Dispelling the myths of electronic filing By TED
BAKER Advanced Automation / Dallas, Texas
(The following article was adapted from Mr. Baker's presentation at the
AMS User's Group convention, which was held in April in Nashville, Tenn.)
IN MY 25 years in the insurance industry (in addition to being a consultant,
I confess I'm also a recovering producer), I've worked with many agents
and brokers seeking to improve their workflow. New technology is often
an important part of the effort. To improve workflow, however, agencies
must analyze their workflow before making technology decisions. They must
also realize what technology can and cannot do.
Some of the most frequent questions I get from agents and brokers these
days are about electronic filing. Agencies want to know if they should
adopt it, how to start, what technology they need, what the benefits will
be and if they're doing it right. I've found that a big part of helping
agencies set up a proper electronic filing system is to clear up their
misconceptions about what they will achieve and how to achieve it. In
this article, I'll discuss some of the most prevalent myths of electronic
Myth No. 1: The goal of electronic filing is to create a paperless
Insurance agencies will always have to deal with paper. Live with it.
If your electronic-filing goal is to become completely paperless, you
will fail to reach it—and no one should set goals that guarantee failure.
Even if you could eliminate 100% of the paper, what would you have accomplished?
Would you be making more money, reducing your employees' stress or improving
customer service? Maybe, but not necessarily. The only thing you would
guarantee by going paperless is that you wouldn't have any paper.
An electronic filing system can help you reduce the amount of paper in
your office, which is good. But your real goal should be simply to find
the system that helps your agency improve its workflow the most. No new
system will work 100% of the time. I find that the "80/20 rule" often
applies to electronic filing—80% of your documents can be filed electronically,
but you need to keep handling paper for the remaining 20%. Trying to file
that 20% electronically can be like trying to fit a square peg in a round
For example, I talked to an agency a few years ago that had started transactional
filing. The agency was having a lot of trouble with their personal auto
policies, which were constantly being cancelled and reinstated—not because
policyholders were missing payments, but because the carrier's accounting
system was flawed. The CSRs complained that they were going crazy, searching
the t-files nearly every day to reconstruct account information. I suggested
they use a "traditional" filing system for personal auto, and keep the
t-filing for everything else. They said, "We can't do that, because our
boss says it's all or nothing." Their failure to be flexible with a new
way of doing things hurt their efficiency.
Another agency I worked with was making the move to electronic filing,
and a CSR spoke to me about a particular commercial account. She had the
file on her desk, and it was quite thick. When she asked if she should
"go paperless" with the file, I asked her how often it was on her desk.
Her answer was, "It never leaves." Since she was touching that file every
day, the smart choice—at least at first—was to make that file part of
the 20% that didn't go to e-filing. After the agency had been e-filing
for a while, I suggested, they could revisit the "20% files" and determine
if and how they should start filing them electronically.
Live in the real world when you start e-filing. There may be some files
that never go "paperless." Revisit your decision frequently, and evaluate
it based on what works best for your workflow, not the mistaken notion
that you can—or should—be completely paperless. –
Myth No. 2: Agencies have a choice about whether to use e-filing.
When transactional filing started to replace the conventional filing system,
some agencies decided to stick with what they had. That was a valid choice.
Electronic filing is different. Agencies have no choice. They must adopt
an e-filing system, for several reasons:
• Privacy laws: Rising awareness of identify theft and privacy laws dictate
that all businesses must "lock down" any confidential information they
have about their clients. We live in an increasingly litigious society,
and the smallest leak of information could lead to big trouble.
A traditional filing system is no longer sufficient to protect information.
I knew some agents in Fort Worth, Texas, who were hit by a tornado. They
received phone calls from people 20 miles away, saying, "We found some
paper in our yard with your agency's name on it." A few years ago, that
would be embarrassing; today it's illegal. And protecting files from natural
disaster or theft may not be enough. E-filing systems can be arranged
to protect information within the agency as well. For instance, if your
agency provides group health benefits to clients, the system can be arranged
so that another producer looking for cross-selling opportunities has no
access to any of a client's confidential medical information that may
be stored in your system.
• Storing information: When agencies are discussing a move to e-filing,
I often hear CSRs say, "I'm concerned that we might not have enough storage
space on our server" and, "I'm afraid that if we lose an electronic file,
the information is gone for good." These are valid concerns--just as they
are with paper files. It's funny that I rarely hear people say, "I'm worried
that we might run out of space in our filing cabinets." E-filing stores
documents more efficiently than paper files do, and hard disk space today
costs a lot less than a fireproof filing cabinet.
Computers can lose information, just as paper files can be lost. The advantage
of losing an electronic file lies in the backup choices available. Agencies
can back files up on tape and keep tapes at a separate location. A number
of backup services—some through agency management system vendors—offer
online data backup, storing the information at their secure servers and
offering assistance with recovery.
Ultimately, many CSR concerns about e-filing are not based on worries
about the agency, but about themselves. If an electronic file is lost,
it somehow will come back on them. Management should acknowledge the validity
of this concern and not treat it lightly—it is good for agencies that
CSRs are so concerned about process and security. But ultimately, this
is a top-down decision, and CSRs must accept it.
• Efficiency: With a paper filing system, let's assume it takes a CSR
five minutes to get up, retrieve a file and return to the desk, including
the time the CSR spends chatting at another desk along the way. Let's
also assume the CSR has to retrieve a file 10 times in a day. That's nearly
an hour that the CSR is effectively out of the insurance business. If
you have a staff of four CSRs, that's like paying a half-time employee;
with eight CSRs, it's the equivalent of an additional full-time employee
who does no work. Agencies cannot remain competitive with such an expense.
You only gain efficiency, of course, if e-filing comes from the top and
is implemented correctly. If producers refuse to learn the system or managers
demand to see paper files on a client, you're increasing, not decreasing
the CSR workload by going to e-filing. –
Myth No. 3: E-filing is simply the latest filing system, like
the move to t-filing.
E-filing is far more than just the next type of filing system to come
along. A successful shift to e-filing involves a cultural shift for an
agency. Part of the move, for instance, involves examining all documentation
within the agency and re-evaluating what to keep and what to throw out--in
For example, E&O classes have for years been stressing, "document, document,
document." Well, I know of an agency that used a popular agency management
system, and had a policy of attaching every possible document to client
files in that system. The agency went to court for an E&O case, and their
electronic files were subpoenaed. Those files included a note saying,
"The husband on this account bought a house for his girlfriend. Do not
tell the wife." This type of potential problem has led some agencies to
consider the thought, "What we don't keep, the courts can't subpoena."
Some agencies are also tempted to keep certain paper documents as backups,
in effect creating a dual filing system. This is even more fraught with
potential danger. Whenever you have a dual filing system—say, when a producer
gives some handwritten notes to a CSR, who enters the notes in the system
and keeps the handwritten copy as a backup-there could be discrepancies
between the two versions. Keeping such notes could help you later in court,
or it could nail you to the wall.
Before implementing a new system, an agency should go through every document
that comes into the agency—in either paper or electronic form—and decide
what you do with it, and why.
Start by grabbing someone's stack of mail and looking at what's on top.
Say it's a direct-bill premium notice. The first question to ask is, "What
are we currently doing with this?" Are you throwing it away or keeping
it? If you keep it, are you scanning it or creating an electronic activity
in your management system? Doing this at an agency-wide level should help
you identify any inconsistencies in your procedures.
The next question you should ask is, "Is the world going to come to an
end if I don't keep this?" (And by "keep," I mean electronically.) You
could develop a chart-say, divided up between commercial and personal
lines-and include every piece of paper you receive. Use the chart to indicate
what you'll do with each piece of paper. When you finish this chart, you
can distribute it to everyone in the agency to say, "This is how we do
The next piece of paper in the mail stack might be a direct-bill intent
to cancel. This is a copy of a notice that the carrier sends to the policyholder.
Some agencies file these. You shouldn't. The idea of direct-bill is that
the carrier handles the billing, for which the agency gets a reduced premium.
So every time you touch such a notice, the agency is losing money.
The next item might be a final cancellation notice. You already enter
this electronically, through scanning or manually entering an activity
in your management system. Should you keep the paper? No—again, this would
be creating a dual filing system.
Look through everything else in the mail and decide what to do with it.
One agency we worked with established a rule that they would not keep
paper or electronic files for any information they could get within one
business day from any other source. –
Myth No. 4: Imaging and scanning are the same thing.
Most people use the terms "imaging," "scanning" and "electronic filing"
synonymously, but they are not the same things. Scanning is just one type
of imaging, one way to get things into an electronic file—and it is the
most costly, least effective way, at that. Scanning is a step up from
a completely paper-based filing system, but it still takes time and introduces
the possibility of inconsistencies and mistakes. Electronic filing that
uses imaging methods other than scanning—i.e., by using original electronic
documents—is more efficient and consistent. Agencies still using scanners
should choose the most efficient scanning method.
• Some agencies use front-end scanning, in which all incoming mail is
scanned at a central source before being routed electronically to the
appropriate people. In most cases, nothing is screened before scanning;
CSRs later make the decision about what to keep and what to discard. This
means that as much as half the time spent scanning could be wasted time.
• With back-end scanning, incoming documents are immediately routed to
individual CSRs. The CSRs process the documents and decide what to keep.
For each item they keep, they print a barcode label and attach it to the
document. All such documents are routed to a high-speed scanner in a central
location, and the barcode "tells" the system where to electronically store
the document. This cuts down on front-end waste, but it has its own drawbacks.
For instance, I spoke with a 100-member agency that said its IT person
had to fix about 20 to 30 documents a day that had been stored in the
wrong electronic file, either because of a system "glitch" or an error
by a clerical employee doing the scanning.
• The third method is to use desktop scanning. Every CSR has a scanner
on his or her desk and decides which items to scan and which to discard.
A number of reliable, relatively low-priced scanners are available. Many
of these scanners provide the additional advantage of effectively serving
as a desktop fax machine as well. One drawback of this method is the use
of the CSRs' time to scan documents, instead of having the task performed
by a clerical employee.
A 20-CSR agency we worked with implemented a procedure to reduce their
paper without using scanners. Whenever anybody called them and said, "I
need something mailed to me," the CSR's first response was always, "If
you give me your e-mail address, I can send it to you." If the requesting
person didn't have or want to use an e-mail address, the next response
was, "OK, if you give me your fax number, I can fax it." The CSR could
then fax the item directly from the desktop. Only if the person declined
that option would the CSR ask for a physical mailing address. In a nine-day
period, this agency reduced their postage bill by $1,500. –
Myth No. 5: Electronic filing is all there is.
Electronic filing is a great start, but it should be just that—the start
of a cultural change at the agency. We believe that all agency employees
should sit down to a perfectly clean desk every morning and leave a clean
desk every evening. That may not be completely possible, but the closer
you get to it, the more of a psychological boost agency employees would
More and more agencies are fortifying their shift to e-filing by putting
dual monitors on CSRs' desks. Agencies that have not tried this worry
about the cost and wonder about the benefits. Agencies that have purchased
dual monitors have learned that new flat-screen monitors can cost less
than $250 and that their CSRs would shoot them if they ever tried taking
the monitors away.
Agencies are finding that whatever the cost, dual monitors pay for themselves
quickly through increased productivity. Many CSRs find the arrangement
easier to use than to tab back and forth between software applications,
and it's certainly preferable to the other two options—either comparing
a paper file with what's on your screen or simply remembering everything
in a file when you open another program.
Many agencies afraid of e-filing say, "But we're insurance people, not
computer people." Well, I'm not a computer person either. I don't care
all that much about computers-but I do care about the benefits they can
bring to an agency when they are used correctly. With all of the software
and hardware available today, what agencies need most is to change their
mindware. They must analyze their workflow, chart a more efficient path,
and give their employees the culture and tools they need to follow it.
E-filing isn't rocket science—it's just a way to give insurance agencies
greater control of their time and launch them toward higher profits.
Ted Baker founded Advanced Automation, a consulting
group providing assistance to independent agencies, in 1990. Mr. Baker
has worked in the insurance industry for 25 years. He has presented seminars
to such groups as the AMS Users Group, the Applied Systems users groups,
the IIABA, the PIA and ARM Partners. Readers can contact Advanced Automation
by calling (877) 704-1480. Pfingsten Publishing, LLC. 6000 Lombardo Center
Dr., Suite 420 â€¢ Seven Hills, OH 44131 Copyright 2005
Pfingsten Publishing, LLC.
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