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Going Paperless in Life Insurance

The life insurance industry is very much stuck in the 1950’s when it comes to going paperless. It seems everyone keeps hardcopies laying around – brokers, wholesalers, and insurance companies. Why is that? Can it be fixed? Should it be fixed?

5000 sheets of recycled paper can be had for $50 at any office supply store. That would lead me to wonder if in fact ‘going green’ is a compelling reason to go paperless. It’s not a significant cost, and at first glance it appears to have minimal environmental impact (especially if we hope that any non-recycled paper comes from tree farms instead of old growth forests).

A few years of shuffling papers back and forth between clients and insurance companies tells a different story though. The use of paper can have an expensive impact on a business as well as a significant environmental impact. But it’s not necessarily the paper, it’s the use of paper causing the problems and the costs. We’ll see this as I document our shift towards paperless below.

How do we go paperless?

The first question is how we to go paperless from a mechanical perspective. Currently we have to print out an application which the broker completes with the client. We scan the application and email to our clients where they print it out. The application is returned to our office, we process and forward it on to an aggregator who then forwards it on to an insurance company. In addition to the application we have our own internal tracking mechanism inside every file, plus other assorted documents common and required in the insurance industry.

Our first step is setting up a database to manage and track our processes. Something that’s not immediately intuitive is that it’s not just the paper that has to be changed, its the flow of work that the paper is used in. We’ve managed this by switching from our custom database over to a database called ‘vtiger’. Starting with the off the shelf package we’ve had it customized so that it suits our life insurance brokerage operation.

Our current processes now are moving towards our brokers creating a database record. Any papers are printed to PDF instead of paper, and attached to the client’s record. And any workflow such as client or insurance company follow up are now maintained and tracked through the database. This is a significant shift from having a bunch of open files that are being worked on, to simply having a ‘list’ in the database of open files.

Unfortunately we still have to have some paperwork. Insurance companies and regulations require that some papers still be tracked. However we are moving towards not storing papers. Instead, once the applications are returned to us from clients we’ll keep a scanned copy, the original is forwarded on to the insurance company and we simply maintain an electronic version.

Drawbacks:
There’s some drawbacks, both more and less significant than you might expect.

The first is the cost. Setting up a custom database and transferring thousands of existing records over takes a lot of time and money. Security has to be tightened and our database servers need to be upgraded to be more robust.

The second drawback is the training. Internally we’re fairly technically literate but we work with a some external brokers with varying degrees of tech-savviness. Getting these folks up to speed may take some time as they have to shift their focus from processing files to maintaining lists on the database.

Benefits:
Once fully implemented, we expect our customer service (which is already high) to become even better. About once a year we seem to have that one client who falls through the cracks and experiences poor customer service from us as the result of someone not following up. Tracking through a database means all customer service and insurance company follow ups are 100% maintained and available in a list that is checked every day.

Once we’ve transferred all our clients to the database we can also get rid of the huge wall of filing cabinets we currently maintain. So we’ll save some space.

We should also save on shipping/postage costs as our transfer of files between various locations should be diminished. If there’s a significant environmental and costs savings, it’s in the trucking of papers back and forth across the country and burning gas.

Going forward:
The benefits going forward continue. We should be more streamlined and better able to handle an increased flow of business at current staffing levels. Between our database and our Voip/internet phone system we can coordinate and expand with external brokers who work from home rather than maintaining an office with the associated expense and driving. Adding staff becomes as simple as giving them a computer and a phone extension in their home office. And we lose the printing costs and maintenance requirements of having thousands of client files stored onsite.

And from the client’s perspective, maintaining records electronically means we can automatically notify them at important points in their life insurance policy such as renewal, policy anniversary and conversion dates.

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