The reasons to go paperless were piling up around ProCentury Corp. quite literally for some time before the executives there saw the light.
Stacks upon stacks of critical documents and carefully labeled file folders covered the desks, stuffed the file cabinets and lined the shelves at this Westerville-based insurance holding company.
Yet the time it took to manually file and retrieve documents daily, not to mention locate the occasional misplaced file, simply became too much. Ditto for the cost of storing all that paperwork and shipping files back and forth among ProCentury’s offices in Columbus, Phoenix, Houston and Boston. It just wasn’t efficient.
“We made the determination to become a paperless environment because we knew we had to achieve significantly greater efficiencies to increase our competitiveness,” says Edward Feighan, ProCentury’s chairman, president and CEO. “That was an enormous task. We literally scanned and archived millions upon millions of documents. But the benefits have been enormous in terms of productivity. It’s saved us millions of dollars in just the past few years.”
It also made the company more than $100 million more.
When Feighan was named to the top spot at ProCentury in late 2003, the company’s gross written premiums the closest equivalent to revenue in the insurance business were $149.7 million. Last year it recorded gross written premiums of $283 million, an 89 percent increase in less than four years.
“There’s no question about it,” Feighan says. “Our investment in technology has been a major centerpiece of the success we’ve had over the past few years.”
Here’s how three high-tech strategies increased efficiency, productivity and financial performance at ProCentury.
No more paper trails
Before taking the paperless plunge, executives at ProCentury did some figuring.
“We analyzed all the work hours involved in the maintenance and retrieval of physical files,” Feighan says. “We took into account the limited access to physical files. For example, if a person in Ohio has a file on his desk, a person in Phoenix has to wait for that file to be shipped to him.”
They also attempted to calculate the time lost and opportunity to be responsive created by the limited access to paper files. And don’t forget the cost of copying and buying the mountains of paper required to support the company’s traditionally document-laden lifestyle.
“It was not a particularly difficult analysis,” Feighan says.
Once the decision to go paperless was made, ProCentury created an in-house scanning department.
“They began the Herculean task of scanning in those millions, those tens of billions of pages, policies, correspondence and claims that were filed into our system,” he says. “Simultaneously, we began training our employees to access a digital file.”
After all, during the multiyear process of converting to a paperless system, some files remained accessible only in a paper format, while others were only available digitally.
“The biggest cost was running the dual system of physical files and digital files because we relied so heavily on personnel,” says Feighan. Training personnel to use the new technology, however, wasn’t an enormous challenge.
“The average age of our employees is about 35, so our employees are typically quite comfortable working in a digital environment,” Feighan says. “By and large, they welcomed the opportunity to have the added flexibility. Today, we can have someone in the Columbus office reviewing some dimension of an insured’s file, and their colleague in Phoenix can be looking at another aspect simultaneously. It’s much easier to work on a collaborative effort online than with a physical file.”
Training agents and client companies on the software presented a bit more of a challenge.
“Some of them had only recently started using e-mail,” Feighan says.
Some hand-holding and additional training were required, but even that hurdle has been largely overcome in the past couple years.
“Now when we get a submission from a client, it typically comes in digitally,” he says. “But if it comes in faxed, we digitize it.
“We are a virtual environment and are virtually paperless,” he says, noting that all paper documents are destroyed after they are scanned into the system.
It’s a notion that may sound frightening to some CEOs. Feighan says it shouldn’t be.
“We back up our system every day,” he says. “It’s all stored off-site. When you’ve seen significant increases in productivity and you know you have multiple backups, it’s not at all unnerving.”
Warehouse your data
While converting to a paperless environment increased efficiency and reduced costs at ProCentury, Feighan says the most essential investment his company has made in technology is creating a data warehouse. “As an insurance company, our analysis of data is the lifeblood of our business,” he says. “It builds the foundation for much more sophisticated business intelligence.”
That’s why it’s a strategy just about any company could benefit from embracing.
“Any industry that has a significant customer base, I believe, needs some sort of data warehouse,” Feighan says. “It can be used to do an ongoing analysis of pricing or to get a detailed understanding of customer needs.”
For ProCentury, data warehousing allows the company to put itself and its agents under a more powerful microscope.
If Feighan wants to know how much business an agent in Atlanta is producing monthly and at what loss ratio, for example, he can access that information. If he wants to measure productivity by looking at the premium volume per employee, that’s in there, too.
The trick, he warns, is not just collecting the data.
“It’s having the data in a form that can be easily accessed,” Feighan says. “It sounds simple, but it’s pretty challenging to achieve.” ProCentury used an outside consultant, Chicago-based WhittmanHart, to build its data warehouse.
“They started with an enormous amount of data,” Feighan says. “We’d been in business almost 30 years. So what they did was build the warehouse so it would segregate the data in ways that we could easily and logically extract it. They said, ‘Tell us what you want and how you want to look at it.’ Now we can get data instantaneously.”
Data such as the time it takes to get back to clients on inquiries and quotes, and the number of potential clients declined or accepted for insurance coverage are captured in real time and can be mined in any number of ways. “It wasn’t that long ago that it was impossible to extract data at that level of complexity within moments of capturing it,” Feighan says. “It remains remarkable to me. Mysterious and remarkable. And as a result of having the data warehouse, we can become far more granular in the analysis of our business.”
Listen to your customers
When assessing new technology, Feighan says he keeps one thing in mind: “We’re not making these investments to make life easier for us. We’re doing it to make life easier for our agents and our clients. We’re doing it to make it easier for them to do business with us.”
That’s what prompted ProCentury in 2005 to develop a Web-based insurance rating and quoting portal called Century Online. It al-lows agents to immediately quote premiums for potential customers and, with a single keystroke, write and send the policy directly to the customer either digitally or via mail.
“Our agents need to be responsive to customers as quickly as possible,” Feighan says. “It’s as or more important to them to beat their competition in responsiveness than price. This is one more tool we’re giving them to do that.”
When Century Online was being developed, it was done with a group of agents.
“We wanted to be sure we were being responsive to their needs,” he says.
“That’s the absolute starting point [with any new technology]: What will enhance your customers’ use of your service or products? What needs can you address? The time that is spent upfront on an assessment of your customers and of your internal needs makes the rest of the process easier and more logical and compelling.”
In the case of Century Online, the technology was fundamentally changing the way ProCentury did business. It redefined how the company differentiated itself in the market. To get everyone on board, it had to be easy to use. “The ultimate test was, when it was completed, I had to sit down and rate, quote and bind a policy on my own,” Feighan says. “And I know if I can do it, anyone can. I was able to do it the first time. It is that intuitive of a system.”
ProCentury’s emphasis on using innovative technology to drive its business earned the company accolades last fall. Century Online was a finalist for A.M. Best Co.’s E-Fusion Award, which recognizes outstanding, resourceful uses of technology.
Feighan seems to enjoy being a bit of a pioneer in his industry when it comes to trying out new technology. In fact, he’s not at all worried about getting arrows in the back. Other businesses financial institutions, medical offices and the like have been using similar technology for years.
“To me, it’s not even on the radar as risk,” Feighan says. “It’s an essential investment. It’s what we must do to remain competitive.”
HOW TO REACH: ProCentury Corp., www.procentury.com or (614) 895-2000