Many insurance firms have a long history of mergers and acquisitions. For these enterprises, integrating myriad entities has posed a longstanding challenge, and today, many continue to struggle to standardize disparate systems, update legacy platforms and leverage technologies to maximize customer communications.
Businesses expect significant scale and efficiency benefits from M&As, and ineffective integration and redundancies significantly diminish those benefits. One area in insurance organizations where the bottom-line impact is clearly evident is that of print operations. Transactional print environments consist of multiple business units and divisions, each running their own systems and mainframes in isolation from central oversight or control. In many instances, programming code is 30 to 40 years old, and no one on staff is capable making changes to it. Most firms elect to “sunset” these platforms rather than convert to new systems, and many fail to realize the downstream impact that old platforms and systems have on customer communications as the sunset runs its course.
The decision to not move away from legacy systems, files and formats is driven by the IT costs associated with converting relatively small numbers of customer records. Failure to convert, however, results in extreme inefficiency, manifested in inordinately high numbers of small print runs that create an exponential amount of stress on production facilities. Specifically, most small production runs require manual intervention such as hand inserting and mailing. Human error enters the picture, as hand insertion of customer bills and letters significantly increases the possibility of Personal Information (PI) violations.
Managing and producing small production runs also requires print production facilities to hire 20 percent to 30 percent more staff. Because the additional staff is typically viewed as a cost of business, the cost gets buried in the production facilities budget and carries over year to year, eventually outweighing the IT cost that would have been needed to convert the systems and files. Moving the files, meanwhile, would enable automated production, leading to lower costs and reduced chances of PI infractions. (The cost of a PI infraction alone should be the driving force for conversion and automation.) Add to that the ability to manifest print runs and reduce postage costs, and the result can easily be six-figure savings.
Today, however, few insurers are taking steps to rationalize their print operations. A primary obstacle is organizational inertia characterized by an attitude of “we’ve always done it like this,” or “it’s too complicated to change.” Piecemeal efforts to improve print operations processes, meanwhile, yield limited gains and don’t address the broader issue of fragmentation. What’s needed is a holistic assessment of current state costs – from order entry through delivery – and creation of a detailed map of the future state customer communication strategy. This assessment must consider the cost of manual labor, higher postage, inefficient operations due to high percentages of short run jobs, increased equipment, restriction of Customer Communications Management (CCM) initiatives and risk of IP infractions.
Over the last 12 months, suppliers have developed methodologies which allow small print jobs to be easily converted and to run with the automated files. This creates an opportunity for many insurance companies to address the small jobs that have been the main resistance point to outsourcing. These providers can deliver additional benefits through their CCM and Enterprise Content Management (ECM) capabilities, resulting in a compelling argument to consider a sourcing scenario.
In addition to driving efficiency improvements and reducing cost per document, a print operations initiative can allow insurers to lay the groundwork for a digital transformation that reduces the volume of printed materials. Such an analysis can complement a data analytics program to identify, target and respond to customer preferences, allowing insurers to transition a high volume of paper-based communications to digital form.
Optimizing internal operations and leveraging efficiencies and economies of scale is a challenge for any large, global enterprise. Insurance firms in particular confront the task of bringing together multiple units into a cohesive and seamless entity. Executives charged with moving enterprise integration forward should consider the low-hanging fruit of consolidating print operations.About the author