Is it Time to Convert Paper to Electronic? published in the Insurance Agents Guide in several US states.

Is this you? Your agency has
multiple offices in different
locations. To locate a specific
customer policy or other business
document, you have to drive offsite and
face rows and rows of filing cabinets
crammed into a small room. Two hours
later, you finally find the file you need,
down the hall where the overflow cabinet
is located, misfiled in the wrong folder.
The file is four inches thick.
Policies, customer records, claims,
invoices, correspondence�it’s all on paper
and your agency needs this information
to operate. You get calls from customers
and you cannot help them until you put
them on hold to retrieve documents. Just
the process of handling claims alone
is one of the most paper-intensive and
interactive activities within an insurance
Is it time to convert?
organization. Your agency
would be lost without
paper … or would it? Did
you know that
90 percent of businesses
that experience a disaster,
such as a fire or flood
and did not implement a
backup plan fail within
six months?
Is it time for the
much-touted paperless
office? What will the
conversion from paper
to electronic cost? How
much will it save? Will
conversion disrupt your
business workflow? Is it
a feasible solution for
you and your agency?
These are typical questions
asked by agencies
considering electric records
management, and this
article will attempt to
address them.
Converting the
mountain of paper
There are many benefits
that result when an
insurance agent or agency
converts their records to
electronic format:
1. cost savings on
storage space;
2. reduction of costper-
document processing
and archiving;
3. capability to share
information across the Internet or a local
area network;
4. elimination of misfiles, lost
documents and costly, time-consuming
errors;
5. improvement of customer
response time;
6. the provision of audit trails;
7. built-in disaster recovery; and
8. competitive advantage.
Even a devoted fan of paper can
appreciate the ease with which electronic
documents can be stored, searched and
accessed. Most people will agree that
technology has a positive impact on
business. The U.S. Department of Labor
says that agents who incorporate new
technology into their existing businesses
will remain competitive. So, once you
decide conversion is right for your
agency, where do you start?
Electronic records in the insurance agency
By Peter F. Ransome
—Reprinted with permission from PIA.—
2 Professional Insurance Agents/April 2006 www.piaonline.org
Selecting a company to
handle your conversion
When selecting a company to
convert your existing paper records and
help you make the change to electronic
format, look for an organization with
experience, innovation and flexibility
that depends on advance partnering as
the solution. The company handling your
conversion may even become a mission
critical component or an extension of
your agency.
Keep in mind that you might need
to purchase hardware, software, servers
and backup components, but beyond
that you also will need training and
support during the conversion and
implementation process. All of this
means up-front costs unless you chose
to use an application service provider
subscription service and pay as you go
only for what you need! Outsourcing of
scanning with an ASP option rapidly is
becoming a preferred option because of
improved return on investment.
To save time and the capital
expense of purchasing and maintaining
infrastructure, you can outsource
conversion or rely on a combination
of both in-house work and outsourcing.
After the investment, you will reap
thousands of dollars a year from time
saved, improved filing, and decreased
staff and storage needs. Most importantly,
with outsourcing you are able to get the
job done fast, less expensively, without
capital expenditures and little distraction
or disruption to your business.
How much will
conversion save?
As a rule of thumb, the savings you
will obtain by reducing paper and going
electronic may include up to a 90 percent
reduction in storage space. Depending
on your cost per square foot, this can add
up to thousands of dollars in reclaimed
office space. In terms of labor and time,
Deloitte & Touche USA LLP report that
companies spend about $20 to create and
file a document. The cost to replace a
missing document is generally assumed
to cost around $120 and to reproduce a
missing document is $220.
It is likely that over the years,
your agency or insurance carrier set
—Reprinted with permission from PIA.—

www.piaonline.org Professional Insurance Agents/April 2006 3
up several sets of incompatible legacy
systems, each of which has a separate
information repository, including
policy administration systems, claims
management systems and customer
relationship management systems.
Once you consolidate the information
contained within these systems, you
will obtain a competitive advantage
in the marketplace and see dramatic
improvements in productivity and
processes. Process automation can
increase productivity by as much as
300 percent in relation to labor cost.
In real terms, this means companies
can grow without increasing head
counts or reducing labor to improve
bottom-line business performance.
Will conversion
disrupt business?
The transition from a paper
environment to an electronic one will
not be a fast and simple process and it
requires commitment. Accomplishing the
transition in a phased approach is often
the best way to avoid disruptions to daily
business. It is critical for most agencies
to have the lowest possible cost with
minimum downtime. Look for a vendor
who can guarantee 100 percent uptime.
There are companies that will
collect, scan and digitally store your
paper, microfiche, microfilm and even
e-mail and fax records without changing
the way you do business. In short order,
you will be able to retrieve information
from the Internet or a proprietary system
while your customer is on the phone.
With modern e-tools, you also will be
able to update newly created electronic
files in real time from your computer or
fax machine.
Security should not be an issue if the
technology is utilized correctly. Sensitive
documents should be stored on secure
servers with Netscapes’s full secure
sockets layer or secure shell, commonly
known as SSL and SSH, encryption,
password protection, firewalls and other
technology that restricts access to your
“online file cabinets.”
In a traditional paper environment,
the ability to track access to a file cabinet
is virtually impossible. You cannot
password protect and encrypt paper
documents. Audit trails—who accessed
Noteworthy statistics
1. 90 percent of corporate information is on paper.
2. An average document gets copied 19 times.
3. 7.5 percent of documents get lost.
4. 10.5 percent of documents get misfiled.
5. Workers spend 50 percent of their time looking for
information and 10 percent of their time reading it.
6. There are more than four trillion paper documents in
the United States and the total grows 22 percent a year.
*Statistics courtesy of Cooper and Lybrand
what and when—are difficult to manage
in a paper environment, but automatic
in an electronic one. In an electronic
records management system you can
systematically delete documents when
they reach the limits of legal retention
periods, or you can archive them for
years. It is much more difficult and time
consuming to destroy paper documents
or archive them.
How do HIPAA and other
regulations affect electronic
records?
Maybe your agency needs
increased security to comply with the
American Health Insurance Portability
and Accountability Act, a set of rules
followed by insurers, health plans,
doctors, hospitals and other health
care providers. Today people often
change jobs, and HIPAA helps them
carry their health insurance throughout
job transitions.
According to HIPAA, people must
be able access their health care
records and correct errors. They must
be informed of how their personal
information will be used. Other
provisions involve confidentiality of
patient information and documentation
of privacy procedures. These provisions
require regulation-specific software
updates when your records are in
electronic format. If your records are
still paper-based, it can mean a complete
overhaul of your records system.
The Department of Health and
Human Services adopted national
standards for electronic health care
transactions to reduce the volume of
paperwork and provide better service
for insurers. These standards establish
formats, codes, standard data content
and procedures for submitting electronic
claims and other healthcare transactions.
The DHHS says that by promoting the
use of electronic transactions and the
elimination of inefficient paper forms,
the standards will provide a net savings to
the health care industry of $29.9 billion
over 10 years.
If you need to learn more about
HIPAA compliance, there are online and
offline HIPAA courses and software that
provide training and materials for HIPAA
security. Some HIPAA software offers a
complete security solution that includes
risk analysis and assessments.
Conclusion
Increasingly and unnecessarily,
agencies, are being overwhelmed by
paper files. Electronic records can help
eliminate the clutter of an inefficient,
costly, error-laden, paper-based system.
The investment in document imaging will
not only save you space and time, but
will help you to improve the financial
outlook of your agency and prepare it
to head into the future.
Peter F. Ransome is executive vice
president and chief marketing officer of
Active Data Services Inc., a business process
outsourcing firm. As a next generation
Integrated Document Facilitysm, the company
captures, manages and distributes
more than 150 million personalized print and
electronic communications a year. Ransome
is a certified document imaging architect.
He can be reached by phone at (866) 237-
2677, by fax (919) 654-2099, or through the
company Web site, www.activedataservices.
com.
—Reprinted with permission from PIA.—