive automatically adapts to reflect the ongoing best practices of your business. Together, they deliver a complete picture of data and documents with automatic and enduring integration.
We have now traveled the entire information lifecycle. Information transactions, the principal output of the insurance industry, have historically been recorded on paper, but the business case for moving to electronic documents for both distribution and storage is too compelling to deny. Ubiquitous email, Web access, and PDF-aware browsers have lowered the costs and increased the benefits of electronic delivery and archive, so even the conservative regulated insurance industry is in a position to act now.
Still, you must adopt technology that saves costs, protects documents legal authority, and renders their data content more accessible for related processing. Plus, you must do so in a way that complements rather than conflicts with other essential information infrastructure.
The great opportunity you have, as a late technology adopter, is to integrate technology that is more mature and experience a smoother transition than that of early adopters. But the race is on. Acting wisely now will surely allow you to have the last laugh. Carpe diem.
John B. Bennison is vice president, archive imaging and document management, for Docucorp International. He can be reached via email at firstname.lastname@example.org, or visit www.docucorp.com.
Reproduced from National Underwriter Life & Health/Financial Services Edition, October 15, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.