Getting Easier Being Green

If green is the new black, then what colour is the insurance business in Canada?

Even with a society-wide mandate to minimize environmental impact, the industry has hardly set the pace. Of course, many insurance workplaces strive for environmental responsibility, blue boxes abound and every email urges the reader to think twice before printing. New policy forms even enable clients to rebuild damaged properties to new ‘green’ standards. But with its hidebound traditions of inch-thick policy wordings, redundancy as an innate form of risk-management and a deep reluctance for change, the Canadian industry’s shade might be a kind of mottled grey, at best.

No doubt improving the environmental scorecard of the insurance industry will be accomplished through innumerable separate, individual efforts. Such changes are more easily accepted, too, when they save time, expense and natural resources. One example is a recent enhancement to insurer-broker electronic data interchange (EDI). This will save substantial time and money for brokers and companies alike, but ultimately it may help to spare a forest or two.

One time-honoured insurance practice is for vast amounts of paper to travel daily from insurer offices to brokerages all over the country. A large fraction of this cargo is policy documents – including copies destined for clients or other interested parties, and copies for brokers’ own records. Previously, broker copies were physically filed away for later reference. However, nowadays they are very often scanned and filed electronically in the broker’s management system. The originals are shredded and, optimally, recycled.

FROM PAPER TO ELECTRONIC IMAGES

This vast effort to move and handle paper only to scan and shred it wastes resources.

Certainly current economics create incentives to find greater savings in all insurance operations. Consequently, some insurers, especially in the United States, have started to generate electronic images of policy documents to replace previously printed broker copies. The electronic images are then made available on insurer Web sites to be retrieved by the broker.

This approach, however, while ‘green’ and reducing an insurer’s paper, printing and transport expenses, creates some unfortunate, unintended consequences. For example, the perceived benefits evaporate quickly when the changed process impairs brokers’ ability to serve customers or compromises the records brokers maintain on their behalf.

Brokers interact with any number of insurers while working with their customers. As they do so, brokers safeguard clients’ information within a centralized repository of dedicated management systems (BMSes). To provide the best service, either now or at some later point, brokers must maintain their own complete records so they can access relevant data and documents accurately from that single source.

Clients expect one-stop-shopping; they will not accept brokers wasting their time, navigating through multiple insurer portals to find their information. Furthermore, if at some future date the broker no longer has a relationship with an insurer, brokers are still legally responsible for preserving customers’ information, regardless of insurer system changes, mergers and contract terminations.

Until now, when an insurer eliminated printed broker copies, brokers were forced to choose between two unacceptable options. First, brokers could compromise and rely on insurer systems for customer record retention. Second, brokers could institute painfully laborious, inefficient workflows. Brokerage staff would be paid to spend their days retrieving images from insurer Web sites and transferring them manually into the broker’s systems.

The ideal solution would be an efficient, environmentally friendly mechanism that spares insurers printing and transport costs, but that still respects the nature of brokerage operations. Surprisingly, the industry already has an efficient process in place, in the form of the CSIO EDI upload-download. Each day, the complete details for thousands of policies are transferred electronically between insurer systems and the individual client files held in broker management systems. The only thing missing is the image of the policy document itself. In 2010, CSIO started work on adding that missing piece.

The Missing Piece

In Spring 2010, CSIO created new standards for file attachments in EDI. A specially convened working group confirmed the developing capacity of the existing CSIO network for increased volume and discussed how a policy image can be attached to the specific data transaction it represents for the purpose of transmission. This attachment is the most useful means for images to be routed to client files within a brokers system during a download session. Although the standards do allow for a potential variety of file formats, the group also agreed the almost universally accessible Adobe PDF format is probably the most practical.

Subsequently, CSIO circulated an open letter to its brokerage audience. CSIO called on readers to “just imagine” the following scenarios (as quoted verbatim from the letter): • “No longer having to wait for the mail or courier to receive … Dec pages.  • “No longer having to scan Dec pages … and file them in the client file.• “Being able to upload appraisals, certificates or photos to … carriers.• “Savings on mail and courier costs.• “Not having to log on to … carriers websites to download …Dec pages.”

Brokers across the country share CSIO’s enthusiasm. The Insurance Brokers Association of Canada (IBAC) approved a White Paper on the Transmission of Electronic Documents between Insurers and Brokers in June 2011. The paper outlines the following principles to be used when evaluating technology initiatives that eliminate broker copies of paper documents:• In place of paper documents, insurers should produce electronic images of those documents and transmit them to brokers.• The transmission of those documents should be accomplished in as efficient a manner as possible, making use of established standardized industry batch transport methods such as CSIO EDI batches.• BMS systems should be capable of accommodating these transmissions as an automated process.• Insurers should not unilaterally impose discontinuation of paper broker copies until a standard batch process is available in conjunction with CSIO EDI.

Some insurers have already moved to discontinue paper broker documents. IBAC has expressed hope that, under these circumstances, brokers can depend on these insurers for access to their systems indefinitely and to confirm continued access in the event that a broker and insurer cease to do business together.

Brokers are most encouraged by the success some industry stakeholders have already found experimenting with the CSIO attachment standards. CSIO, Power Broker and SGI, working with Mastercom, happily announced on July 22, 2011 their successful test of “a download transaction providing a no-touch inclusion of a Dec page attachment.” In this instance, the image of the policy document “moved to the client’s database automatically with no broker intervention.” Although no other official announcements have yet occurred, other BMS software vendors and insurers have identified EDI document attachments as a key development area; brokers strongly support prioritizing the implementation of a common EDI process to include transfer of documents.

The insurance business has a long way to go before truly qualifying as “green,” but initiatives such as the CSIO process for EDI policy document attachments are encouraging. All participants will benefit and at the same time genuinely reduce their consumption of paper. Given the size of the challenge throughout the industry, there are equally large opportunities to find efficiencies and eliminate wasteful redundancy. With each new idea implemented or old barrier removed, the only question is: ‘What’s next?