People and technology are essential elements in any modern business. But the real key to success is finding the right balance between the two, especially in high-volume environments like print/mail finishing. A case in point? The Meemic Insurance Co., a 50-year-old property and casualty insurer located in Auburn Hills, Michigan.
The traditional work processes had served the company well for many years. But the manual approach couldn't keep up with the steady growth or support plans for expansion into new markets. We urgently needed both faster turnarounds and better accuracy to achieve our customer service goals. Formerly known as the Michigan Educational Employees Mutual Insurance Co., Meemic is now a $130 million publicly held insurance company with ambitions to grow beyond both the educational and Michigan markets. The company writes four lines of coverage: personal automobile, home owner, water craft and personal umbrella and employs about 200 people who serve roughly 130,000 policy holders.
The problem
Nearly 10% of the work force was assigned to Policy Services, where they manually assembled insurance policies and customer communications such as invoices, cancellation and reinstatement notices and ID cards. When mail volumes were lower, manual processing was both prompt and accurate. But as the number and complexity of policies grew last year, the unit handled more than six million pieces of paper response time and integrity suffered, and turnover increased as employees grew weary of the daily tedium.
We were spending too much time and money on turnover and training, the postage costs were too high because of erratic metering standards and there were too many customer complaints due to misdelivered or misassembled mail. We knew there had to be a better way. To remedy the situation, Meemic assembled a team consisting of Pat Ruhlman, who serves as director of IS, Laura Kennedy, the manager of Mailing Services and me to research and specify a high-speed, high-integrity automated solution.
Our search included visits to trade shows, discussions with U.S. Postal Service representatives, reviews of trade magazines such as Mailing Systems Technology and briefings by vendors and other firms that operated applications and processes similar to ours.
Our criteria was detailed and called for a solution that:
The solution
A coordinated mix of hardware, software and professional services centered on the 8 Series Intelligent Inserting System, outfitted with the Direct Connect file-based processing control system, from Pitney Bowes Document Factory Solutions plus two Xerox 92c color laser printers. The solution was also linked to our IBM AS/400 model 730 data processing capability, included middleware from Solimar and a DAP forms generation package from DocuCorp.
Measurable cost-effectiveness
We were methodical in our research for two reasons. First, the investment was a big step forward for us, and it had to be cost-effective. Second, insurance is very much intangible and our policies and statements are often the only concrete representation of the quality of our products and services. We recognize these communications are a key link with our customers and need to be totally accurate, delivered promptly and custom-tailored to individual needs. And, while it's sometimes hard to quantify the benefits of faster turnaround and superior customer service, it's easy to measure the costs of poor service in terms of lost customers and revenues or excessive calls to customer service centers and the need to perform costly rework. A key part of the solution centered on acceptance testing, which involved shipping pallets of actual Meemic forms to the factory where the inserting system was being assembled so the equipment could demonstrate its full range of capabilities, using our forms and applications before we accepted it. This testing also helped surface and eliminate the few glitches that occasionally accompany the development of highly-customized equipment and served to ensure a superior "as installed" performance.
As for results, we couldn't be more satisfied. Our head count in Policy Services has been reduced by more than 50%, yet our unit is handling 10% more volume than before. Turnover and excessive absenteeism have been virtually eliminated. The remaining employees are being trained as equipment operators and are now more highly motivated, can operate multiple pieces of equipment and have better career opportunities as well. Response time has been compressed with all jobs processed the same day they are received. Previously, turnaround time was a minimum of two days, and it often stretched to three days due to peaks in processing demand. Our postage costs have been reduced by roughly 10%, thanks to the presorting capability and strict adherence to metering standards, which have eliminated use of un-needed postage.
Our integrity is impeccable. The automated equipment has operated nearly flawless for more than nine months. The rare errors encountered by the system are due to external factors such as excessive humidity, which can impede paper handling, or improperly scanned barcodes. These situations are easily corrected by the equipment operators.
Auditing is easy. Each piece of mail is tracked through every stage of production, from generation in the mainframe though drop-off with the USPS, so we now have an audit trail that is virtually fool proof. The system also detects inconsistencies in address information and generates a report so underwriting personnel can investigate possible discrepancies.
Since insurance premiums can vary according to location, adjustments in premium levels may be necessary to ensure proper coverage. Plus, the correct address information reduces the amount of returned mail and the costs involved in reprocessing and remailing.
In-sourcing risk-free revenue
Lastly, our print and mail finishing unit now has excess processing capacity, and we are hoping to in-source work from other organizations. In-sourcing is particularly attractive to an insurer like Meemic because the revenue is risk-free. Whenever we insure something, we always run the risk that damage will occur and a claim will be filed. But the income from our print and mail finishing capability comes as pure revenue without any risk to the business. But despite these impressive achievements, we can't rest on our laurels. We are currently investigating how best to implement an automated messaging capability that would deliver information to agents via e-mail and replace the current, costly paper and bulk mailing process. Plus, we are looking into the various methods available to heighten the impact of each customer's mailpiece via the use of one-to-one marketing techniques.
Upgrading our processing capabilities going from "the Stone Age to the space age" was long overdue. But thanks to our team's extensive research and fact-finding, we now have a processing platform that will serve us well for many years to come.
William Sabados is vice president and CIO of Meemic Insurance Co. For more information, please visit www.meemic.com.
