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Premium Accounts
The insurance market still offers benefits to those with the right product mix.
BY KATHERINE L. HOUSEFORM, Dec. 1996
The transition to cut sheet forms in the insurance market has had a marked effect on distributors' volume and profitability during the last several years. Insurers have capitalized on laser printers and Xerox DocuTechs to print documents on demand, reducing inventories, eliminating multipart forms and allowing them to keep up with changing state regulations. But by standardizing many forms to the 8 1/2 x 11-inch size, insurance companies have also found it easier to file documents and convert to electronic document imaging systems, says Dave Lund, president and CEO of Professional Business Products Inc., a distributorship in Lincoln, Neb.
Lund should know. His distributorship helps clients keep track of vital business documents. For a few years, Professional has sold specialized color coded file folders made from durable stock that have built-in metal clasps. A life insurance company purchases about 150,000 annually. Professional has recently begun to provide bar coded file folder labels to improve tracking. The Codabar bar codes contain the policy number and the policy holder's Social Security Number. "Filing systems are really important to [insurance companies]," says Lund.
But the insurance industry is going beyond paper file folders to track business documents, and so is Lund. PBP's Technology Division recently received approval from an insurance company to install an electronic image management system. Imaging systems consist of several components, including scanners and specialized software, to allow users to store, track and route digitized documents. Digitized versions of paper documents as well as electronic forms can be incorporated into imaging systems. These systems can cut document retrieval time significantly, increase customer service response time, and allow quick transfer of documents among employees in multiple locations. Files can be updated easily, and companies can reduce or eliminate storage of paper documents or microfilm, depending on industry regulations.
PBP, a value-added reseller for Optika Imaging Systems, had been working with the life and health insurer for about six months when it was awarded the business. The installation will begin in the underwriting area and will spread to other functions during the next few years, according to Lund. He says imaging will cut information retrieval time from hours to seconds, and the insurer will be able to handle additional volume without hiring more people, a prime benefit of imaging systems. Professional has made a proposal to another insurer interested in imaging. As with other high-tech sales to large companies, the sales cycle is long. Professional is working with an imaging systems committee with members from several departments of the insurer.
Imaging can eliminate some forms, but Lund isn't worried. He knows companies that install these systems often need document design expertise to standardize forms and make them compatible with imaging equipment. And, Lund believes his company positioned itself well for industry changes by diversifying its product line to incorporate a wide variety of business printing and technical services. The firm's Technology Division sells IBM, Compaq and other computer equipment and installs local area networks.
Technology Solutions
Document imaging is not the only technology insurers have begun to embrace. Bob Ashcraft, vice president of Shaffstall Electronic Technology Services, specializes in selling electronic forms to insurance companies. His firm recently beat out several major forms vendors for an outsourcing contract to design and install e-forms for a large Philadelphia area insurer. He usually begins his work in the administrative services department, which handles printing and graphic design of many forms. He also works closely with Information Services. The key to installing e-forms in the insurance market is designing and creating multiple electronic versions of the same form since many must be printed on-demand, while some may be put on the Web or faxed to agents or customers, Ashcraft says.Because of this and the industry's need to update forms as regulations change, insurers need an electronic library to handle forms management. (Ashcraft's firm sells its own software for this purpose.) And, they need a system to ensure that electronic forms are updated accurately. For Ashcraft, this means working with multiple "form owners," who review and approve updates.
One of Ashcraft's projects is transforming a 3-part 8 1/2 x 14-inch paper form with backers into electronic format. First, the Account Agreement W-9 form was redesigned so it could be printed on-demand on 8 1/2 x 11-inch paper. This way, agents can print it out locally and sign it. Although many insurance agents have laptops and even portable printers, signature pads for collecting digitized signatures remain prohibitively expensive, says Ashcraft, especially for a large insurer that would need hundreds of them for all its agents. Plus, insurers are not certain that electronic signatures are legally acceptable.
Insurers appreciate the personalization potential of electronic forms, says Ashcraft. For example, an agent could pull up a form on a laptop, such as a change in beneficiary form containing the customer's name and key information about that customer. He believes that in the next few years, more insurers will use electronic forms on the Web to communicate with agents, preferably from a Web site on an outside server or an intranet to improve security, a major concern. Anna Rembert, manager of publishing and shipping for Standard Insurance Co. in Portland, Ore., says her company is studying e-forms, but its "homegrown" network means company-wide installation is still a few years off.
Digital printing also appeals to insurers. They were among the first to embrace digital printing, and many larger insurers have DocuTechs and other digital production equipment in-house. Standard Insurance Co.'s two DocuTechs allow the firm to print critical forms such as enrollment forms on-demand. Employees throughout the company can send jobs to the machines with electronic job tickets, according to Rembert. Recently she analyzed the capabilities of the Indigo E-Print¨ 1000 and Xerox's DocuColor 40. She sees several applications for short run digital color printing in the insurance industry, including magazine ads, personalized marketing pieces and direct mail pieces personalized with agents' names.
Check Out These Printing Needs
Demand for paper forms is down, but insurance companies still require a wide variety of business documents. Insurers began using cut sheet printers several years ago, but the changeover is not yet complete. Distributors still find themselves redesigning forms from continuous to cut sheet format. For example, Lund's company recently redesigned a life status report for a life and annuity insurance company. The old form was a 13 5/8 x 11-inch 2-part continuous product. The new one is an 8 1/2 x 11-inch laser cut sheet. The challenge was fitting critical data onto the smaller form, which Professional accomplished with condensed type and redesigned fields to convey vital information about new and existing policyholders.Checks remain critical to insurance companies, particularly dividend and claim checks. Today, that often means cut sheet checks perfed out of a statement or explanation of benefits form. Conservative, security-conscious insurers likely will require document security features and may demand that you guarantee no missing numbers. For some distributors, this means working closely with financial forms manufacturers. Don Beiger, CFC, president of Marathon Information Management Systems Inc. in Stockton, N.J., is converting an insurance company's 14 continuous checks to cut sheets. The client requires a void pantograph and security paper with an artificial watermark; Beiger will soon add microprinting and bleed-through numbering.
He recently returned from a trip to one of his manufacturer's plants, where he inspected a run of checks as they were being processed on the collator. His client uses 3 million to 4 million dividend checks each year and requires that Beiger guarantee no missing numbers. The company is extremely security-conscious, in part because some of its checks were forged a few years ago. Beiger works with the company treasurer on check orders. He gained his first check order with the firm three years ago after proving his service to the cautious insurer for 12 years.
Dave Carlson, president of Superior Business Forms & Systems Inc. in West Des Moines, Iowa, recently took a new customer on a plant tour at Northstar Computer Forms in Brooklyn Park, Minn. Superior Business Forms paid for Carlson and two computer operations managers from a third party insurance administrator to fly to the Twin Cities for the day. There, they met with Northstar's sales manager, who talked about various security features. They also toured the Northstar plant, complete with security cameras and state-of-the art systems for checking for missing numbers, according to Carlson. "They were very impressed," says Carlson of his client. The customer processes a large quantity of claim checks quarterly for several insurance companies; it adds MICR lines and insurance company logos to the check stock at the time of printing.
As a result of the plant tour, Superior's client is considering bleed-through numbering and additional security features. Says Carlson of the plant tour, "I think distributors should do more of that." Even cut sheet check business may not be around forever, warns Mike Larkin, CFC. Larkin, a sales associate with American Business Forms & Promotions in Des Moines, Iowa, says some large insurers are examining wire transfers for claim payments, and some are interested in electronic data interchange with vendors.
ID cards are big business in the insurance industry, especially for health and automobile insurers. Some insurance companies have switched to paper cards perfed out of a declaration sheet, while others, including many health insurance companies, require more permanent forms of ID. Carlson sells several types of ID cards to insurers-plastic cards, continuous Kromekote¨ cards, continuous cards printed on 100# tag stock, which are then laminated, and ID cards perfed out of 20# blank cut sheet stock. But Carlson's mainstay in the insurance industry remains forms, including an 11 3/4 x 25 1/2-inch carbonless unit set application form for one insurer, policy booklets, and cut sheet claim forms, checks and policy statements. Beiger's client still uses some unit sets, particularly for internal forms, such as speed memos, requests for checks and certain letterhead.
Weighing Marketing and Mailroom Possibilities
The bad news in the insurance industry is the transformation from multipart continuous forms to cut sheets and an overall decrease in preprinted forms. The good news is that insurance companies have diversified in recent years to become well-rounded financial services firms offering everything from traditional policies to credit cards, annuities and other types of investments. Distributors who can reach the right buyers have a shot at much of this business.Beiger sells an insurance company some 8 1/2 x 11-inch promotional pieces that are folded into #10 envelopes containing statements. The pieces are designed by his client's 6-person design staff, which gives Beiger a disk containing the completed design, a common practice in the insurance industry. The promotions aim to convince existing customers to buy other types of insurance from the firm. Larkin sells presentation folders to insurers for such applications as sales kits for agents that can then be given to customers. A few years ago, he handled an order for 54,000 4-color folders to promote an insurer's variable annuities. The inside of the sales kits included a brochure with a 4-color cover and tiered informational pieces.
Distributors say there are plenty of opportunities to sell ad specialties to insurance companies if you can make inroads with appropriate marketing managers. Carlson says insurers need golf tees, balls and shirts for annual tournaments. He has sold automobile sun shields to a health insurance company to promote its wellness program and pens and buttons for the claims division of an insurer to celebrate a productivity milestone. Lund's firm provided gold plated paperweights to an insurer to recognize top agents.
Envelope needs of insurers can be significant, especially for firms that send mailings to hundreds of agents or those relying on direct mail to attract new customers. Mike Tritch, a sales associate with American Business Forms & Promotions in Des Moines, Iowa, helped a mailroom supervisor save money by researching envelope substrates. The insurer was using a 9 x 12-inch paper envelope for mailings to agents. When the client needed a larger envelope, it switched to a paper expansion envelope and thus was ordering and storing two different envelopes for the same purpose. The supervisor was reluctant to switch to Tyvek¨ because of the cost. Tritch found a polystyrene envelope that has qualities similar to Tyvek and is more durable than the 9 x 12 flat paper envelopes.
Larkin, also of American, says mailrooms are good opportunities for distributors who can find ways to help clients cut costs, save time and qualify for postage discounts under new postal regulations. He recently switched one of his insurance company clients from a 6 x 9-inch envelope to a 6 1/2 x 9 1/2-inch envelope. Employees can stuff #9s more easily into the larger envelopes, yet the insurer still qualifies for the 32-cent first class rate since the outgoing mail is presorted. Recently, Larkin also has been selling envelopes with larger windows to accommodate bar codes, allowing his clients to qualify for postal discounts.
"The biggest thing a distributor can look at [for mailrooms] is an alternative like InfoSeal¨ to get [documents] in the mail stream quickly," says Larkin. He says many large insurance companies have to presort their mail by 3 or 4 p.m. to get it out that day; otherwise they pay full postage. You can be a hero by suggesting self-mailers or developing process changes that enable clients to get thousands of extra pieces in the mail in a day, particularly statements, he says.
Despite rapid changes in the marketplace, Beiger is not ready to abandon his insurance client. "For the distributor, any insurance company that is dealing with the public is a good place to be," says Beiger, who does not foresee a time when many forms, such as statements that must reach customers, will be eliminated.
Katherine L. House is managing editor of FORM Magazine.
Promoting Short Run Digital Color Printing
When Mike Larkin, CFC, wanted to promote short run digital color printing, he decided to show customers what the technology could do. Larkin, a sales associate with American Business Forms & Promotions in Des Moines, Iowa, designed a calendar printed on an Indigo E-Print 1000 Digital Offset Color press that demonstrates the equipment's capabilities. The 10 7/8 x 16 7/8 calendar, which contains a color photo of Larkin in the upper right corner and a photo of American employees at the distributorship's headquarters in Glenwood, Minn., across the bottom, is a great promotional piece for Larkin.More importantly, Larkin says, he successfully demonstrated the variable printing capabilities of the Indigo by personalizing each calendar for 225 customers. Each customer's name is printed in large blue type on the top of the calendar. Smaller type in red ink under the customer's name says, "We appreciate your business throughout the year!" Larkin produced the calendars, which depict the months July 1996-June 1997, in May to give clients plenty of time to order them for 1997. He printed the names and thank-you message in two colors to demonstrate the versatility of on-demand equipment. Larkin designed the calendars and had them typeset by a local composition house. He sent his manufacturer an ASCII comma-delimited file containing customer names, which he extracted from his ACT! contact management software.
As a result of the promotion, Larkin received a few orders (none yet in the insurance market), including an 11 x 17-inch label for a breakfast food company and point-of-purchase materials for a bottled water firm. The insurance industry is a great market for on-demand printing, says Larkin. Potential applications include personalized marketing pieces containing agent pictures and test marketing materials.
An Industry Insider Shares Trends
Mike Tritch, a sales associate with American Business Forms & Promotions in Des Moines, Iowa, began selling printing less than two years ago. But Tritch has an edge when it comes to selling to insurers: he previously worked in purchasing for a very large Des Moines-based insurance company for eight years. The following tips will help you stay in step with trends in this conservative marketplace:
- Accept credit cards. As insurers cut back on preprinted inventories and demand faster turnaround, they want vendors who accept credit cards so they don't have to cut a purchase order and a check or turn to petty cash, according to Tritch.
- Remember image is critical, but insurers walk a fine line between being too conservative and too promotional. "In one respect, they don't want to have too much color and too much flash. They don't want to look like they are making too much money and charging too much for premiums," explains Tritch. "On the other hand, color sells." Insurers can achieve a happy medium with 1 and 2-color logos, he says.
- Look for opportunities to sell nontraditional products to the training or personnel departments. Tritch's former employer had its own video production studio to produce training tapes for agents. Although he has not penetrated the niche yet, Tritch says there are opportunities in this market to handle tape duplication and to sell tape boxes, labels and collateral printing and packaging. His former employer produced a quarterly video newsletter for agents, but other firms might have print versions.
- Learn to appeal to the big business mentality. As insurers have diversified and expanded, some have become large financial services conglomerates and they can be choosy about business partners. If you're one of the chosen few, be prepared to follow all kinds of rules which may dictate such things as bar coding of all cartons, says Tritch.