TRANSACTIONAL FILING: TAKING THE PLUNGE
by Rick Morgan
For many agencies, automation has meant simply adding new methods and procedures while retaining traditional ways of operating. Effective implementation of agency automation requires changing office workflow, taking advantage of technology to do new work in new, more efficient ways. Transactional filing provides a perfect example.
Every agency with an automation/information system (A/I System) should take a careful look at transactional filing; using the system to track and file all customer documents by transaction date rather than alphabetically. Transactional filing can eliminate the investment in time, money, and energy needed to maintain a fully integrated customer database and its mirror image in paper. An agency that fails to accept the electronic file as the primary-if not the sole-source of customer information is condemning itself to the 'double work syndrome.'
BY WAY OF INTRODUCTION
In early 1984 I first conceptualized transactional filing in my agency and began to implement it. Agency automation was still in its infancy and my GEMINI system, by today's standards, provided extremely limited support for this process. Yet GEMINI did automatically log the entry/transaction date of all billing activity and provide the ability to view a customer's money-related transaction activity -- two essential elements in transactional filing. (Some agencies use the notepad and word processing features to log transactions manually, but this practice leaves too great a chance for error).
Not only was the technology of 1984 barely adequate to support transactional filing, but peer support was nonexistent. Most of the agents I told about transactional filing probably thought I was crazy or at least reckless as an agency manager. While helping create the 'People and Computers' seminar, I ran into an extraordinary amount of resistance to transactional filing from the ACORD committee evaluating the seminar. Many committee members didn't want the 'T word' even mentioned. Comments such as 'I would never do that in my agency' were common. Somehow, transactional filing remained a part of the seminar, and several of the agents who made those comments have now instituted it in their agencies.
After leaving my agency in June of 1984 to form Automation Management Group with John Ashenhurst, I had very little direct contact with transactional filing. However, I kept in touch with several agents who decided to give it a try and by 1986 I knew that the concept worked.
Today, the most current versions of agency management systems have a variety of features that support transactional filing, directly or indirectly. The concept now enjoys a proven track record and peer support, with hundreds of agencies throughout North America using a wide variety of A/I Systems.
THE NUTS AND BOLTS
Transactional filing is based on using the A/ISystem to track customer activity and maintain records based on the processing date, rather than by alphabetical files. As business comes into the agency, customer files are not pulled. Instead, the business is distributed to CSRs, producers, claims handlers, underwriting assistants, and others to process by computer: invoicing, updating customer and policy coverage, writing memos, updating claims, and creating or deleting suspense messages.
Invoicing involves both agency-bill and direct-bill policies. Although direct bill invoices are not created or mailed, the policy premiums, commissions, and producer splits must be entered into the computer. Direct bill items are processed and commissions entered as each item is processed, rather than when the direct bill commission statement is received from the company.
When the person handling the work is finished, the document is put in a back-to-file basket. All work from office personnel is collected at the end of the day and filed in a single folder, which corresponds to the current calendar date. Thus, a transactional filing system has 365 divisions-one for each day of the year. It's essential to understand that paper is filed not by effective date, but by the date it was processed into the computer, i.e., the transaction/entry date.
Filing in this manner doesn't eliminate paper: The agency is not paperless. However, dependence on paper files is reduced. The duplication of work required to maintaining both paper and an electronic database is eliminated. It's no longer possible to use the paper file as a crutch. The information contained in a traditional paper file is now found in any number of date files. The computer provides the index to the date files and permits compiling or reassembling a customer file or policy if necessary.
When I first began transactional filing, my system supported this type of processing for money items only. Phone messages, customer-originated letters, and non-financial inquiries were not included. So the agency maintained a traditional customer file-but without any policies or declarations pages. Since the majority of agency activity is associated with money transactions, even this limited form of transactional filing was of great benefit.
Today, most A/I Systems log money transactions automatically, and many log non-money activities (suspense, claim, and customer activity) as well. Many systems have 'hot key' access to allow logging of nonsystem-related activity such as phone conversations. This allows agents to eliminate any type of traditional customer files completely, particularly in Personal Lines.
COMMERCIAL LINES
A couple of years ago I was consulting with a large Commercial agency. After describing transactional filing to one of the owners, he gave me one of those 'looks' and stated that he would never allow several of his very large 'pet' accounts to be handled this way. I agreed; after all, these accounts were bringing in enough revenue to allow the agency to deal with them as inefficiently as they wanted. There will always be exceptions to the use of transactional filing, and that's fine. The success of any strategy should be measured by its ability to handle the majority of cases-not the exceptions.
TRANSACTIONAL FILING WORKS FOR COMMERCIAL BUSINESS.
Improved policy screens and system features such as policy history and interrupt make it all the more appropriate to transactional-file Commercial Lines. Because of the complexity of many Commercial accounts and the propensity toward annual remarketing, many agents keep what I call 'underwriting files' for these accounts. These underwriting files are customer files that contain such items as photographs, financial statements, rating worksheets, engineering reports, appraisals, and so forth, used by the agency in the annual re-marketing effort. Once image processing becomes commonplace, even these files will be unnecessary.
SYSTEM REQUIREMENTS
Besides the ability to log and retrieve money-based transactions automatically, an A/ISystem needs several other attributes to provide full support for transactional filing: endorsement processing, policy history, interrupt, log creation, log retrieval, and summary screens. (Of course, they also have tremendous value for agencies not using transactional filing). These brief descriptions should help you evaluate your A/ISystem's ability to support transactional filing.
A word of caution: Like most lists, this one can be misleading. Each of the features listed operates differently on various systems:
Without a paper file there is no policy change request form, so the agency needs some way to process endorsement requests electronically. This can present problems in Personal Lines because many companies require a endorsement request form. Systems vary widely in their ability to produce Personal Lines change request forms efficiently and effectively. Some systems provide customized forms that meet unique company requirements, are prefilled with the available database information, and are easily produced. Other systems require endorsement requests to be processed through word processing and are incapable of supporting forms unique to individual companies.
Many systems can produce ACORD policy change requests for Commercial Lines. However, some of these forms are not integrated with the agency database and information flow between the database and the form does not occur. Nearly all of the major vendor systems can produce some sort of endorsement request. It's necessary to understand each system's specific capability in this area fully to determine if that system can satisfy your agency's endorsement ordering requirements.
If you are still using paper files to support customer inquiries, policy, and coverage, history may not seem to be an important system feature. However, as agency dependence on the electronic customer record increases, so does the value of policy/coverage history. Being able to review previous versions of a policy improves the agency's ability to service customer inquiries efficiently. It also increases confidence in the system and the reliability of the database.
Some systems allow for almost unlimited storage and retrieval of past policy/coverage history. Some also have the history integrated in such a way that when items such as claims and audits are processed they automatically retrieve the policy and coverage information in force at the time of the claim or audit. Note that not all systems support policy history.
As with policy history, if agency personnel grab a traditional customer folder to service customers, an interrupt feature has less value than a good manual filing system. In the old days when a customer called and I was working in the computer, I had to back out of my current process in order to access the information or processes needed to service the call. In essence, every call interrupted the work in process.
Not being able to freeze current activity, jump to another task in the computer and then jump back to the original task severely limits the ability to become completely dependent on electronic customer records. Currently most systems permit the interruption of a task to perform other tasks. However, some of these systems will only allow users to interrupt and view additional activity. Many systems allow for multiple levels of interrupt.
The most basic support of transactional filing requires that a system be able to log money transactions by the date items are processed into the system. Today, most systems do this automatically. Additionally, several systems log all other system activities automatically. Many systems allow the agency to define what items will be logged. Nonsystem activity can be logged in transaction registers by using a hot key, window or menu-accessed data entry.
Just as critical to transactional filing as creating a log is a system's ability to allow on-screen printing and retrieval of the transaction register. Again, various systems differ in their log-retrieval capability. Some have the ability to retrieve all customer transactions (money and nonmoney) on a single or common transaction register. Others require users to view several different logs to gather all customer activity. At least one system has a 'drill down' capability, which makes it possible to retrieve or review the detail of a transaction directly from the transaction log. For example, it's possible to pick an item on the log, and then go directly to the detail-such as an invoice or memo regarding a phone conversation.
A few systems can run management reports from information in the transaction log. That is, it's possible to find out how many total transactions a CSR handles or how many transactions have been processed on a customer, then compare this information with commissions received. Many agents find the capability to review all logs and view all customer activity chronologically to be of considerable value even if they do not use transactional filing.
When no paper file exists, a good customer summary screen can come in very handy. This is especially true for producers and agency owners who are often not as adept as other agency personnel at moving around a customer's record. A quick 'snapshot' of all customer activity can also help a CSR respond with authority and confidence to a customer inquiry. Ease of access and completeness of information vary widely among systems. Besides names and addresses, these screens should include summaries of policy and billing activity, together with flags indicating claim and suspense activity. From these screens it should be easy to move to more detailed information, including the transaction log.
PITFALLS AND REMEDIES
Implementing a transactional filing system involves special considerations.
Here's a brief overview of common problems-and solutions:
What happens when you delete a customer from the system or run a system purge? If your system will not save the transaction records of customers, it will be necessary to print out a list of each eliminated or purged customer's transaction history. This paper record is then kept for future reference.
How do you get information back into a transaction file once it is pulled out? Many agencies date-stamp all items put into a transaction file. This helps ensure that items pulled out of a date file will find their way back to the correct folder.
In most systems, the transaction log cannot be altered. Once an item is put in the log, the date cannot be changed nor can the item be eliminated. This means the transaction log may have more credibility than the paper records previously kept.
Some agents fear that the dependence on automation and processes such as transactional filing increases E&O exposure. Sometimes this becomes an excuse not to automate. In reality, full implementation of agency automation will limit E&O exposure. First, transactional filing has not eliminated any paper. Automation and transactional filing help support and organize the paper. Second, automation forces a certain discipline or uniformity of procedures on the way work is processed. The structure imposed by the computer may be one of automation's strongest contribution in support of effective E&O procedures. Finally, computers provide strong audit trails and reporting capability, which can be used to monitor agency and customer activity.
The real E&O danger lies with agencies mired in what I refer to as the transition environment, with duplicate and sometimes conflicting procedures to handle both automated and nonautomated activity. For example, some employees may use a paper suspense system, others may use the computer's suspense capability, and still others may use their calendar-or a combination of all three. Such an environment is an E&O claim waiting to happen.
Using a combination of paper and electronic files to store customer information presents a dangerous E&O exposure. It is not uncommon to find agents storing policies and most claim information in the paper file with all invoice, suspense, and some claim information in the computer. How strong is a legal defense that can show no consistency in the handling of policy information, customer calls, meetings, claim information, and so on?
- Agency Mergers Or System Conversion
I'm not aware of any system that can fully convert a transactional filing log. In most cases, the log is dumped into a text file and for all practical purposes becomes a word processing document attached to each customer. While that may not be the very best solution, I think it works. After all, how often does an agency need to revert back to a log to document all customer activity or recompile a policy?
Since paper has not been destroyed, it is possible to retrieve policy information that might be required by a company audit. It will be a slower and more arduous task than pulling traditional files. Perhaps this would be a good job for the company auditor.
- Saving Transactional Files
How long do you need to keep transactional files? How about 25 years? That's what one agency told me. Why not throw out declarations pages away as soon as they Are processed? That's what another agency does. I prefer the second choice. You will need to make the decision. But, generally speaking, transactional files can be purged using a rule similar to the one employed for your 'dead' files. Another advantage to transactional filing is that it provides a perfect index for all of your files. I didn't have such an index with my old paper 'dead' files.
MAKING THE TRANSACTIONAL TRANSITION
If your agency is committed to maximizing its automation investment, and assuming your system adequately supports transactional filing, you may be ready to make the move. There's no need to rid yourself of your traditional customer files; keep them and purge them slowly as customers leave the agency or as time permits.
Many agencies have begun building their database and a transactional filing system at the same time. This approach makes sense. An effective way to ensure a valid, complete, and properly maintained database is to remove all paper files, making everyone dependent on the information in the electronic files. Building and maintaining a database can be done in conjunction with beginning a transactional filing system. Any activity on a file prior to the start of transactional filing remains in the traditional file, while all activity after the shift to transactional filing will be found in the transaction log and files.
Announce the change to the agency well in advance of implementing the system. Be sure to give everyone a chance to ask questions about the change and its implications. Have all the new workflows and manual procedures that will be used to support transactional filing in place before the start date. In my experience, the manual systems to manage automation strategies are as important as the capability of the computer system in determining the ultimate success of the effort. Every procedure from mail handling to the storage of transactional filing must be structured to support the transition.
Many agencies have eased into transactional filing. They may start with just one CSR or one department. I see no harm in this and would encourage agencies to set up programs in keeping with their own objectives.
Pick a date and begin. For many agencies the process has been accepted and implemented more smoothly than expected. I have found that management is often more anxious over beginning transactional filing than are CSRs. More often than not, CSRs have become comfortable with the agency's automation system and are willing to do whatever it takes to eliminate the duplication of work.
THE FUTURE
Transactional filing is not an end in itself. It is simply a strategy that allows agents to use their automation system more effectively by eliminating a significant amount of redundant work. As new technologies are introduced into agencies, other strategies will evolve. I believe that something similar to the transaction log will remain as an index to customer activity, and I have no doubt that the practice of storing paper will cease.
A FINAL WORD
Implementing transactional filing signals all agency employees that the agency is committed to maximizing its automation investment. Implementation is a team effort that will require total commitment. Every employee will need to embrace the electronic file as the main source of customer information- and to accept the many changes transactional filing will spawn.
For agency automation to pay off, management must to begin to redirect the time saved through more efficient processing into providing customers with more effective total quality service. Paper is an information source that when converted to an electronic database becomes universally accessible and more manageable. The challenge facing agency managers is to devise more creative approaches that can reap the benefits from using this information. Transactional filing offers one such response.