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How to Create a Paper “Less” Agency Process

A White Paper Provided to Independent Agents,
Published by Deerbrook Insurance

Table of Contents

The Paperless Office, From Holy Grail to Reality

Section 1

What Is A “Paperless Office” and Why Do I Need It?

Basic elements of the paperless office

Why do I need a paperless office?

Additional benefits of a paperless office

Section 2

Transactional Filing—A Closer Look

What is transactional filing?

How does transactional filing work?

What is required to start transactional filing?

Error and omission issues

E&O checklist

State and carrier-specific issues

Section 3

Putting It All Together

System requirements

Special considerations

Summary

Section 4

Scanning and Electronic Document Storage

Choosing the right technology

Is scanning right for your agency?

Conclusion

Appendix A—Practical Scanning for Any Agency

Appendix B—Scanning/Imaging and Electronic

The information in this white paper is not intended to provide specific advice about individual legal, business or other questions, and is not a substitute for the reader’s independent research and evaluation of any issue. Legal and regulatory requirements vary by state. We recommend that you contact your local insurance trade association, your state regulator and your attorney to determine whether there are unique requirements that apply in your state or to your agency.

The Paperless Office, from Holy Grail to Reality

Introduction Much has been written about the “paperless office.” This concept has become a reality for some independent insurance agencies, but for many others it remains as vague and elusive as the Holy Grail. Some agencies struggle with understanding the paperless office and how they could benefit from it. Others have rejected the idea as too difficult and expensive to implement. And some want to implement a paperless office but do not know how to go about it, or believe there may be some regulatory or error and omission (E&O) issues reventing it.

In the past, many of these concerns have been real. The barriers and obstacles to the paperless office have been formidable. Today, however, improved technology and software, better carrier support and positive changes in regulatory direction have made it easier for agents to realize the benefits of a paperless office. In fact, this level of efficiency and economy soon will be required not only to thrive—but also to survive—in the “dot-com” world.

Deerbrook Insurance recognizes this need, and has developed the technology and business processes to support implementation of a paperless environment for its agent partners. Deerbrook has produced this paper to address the concerns and challenges surrounding the paperless office concept.

Section 1 defines what it means to be a paperless office. It evaluates which paper can be eliminated and which must be retained. It also highlights the many bottom-line benefits of the paperless office.

Section 2 explains transactional filing—what it is, how it works and what needs to be in place to start. This section also provides a checklist of internal and external considerations that must be addressed to implement a paperless office including carrier, E&O and regulatory issues.

Section 3 provides a step-by-step blueprint for implementing a paperless office. It describes the workflow changes necessary to realize and capture the benefits of becoming paperless, including details on implementing transactional filing.

Section 4 is a primer on understanding today’s scanning and image technology options.

Section 1: What Is A “Paperless Office” and Why Do I Need It?

Can you imagine running your agency with less or possibly even no paper? Have you wondered how much time and money is spent creating, maintaining and managing paper in your office?

The word “paperless” is a misnomer because it may be impossible to completely eliminate the flow of paper through an agency. The goal of the paperless office, however, is to shut off the flow of paper into and out of the agency wherever possible, and to dramatically reduce the cost of handling and processing whatever paper remains.

Basic elements of the paperless office

There are four basic elements that make an office paperless:
Agency management system
Utilization of an agency management system that supports transactional filing, as well as carrier upload and download processes.

Transactional filing (t-filing)
Filing paper by date rather than by client, and using the agency management system for all day-to-day transactional data.

Shutting off the paper
Shutting off the flow and production of paper whenever upload/download processes make this possible.

Electronic data storage methods
Using document scanning and optical storage capability to reduce physical space requirements and to make documents available to multiple workstations and locations.
Technology enablers
New and improved technology now makes implementing the paperless office possible.
Today’s advanced agency management systems can capture, store and manage client data. The latest versions of these systems can be rented over the Internet, avoiding the need for high-cost hardware and systems maintenance staff.
Advanced single-entry carrier interface processes such as Deerbrook Insurance’s new Internet-based system, can eliminate the need for local storage of client data.
Faster and more economical document scanning processes can be managed independently or integrated with your agency management system.

Why do I need a paperless office?

Well-run and highly profitable agencies have recognized that they make changes to survive and thrive in the technology-enabled business culture of the 21st century. Becoming paperless is one of those changes.

Quite simply, the paperless office saves customer service representative (CSR) time, which translates into real dollar savings and even increased levels of customer service. For example, conservative estimates show that CSRs spend one hour each day maintaining and handling paper files. Agencies actually report CSRs spending up to three hours a day on these activities. The paperless office can dramatically reduce time spent on these tasks and re-focus energies in ways that benefit the customer and agency.

Each of the four basic elements of the paperless office contributes toward an efficient and cost-effective environment.

The Agency Management System
The agency management system is the technology hub of the paperless office. Therefore, it is important to invest wisely in a system that has data capture and management capabilities to support the paperless processes.

An agency management system with advanced information management functionality makes possible:
download from carriers, so that most paper you receive is made obsolete by electronically transmitted data
t-filing and scanning of paper documents
rotational servicing” (in which the next available CSR takes the next incoming call), which allows CSRs to service accounts more quickly because all policy and client data are available on the desktop
increased levels of customer satisfaction and retention because your CSRs no longer spend time locating and rummaging through paper files in order to address client needs.

Transactional Filing
T-filing simply saves time. The chart that follows can help you calculate the cost of traditional filing to your agency, and the number of hours you could save each year using t-filing.

Calculation Example Your Agency

Line 1: Average CSR salary $30,000

Line 2: Hours per year - The number of CSR hours worked per year. 2,000

Line 3: Average wage - Calculate by dividing average CSR salary (Line 1) by hours per year (Line 2). $15/hour

Line 4: Number of hours spent filing - Consider the number of hours spent maintaining files, walking files from desk to desk, locating and pulling files, stapling, re-filing, etc. A conservative estimate is 1 hour per day; some agencies report as many as 3 hours per day. 1 hour

Line 5: Daily cost per CSR - Multiply Line 3 by Line 4. $15

Line 6: Number of CSRs 3

Line 7: Total daily cost to maintain traditional files - Multiply Line 5 by Line 6. $45

Line 8: Number of workdays per week 5

Line 9: Weekly cost to maintain traditional files - Multiply Line 7 by Line 8. $225

Line 10: Annual cost to maintain traditional files - Multiply Line 9 by 50 weeks. $11,250

Line 11: Total hours potentially saved by automating filing systems - Multiply Line 4 by Line 6 by Line 8 by 50. 750

Resource: “The ABC’s of Transactional Filing,” published by ACORD

Shutting off the paper
Processing and handling paper that does not exist requires no cost. Section 3 explains why and how shutting off carrier paper flow is possible.

Electronic data storage methods
Storing information electronically allows you to handle paper documents once and then discard them. Scanned documents:

reduce cost by drastically reducing the need for, and the cost of, document storage space.
let you retrieve documents nearly instantaneously, from any desktop.
keep original documents secure—they cannot be lost because they are permanently stored and backed up in an electronic format.
let you share information quickly and conveniently—documents can be faxed or e-mailed from any desktop without leaving the workstation or generating paper copies.

Additional benefits of a paperless office

Better control for E&O. Paperless offices require full agency management system utilization, which helps avoid E&O issues by:
forcing consistency in transaction processes and procedures
providing documentation of consistent application of those processes and procedures if E&O disputes arise.

Improved audit trail. Agency management system documentation features make it easy to determine who did what for a given customer. This can reduce the amount of time spent resolving client questions at the time their expectations are highest.

Accurate data at your fingertips. When all client and coverage data are at the desktop, CSRs do not have to search for or through paper files to answer customer inquiries or service requests. Developing a “once-and-done” customer service process, in which questions or requests are handled without need for follow up, will significantly reduce the time CSRs spend on an account, and allow them to focus on making additional sales or enhancing service.

Information that is managed and mined to expand your business. You can access and manage electronic information in ways that, at best, would be cumbersome and time-consuming if the data existed only in filing cabinets. Tasks such as determining the average age of your customers by line of business are impossible in the traditional environment. Now this information can be used to develop focused sales efforts that can lead to increased revenue.

All of these benefits are likely to lead to increased customer satisfaction and improved client retention. Remember that as little as a five percent improvement in customer retention can generate a 50 percent improvement in an agency’s bottom-line profitability.

Section 2: Transactional Filing—A Closer Look

Transactional filing—known as “t-filing”—is the key to operating a paperless agency. This method of filing puts the agency management system to work to improve business processes.

What is transactional filing?

Simply stated, t-filing involves filing paper by date rather than by client. Filing in this manner does not eliminate paper and make the agency paperless. However, dependence on paper files is diminished, as is the duplication of work required to maintain both paper and electronic databases.

T-filing systems:
save CSRs time—CSRs will rarely need to access paper files because relevant data is readily available on the agency management system.
save agents time—agents spend less time managing paper and more time providing value-added service to their customers.
safeguard errors and omissions—t-filing’s process improvements can help reduce or eliminate the E&O concerns that keep agency principals awake at night.

How does transactional filing work?

Document data is input directly into the agency management system. Customer files are not pulled when documents come into the office. Rather, documents are distributed to CSRs for invoicing, updating client information and coverage, creating memos, updating claims, deleting or setting up suspense or diary items—all on the agency management system. The system attaches a date to each entry.

Once input, documents are filed by date. When the person handling the work is done inputting the data, the document is put in the “back-to-file” basket. All work is collected at the end of the day, date stamped, and filed in the file folder for that date.

The agency management system directs you to information. The information contained in a customer file is now found in any number of date files. The agency management system provides the index to the date files and makes the compiling or reassembling of a customer file or policy possible, if necessary.

When filing by transaction, certain client files may still be maintained, such as permanent client information, appraisals and original applications. Scanning technology, when used with an agency management system, may offer the ability to provide access to these documents electronically as well.

What is required to start transactional filing?

An agency management system capable of supporting t-filing. All client and policy detail must be captured on the agency management system so that CSRs can access at their desktops the information needed to handle most, if not all, customer service questions and transactions. The agency management system must have the capability to document and track the following:
individual policy and coverage level changes
incoming phone calls, mail and electronic documents.

Detailed client information that is accessible on the agency management system. Somehow, client and policy data must be input into the system, either via direct keying or some other form of data loading. Many carriers provide initial client loads and ongoing daily downloads to help agents reduce the effort needed to accumulate and maintain policy detail.

A commitment to using the agency management system. Once the system has been loaded and tested, the agency must commit to changing its behavior to exclusively rely on the system rather than paper files. In some cases, agents locked away duplicate paper files in the short run while their staff gained confidence in the new processes. This ensured staff compliance with the paperless process.

A plan to get started. Section 3 of this document describes a getting-started process that has worked for many agencies. You may choose this or create your own. Either way, the key to success is developing a plan and sticking to it.

Error and omission issues

Some agents fear that dependence on electronic data and processes such as t-filing increases E&O exposure. Sometimes this becomes an excuse not to fully automate. In reality, the consistency and reliability of agency automation may help to decrease E&O exposure for these reasons:
T-filing has not eliminated any paper. Instead, automation and transactional filing help support and organize the paper.
Computerization forces a certain discipline or uniformity of procedures on the way work is processed. The structure imposed by the computer may be one of automation’s strongest benefits in support of good E&O procedures. Computers provide strong audit trails and reporting capabilities that can be used to monitor agency and customer activity. For example, most systems generate transaction logs that cannot be altered. That is, once an item entered, the date cannot be changed nor can the item be eliminated. Because of this, the transaction log may have more credibility than the paper records agents previously kept.

The real E&O risk
Agencies that have duplicate (and sometimes conflicting) procedures to handle automated and non-automated items are at risk for E&O claims. For example, some agency employees may use a paper suspense system while others may use the computer’s suspense capability. Still other employees may use their calendar or a combination of all three.

Such an environment makes it more difficult to explain agency procedures, find important data or documents and establish a log of times, dates and subject matter of customer calls and meetings. The more difficult it is to show what happened, the greater the E&O exposure.

Using paper and electronic files to store customer information presents the same E&O dangers. It is not uncommon to find agents storing policies and most claim information in a paper file, and all invoice, suspense and some claim information in the computer. There is little defense for a system that can show no consistency in how policy information, customer calls, meetings, claims information, etc., are handled.

What the courts will accept
In general, the courts will accept electronic records provided there also is evidence that:
the records were created in the ordinary course of business for business purposes.
the agency relies on the accuracy of the records.
data was input by an individual who had personal knowledge of a transaction or reviewed the information from someone with such knowledge.

E&O checklist

Use the following checklist to evaluate your agency’s E&O exposure:

The agency has a written procedures manual covering all functions and all positions.

All transactions are processed by accessing the computer record first.

All renewals are reviewed electronically for minimum agency coverage standards every year.

Electronic files contain the same information as paper files.

Electronic files are used first for handling transactions.

Paper files are used for documentation, not daily use.

Diary/Suspense is maintained on the system.

Everyone in the agency handles each transaction the same way every time.

Employee performance expectations include standards and measurements of quality.

Competence is ensured by a performance review policy.

Accurate input of information is a measurement of job performance.

Written procedures include:

         Procedures for transaction processing

         Insurance transactions

         Accounting transactions

         Adherence to standard procedures as a basis for performance review

Procedures for data verification

         Random spot-checks of data input by supervisor and system
    coordinator

         Regular audit of database for accuracy of insurance information by
    manager

State- and carrier-specific issues

You will need to consider your partner-carriers in the decision to go paperless.
Make sure you deal with carriers, such as Deerbrook Insurance, that support a paper “less” process.
Carriers should provide once-and-done upload and download technology, and should accept electronic copies of documents for audit purposes.
Regulations regarding document retention vary by state and must be verified prior to implementation. State and local agent associations frequently document state variations for their members. Vendor user groups, especially local chapters, are another excellent source for state and local documentation guidelines.

Section 3: Putting It All Together

Getting started
If your agency management system supports t-filing and your agency is committed to maximizing its technology investment, there will come a point when t-filing will be the logical next step in your agency’s automation process. Here are some guidelines for getting started on the paperless road.

Manage traditional files effectively
There is no need to rid yourself of traditional customer files until you are comfortable with the new procedures. You can keep and slowly purge them as customers leave the agency or as time permits.

Many agencies have started building and maintaining a database as they create a t-filing system. Here’s how they manage it:
Before t-filing: Any activity performed on an account is found in the traditional customer file.
After t-filing: Any activity performed on an account is found on the agency management system and documented by referencing the transaction log and the transactional files.
Ensure proper database maintenance
The critical success factor for t-filing is choosing the electronic file first. One way to ensure that this happens—and that your database is valid, complete and properly maintained—is to physically remove paper files and lock them away. This forces staff to become dependent on the data in your agency management system.

Rick Morgan, author and publisher of The Automated Agency Report (TAAR), is often referred to as the “father of transactional filing.” As an agent, Rick developed many of the procedures detailed in this document, and he also supports the idea of removing the paper files. Only then will the electronic file be taken seriously. Rick often uses the example of the Susan B. Anthony silver dollar. The transition from paper to coin never caught on, primarily because the paper dollar was not eliminated. So it is with computer and paper files. Office automation will be taken seriously only when the “crutch” of the traditional paper is eliminated.

Begin eliminating paper
When an agency uses electronic files as its primary source of information, paper files lose their importance. Thus, it is no longer necessary to keep paper copies of electronically processed activity. Because the agency does not maintain the paper file, it also does not generate the paper to file.

“Hit list” paper items generally are those containing data that can be captured on the agency management system, such as records of invoices, statements, ACORD forms, endorsement requests, correspondence, etc.

Remember your internal marketing
Announce the agency’s t-filing initiative and move toward a paperless environment well in advance of implementing any changes. Be sure to give staff the opportunity to ask questions about the change and its implications.

Create workflows and manual procedures
Be sure to put in place all the new workflows and manual procedures that will support t-filing before the actual start date. Experience has shown that manual systems implemented to manage automation strategies are as important as the capability of the computer system itself in determining the success of the effort. All procedures—from how mail is handled to how t-files will be stored and everything in between—need to be structured to support automation and the changes associated with t-filing.

Ease into the change
Many agencies have eased into t-filing. They may start with just one CSR or just one department. There is no harm in this approach and agencies should set up an agency management system that reflects their objectives.

Pick a date and begin
Most agencies accept and implement the required changes more smoothly than expected. Frequently, management is more anxious about beginning t-filing than CSRs are. More often than not, CSRs have become comfortable with the agency’s automation system and are willing to do whatever it takes to eliminate the double work.

System requirements

Besides the ability to automatically log and retrieve money-based transactions, there are several other attributes that systems need to fully support t-filing.

Endorsement processing
Without the paper file, there is no need to generate a paper policy change request form. So the agency needs some way to process endorsement requests electronically. This can present a challenge in personal lines, where many carriers require their own unique endorsement request forms.

If a change request form is required, you may encounter problems because systems vary widely in their ability to efficiently and effectively produce these forms. Some systems provide customized forms that meet unique company requirements. These forms pre-fill with the available database information and are easily produced. Other systems require that endorsement requests be created through a word processing format and are incapable of supporting company-unique forms. Most systems can produce ACORD policy change requests for both personal and commercial lines.

Again, the best and most efficient approach is to process changes electronically to avoid creating unnecessary paper and the work associated with it.

Policy history
Policy and coverage history may not seem like an important system feature if you are still using paper files to support customer inquiries. However, as agency dependence on the electronic customer record increases, so does the value of policy/coverage history.

Being able to look back at previous versions of a policy increases the agency’s ability to efficiently service customer inquiries. It also increases confidence in the system and the reliability of the database.

Creating a log
As mentioned previously, t-filing requires that a system be able to log money transactions by the date that items are processed into the system. Most of today’s systems automatically log money items and all other system activity. Many systems allow the agency to define which items will be logged. Non-system activity can be logged in transaction registers by the use of a hot key, window or menu accessed data entry.

Retrieving a log
Once a log is created, the system must have the ability to retrieve it on screen and/or print the transaction register.

Summary screens
When no paper file exists for an account, having a good customer summary screen comes in very handy, particularly for producers and agency owners who often are not as adept at navigating customer records as other agency personnel. This “snapshot” of all customer activity can also help a CSR respond with authority and confidence to a customer inquiry.

Special considerations

Saving transactional files
How long do you need to keep t-files? One agency keeps them for 25 years. Another tosses out declarations pages as soon as they are processed. No one answer exists. Yours must be based on state laws and regulations, and business or carrier requirements. General guidelines say “paper” or “imaged” documents should be retained for seven to 10 years.

T-filing makes it easy to purge outdated documents because all paper is already sorted by date. Consequently, rummaging through individual customer files becomes unnecessary.

System purge
What happens when you delete a customer from the system or run a system purge? Implications for this process can vary with the age and sophistication of your agency management system.

For example, if your system will not save customer transaction records, you will want to print a list of the transaction history of each eliminated or purged customer, and keep this paper record for future reference. Some systems, however, are capable of writing the purged information to a disk or tape file, eliminating the need for a paper record.

Date stamping
How do you get documents back into a transaction file once they are pulled out? Many agencies date-stamp all items put into a t-file. This helps ensure that items pulled out of a date file will find their way back to the correct folder.

Agency mergers or conversion to different systems
Most system vendors cannot fully convert a t-filing log. The log is usually output into a text file and, for all practical purposes, becomes a word-processing document attached to each customer. While this may not be the very best solution, it will work. After all, only occasionally will you need to revert back to a transaction log to re-compile a customer file. The complexity of this conversion process will vary, based upon the capabilities of the two systems involved in the conversion.

Company audits
It is always possible to retrieve policy information that might be required by a company audit. However, if reconstruction of a complete customer file is necessary, the task may be slower and more arduous than pulling traditional files. If only trailing documents are required, the “click and print” capabilities of imaging systems can speed up this process.

Summary

T-filing is not the final word in agency automation. It is simply a strategy that allows agents to effectively use today’s automation to eliminate a significant amount of redundant work and paper handling. New processes such as electronic image management and XML-enabled data sharing may further reduce data storage requirements and allow even more efficient work processes to evolve.

T-filing will not solve every office problem, nor does it magically transform an office into a perfectly automated operation. Yet, implementing t-filing is a signal to all employees that the agency is committed to automation and is serious about maximizing its investment in this area.

T-filing is a team effort
T-filing must be supported by all levels of the agency. Everyone must embrace the electronic file as the main source of customer information, and accept the many changes t-filing will create.

Redirect time saved
For t-filing and agency automation to really pay off, management must begin to re-direct the time saved through more efficient processing. This additional time affords agents the opportunity to refocus on providing the value-added consultative support that can differentiate them from other distribution channels.

Extra resources
The ABC’s of Transactional Filing, (published by and available from ACORD), provides model procedures for implementing transactional filing and discusses many of the concerns that agencies have with this filing method. While the publication is old by technology standards (1994), the principles and practices described are just as valid today as when they were originally published. It answers many questions in a down-to-earth and practical way. We have also have provided an article in the Appendix.

The ultimate benefit of the paperless office is that it enables agents to deliver the powerful combination of high-value sales support and exceptional customer service.

Section 4: Scanning and Electronic Document Storage

Background
Many agents have implemented scanning and optical technology. Their successes have allowed the virtual elimination of paper—including the t-file. Costs to implement this technology can range from a few hundred dollars to hundreds of thousands of dollars, depending on the level of sophistication desired.

Agents gain productivity improvements and enhancements to the customer service process when they scan documents. Like the agency management system, the key benefit is having all information available at the desktop and thus no need to rummage through paper files. The challenge is linking the scanned images to management systems.

The major management system vendors have all developed scanning and optical storage options. Image technology is still less than mature. Consequently, there is no “standard” upon which to rely. Steve Anderson’s Rough Notes article of June 1999, “Practical Scanning for any Agency,” describes a process that has allowed the agency’s scanning/imaging process to be independent of the management system vendor. (A copy of this article is found in Appendix A.)

In addition, vendors such as IT File provide agency imaging processes. Because many agents are uncomfortable or unfamiliar with scanning/imaging technologies, these resources can remove a major impediment to electronic document storage. (See Appendix B for a list of resources.)

Choosing the right technology

One step at a time
Your best bet is to start simply and inexpensively by scanning and date-filing a paper t-file. Based on your experiences with how often the files need to be retrieved and the reliability of doing so, you can venture into more expensive and complex processes if you feel there will be a cost, productivity or customer service benefit achieved.

Scanning t-files
Most agents find that they seldom need to retrieve t-filed documents; therefore, simply storing paper files works. But there are several good reasons to scan and electronically store t-files. Doing so:
reduces paper storage of paper
makes t-files available at the desktop
creates a permanent (i.e. never out of file) t-file record.
Consider a simple scanning approach using the entire day’s scanned t-file documents grouped by t-file date. To simplify retrieval, you may choose to index documents by client name, CSR or customer ID at the time of scanning. This takes additional effort but provides a method to locate documents other than by t-file date.

Scanning software
Most scanners come with pre-packaged basic document management software included in the price. While this software may meet your short-term needs, consider purchasing software with enhanced indexing capability that could accommodate your long-term needs. Doing so will help avoid the challenges of a later conversion.

OCR software
Some agencies that have scanned all documents use Optical Character Recognition (OCR) software to turn the documents into text so they can be indexed and searched. You will need to purchase additional storage capacity to support this option for full historical retrieval.

OCR technology increases the cost and complexity of electronic storage, but increases the likelihood of retrieving a document quickly on the first try. Like scanning, the key is to start with a basic process and then evaluate whether you need additional capabilities to effectively support your customer service efforts. The chart below shows how different electronic document storage solutions compare on the cost/complexity scale.

Is scanning right for your agency?

While the goal of this document is to help you become paperless, agents need to evaluate the extent to which they will realistically utilize paperless technology such as scanning.

All agencies can benefit from scanning if they:
have limited physical storage space
have high t-file retrieval volume
need to fax or e-mail t-filed documents from the desktop
need to attach scanned documents to carrier submissions.
Larger agencies can benefit if:
multiple CSRs need access to t-file documents
the agency has multiple locations.
In the future it is conceivable, and in fact likely, that carriers will require agents to submit trailing documents such as grade reports or safe driving certificates as scanned images.

Conclusion

It is impossible to cover all aspects of implementing a paperless office in one report. The four elements defining the paperless office help agencies create operations that focus more on customer needs than the effort required to process their transactions. Eliminating paper saves time that can be channeled into growing the business rather than moving the paper.

Becoming paperless is a continuous journey—not an end to be reached. It allows you to put your automation to work and eliminate a significant amount of redundant work. By involving the staff in the development of your paperless procedures, you can ensure they will own the process as much as anyone. And soon you will find them devising new and creative ways to make the paperless process a success.

Appendix A

“Practical Scanning for Any Agency”
By Steve Anderson

The real benefits of imaging—besides providing a better way to handle
customer files—come from “outside the box” thinking about ways to reduce overhead and increase productivity.

As agencies apply technology to more functions within their operations, one would think these organizations would generate less paper—not more. The reality is that agencies have as much, if not more, paper to handle, manage, file, and store than ever. Our industry has been talking about scanning our paper for many years. Unfortunately, despite the persistent predictions of a paperless office, agencies are still deluged with documents. Controlling this torrent of paper is the primary function of an electronic imaging system.

Cadenhead Shreffler Insurance, the agency with which I’m associated, has been scanning and storing most of its paper files for over four years. Of course there have been challenges along the way—more on that later—but the benefits have exceeded the trials and troubles we went through to get our system working well.

To help understand the system we constructed, it is important to understand the different methods available to process paper electronically. These are: image processing, image workflow and image enabling. Let’s take a quick look at each of these.

Image processing
With image processing you take a piece of paper (letter, form, application, etc.) and process it by placing it in a scanner that converts it into an electronic image. This electronic copy must then be processed by a staff person to “attach” the image to your customer or policy database of your agency management system. This image is just like a picture, a piece of clip art, a logo, or other graphic element. All you can do with that image document is look at it—it’s simply a picture. The image is stored in the computer just like any other computer file. To find the image when you need it, the electronic copy must be attached to your electronic customer record, policy record, or transaction entry. To accomplish this task, a staff person opens up the image on his/her computer screen, accesses the agency management system to find the correct customer, and then ”attaches” the image to that customer, policy, or transaction record.

Our concern with this process is that it must involve a CSR-level individual who can recognize what the paper is and then know which customer or policy it needs to be attached to. It also creates the potential for “losing” an image through mislabeling, miskeying, or attaching it to the wrong customer file. If that happens, it would be difficult, if not impossible, to find it again. If an image is attached incorrectly, there simply is no way to find it.

Image workflow
Image workflow is similar to image processing in that you scan the paper into an electronic format. But instead of just filing the image into a database for later retrieval, you electronically move the image through the organization as work is completed on it. For instance, the incoming mail is scanned when it arrives in the office and then is “routed” or electronically delivered to the workstation of the individual who is responsible for the work. When the first person has completed his/her task, the individual forwards it (electronically) to the next person who needs to look at it, and so on until the document is electronically filed.

This workflow processing can work very well in larger organizations, such as insurance companies, that have a number of people handling the same piece of paper. For example, in the underwriting process, when an application comes in from the agent it goes to a processor to review for complete information, then to the underwriter, then it is sent to be rated, and then back to the underwriter to approve the final price. The application then goes back to the processor to issue the policy.

But, this process does not make a lot of sense for most insurance agencies. For most agencies the workflow process doesn’t involve a number of individuals. First the mail is opened, sorted, and delivered to the person responsible for working on it. Whatever needs to happen with the document is completed by that same person, and then the paper is filed. In fact, generally when the mail arrives, the CSR is the only person who handles the paper. Because this entails only three steps, a more sophisticated workflow process does not make any sense. This type of system is also generally quite expensive.

At Cadenhead Shreffler, we considered how scanning all of the incoming mail would delay our procedures and processes. We anticipated it would add about one day to the time it had taken us to respond to incoming mail. We also tracked incoming mail and discovered that 30% to 40% of that incoming mail was thrown out before the remainder was ultimately filed. Thus, while workflow processing has a lot of pizzazz on the surface, it does not have practical application in an agency.

Image enabling
Image enabling takes the image created in the processing steps described above through an additional step that allows the image to be used for more than just a picture. Image enabling is based on and, in fact, requires optical character recognition (OCR) technology.

The use of OCR is one of the main differences in the process we developed. With the system we created at Cadenhead Shreffler, after you scan piece of paper, the process changes. Remember, when you use a scanner to convert a piece of paper into an image or picture, you can only look at that image or picture. OCR software, on the other hand, looks for patterns of letters contained in the “picture” and converts those patterns into actual word processing text. The text now becomes something that enables you to actually use the information contained in the image. Every character (letter or number), every word, sentence, paragraph, etc., can be edited, changed, or modified just as if it were a word processing document. And the text in the word processing document is linked with where it is located in the image document. So if you search for a word or phrase in the text, you can look at the picture of the page where the text is located.

I should clarify at this point that there are actually two different and distinct files created in this process. First is the actual scanned image that cannot ever be changed. The OCRed text is a text file that can be changed. Because you always have the original scanned image, all security and E&O concerns are taken care of. You can always reproduce the paper exactly as it looked when it was scanned.

In effect, when you scan your day’s work, you aren’t only creating a batch of images; you are also creating a batch of usable and editable text documents linked with the image. This is important because we can now use a search program to look for text located in the original document. OCR gives you the ability to create one big “searchable” database from your scanned documents.

The significant difference in image enabling applications, which is made possible by OCR software, is you don’t have to go through the tedious manual process of attaching images to customer files, policies or transaction entries. Instead, the software creates the index as a by-product of the OCR process. Once the software has the OCRed text, it creates an index of the words that show up in the text file. To retrieve a specific document you type an identifying phrase for what you are looking for. This could be a customer name, policy number, or VIN number—anything that appears in the document you want to find can be used. The software then lists the documents that are relevant to your search and you pick the one you want to look at.

How the system works.
Essentially, we scan our t-file. All of our workflow processing steps remained basically unchanged when we started to store documents electronically. The mail arrives at the office and is opened, date stamped, sorted and delivered to the correct CSR just like it always was. The CSR completes whatever activity is necessary and then files the paper in the t-file. That file is picked up the first thing the next morning and is scanned into an electronic t-file folder with the correct date.

Our electronic storage system is not connected to our agency management system in any way. And that's how we intend to keep it. Cadenhead Shreffer switched vendor systems about two and a half years ago. The imaging system was completely unaffected by the change. If all of our documents had been “attached” to the old system it would have been harder to change.

To retrieve a document we go through the same process that you would to retrieve any t-file document. We look up the transaction record in our management system. Using Windows, we flip over to our document management software and look up the folder with the date we need and look down a list of all the documents that were scanned for that day. The documents are listed in alphabetical order by customer name. At that point, we can view, print, fax or e-mail the document. The full text index gives us the additional advantage of being able to find any document based on

the text in the document. So, if we need to recreate a policy (one of the concerns with t-filing) we can search for the customer name and retrieve a list of the documents with that customer name. We then can go down the list and open and print each document that we need.

Perhaps the biggest advantage to this type of system is that our receptionist is the person who manages the process. We can do this because the CSR makes all of the decisions about what happens with the document. The receptionist simply scans the paper. This keeps the internal overhead cost of the system low.

As with everything that is new, we encountered problems when we first started. Although the main bottleneck was the scanner—it was pitifully slow, causing us to be weeks behind in the scanning process—we also realized that the way we had set up the actual image database files was not going to work the way we thought. So we decided to throw out our first six months of scanned images and start over with a faster scanner and different file structure. We now have a scanner that is rated at 26 pages per minute and has been a workhorse for the last four years.

Other big benefits
For many agents making the decision to scan customer files is a big change. We found out, however, that electronic storage of customer files is only one benefit of image technology. We discovered other areas where the benefits of imaging have little to do with customer records. Let me give you an example.

While ACORD forms have dramatically improved the number of applications we need to keep for different companies, we still need to keep a large number of nonstandard applications. Our imaging system has allowed us to create a company forms image database to store all of these forms. Now when we need a form, we don’t have to go looking around the office for one. We can simply print a copy from our forms image database.

Too many people think of imaging as only a way to better handle customer files. The real benefits come from thinking outside the box about other areas where imaging can reduce overhead and increase productivity.

Technology for many agents has a lot of allure. They want to be on the cutting edge. But you need to be careful. Adding technology for technology’s sake can create many problems and increase your overhead, not reduce it. The technology is available today to make imaging a reality in your agency. It will take time and effort to get a system like ours working well, but the benefits in increased productivity and efficiency are well worth the effort.

The author
Steve Anderson is a licensed agent in the Dallas/Fort Worth area. He also heads American Insurance Consultants (AIC), which provides consulting services on how to maximize profits using commonsense technology, is a founding partner of MarTech, Inc., and is a member of the TAAR Network. He can be reached via e-mail at steve@SteveAnderson.com or by phone at (817) 581-6486.

©COPYRIGHT: The Rough Notes Magazine, 1999 (used with permission)

Appendix B

Scanning/imaging and electronic document storage resources

Finch, Steven. “An Introduction to Imaging Workflows.” TAAR Report, Sept. 2000.

Harrell, Ron. “Is Imaging Technology for You?” American Agent and Broker, Automation, March 2000.

IT File, The Simple Scanning Solution. Contact Steve Aronson, 617-965-5556, ext. 135

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