In the insurance business–the most heavily litigated businessthere is–companies have always had to contend with legal discovery;the process where each party to the litigation provides the otherwith content relevant to the case at hand.

December 2006 changes to the Federal Rules for Civil Procedure (FRCP) added a new challengeby establishing requirements for providing electronic informationand records through e-discovery. Today, companies need to have aprocess in place that lets them know where critical documents arelocated, establishes guidelines regarding information retention,and enables them to produce required information within definedtimeframes.

Whether discovery involves paper documents or electronic content(e-discovery), it can be costly. Carriers spend both money and timecollecting, analyzing, and preparing the hundreds, thousands, ortens of thousands of documents that can be examined in a particularlawsuit. And once electronic content is compiled, it needs to beprocessed to provide to opposing counsel, which can cost about$2,000 per gigabyte, according to Bryan Reynolds, co-founder ofenterprise content management (ECM) consultancy Sitrof Technologies, Inc.

“If a company doesn't have its unstructured content undercontrol, it will spend millions more on e-discovery when it isinvolved in an action,” Reynolds claims. “The cost of gettingcontent under control proactively is a mere fraction of the highcost of a typical, reactive approach.”

Discovering Challenges

Since most insurance litigation involves claims, thefile-oriented nature of the claims process does give an insurer anadvantage over other industries in e-discovery. However, opinionsvary as to just how well positioned they are.

“Probably eight out of ten insurers don't have their acttogether,” when it comes to e-discovery, Reynolds claims. “Somehave document management strategies that are little more than aglorified file-share system. They haven't put thought into indexingmetadata and they have multiple places where content is stored,making it incredibly difficult to locate.”

“Most insurance firms have their business information in fairlygood shape, with strong policies typically in place across theorganization regarding information management,” counters AlanPelz-Sharpe, principal analyst and director at research firmThe Real StoryGroup. “Additionally, most insurance discovery requests arerelated to well-documented processes and information.”

Even so, e-discovery can be an expensive and resource-intensiveprocess, Pelz-Sharpe maintains. “Where e-discovery really getspainful is when your information sources are messy. Finding thesmoking gun in 10,000 locked mailboxes is a nightmare. Proving thatyou have proven yourself innocent is even harder,” he says.

Proliferation is at the root of many problems related toe-discovery. The volume of electronic information has expanded,with some estimates showing unstructured data growing at a rate of80 percent per year.

“There are digital pictures of damaged vehicles; e-mail thatneeds to be stored 'somewhere'; voice files that are recorded inthe call center.; adjuster notes that are just sitting there,” saysKimberly Harris-Ferrante, vice president and distinguished analystfor Gartner Research.“Now insurers also need to deal with content from the next wave ofthe Internet and Web 2.0, with instant messaging and chatfunctionality, and insurers' participation in the social mediaworld.”

Additionally, information in unstructured content continues topose a challenge for e-discovery because it is “petrified”–lockedin unsearchable scanned images. “Despite the fact insurers were oneof the first to spend serious money on imaging scan and capture, afair number of companies don't do intelligent capture, which can beas accurate as or more so than manual entry,” says Pelz-Sharpe.“Technology has moved on, but insurers are stuck with oldsolutions.”

Users also exacerbate the problem of proliferation throughduplication. “For so long we said, 'storage is cheap, so we canstore everything,' and users wanted to access all the content on aparticular policy in one system,” says Mike Carrier, systemsmanager at United Fire Group.

The problem is, that truly meant “everything”–images of legacysystem screen capture, the same e-mail thread stored by 10different users, massive color TIFF satellite images that weren'tneeded beyond the initial underwriting of a policy. Storing allthat content in United Fire's ImageRight ECM system caused thecontent repository to swell. “It has grown exponentially over thelast few years,” Carrier says.

The solution to the proliferation problem is a combination ofpeople, process, and technology. “We've had to have meetings withthe various users and provide education to get the situation undercontrol,” Carrier says.

Insurers with an eye toward effective e-discovery createprocesses that govern the life cycle of documents: controlling andproviding visibility into changes to electronic documents,establishing guidelines for the retention periods for differenttypes of records, and having plans in place for document storage,archival, and disaster recovery.

And on the technology front, e-discovery solutions have emerged,particularly in the wake of the 2006 FRCP changes, which aretargeted at the goal of looking through the electronic content of acompany.

These solutions allow insurers to pull information and recordsfrom either centralized or federated repositories, perform legal'holds' to ensure content is not changed, and perform functionssuch as deduplication to reduce the size of e-discovery files.

“It's search on steroids with a 'holds' facility,” saysPelz-Sharpe.

“What's different about today's e-discovery technology is that,for the first time, you can have a monolithic view acrossrepositories,” Reynolds says. “Systems can connect into structureddatabases, repositories of content management systems, and fileshares.”

E-discovery solutions deal with unstructured content andpetrified documents by first crawling index information andcreating what Reynolds calls a “thindex” of available metadata.

“Every document has some metadata associated with it, ande-discovery solutions can go through terabytes of index data veryquickly,' he says. They will tell you what type of document it is,so you can then decide if it is relevant to examine manually or toprocess with intelligent capture.” Solutions will typically take asecond pass to do a full text crawl of searchable documents,including Word, Excel, and PDF.

“The search engine is the key,” Reynolds says, explaining thatthe best insurers allow users to do linguistic analyses in theire-discovery. For instance, linguistic searching on “will” canreturn results relevant to the legal document, rather than thoserelated to other meanings of the word.

E-Discovery Meets ECM

Under the theory that an ounce of prevention is worth a pound ofcure, having an ECM strategy in place to control content can avoida lot of problems in e-discovery.

“A content management system lends itself to the e-discoveryprocess because content is centrally managed with metadataand–hopefully–searchable information. Electronic workflow alsoreduces duplication because people can view the same piece ofcontent at the same time, rather than recreating it,” Reynoldssays. ECM also provides lifecycle control of content, from creationto archival or destruction.

Carrier says Vertafore's ImageRight system has benefitted theinsurer's e-discovery efforts by putting all content related to apolicy or claim in one place. “ImageRight has a utility that allowsus to export the entire file or just certain pages, attach aviewer, and create a CD or email to a law firm that is requestingthe information,” he says.

Gleaner Life originally began working with ECM integratorImageSoft to implement the OnBase ECM platform from Hyland Softwareto manage an influx of new business paperwork, e-mail and faxes.Since deploying the system, the company has continued to work withboth solution providers, and has seen the benefit of OnBase toe-discovery as well.

“Whether it is for claims litigation, commission questions,billing questions, or other purposes, everything is right there topull out the documents we need,” says Michelle Beal, workflowspecialist at Gleaner Life.“The audit capabilities are also valuable. We can tell you who haslooked at a document, changed a document, or e-mailed a document.If an auditor wants to see our document controls, we can show thatwe have [controls] built in and no one has modified or seen thedocuments they're not supposed to have access to.”

“With OnBase, the discovery process is much easier, and theeasier you can make it for the user the less likely you are to missthings,” adds Debra Keller, vice president of IT at GleanerLife.

More than e-Discovery

While e-discovery has heightened the interest in ECM, it is onlyone of the factors influencing carriers' decisions to invest in thetechnology. ECM is “both tactical and strategic,” Harris-Ferranteclaims.

“There are a good number of cost-focused insurers who arefocused on content management technology as a means to reduce theexpense and improve the process around content accessibility,” shesays.

Also, companies that currently have a number of department- orapplication-level content management systems in place are lookingto the “enterprise” part of ECM in a focus on system consolidation.“From a tactical standpoint, consolidation provides the opportunityto reduce storage and maintenance costs. From a strategicstandpoint, particularly as the industry becomes more highlyfocused on analytics, smart companies realize it's easier to minefewer databases and content repositories in order to analyzeinformation, do fraud detection, or perform predictive analytics ortargeted customer segmentation,” Harris-Ferrante says.

The OnBase platform is actually Gleaner Life's second foray intocontent management technology. “We installed a system in themid-1990s. We found the imaging and COLD components worked fine,but the workflow did not,” says Keller.

The company started with modest goals when it began deployingthe OnBase platform to the underwriting area in 2001. “Originallywe wanted to take everything that was in a file folder andmicrofiche and image that. Second, we wanted to shorten the time ittook to issue new policies,” Keller says.

By providing an electronic file and automated workflow, GleanerLife accomplished both goals–reducing the underwriting timeframefrom a week to two days on “clean” life insurance applications andfrom two days to the same day on annuity applications. The time toprocess applications that needed follow-up also was slashed througha combination of imaging, replacing manual file pulls withautomated and electronic workflows, and establishing EDI with labsand service providers.

“Combined with the workflow capabilities of OnBase, follow-upscan be done right away, which allows us to process things faster.We can do more work with fewer people,” says Beal. Integration ofOnBase with the insurer's line-of-business administration systemalso enables policyholder correspondence and issue documentation tobe prepopluated with policyholder information. In the new businessarea,

Gleaner Life has gone from ten to seven staff members due toattrition and did not need to refill the vacant positions.

Over time, Gleaner Life has rolled out the system to claims,customer service, field operations, financial, and executive areasand has achieved a 25 percent reduction in paper across theenterprise. The most recent project, completed early this year, wasto automate the check signing process by matching payments toinvoices and ensuring that the appropriate executive authorizespayment. Check processing time has been cut in half, and thesolution aids compliance efforts by automating the verification ofchecks for OFAC compliance.

“The solution puts controls in place that were not part of ourmanual process,” says Keller. The system also puts users in touchwith relevant content and aids in the e-discovery process bysupporting custom queries, along with standard search capabilitiesat the document and keyword level.

“Being able to answer a question right then and there becauseusers can easily search for information and have content at theirfingertips also has raised our level of service,” Keller says. Thenext processes to be automated are agent onboarding andcontracting.

From everyday business processes to the demands of e-discovery,enterprise search is one of the key benefits of ECM technology.Gleaner Life focuses heavily on taxonomy development as it rollsout the system to additional business units to ensure thatdocuments are correctly indexed and searchable. “Many companiesdon't understand the importance of the indexing process to beingable to locate content later on,” says Beal.

“We work closely with people to make sure we understand the bigpicture,” she adds. “The more we understand things, the bettersystem we can build for [business users] to get them what theyneed.”

Likewise, United Fire has been rolling out its ImageRight ECMplatform over the better part of a decade. “We began with ourcommercial underwriting group and have deployed it team-by-team,”says Carrier. “Today, there is no one within the company thatdoesn't use ImageRight.”

“The system has been a huge timesaver for claims andunderwriting staff based on the accessibility of files alone. I canhave the same file open as my supervisor. You don't have to have acopy of the file to continue working on it. Mail has been cut downfrom our agents because people have all the information availableon-screen when they are answering calls,” says Sonja Hadenfeldt,imaging specialist, United Fire.

Integration of ImageRight and United Fire's e-mail platformenables attachments, such as photographs, to be automaticallyimported into content repository.

Web services pull content from ImageRight and populate theinsurer's agent Web portal. The company has built out workflows notjust around underwriting and claims processes, but also for projectmanagement in IT and employee onboarding in human resources.

The most recent workflow, deployed in August, was in losscontrol. It replaced a manual document handling process with onethat automatically attaches electronic loss control documents topolicy files along with photographs and routes the file based onthe type of document received. Recommendation letters to thepolicyholder are automatically created and mailed, with lettersbarcoded so they can be automatically indexed and the underwritingfile updated when they are received.

Both United Fire and Gleaner Life have taken a “start small,think big” approach to ECM. That approach can be successful–withthe right governance.

“You need to have rules, protocols, and an overall governancestructure in place to make sure that if 'enterprise' is your futureobjective, content management buying decisions do not happen thatcontradict the enterprise strategy,” says Harris-Ferrante.“Unfortunately, it's easy to have those rogue buying decisionshappen because if a plan has my department fourth or fifth in lineto move to the ECM system, I might not want to wait.”

The success of thinking big also comes from showing quick wins.“You can use a point solution as a proof of concept. And if itworks well, you use those lessons and technology to roll that outelsewhere,” says Pelz-Sharpe.

“We were able to launch the initial workflow and it worked. Oncethey saw what it was doing, there was buy-in,” says Keller. “Thegreat thing about our solution is that it touches all areas withinthe company, and everyone can see the benefit of the ECMplatform.”

Letting users direct the focus of the system is a key to doingECM right. “The end users are the ones who know the process best,”Hadenfeldt says. “They're the ones that are going to come up withsuggestions. We don't use the system like they do. We're notcommunicating daily with people outside the company. Users are theones that discover and uncover capabilities.”

“The buy-in at the executive level has been strong,” saysKeller. “They're asking why we hadn't deployed the OnBase systembefore, and users are coming to us with new requests for thesystem. They're thinking outside the box about how we can improveour efficiency. Enterprise deployment has always been our keyobjective.”

The E in ECM

Not all carriers have had the successful experience of GleanerLife and United Fire in the deployment of an ECM system. Across theindustry, many insurers have a problem putting the “E” in ECM, saysHarris-Ferrante.

“It's not traditional that companies bought 'enterprise' contentmanagement systems because funding was department-level and therewas no corporate governance to enforce an enterprise system,” shesays. “Additionally, if you peek under the covers of policy andclaims systems, they often come with lightweight content managementsystems, too, with repositories storing content created by thosesystems,” which leads to platform proliferation.

“There are over 400 document management systems on the markettoday, and it's common to find multiple systems in place at anyparticular carrier,” Reynolds reports. “Some companies have more ofan ad hoc deployment to content management technology, whichcreates the same problems of having multiple places where contentis stored and multiple copies of the same document. It's hard toknow where content is.”

But companies continue a scattershot content management strategyat their own peril. Although creating greater efficiency in theworkflow has been the primary goal driving insurers' deployment oftrue enterprise solutions, e-discovery requirements make it moreimportant than ever that insurers manage electronic informationeffectively, can locate it quickly, and are able to prove thatcontent provided in the e-discovery process is accurate, complete,and controlled.

“I'm amazed that I can walk into a billion-dollar company andthey look like they are in their infancy with the way they arestoring information,” Reynolds says. “It is complex process, butyou absolutely need a content management program, and you need theright technology. You need to deal with the problem.” TD