Tall as a mountain glacier (and just as slow moving), sometimes the paperwork in the insurance industry seems that insurmountable.
Every agent has faced the frustration of piles of proposal documents, underwriting requests and reams of bureaucratic requirements that have to be reviewed on a regular basis. By its nature, the bureaucratic process often drags on for days or weeks, foiling sales and destroying competitive advantage.
New collaborative technology and the power of the Internet, however, are beginning to melt the paperwork glacier and speed up the interaction between agents, insurers, regulators and consumers.
"The old paper-based organization of the insurance industry is a process that can be completely automated with the right technology," explains Michelle L. Morgan, insurance industry marketing manager for Lotus Development Corporation, in Cambridge, Massachusetts, a software development company that specializes in financial and collaborative systems. "And the industry is very motivated to make the technological changes.
"Competitive advantage is based on reducing response time from the development of consumer need to the product response and delivery," she says. "And, of course, the cost reduction that comes from streamlining the business process."
By combining a series of computer applications that include Internet access, e-mail and database management, the paper trail that flows from regulator to insurer to agent to customer can be eliminated and replaced with a faster and cheaper electronic record, she says.
One recent example of this new technology and process redesign is the new System for Electronic Rates and Forms Filings (SERFF), launched in June by the National Association of Insurance Commissioners (NAIC) and a consortium of insurance companies.
SERFF allows an insurer to submit all of its filings to state regulators electronically over the Internet or a private data network. Regulatory requirements are completed in no more than a few days. This is a big improvement over the paper filing process and its related bureaucracy that could take as long as 18 months, according to the NAIC.
"SERFF dramatically changes the interface between insurance companies and insurance regulators," notes NAIC President Glenn Pomeroy. "The result will be an enormous productivity enhancement in an industry that touches millions of Americans every day.
"SERFF is a key part of the technology revolution unfolding in the insurance industry which promises to improve both the service and the variety of products customers receive."
Sixteen states already are using SERFF, including California, Florida, Missouri, New Jersey and Washington. About 225 insurers are participating, including Fireman's Fund, Fortis, Guardian, Humana, J.C. Penney Insurance, Metropolitan Life, Nationwide, New York Life, Sun Life Assurance Company of Canada, Hartford and Transamerica Life. NAIC expects about 20 states to be signed up by the end of this year and 45 states by the end of 1999.
More than 200 state insurance regulators and insurance industry representatives attended a SERFF users' conference in July to learn about the system and how to train state insurance department operators and users.
"Negotiating the different approval processes of 51 individual jurisdictions is extremely laborious and expensive," says Robin Clover, Fireman's Fund associate director and a member of the group of insurers that helped develop the system. "SERFF will help minimize the cost of filings by eliminating paper from the process, cutting out mailing costs, time in transit, and making the final submission process as easy as touching a button."
NAIC began exploring the idea of multiple-state online filing in 1992 and funded a pilot project in 1996. "We started with the understanding that we wanted a system built around distributive processing. There should be no central depository," explains Jim Latteman, SERFF marketing manager at the NAIC. "While we wanted to centralize access for insurers and give them a single online way to make their filings, we wanted each state regulatory body to maintain its own database of filing and requirements.
"We also wanted a system that would allow insurers to make multiple filings with a single connection to the system, eliminating faxes or packages to dozens of states for a new national product."
"The elimination of paper mail alone saves as much as three days in the process. The improvement of the workflow can also take days off the process."
--Jim Latteman, SERFF marketing manager/NAIC
The pilot system was designed by IES Midwest, Inc., a computer system integrator and Lotus Business Partner in Overland Park, Kansas. Cost of the system was about $345,000.
How does it work?
The architecture for SERFF is built around two types of communications software from Lotus: Lotus Notes 4.6 and Lotus Domino 4.6.
Lotus Notes is one of the oldest workflow management or collaboration software products. Designed originally to automate workflow in corporate offices through intraoffice electronic mail over simple microcomputer networks, the newest versions use the hypertext style of the Internet and allow users to create and share documents, graphics and software anywhere the Internet can reach.
The new version of the software incorporates a portfolio of functions that include: e-mail, a calendar, to-do lists, name and address book, a personal journal and Internet access. These applications allow a user to share and manage information and separate documents and other information according to topic and collaborative partner.
An insurer or agent, for example, could use the software to establish a separate portfolio of information for each collaborative partner--providing open access to shared information and limiting access to competitive or confidential information.
The Lotus Domino Mail server supports the latest version of hypertext transfer protocol, the multimedia format of the World Wide Web, and secure sockets layer, the Internet security protocol used in electronic commerce applications. Domino hosts Web pages and manages the flow of information to and from users through the Web pages. In SERFF, the server routes mail from insurers, filing for rates and policy forms, to appropriate states.
In the SERFF application, the collaborative system allows an insurer to access the network through the Internet (http://www.serff.org) and upload rate or policy filing information, choosing which states should receive the information. The Domino server software routes the information to the appropriate state regulator office intranet.
The electronic documents are stored in Adobe Acrobat format and need never touch paper. The documents can be routed internally using the Lotus Notes capability so that the appropriate regulatory staff can see the filing simultaneously, eliminating the old single-file workflow.
"The elimination of paper mail alone saves as much as three days in the process," says Latteman. "The improvement of the workflow can also take days off the process."
How fast can it work?
Many standard filings can be approved in a few hours and, in one case, Great American Insurance Co. received approval from the Washington State Department of Insurance in just 25 minutes.
"This kind of technology is going to change the insurance marketplace," Latteman says. "Insurers will be able to create new products in a matter of hours to meet rapidly changing consumer needs and get those products to their agents more quickly than ever."
Effectively deployed, an interactive network that would eventually link agents, insurers and regulators could allow consumers to describe their specific insurance needs to their agent in the morning and receive a new insurance policy for a product that is designed around their needs by evening.
The same Lotus technology is also the cornerstone of the new ACORDstore which allows agents and insurers to purchase ACORD forms and other service materials, including the 800-page Forms Instruction Guide, the Benchmark Calculator and a range of instructional products, directly over the Internet.
ACORD provides services to more than 29,000 insurance agency offices and 50,000 individual agents. About 1,000 insurers are also affiliated with the organization. ACORD members can access the ACORDstore by signing onto the ACORD Web site (http://www.ACORD.org) and choosing "ACORDstore" from the home page index.
Purchasers must have an ACORD membership identification number and use a credit card to make purchases.
"ACORD's mission is to increase the efficiency of the distribution system and the insurance industry as a whole by promoting technology and standards," explains Jo Roberts, who until recently served as ACORD vice president. "ACORD advocates people working together with a high degree of coordination."
E-commerce applications fit that mission, Roberts says, and agents are increasingly turning to e-commerce and the Internet as business resources.
"E-business is all about improving service and efficiency and reducing costs. That's as important to ACORD in conducting its business as it is to the agencies ACORD serves in conducting theirs," Roberts notes.
About 50% of agents surveyed by ACORD earlier this year reported that they have Internet access, up from 13% just two years ago. About 40% of agents say they now have a Web site or other presence on the Internet, compared to only 4% two years ago. Among agents who are not yet online, 40% said they plan to establish an Internet presence before the end of this year.
The survey also indicated that more than 90% of agencies would be exchanging data electronically with insurers by next year. Already, 83% of survey respondents have an agent/company interface, up from about 12% two years ago. More than 60% of agents with an interface receive downloads and send uploads daily.
Agencies with an interface communicate with an average of 3.1 companies, up from 2.4 two years ago.
Lotus' Morgan says that collaborative technology such as Lotus Notes and Lotus Domino can give agents and insurers broader abilities to communicate, permitting not only simple uploads and downloads of form information, but also sharing of documents for works in progress and special attention. *
©COPYRIGHT: The Rough Notes Magazine, 1998