The Digital Mailroom: Why Insurers Should Modernize Now
Artificial intelligence (AI), machine learning (ML) and robotics are pushing the venerable mailroom into the 21st century — and forward-looking insurance firms stand to realize significant benefits as a result.
While other industries have made dramatic reductions in hardcopy documents, most of the insurance firms we work with continue to rely on traditional mailrooms to process inbound and outbound customer transactions. From application submissions and policy changes to claim forms and notifications, communications enter the mailroom in paper form. Only after manual scanning and digital conversion does the value-adding work begin.
Traditional mailrooms are inherently resource intensive, with workers managing intake or outbound activities such as sorting, scanning, indexing, routing, printing and mailing. The mailroom function is typically a shared service across departments or business units, but forms and formats are often unique to those groups. Having multiple formats increases the demand on employees’ time and the likelihood of errors and can result in redundant processes. Creating a useable, digitized document often requires labor-intensive manual scanning to create digital documents, and one-off printed mailings such as marketing campaigns or notifications increase print and mail costs. These factors all contribute to such back-office inefficiencies as missed documents, incorrect routing and delayed processing.
For example, one U.S.-based insurer we worked with had two mailrooms and was seeking to reduce those facilities’ costs. The company’s manually intensive processes resulted in a four-hour average cycle time from receipt to processing. By consolidating teams and redesigning processes, we eliminated paper-based hand-offs and deployed high-capacity scanners and an indexing automation engine for capturing metadata to enable automated routing to the back office, which reduced resource requirements for document classification. The end-to-end solution cut cycle time to 30 minutes and lowered mailroom processing efforts by 90%.
Digital mailroom: Capture the next-generation insurance consumer
In a world in which consumers are accustomed to online, real-time transactions, highly manual mailroom processing can impact the customer experience and leave organizations struggling to compete with newer, agile, app-driven competitors such as Lemonade and Slice. Traditional mailroom-driven insurers typically take two to three weeks to process a life insurance policy, starting with application review, entering application details, acquiring additional medical and financial records, determining the risk profile, and either issuing or denying the policy. That lag time gives prospects far too much time to walk out the door. According to a 2018 Deloitte study, the likelihood of prospects buying a policy once they apply increases 70% to 90% as the underwriting and application process approaches real time. For insurers to capture their share of this valuable market, they need to automate their intake processes to accelerate underwriting and shorten turnaround time.
Modernizing the mailroom
Updating mailroom operations is a three-step process:
Evaluate the correspondence landscape.
To begin, businesses must establish a cross-functional team with representatives from the mailroom, new-business underwriting, policy servicing, claims adjudication and any other groups that rely heavily on paper/digitized correspondence. That team’s task: take a complete inventory of the enterprise’s inbound and outbound customer correspondence including paper, email and fax.
With this inventory complete, the company can rationalize its correspondence. For example, it can simplify and standardize forms and templates; eliminate the need to generate correspondence such as frequent notices, marketing campaigns and letters to returned addresses; and reduce documentation requirements for low-coverage policy change requests or claims. Then it’s time to develop a disposition strategy, exploring opportunities to replace paper correspondence with alternative digital communication channels.
Redesign operating processes.
Businesses seeking to modernize the mailroom must instate smart intake solutions that use optical character recognition (OCR) and machine learning (ML) to automate data extraction, translate it to digital content, and apply robotics to process transactions. For example, smart intake solutions can extract key data fields from an address change request and submit the request to a bot queue. The bot would validate the address using an address lookup tool, such as LexisNexis’s Accurint or the USPS, and enter the validated address in the policy admin system, checking it against the addresses on customer policies.
This significantly streamlines activities end to end and creates downstream opportunities for additional back-office efficiencies by automating manual repetitive tasks such as business rule-driven in-good-order reviews, data entry into systems of records, and generation of acknowledgement letters.
As enterprises redesign their operating model, they inevitably face a build-or-buy decision – outsourcing mailroom functions to a specialty firm, using an as-a-service model and internal development can all work.
Implement a digital mailroom.
Operationalizing the digital mailroom involves myriad changes across multiple work streams: process improvements, technology interventions, and/or sourcing partners and employee training. Moreover, this shift may require dedicated project teams within each work stream. The new cross-functional governance team should drive the process to keep it organized so benefits are realized faster.
Process improvements may involve setting up controls to generate correspondence to returned addresses, simplifying forms to reduce not-in-good-order requests, and exception handling to address any errors from automated data extraction.
Investments in advanced technology solutions such as high-performance mailroom infrastructure for envelope opening and document scanning;ML and OCR technologies for auto-sorting, indexing and data extraction; and robotics process automation and workflow integration all help improve overall productivity and effectiveness of operations.
Based on our experience, migrating to a digital mailroom solution can reduce operational costs 20% to 25% by improving indexing efficiency, eliminating a portion of the overall inbound and outbound paper correspondence and reducing print and mail costs. In addition, we typically find that approximately 50% to 60% of back-office staff can be upskilled to handle exceptions instead of indexing and routing, which reduces high attrition rates attributed to jobs involving repetitive, manual tasks.
One property and casualty insurer found it was spending about 85% of its efforts to analyze inbound email and indexing requests. We streamlined their new business and policy administration mailroom operations using modernized equipment for envelope opening, barcoding, scanning and a customized EDM solution with workflow. In addition, we implemented a smart email AI platform for their commercial segment and deployed a solution to extract information from structured digitized data. The streamlined mailroom operations resulted in a 15% reduction in personnel dedicated to intake and a 60% reduction in email intake indexing effort.
Consolidating correspondence-generating IT systems and creating simplified, standardized templates will help improve usability, ensure consistency and optimize processing. In addition to reducing operating costs and improving back-office and agent efficiency, a digital mailroom will enhance the customer experience by shortening lead times, accelerating response times and reducing “communication fatigue.”
The ideal state for insurers is a fully digital mailroom. We believe that it’s past time for insurers to catch up to other industries in this area.