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Reclaim Your Share
of the Insurance Market
Distributors providing custom printing are "back in the game" with high-volume clients.
BY KATHERINE L. HOUSEFORM, Dec. 1995
For the last several years, insurance companies and other large customers have been converting their continuous forms to print-on-demand applications, often on blank laser cut sheets. That's the bad news. The good news is that some insurers are now moving toward jumbo roll products that are processed on high-speed laser printers. With that transition often comes a return to custom printing. "This puts us back in the game," says Mark Solowicz, vice president of Teuteberg Business Forms & Printing Inc., headquartered in the Milwaukee, Wis., area.
At the very least, 50-inch rolls require some preprocessing, such as the addition of perfs, leaving out most paper merchants and mills, he says. In many cases, they require custom logos or phantoms, such as the rolls Teuteberg has sold to a health insurer. The company buys $350,000 of 50-inch rolls with a phantom of its logo repeated every 11 inches. That quantity of the rolls, used for several applications, lasts about four months. Until last year, the insurer used blank cut sheets for the same applications.
"You can get so generic that people don't know who you are," says Solowicz, who tries to convince insurance clients of the importance of building their image. People who buy insurance buy an intangible product, often represented only by a claims statement, an I.D. card or a declaration page. Company colors, slogans and images, such as The Hartford's deer, are sometimes all that people identify with the company. "Even though things are going laser, someone still has to print the identity," says Solowicz, who stresses the marketing value of custom printing to insurance company clients.
Kim Walker, printing purchasing associate for The Principal Financial Group, a large insurance company based in Des Moines, Iowa, couldn't agree more. "Anyone can lay down variable data on a white sheet, but that doesn't tell anyone who you are," she says. During the past several years, The Principal Financial Group has worked hard at boosting its corporate identity.
Marketing research shows that significantly more consumers recognize the firm and its logo and slogan than when the company was known as The Bankers Life. Walker believes this is because the firm has made a concerted effort to place its logo, printed in a custom PMS color, on virtually every printed piece, even cut sheet forms. Some cut sheets also feature spot color and graduated screens, such as those on statements sent to customers.
"Color is significant in people's minds and plays an integral part in how information is perceived," she explains. "It classes up information sent to customers and helps them remember who we are." The Principal Financial Group buys millions of dollars of custom cut sheets yearly through a contract with a large manufacturer. It also relies on distributors, an in-plant facility, commercial printers and other suppliers for the thousands of products purchased in quantities in the millions yearly.
Through the years, large volumes and a wide variety of forms have enticed many distributors to sell to insurance companies. But the advent of laser printers has left many wondering how much longer they'll serve the market successfully. In addition, it can be frustrating for distributors serving clients that have in-plant facilities complete with web presses, a full bindery and Xerox DocuTechs.
Of course, the type of insurer affects the volumes and variety of forms needed. Health insurers process huge quantities of "explanation of benefits" forms and claim checks, while property and casualty insurers issue claim checks less frequently. One Atlanta distributor, who asked not to be identified, sells several forms to clients who write policies for those turned down by other insurers. Since these consumers represent a large risk to insurers, premiums are high. Insurance companies may finance the premiums and need appropriate forms. In addition, some high-risk consumers buy insurance to obtain license plates and then cancel their policies, she says. This leads to high volumes of cancellation notices, renewal notices and notices of intent to cancel.
Finding a Service Niche
Diversified product lines and value-added services have helped distributors persevere and profit. For Dan Swagler, success has come by selling more than statements and envelopes. Instead, Swagler, president of FormService Inc. in Nashville, Tenn., works with a high-end service bureau to handle statement processing for insurance companies and other clients.In one case, an insurance company client had a mailroom with about 10 employees a few years ago. Now many of those employees have been reassigned within the company. Swagler says his clients are not large enough to afford expensive, high-end equipment that would provide maximum efficiency. At the same time, those operating mailrooms needed to hire enough employees to handle volume on the busiest days, meaning fixed costs were constant. "Now we give them state-of-the-art equipment, and they pay for what they use," he says.
Clients provide mailing data to Swagler on magnetic tape or by modem. The service bureau adds the last four digits of the 9-digit ZIP code and a POSTNET bar code, then sorts the addresses by bar code. Folding, inserting, mailing and stamping are often done the same day data is provided. FormService uses double window envelopes for outbound mail for several clients, allowing it to order in larger quantities for price breaks.
Although Swagler has convinced his customers to outsource mailroom activities, it didn't happen overnight. "These projects are a long time in the works," he says. "The sale does not happen for a minimum of six months to one year and usually requires top management blessing." When the company agrees to have FormService handle its document processing, programming must be done at the customer site to make files compatible with the service bureau's software. Once FormService begins handling the document processing, it's a huge job that must be handled quickly and accurately, he says. Outsourcing mailroom services is not for everyone, says Swagler, who estimates that his customers need an average of about 2,000 pieces per mailing to make the program cost effective.
But not all companies see the benefits of outsourcing. Many large insurance companies have in-house print shops, and it can be difficult to convince clients to outsource work. Greg Farrell, CFC, general manager of Birch Business Systems Inc. in Indianapolis, recently spoke to his contact at an insurance company about handling short run 4-color digital printing. The buyer seemed surprised at Farrell's timing; the firm was considering purchasing an Indigo E-Print 1000 for its in-plant, he explained.
Farrell says some of his banking clients have closed or spun off their print shops in recent years, but his two large insurance clients have expanded theirs. Solowicz says his insurance company clients have maintained or expanded their print shops recently. Of course, there are opportunities for quick turnaround work or for products the print shops can't produce. Farrell supplies some continuous forms and overflow work produced on a DocuTech when machines at a client's print shop are at full capacity. For example, insurers need instruction manuals for agents in different states, he says. Some benefits booklets are produced on DocuTechs, while others are printed on blank jumbo rolls, says Solowicz.
Teuteberg also provides a much appreciated service by helping clients simplify the process of getting letterhead to their agents. Through purchasing departments, the distributorship has set up a program and an order form whereby agents can fax orders for small quantities of letterhead to Teuteberg on designated dates. The distributorship supplies custom letterhead with the corporate logo printed on it and the agency's name, address, phone and fax numbers. Proofs are faxed directly to the agencies, some of which pay Teuteberg directly. In other cases, the insurer pays Teuteberg and bills the agents.
Columbus Paper & Copy Supply in Columbus, Ohio, sells small quantities of letterhead, continuous checks, statements, invoices, notepads and business cards directly to a local insurance agency. The insurance company relies on the distributorship to help it maintain a prestigious image. Its letterhead features foil stamping, and its copy paper has a custom watermark.
Getting Beyond Forms
As blank cut sheets cut into profit margins in large accounts, many distributors have branched into other types of printing. Bob Pineo, CFC, owner of Des Moines Business Forms Inc. in Des Moines, Iowa, is frustrated that some customers have converted to blank laser cut sheets. Although Pineo sold some blank paper to one insurer, he did not fare well when paper prices went up astronomically in 1993-94. To ensure competitive prices, he was required to purchase $30,000 of paper at once. To make matters worse, the customer's building was being renovated, and Pineo's delivery destination constantly changed, adding to the hassles of selling a commodity product at small margins.Pineo is making up some of the lost volume in continuous forms with ad specialties. He has sold road atlases to one insurer, which it gives to agents. The atlases fit in sleeves imprinted with the company's name. He also has sold steak knives, given as prizes to agents. One insurance agency has sophisticated incentive programs that change seasonally and feature prizes, including travel. Pineo works with an ad specialty supplier that provides catalogs highlighting potential prizes. Then Pineo gets the prize business, such as caps, T-shirts and cups.
Large insurers stock pens, pencils, all types of apparel and other gift items. Employees buy the items, which may be offered to agents at discounted prices through a catalog, says Solowicz. Golf putters and golf balls with insurers' logos on them are hot items; Teuteberg stores those items in a secure area in its warehouse. The Atlanta distributor has sold pens and highlighters given out at conventions for agents.
Depending on the type of insurer and the products offered, there may be unlimited direct mail opportunities. For example, diversified firms offering affinity programs such as credit cards need numerous statement stuffers, including 4-color items. Some insurers rely on mass mailings to their agents; others target consumers with high-quantity pieces. Swagler's insurance clients target agents, so he believes there may be applications for short run digital color printing.
Teuteberg sold a health insurer a direct mail piece sent to graduating college students. The 4-color brochure encourages students to sign up for insurance if they are ineligible for insurance through their family's policy and haven't started a job. The brochure includes a perfed application form and return envelope. Teuteberg also has sold personalized letters sent to new insurance customers and I.D. cards affixed to carriers. Other distributors sell a variety of paper, plastic and laminated I.D. cards, some of which insurers image on laser printers.
Although insurers often have internal forms analysts and designers as well as comprehensive prepress departments, distributors can assist clients with a thorough understanding of production equipment and postal regulations. Solowicz attends Xplor and other equipment shows and prides himself on helping print buyers determine the best way to design a piece to use equipment cost effectively. He also encourages insurers to have him print some documents, such as those explaining terms and conditions, on lightweight stock to save postage. Although insurers often have in-house capabilities to print such documents, Solowicz says postage costs would be astronomical if lengthy documents are printed on 20# stock. Instead, Solowicz handles the printing, and the client saves money.
Impact of Technology
Insurers are among the large firms migrating toward electronic forms and document imaging systems. Solowicz says some companies need to upgrade their hardware or computer networks before electronic forms or print-on-demand applications are feasible. In addition, he says that state insurance commissions have not yet accepted digitized signatures as official, meaning paper forms are still required for many applications. Strict control of electronic forms remains a concern for some insurers, says Farrell. He says some insurers fear employees or agents could use the wrong electronic policy or application form in the wrong state, meaning they would not meet the appropriate regulations.The Atlanta distributor no longer sells rate books given to automobile insurance company's agents. The 60-page 81/2 x 11-inch 3-hole drilled books inserted into custom printed binders have been replaced by diskettes. Agents may use sophisticated sales presentation software to promote to consumers, but Solowicz believes brochures are still needed so prospects will have something to take home.
Distributors selling to insurers with imaging systems may need to learn about image-friendly design techniques that increase readability of items when stored digitally but take up a minimum amount of storage space. Those selling to insurers may be able to act as consultants and help forms analysts redesign documents that incorporate drop-out inks and eliminate lots of big, bold type.
Katherine L. House is managing editor of FORM magazine.
The Quest for Electronic Forms: One End User's Perspective
As senior analyst in Graphic Services-Operations for The Principal Financial Group, Kay Hanlon thinks electronic forms will increase productivity by shortening the business process cycle time. In addition, by converting some applications to print-on-demand forms, The Principal Financial Group will be able to reduce preprinted forms, saving warehousing costs, says Hanlon. Even in middle America, warehousing costs for thousands of forms can be staggering.Hanlon has been instrumental in the Des Moines, Iowa-based firm's journey toward electronic forms. By the end of the year, the insurer hopes to complete several pilot programs using software from JetForm, the vendor it chose after an intensive search. One of the pilots is an employee appraisal form in the human resources department. The Graphic Services area is working on its own test project-a bid request form filled out by purchasers. A third pilot will be done in the pension area for enrollment forms. Pension department employees are especially excited about being able to personalize documents with company and employee names accessed from a data base of customers, says Hanlon.
The pilots are the culmination so far of a mission that began in June 1994 when The Principal's IS department began an electronic forms research project. A committee of representatives from different business units evaluated suppliers against a complex matrix of criteria. Suppliers were scored based on their perceived ability to meet those criteria, which were weighted depending on importance. JetForm came out on top, in part because JetForm Server provided batch printing capabilities, says Hanlon.
The company will implement the product in stages. Forms using smart edits, calculations, data base look-up, data base access and print-on-demand will come first. Electronic routing will come later because The Principal Financial Group has a mainframe-based e-mail system that is not compatible with PC-based e-forms software, such as JetForm. The company's IS department is addressing that issue with its e-mail vendor, says Hanlon.
A large company such as The Principal Financial Group also will need to determine who will be responsible for electronic forms design and version control. Hanlon believes much of that will be done through the Graphic Services department. However, other people in the company, such as employees in human resources, already have undergone JetForm training and will undertake some design work. In addition, each business unit has its own IS department that will need to handle mapping to data bases.
To complicate matters, the company will continue to use F3 software for designing paper forms since that software can output to an imagesetter. Ultimately, there could be multiple electronic versions and a paper version of the same form, says Hanlon, making tracking and version control essential. JetForm training will be done by the IS department. An internal marketing program will be developed to tell users about the electronic forms option.
Hanlon recommends that others implementing e-forms take a more hands-on approach than The Principal Financial Group did. Although suppliers did extensive demos, those on the selection committee did not try out the software packages at that stage. Hanlon believes employees would have learned faster by testing the packages earlier.
Suppliers: Are You In It for the Long Term?
Kim Walker has a mind-boggling task. As printing purchasing associate in the Graphic Services-Publishing Services area of The Principal Financial Group, she is responsible for buying 800 to 900 types of custom envelopes, millions of dollars worth of custom cut sheets, traditional business forms such as unit sets, copier paper and sophisticated commercial printing.All of that makes Walker pretty popular with suppliers at the Des Moines, Iowa-based insurer's headquarters. Walker works with Xerox for papers, Standard Register on custom cut sheets and unit sets and distributors for certain business forms and envelopes. She also works with commercial printers and index tab and binder manufacturers. In addition, someone else in Graphic Services helped select JetForm as an e-forms software vendor and is working on a pilot program.
The glamour of selling large quantities to a company with a national reputation attracts all types of suppliers. But suppliers must also be willing to adhere to strict requirements, such as bar coded labels on all boxes shipped to The Principal's warehouses. The firm also has a strong ethics policy spelled out in an informational packet given to potential suppliers. Among the no-nos: gifts of any type, including lunches. "If [a supplier] asks me to go to lunch, I know they haven't read the packet," she says. "That is a signal that they are in it for the short term and not the long term."
Walker has her own set of pet peeves and wishes too. "I want suppliers to be honest," says Walker, one of six buyers in the Graphic Services area. "I don't want to be fed a line of garbage; I can see through that." Honesty is critical, she says, when it comes to making promises about what can and can't be done. "If the ball is dropped, the only name known [to the internal customer] is mine. I pass along very strong feedback to suppliers." Feedback is formalized with a rating program that rates suppliers quarterly against their peer group, such as other printers, and against all suppliers in areas such as timing, cost and quality. Walker says the system is a tool to "build partnerships and open up lines of communication."
Suppliers also should realize the capabilities of the company's large in-plant facility. The printing area houses eight presses and two DocuTechs. The DocuTechs operate seven days per week, three shifts per day. The in-plant offers full bindery and finishing services, including laminating, drilling and padding, and is best suited for 1 and 2-color work up to 70,000 impressions, says Walker, although it has handled 3 and 4-color jobs.
Once suppliers begin to work with The Principal Financial Group, Walker says she works hard to help them understand the company's policies and procedures. Although price is important and new jobs are bid out, Walker tries to minimize the time spent searching for low prices. "I realize that a lot of competitive bidding can be damaging," she says. A switch in suppliers could have hidden costs, such as generation of new camera-ready artwork or disks, and Walker would have to spend time constantly helping new suppliers understand the firm's policies. The Principal's purchasing policy says that most bids do not have to be solicited again for three years, including commodity items such as copy paper.
Although insurers often have internal forms analysts and designers as well as comprehensive prepress departments, distributors can assist clients with a thorough understanding of production equipment and postal regulations.