Case Study

Imaging Shared Services for a Major Insurer

The recession has forced organizations to look for new ways to reduce expenses and
drive efficiency. And, the fact is, most organizations could be making better use of their
operations infrastructure.

Recognizing this, more companies are considering shared services centers. By
centralizing tasks, such as document imaging, companies can eliminate redundant
systems and processes, optimize their workforce, improve control and visibility over
corporate information and reduce costly overhead.

Centralized Document Scanning
One major insurer has achieved significant business benefits by implementing a shared
services center for its document imaging and data extraction. Long before centralizing
its document imaging operations, the insurer had a history of supporting shared
services throughout the corporation for things like training fulfillment, accounting,
general labor, accounts payable and accounts receivable. But not for imaging.
Interestingly, the insurer had experience with image capture in pockets of the company
for applications such as lockbox processing and back-file conversions. But, the insurer
had multiple scanning platforms deployed across its field offices—each with its own
support contract—and there was varying subject matter expertise and little industry
knowledge among the users.

One challenge with the insurer’s decentralized scanning environment was the multifunction
devices that most of the field offices relied on. These devices were extremely
slow and labor intensive compared to scanners. Additionally, there was no standard
for the types of devices used by the field offices for scanning. And, the devices did not
have a direct interface or other integration with the company’s file servers or exchange
server, making it difficult to share images with other staff.

Additionally, when the insurer looked at the number of its field offices across the
United States that were either handling or facilitating claims or doing customer-facing
document processing, it was shocked by what it saw. In many cases, the insurer was
paying office staff a high salary to perform entry-level functions, such as mail receipt,
mail opening and paper shuffling between departments. In many cases, those functions,
such as data entry, could be fulfilled by off-shore providers.

Against this backdrop, the insurer saw an opportunity to centralize document scanning
for its claims and new business areas to reduce costs and accelerate turnaround of
customer-related transactions.

The Solution
In 1997, the insurer launched an imaging shared services operation. At first, the process
was very manual, since there weren’t a lot of technology options. The process largely
was to scan documents, improve the resolution and manually key some information.
Ten months later, the insurer deployed mid-range production scanners with a rate of
120 pages-per-minute using 200 dpi. The insurer still required operators to manually
key all necessary information from document images. As the insurer’s volumes grew, it
looked for ways to better automate these processes. For instance, it wasn’t long before
the operation started using barcode interpretation on scanned items to reduce keying.

The biggest roadblock to rolling out the shared services center was garnering support
from business owners and convincing them of the cost savings as well as the potential
process improvements. To this end, the shared services center offers service-level
agreements for each of its internal clients; while these agreements vary by client, they
typically cover turnaround time and quality.

In 2002, the insurer replaced its mid-range scanners with advanced high-speed
production scanners from Birmingham, AL-based ibml. The insurer uses three ibml
ImageTrac scanners running at 230 pages-per-minute. In addition to accelerating
turnaround, the scanners enable the insurer to capture barcode information and color,
bi-tonal and grayscale images as well as handle co-mingled documents of different
sizes, greatly reducing document preparation and the associated costs.
At the same time, the insurer upgraded its data capture platform to allow for structured
and semi-structured document recognition and advanced optical character recognition
(OCR) interpretation.

The insurer uses document classification and data extraction technology from Kofax.
In 2009, the insurer further enhanced its data capture platform to automate
unstructured document classification, which further improved its OCR performance.
Combined with its intelligent scanning capabilities, this advanced data capture enabled
the insurer’s shared services center to significantly reduce its overall operating costs,
while improving the service levels delivered to internal clients.

The insurer also uses a central repository from Oracle.

Through its shared services center, the insurer image-enabled business processes
for its auto and property claims organization as well as its financial area, centralizing
work from field locations. Today, the insurer’s shared services center processes
approximately 60 million pages a year, or a daily scanning volume of about 80,000
pages (for most of its documents, the insurer does duplex scanning to capture data on
both document sides). To handle this work, the shared services center operates two
shifts, which run from 5 a.m. to 8 p.m. The imaging operation receives documents via
U.S. mail, interoffice mail and incoming fax (via fax server). For the shared services
center’s largest clients—such as the insurer’s claims, agency and financial groups—it
established a centralized facility to receive mail directly; additionally, about 40 percent
of its documents arrive via fax server.

The Benefits
As a result of creating its imaging shared services center and redesigning certain
document processes, the insurer initially saved $4.1 million a year. And bigger savings
may be on tap. As the center continues to mechanize and innovate back-office related
functions, its needs for specialized support staff continue to decrease every year. For
instance, digitally sorting documents in a single electronic depository has improved
operator productivity, while allowing specialized transactions to be placed in a priority
queue for clients to review—in most cases, within four hours of document receipt.

Additionally, the pricing model for the shared services center is all-inclusive with a fixed
cost that includes employee-related and overhead costs. Also built into this price are
the costs for facilities and corporate functions, such as human resources. In spite of
all these costs, in order to take on work, the shared services center must be more costeffective
than the internal client’s own operations, not to mention against the fees from
third-party services providers. As such, the first step in determining whether imaging
work should be centralized is to review the operating costs currently associated with it.

What’s more, the shared services center is proving itself as a key business partner
and strategist for its clients. On one hand, this is demonstrated by the center’s
cost effectiveness against third-parties; on the other hand, the center has shown a
commitment to long-term innovations to support its clients’ business objectives. The
center also adheres to strict service-level agreements with all of its clients.

The move to a shared services center also provides the insurer’s departments with a
flexible workforce. For instance, the combination of front-end scanning and tools for
distributing images is well-suited for offshore processing, expanding departmental
access to affordable workers. In addition to off-shore staff, the shared services center
also uses temporary services and part-time staff. About 40 percent of its staff is
contingency labor that is utilized based on workload. For instance, more contingency
staff are used on Mondays and Fridays, which are the heaviest mail days. On slower
mail days, the insurer’s shared services center is able to leverage mostly part-time
staff.

The Bottom Line
Despite its success with imaging shared services, the insurer calls its efforts a “workin-
progress,” noting that it still has some satellite scanning locations that may have
been acquired or left alone.

But at a time when organizations are looking for ways to improve efficiency and
effectiveness, this insurer has shown the way with its shared services center for
document imaging and data capture.