The surge in ma&d pressures insurers to up their file management game

Insurance companies generate millions of digital and paper files. Regulations require insurers to store various data for different periods—and in some cases, these timeframes are extensive. For example, carriers with long-tail claims (e.g., asbestos liabilities) may need to store documents and policy information for up to half a century to fulfill their claims-paying responsibilities. 

File organization of this magnitude is often overwhelming, time-consuming, and complex for one company alone. It becomes even more challenging when insurers merge or grow by acquisition.

Insurance industry mergers, acquisitions, and divestitures (MA&D) accelerated in 2021 as strategic and financial buyers went on a spending spree. Overall, 249 transactions were announced from the end of June to mid-November with a combined deal value of $34.2 billion, according to a PwC report. Industry watchers expect this volume to continue growing in 2022. 

Insurance companies taking advantage of growth opportunities are triggering all of this movement by acquiring new and complementary business lines. Newly formed insurance companies must then decide how they will manage the MA&D activity data. These Transfer Service Agreements (TSAs) can be complex and create a need to share and/or duplicate records to enable servicing for their respective customers. Fortunately, there are streamlined solutions that can ease the burden. Here's how insurance providers can manage their files and physical assets through an MA&D transition.

The unique challenge of integrating data and physical files

Merging multiple companies of any type is a challenge. Management has to consider how everything comes together, including furniture, office space, and disparate technology platforms. But in an industry that requires such extensive record-keeping, integrating file management and data is a significant headache for the acquirer.

Specifically, the acquiring company must combine, rationalize, and align a full range of assets with the new organization's goals. This task can be complex, as document policies can differ by business unit or file type. The acquirer must know what the files contain, where they are stored, and how long they need to be retained. 

As a part of the TSA, the acquiring organization may only have a window of 12 to 18 months to align incoming companies with its culture, processes, and data management procedures. Such time constraints can leave little to no spare time for the organization to sort through its assets, but not doing so can have significant business consequences. 

Firms that don't have a handle on their file management system may face the following business concerns:

• Increased risk as each state conducts exams to evaluate the carrier's responsiveness in serving their customers. A firm may face fines if it fails to locate the records needed to provide policy services and process claims in a timely manner. In addition, storing unnecessary files can complicate legal discovery, audit response, and compliance management processes.
• Unnecessary spending on the physical or cloud storage of data assets they no longer need.  
• Lost productivity as employees spend countless hours searching for poorly indexed digital files and unsorted physical records. 

Considerations for physical assets

Along with the recent increase in MA&D, today's hybrid work environment is forcing insurance companies to reconsider if they still need all of their current office space and the physical assets that come with it.

Some offices may be downsized or deemed unnecessary altogether. This change means everything from filing cabinets, equipment, and furniture to servers, PCs, and IT assets may need to be moved, organized, consolidated, or even repurposed. 

By evaluating these items and equipment, merging companies may be able to:

• Reduce their real estate footprint to lower costs.
• Repurpose space for higher-value alternatives and social distancing.
• Remarket IT assets that still have value, while securely destroying/recycling the outdated assets that still may have personally identifiable information on them. 

However, sorting through entire offices can be a time-consuming and inefficient use of employees' time. 

Insurers need a streamlined way to eliminate waste and inefficiency

As insurance companies reimagine how they work through office moves or the transition to a remote or hybrid working environment, a streamlined process can help cut costs and save valuable time. Third-party experts can shoulder the burden of record and equipment organization and help implement a process for success.  

A smart and clean way to manage your merger

If you're interested in enlisting the help of a third-party vendor, you'll want to ensure the organization has: 

1. Extensive knowledge of the insurance industry and the ability to work with your company's retention policy.
    
2. The ability to safely destroy physical and digital assets that are past their retention points.
    
3. The expertise to sort and index retained items with the relevant metadata for fast retrieval.
    
4. Secure storage facilities for physical records and a content services platform to help you manage the information you need to keep.
    
5. The ability to securely handle IT assets at the end of their lifecycle by either disposing of them in a sustainable manner or preparing them for recycling. Either way, the vendor should provide certified handling, guaranteeing that hackers can't resurrect sensitive information.

Most importantly, the right third-party partner will be able to address your enterprise needs with tools to automate and streamline your integration and organization processes for the new way of working. They should be identifying waste and duplication in your overall footprint while aligning data and file management systems with your new organization's needs.