News Release

New Technology Helping Insurance Industry Save Time, Money in Check Processing

Omaha, September 22, 2006 − Nebraska Post 9/11 legislation has spawned the development of new technology, which could save insurance companies time and money in check processing through electronic transfers that may revolutionize the industry.

These innovations are the result of Check 21, a federal law that went into effect in October of 2004. Instead of physically moving paper checks from one bank to another, Check 21 allows banks to process more checks electronically, according to the Federal Reserve Bank (FRB).

Banks and third-party companies that have sprung up as the result of this legislation are creating the ability to capture a picture of the front and back of the check, along with the associated payment information, and transmit this information electronically. If a receiving bank or its customer requires a paper check, the bank can use the electronic picture and payment information to create a paper “substitute check,” the FRB reports.

“After the 9/11 attacks, when all the planes were grounded, Congress realized that physically moving checks around the nation was not in the best interest of the country,” said Jana Waughn, who started RemitPro, Inc., in 2001. RemitPro is a technology company that was founded to specialize in electronic check processing and identification verification using proprietary, Web-based applications.

This new technology could eventually bring to an end the practice of insurance agents and brokers making daily bank deposits and worrying about timely access to their funds and identifying bad checks. Waughn’s company, for instance, has created a product called eRemitPro, a desktop check processing application that provides customers with the ability to scan checks and transmit them via RemitPro to their chosen bank for clearing as electronic images or ACH transactions.

The Ease of Electronic Deposits
“We did not jump on the band wagon right away,” said Sally Ouellette, senior treasury manager for the Principal Financial Group, based in Des Moines, Iowa, whose company has started working with both banks and RemitPro to electronically process checks in several of their areas. While it’s still too early to tell the extent of the savings that might be realized, Ouellette said the innovations look promising and could have far-reaching effects for her company, which deposits about 50,000 checks a month over-the-counter.

“We have a branch in the south that was mailing all their deposits so that was the perfect place to start. Our mutual fund company also is utilizing the new process,” she said. The Principal Financial Group will be analyzing and assessing how phasing in the electronic processing could benefit other areas, Ouellette said. Currently several areas use lockboxes at banks to collect checks.

“Eventually this process could eliminate trips to the bank, reduce fraud and improve collections,” Ouellette said. “Transferring everything electronically could be faster and safer. Banks can extend their deposit window later in the day because the electronic deadline is later. Another advantage of electronic transfer for companies with a lot of remote locations is that it’s not necessary to have a bank near them.”

The Many Advantages
Waughn explained how her company’s software works: “With the help of a scanner about the size of a telephone that is connected to a computer, the home office or branch office of an insurance agency can capture the images of checks. The software then creates an image cash letter that’s electronically sent to a bank,” Waughn said. “As companies are processing these checks, we can pull this information into our Web site where we have centralized reporting that allows editing and reviewing the information. For security purposes, companies are then encouraged to destroy the original print copies of the checks.”

The process can be accepted by any bank, no matter where they are in the technology age. If a bank has similar technology, they can process the electronic files but, even if they don’t, banks can print copies of the checks that come in electronically.

“This process also helps companies offer better customer service,” she added. “Images are stored for 90 days, so an agent or broker would have the image of a check to pull up immediately and attach to the customer’s account or policy,” she said.

“Other advantages include reduced fees, not only on a per-check basis, but businesses will be able to reduce the number of bank accounts,” Waughn said. “If an insurance company has an account for every agent, they can then collapse them in a single depository account. Companies also have faster access to their deposits so they’ll know sooner in the process when checks are bad,” Waughn added.

Phenomenal Growth
Costs for the service depend on volume, but companies can expect to recoup their investment in five to nine months, according to Waughn. The phenomenal growth of RemitPro is a testimony to the success of this new way of handling checks. The company has doubled revenue in both 2004 and 2005. RemitPro’s goal is to reach $50 million in annual revenue by 2011.

The company, with clientele that includes AG Edwards, Piper Jaffray and the Principal Financial Group, nearly tripled the number of checks processed in August of this year compared with August of 2005.

Waughn said a lot of larger banks have developed their own electronic check processing solutions, but others are working with third-party vendors such as RemitPro. “Banks have been very receptive to this technology and RemitPro is serving as the electronic clearinghouse for many industry leaders including Wells Fargo, US Bank, Bank of America, Bank One, Commerce Bank and Wachovia,” she added.

For more information about RemitPro, visit www.remitpro.com or call (402) 861-0005.

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