Credit union tracking departments may breathe a sigh of relief as insurance document exchange catches up with the electronic age, thanks to recent wider acceptance of Electronic Data Interchange (EDI) technology.
According to experts at Vystar CU and CUNA Mutual, insurance heavy-hitters Allstate Corp. and State Farm have added EDI in the past two years to enhance the Collateral Protection Insurance (CPI) process.
The two insurance giants joined several other large companies in the past decade in a movement to cut the amount of manual labor associated with exchanging CPI documents for loans that cover cars, boats, trailers, or motorcycles.
"Bigger insurance companies are now catching on to EDI," said Dede Owens, vice president of records management systems at Vystar CU. "We've seen the biggest difference in our own productivity in the last four years."
Four years ago, EDI was adopted by Geico, Vystar members' biggest underwriter. Vystar's mailroom staff immediately felt the impact. Documents could be transferred electronically, so the CU's mail handlers didn't have to sort, open and disperse nearly as many proof-of-insurance documents, said Owens.
In addition, "the quality and accuracy of information within the documents has increased because we've eliminated manual key strokes," she said. The CU no longer re-keys and matches data off of incoming paper declaration pages or cancellation notices; information is automatically integrated and matched to Vystar's CPI documents for nearly 57,000 loans.
Though the technology has come a long way in its 10-year integration with CPI, insurance companies still hold the EDI reins, according to Gary Kirkindoll, vice president of Collateral Lending Solutions at CUNA Mutual.
"Even though we won't see 100% of the industry using EDI, I'd like to see 70% to 80% of the carriers using it," said Kirkindoll.
In 2003, Madison, Wis.-based CUNA Mutual became the first independent CP insurer to sign with State Farm in a partnership that uses the EDI 811 Insurance Coverage Notification format, he said.
Kirkindoll said that the partnership cemented CUNA Mutual's reputation. "For a large insurance carrier such as State Farm, there is a lot of work and commitment on their end to invest in the programming and technology that enables the electronic transmission of insurance documents."
Meanwhile, "EDI is really growing in leaps and bounds," Kirkindoll added. CUNA Mutual receives nearly 50% of its CPI documents electronically, up from about 10% in 2000.
Still, that means the postal service is delivering the other 50% of the documents, potentially adding an additional week of lag time to CPI processing. "Unfortunately, paper mailing is not a thing of the past, yet," Kirkindoll said. "But we've certainly been able to reduce the mail that is necessary between insurance carriers and financial institutions regarding the lienholder's notification of insurance."
EDI has increased CPI efficiency enough for CUNA Mutual to "track many, many more loans than before," said Kirkindoll.
The financial service provider to credit unions now tracks nearly four-million loans for its CPI programs, up from 2.2-million in 1994, he said. "We have sustained a high percentage of growth with a smaller percentage of growth in staff to manage our tracking processes," he added.
CUJ Resources
For more info on this story:
* Vystar CU at www.vystar.org
* CUNA Mutual at www.cunamutual.com
