The old adage, “You can’t teach an old dog new tricks” has often been equated with the insurance industry and its apparent aversion to technology adoption. For individuals as well as industries like insurance, it stands to reason that as we get older, change becomes harder. It gets more difficult to think differently about people, processes or even concepts that are part of an everyday routine.
Whether we are talking about legacy systems hampering the faster pace of modern business or the time-consuming practice of filing paper documents, the tendency is to resist change even if it is warranted. The rationalization goes something like this: Even if it doesn’t work exactly right, it does work. Even if it can’t go at top speed, it does go. Insurers are risk-averse by nature, so why take a chance on something new?
The answer is simple: Because market pressures demand it. The softening market is top of mind this quarter for the majority of insurance executives. In this environment, maintaining existing market share is a priority. What many insurance executives fail to consider is the critical role that documents and communications play in retaining existing customers, and even in winning new business.
Thinking differently about your documents
It’s time to think differently about the documents that drive your business. Static paper documents can’t move your business beyond a snail’s pace, but electronic documents are interactive, and interactive documents can live and breathe and add value to your organization. Thinking differently about your documents enables you to innovate, drive speed-to-market and continue to propel the business forward. It starts with identifying the people, processes and programs that produce your company’s documents today.
Donald Light is a senior analyst in the insurance practice for Celent, LLC, a division of Oliver Wyman Consulting. Light’s recent study, Insurance CIO/CTO Pressures, Priorities, and Plans in 2008, indicates insurance company executives are aware of their companies’ shortcomings and will seek to address them in the coming year. The study found that the top three business drivers for IT projects across life and property/casualty insurance companies are:
- Promoting growth in a soft market
- Expense control
- Ease of doing business/Time to market
Celent also identified the key IT initiatives insurance company executives will turn to in 2008 to satisfy these business cravings:
- Improvement or replacement of policy and/or core administration systems
- Increased focus on new business and distribution
- Data mastery projects, including data warehousing, analytics, business intelligence, document management and document automation
All signs indicate document automation in the insurance industry is an area that will experience significant growth in the near future. A recent report by Jeff Goldberg and Ashley Evans, also of Celent LLC, found the insurance environment ripe for document automation.
Document automation defined
“Document automation is the authoring or automatic generation of a document to communicate with external parties, such as regulators, agents, policyholders, or prospects,” wrote Goldberg and Evans inDocument Automation Solutions Vendors for Insurers 2007. “It is high on CIO priority lists, with more than half of the CIO respondents to Celent’s 2007 CIO survey either implementing or actively considering document management initiatives.”
According to the study by Goldberg and Evans, “Document automation solutions comprise both design-time components and run-time components. The design-time components allow users to set up templates with document metadata, which is information that describes the final document. The run-time components combine the templates with production data to generate final documents for distribution.”
Design-time functionality typically includes a tool for authoring document templates and another for managing printing and document generation. Run-time functionality common in document automation solutions can include options such as a pre-built Web solution, which allows users to choose templates and generate documents, an archiving and content management application, and a Web services layer to access the production engine and archive.
Key issues in document automation
“Key issues in document creation are complexity (the number of different elements that must be assembled into the document) and volume (the number of documents that must be produced and distributed),” continued Goldberg and Evans.
Figure 1: An example of various document types found in insurance production environments, from simple to highly complex.
The lay of the land
Recent years have seen a substantial amount of convergence among document automation solutions, according to Goldberg and Evans. “For example, nearly all of them now offer a WYSIWYG (‘What You See Is What You Get’) interface for template design, as well as both ad-hoc and batch capability. At an even more detailed level, most vendors build templates from document components, allowing a content author to create text blocks, rules, and logic once and then reuse it across multiple templates.”
Currently, insurance companies are on board in terms of document automation in only a few key areas, including policy issuance, customer communications and claims. But seeing competitors successfully automating these functions and the increasing level of sophistication among document automation tools has further increased the interest of insurance companies in these types of solutions.
In an industry where paper proliferates, manual processes are still the rule of thumb for most insurance companies. However, some forward-thinking insurers are leading the charge and using their documents in innovative ways.
Case study: FBL
FBL Financial Group, Inc.(FBL) is just one example. FBL had a myriad of document management, creation and publishing programs in place and was looking to consolidate everything into one system. The goals were to accelerate speed to market, increase accuracy and consistency, and improve customer service. FBL achieved start-to-finish integration with the company’s central document repository vendor and an external print vendor. The result was an 80 percent reduction in time to get a policy out the door.
To date, FBL has also moved to:
- Reuse form language
- Ensure corporate consistency and branding
- Allow incomplete documents to be returned electronically to the business owner for completion
- Submit complete policy packages automatically for printing and imaging
- Position the company to be Web-based and portable for business continuity and disaster recovery
Efforts such as these are just the beginning of a trend in the insurance industry to think differently about the way things are done and how processes and performance can be improved through document automation. Light’s survey notes that “growth in a soft market can mean growing relative to competitors.” What some insurance executives are just beginning to realize is that document automation can facilitate both retention and growth.
Documents as data
The next important step for insurance companies is to start thinking about their documents as data sources. In today’s integrated, service-oriented environments, the data residing in an insurer’s documents is more accessible than ever before. Often this information is in the form of unstructured text – for example, the record of a phone call in which an insured requested a change of beneficiary. There are numerous products on the market which can capture and structure this type of unstructured data. This information can then be fed back to business units or actuarial teams to help make more informed underwriting decisions.
There also is the potential to feed this information into an insurance-specific business intelligence system for analysis, turning unstructured data into actionable information. When document automation is implemented and forms such as policy documents are produced, controlled and distributed electronically, the forms can then be “mined” for information specific to policyholders in a certain geographic area, used to identify trends in a book of business or cross-selling opportunities for new products.
The analytics gleaned from unstructured documents can also give insurers a deeper understanding of who is buying which products, and help provide a 360-degree view of each customer. Customer service representatives, marketers and sales teams have an instant ability to see a customer’s history at a glance, instead of having to page through a three-inch-thick paper file. They cantailor their marketing and sales pitches to that customer’s profile with every contact. This increased transparency gives insurers the potential to increase growth exponentially by identifying new opportunities and working to improve ratios.
Using analytics to increase policy value
Consider, for example, the case of an auto policyholder with two dependents: a 15-year-old daughter and a 13-year-old son. The daughter will be old enough to drive next year. The insurer can utilize a customer communications management (CCM) system to send a postcard to the policy holder, reminding the parent her daughter will soon need to be insured as a driver on the family car. The action can be repeated in two years time when the policyholder’s son turns 15.
Carriers can use similar intelligence to create customized messages in order to cross-sell – for example, an offer of homeowner’s coverage to a current auto insurance policyholder who has just purchased his first home. Or the carrier may have a life and health client who smokes, and who makes regular claims for asthma medication. The carrier can use its CCM system to send that customer information on stop-smoking programs. In this manner, a carrier can potentially increase the value of an existing policy. Response data from such campaigns can be analyzed to gauge the effectiveness of the messaging and gain insight into buying trends.
These types of efforts can improve retention rates and give insurance companies the ability to hang on to valuable customers, but insurance companies need to leverage modern document automation tools to realize the full value of the data residing in their documents.
Case study: CSE Insurance Group
Civil Services Employees (CSE) Insurance Group is one company doing just that. CSE recently replaced a home-grown COBOL-based legacy system with an easy-to-use, modern document automation solution that integrates seamlessly with the company’s existing policy administration system.
The immediate goal for CSE was to improve the quality and presentation of their policy documents, but bar-coding and automated routing and inserting in the mailroom have resulted in cross-selling benefits. The insurer has used this new capability to insert targeted marketing materials into its policy documents, resulting in an increase in new business every year since it implemented the system.
Additionally, CSE has realized:
- Improved compliance
- Lower handling costs
- Reduced paper usage
- Improved customer service
- Complete ROI within a year of implementation
Building a better relationship
Insurers need to put the document lifecycle in the context of their relationship with customers or policyholders. By taking an enterprise-wide view of data and documents, insurers can identify ways to use data to improve relationships with specific prospects, policyholders or groups of policyholders.
Data from automated documents can also be used to provide better customer service. Insurers that automate their documents can increase the use of on-demand generation, even allowing customer service representatives, agents and other employees to create documents as the information is taken down or provided directly from the policyholder or prospect. These kinds of capabilities could have significant potential implications for call centers and agents in particular, allowing for easier servicing of policyholders and prospects over the Web.
A brand experience is defined and reinforced every time a customer interacts with the carrier. This includes calls into customer service, Web self-service and, increasingly, communication via cell phone and hand-held devices. Accurate, up-to-date information and messaging can be incorporated into all of these touch points – from customer service representatives who can see a client’s entire claim history, to Web portals that provide 24/7 access to up-to-date online records, to claims responses received via hand-held devices. The more satisfied an insured is with each of these interactions, the more likely it is that she will become a repeat customer.
The psychology of document design
The purpose of producing documents and correspondence has changed over the years, so it stands to reason how they are used has also changed (or should have changed). For example, the production of an invoice was once seen as a purely utilitarian function. Insurance companies had to produce an invoice in order for policyholders to pay. Cause and effect – you get the idea.
Today, the invoice is just one form that has been identified as a primary customer touch point, a time when an insurance company has the undivided attention of their best customers. This simple realization, that even common communications can be used to deepen the customer relationship, has served as a wake-up call for many insurance companies and spurred the consideration of additional possibilities made feasible through document automation.
Michael Turton of United Kingdom-based Cavendish Consultants has been researching and designing transaction booklets, invoices, statements, letters, customer correspondence and computer-generated forms for more than 15 years. He is still surprised by the lack of sophistication that exists in the business world, including the insurance industry. “There are so many documents that still look as if they are written by a typewriter that it is astonishing.”
Turton’s research and experience indicate that every piece of correspondence, even the most utilitarian of forms, has psychology behind it. Word placement, logos, fonts and even white space can have an impact on the way that documents are perceived and on the action taken upon them.
The difference ownership makes
“Many of today’s forms are owned by IT,” said Turton. “They print them simply because they are told to print them. It’s just one more function. They have no interest in making them attractive. …A bad invoice, for example, won’t even contain any scrap of logo or branding of any sort – just a black piece of paper with lots of numbers on it. That’s technically all that IT has to do with it.”
Document automation can improve all that. When you make documents easier to create and manage, it means that marketing and business users can take over ownership of the forms and correspondence. They can update the look, incorporate color, and make the documents consistent in terms of branding, logo placement, contact information and many more factors that impact how the correspondence will be received by your customers.
“Marketing documents typically look good when you pass them across the table,” explained Turton. “You like it. You feel you need to read it and take action on it really soon.” Recent research in the UK has shown that even the simple act of highlighting the “amount due” box in red can spur a customer to pay their bill faster.[i]
Influencing customer behavior
Positive perception of forms, documents and correspondence can have many benefits. Turton described his experience at a major insurance company where the IT department was in charge of document generation. “They sent out annual reminders for premiums because it was a legal requirement,” Turton explained. “It hadn’t crossed their minds that they could use it for marketing purposes until we recommended they do so.”
With the next annual reminder, the company inserted a marketing mailer showing how much the customer’s policy would be worth at retirement. The mailer included a chart indicating how much the fund’s value would be reduced due to inflation. The insurer also included an application form, giving each customer the option to increase his or her annual premiums. The result was a 14% increase in existing business – all because the insurer began to think differently.
Resistance is futile
The insurance industry is still several years behind other industries in implementing document automation and updating the look, feel and function of forms and correspondence. This is mainly due to the foothold of legacy systems and mainframes. The trend today is toward insurers recognizing that an update is in order, and that realization is driving the replacement of core administration programs, legacy systems, mainframes, and other outdated technologies.
Replacement of older technologies alone is not enough to enable the usage of documents as data; nor is it enough to improve your communication with policyholders, customers and prospects. Insurance companies need modern, flexible document automation systems that enable insurers to alter a document interactively (such as when a rider is added) or on-demand (triggered by an event, such as when a life insurance policyholder reaches his 70th birthday). Many insurers today are taking advantage of such capabilities to reinforce brand recognition and loyalty among their current customers.
Case study: Improving key communications
A South African insurer has begun automating the design, production, management and delivery of all its policy-related correspondence. For this carrier, the goal of document automation is to speed the process of creating or amending policy documents, welcome packs, renewal letters, claims letters and other key communications across all divisions and countries.
The insurer also is utilizing a workflow user interface option within their document automation tool. This allows employees from design, marketing, compliance and other relevant groups to provide feedback on the development and approval of customer-facing documents. In addition to the consistency, branding and communication benefits the company has realized already, the carrier eventually hopes to achieve a response rate to file requests of less than two seconds.
Ultimately, learning how your documents, forms and correspondence are perceived can lead to improved customer loyalty and higher retention rates. Your customers may even pay their bills faster.
Conclusion: Think differently and innovate
With the market softening and competitive pressures increasing, the need to think differently about documents has never been more critical. New ways of thinking about documents can help build an insurer’s business if they are willing to take an enterprise-wide view of documents and the data they contain. Document automation helps insurance companies transform paper-driven processes into electronic workflows, dramatically reducing the time, errors and costs associated with manually creating policy documents and correspondence. This type of innovative thinking will define the leaders of the future, helping them retain market share and win new business from their existing customer base.
Document automation is not longer about generating paper copies. In today’s green-thinking world, paper is costly and unnecessary – and one could even make a case that it’s irresponsible. Today’s document automation projects are about gaining interactive capabilities and producing documents on demand. This enables corporate agility and flexibility, and lets the business respond quickly to a changing marketplace.
Insurance companies using document automation solutions are more able to achieve a competitive edge. Document automation solutions can bring all stakeholders into the process if your company is only willing to think differently about your documents.
[i] YouGov Plc survey, January 2007.
Karin Jessop, CPCU, and Jill Davidson are product managers at Skywire Software, a leading provider of customer communications management (CCM) software to the insurance industry. Both are noted experts on document automation technology and insurance business processes. Jessop and Davidson play pivotal roles inadvancing the use of document automation technology, enabling insurers to solve key business challenges and transform the way they do business with their insureds.