The following timely article appeared in Agent & Broker magazine in Dec. 2001.
We thought our clients would be interested in reading it and Ms. Cunningham, its author, agreed to let us include it here.

Terrorist Attacks Highlight the
Advantages of Electronic Files
Reprinted with permission by Sharon Cunningham

THE events of Sept. 11 have made us all aware that it is possible for a business to lose all its resources. Previously, crisis planning assumed that only some data would be lost, that any power shutdown would be temporary, and that building damage would be limited. The thought of losing an entire building, all client files and vital personnel at once was unthinkable.

In an industry that has long relied on and embraced the use of paper, the idea of losing it all is difficult to accept. Such a thought makes you wonder what you would do. How would you provide service? How would you rebuild?

A major insurance carrier with offices in a World Trade Center building that was destroyed in the terrorist attack was thankful all its employees survived but distressed because its office was gone. However, the company's foresight in implementing an electronic filing system over the previous two years allowed it to resume operations within days. Although staff members had to be relocated temporarily in different facilities with new workstations, they had access to all vital information in electronic files, rather than traditional paper files.

There is a lesson here for agencies and brokers throughout the country: automate or risk losing the information vital to your operation and the perpetuation of your business.

Every agency system in use today has the capability to provide complete, functional client files that can be accessed from any location. However, agencies have been reluctant to use them fully. One of the big roadblocks to electronic filing has been discomfort with transactional filing.

The first step in creating a complete electronic filing system is to implement transactional filing ("t-filing") throughout the agency. Most personal-lines departments are using t-filing, as are many small-commercial-lines departments. T-filing generally increases efficiency by 20%. With t-filing, all data is stored in the computer system as it is received. As transactions are processed or information is retrieved, the electronic file is the only source of information for customers. Because you no longer need to retrieve paper on a regular basis, paper is filed by date and not by client or account name. In the rare event that paper is needed-copies of policies, schedules of valuable items, signed applications, client correspondence, etc.-it is accessed by the date of the associated transaction.

Although the concept of t-filing has been around since the 1980s, mid-market commercial-lines agencies have not embraced it. In my experience, the commercial-lines service staff want to use t-filing because they know it will save them time and make it easier to serve customers. However, many producers and owners raise objections to using t-filing because they don't understand that the computer system can be invaluable in handling customers and because they cannot visualize how it can provide the information they need, both to sell and to provide service to customers.

The electronic file contains the same information available in a paper file, just in a different format. Whereas you have to pull out a paper file and dig through its contents to perform various functions, an electronic file allows you to print a summary of insurance, a current proposal or even current applications. A printout of the activity file gives the producer a summary of both the status of the account and changes that have been made. The printout from an account's electronic file is streamlined and orderly and provides an impressive, more professional presentation to the client than the thick and sometimes disorganized paper file.

There are other significant benefits to t-filing. First, relying on a paper file requires a great deal of time and effort to keep the data accurate; once an agency goes to t-filing, the electronic file is kept up-to-date automatically. Management receives the benefit of knowing that production reports, collection reports and activity reports are reliable. Claims handlers can take reports with confidence that the coverages and limits shown on the screens are accurate. CSRs save time because they don't have to search for files, sort through files and rearrange file papers. They can also perform a transaction while the customer is on the phone, rather than having to retrieve the file and call back after reviewing it.

Implementing an electronic filing system may also be necessary to meet our clients' needs. Clients increasingly want to access their account information online, record their own claim information, process change requests or issue their own certificates. They will be able to access information and process their transactions only if the electronic file is accurate and complete.

T-filing can be supplemented by the scanning of documents. Any information that cannot be stored in the agency management system, such as claims documents, fine arts appraisals, copies of contracts, client correspondence and pictures, can be saved as an image, indexed to the file and retrieved as needed. In this case there is no t-file to store; the agency saves storage space and filing time. The data is now in one location and can be accessed from anywhere. With a nightly backup tape of the data kept off-site, any disasters to some extent are de-fanged. If a disaster occurs, the backup data can be loaded onto a new server, and the office can be up and running rapidly. Some agencies run a backup server for just such a situation.

A new trend in agency automation is the application service provider (ASP). With an ASP, data is stored in a remote data center and accessed via the Internet. If an agency's office is physically destroyed, the data can still be accessed through any Internet connection from virtually any location. The staff members in the data centers are on-site 24 hours a day, seven days a week. Data is typically stored on multiple file servers, and the facilities are in secure buildings with fire suppressing equipment, generator backup and emergency remote sites available. Most agencies could not afford by themselves the sophisticated monitoring and security available at an ASP data center.

It may take some work and a change in priorities, but developing, using and relying on electronic data filing can give agents and brokers peace of mind. They know that if physical facilities are lost, the valuable client data and on-going client service will still be intact. The electronic file thus is a vital component of any emergency-preparedness program.

Sharon Cunningham is president of Business Management Group,
a management consulting firm based in Hartford, Conn. BMG provides
a variety of services, including electronic file implementation and
emergency-preparedness planning. Sharon can be reached at
(800) 772-0208 or at scunningham@bmgconsulting.com.

If you have more questions or any comments, feel free to e-mail me at jack@worldpointinc.com.