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IMPACT OF OFFICE AUTOMATION IN THE INSURANCE INDUSTRY B u lle tin N o . 1 4 6 8 U N IT E D STATES DEP ARTM ENT OF LABOR W. Willard Wirtz, Secretary BUREAU OF LABOR STATISTICS Arthur M. Ross, Commissioner OTHER BLS PUBLICATIONS ON A U T O M A T I O N AND PRODUCTIVITY M anpow er Planning to Adapt to New T ech n olog y at an E le c t r ic and Gas U tility (R eport 293, 1965), 25 pp. D e s c r ib e s p erson n el p r o ce d u r e s and p r a c tic e s u sed to m in im ize h ardsh ips on e m p lo y e e s during c o n v e r s io n fr o m m anufactured to natural g a s, in trod u ction of an autom ated telephone sy stem , and ch a n g eov er to autom atic e le v a to rs . O utlook fo r N u m erica l C on trol o f M achine T o o ls (B u lletin 1437, 1965), 63 pp. O utlook fo r this key tech n olog ica l innovation in the m etalw orkin g in du stry and im p lica tion s fo r p r o d u c tiv ity , occu pation al re q u ire m e n ts, training p r o g r a m s , em p loym en t, and in du stria l r e la tio n s . C ase Studies of D isp la ced W ork ers (B u lletin 1408, 1964), 94 pp. , 50 cen ts. C ase studies o f the post la y o ff e x p e rie n c e s o f n e a rly 3 ,0 0 0 w o rk e r s fo r m e r ly em p loyed in the p e t r o leu m refin in g , autom otive equipm ent, g la s s ja r , flo o r c o v e r in g , and ir o n fou ndry in d u strie s . T e c h n o lo g ic a l T ren d s in 36 M ajor A m e r ic a n In d u stries, 1964, 105 pp. Out o f prin t, ava ila b le in lib r a r ie s . R ev iew of sign ifican t te ch n o lo g ica l d ev elop m en ts, with ch arts on em p loym en t, p rod u ction and p rod u ctiv ity . P r e p a r e d fo r the P r e s id e n t's A d v is o r y C om m ittee on L ab or-M a n a g em en t P o lic y . Im p lica tion s o f A u tom ation and Other T e c h n o lo g ic a l D evelop m en ts: A S elected Annotated B ibliog rap h y (B u lletin 1 3 19 -1, 1963), 90 pp. , 50 cen ts. Supplement to B ulletin 1319, 1962, 136 pp. , 65 cen ts. D e s c r ib e s o v e r 300 book s, a r t ic le s , r e p o r t s , s p e e ch e s , c o n fe r e n c e p r o c e e d in g s , and oth er rea d ily ava ila b le m a te r ia ls pu blish ed p r im a r ily betw een 1961 and 1963. In dustrial R etraining P r o g r a m s fo r T e c h n o lo g ic a l Change (B u lletin 1368, 1963), 34 pp. av ailab le in lib r a r ie s . Out of prin t, A study o f the p e r fo rm a n ce o f o ld e r w o rk e r s b a sed on fou r ca se studies o f in du stria l plants. Im pact o f O ffice A u tom ation in the Internal R evenue S e rv ice (B ulletin 1364, 1963), 74 pp. ava ila b le in lib r a r ie s . Out o f p rin t, A ca se study highlighting m anpow er planning and em p loym en t im p acts during a m a jo r c o n v e rs io n . Im pact o f T e c h n o lo g ic a l Change and A u tom ation in the Pulp and P a p er Industry (B u lletin 1347, 1962), 92 pp. , 50 cen ts. G en era l in du stry su rvey and th ree ca se studies highlighting im p lica tion s o f te c h n o lo g ic a l change. T e c h n o lo g ic a l Change and P ro d u ctiv ity in the Bitum inous Coal In dustry, 1920-60 (B ulletin 1305, 1961), 13b p p . , 65 cen ts. T ren d s in tech n olog y and p rod u ctiv ity and im p lica tio n s fo r em p loym en t, u n em ploym en t, and w a g es. A dju stm en ts to the In troduction of O ffice A u tom ation (B u lletin 1276, I9 60), 86 pp. , 50 cen ts. A study o f som e im p lica tion s of the in stallation of e le c tr o n ic data p r o c e s s in g in 20 o ffic e s in private in du stry , with sp e cia l r e fe r e n c e to o ld e r w o r k e r s . Studies o f A u tom atic T ech n olog y (F r e e ). A s e r ie s o f ca se studies o f plants in trodu cin g autom ation. D e s c r ib e s changes and im p lica tion s fo r p ro d u ctiv ity , em p loym en t, occu p ation al r e q u ire m e n ts, and in du stria l re la tio n s . Studies c o v e r c a s e s in e le c t r o n ic s , in su ra n ce, ba k ery , p e tro le u m refin in g , and a irlin e in d u strie s . Sales pu blica tion s m ay be p u rch a sed fr o m the Superintendent o f D ocu m en ts, W ashington, D. C. 20402, o r fr o m reg ion a l o ffic e s o f the Bureau of L ab or S tatistics at the a d d re s s e s shown b elow . F r e e p u blica tion s a re a v a ila b le , as long as the supply la s ts , fr o m the Bureau o f L ab or S ta tistics, U. S. D epartm ent of L a b or, W ashington, D. C. 20212. R eg ion al O ffic e s : New England R egion 18 O liv e r Street B oston , M a ss. 02110 M iddle A tlan tic R eg ion 341 Ninth Avenue New Y o rk , N. Y . 10001 E ast C en tral R eg ion 1365 O ntario Street C levela n d , Ohio 44114 North C en tral R egion 219 South D ea rb orn Street C h ica g o, 111. 60603 Southern R eg ion 1371 P e a ch tre e S treet, NE Suite 540 A tlanta, G a. 30309 W estern R eg ion 450 G olden Gate Avenue B ox 36017 San F r a n c is c o , C a lif. 94102 IM PA C T O F OFFICE AUTOMATION IN T H E INSURANCE INDUSTRY Bulletin N o. 1468 UNITED STATES DEPARTMENT OF LABOR W. Willard Wirtz, Secretary BUREAU OF LABOR STATISTICS Arthur M. Ross, Commissioner For s a le b y th e S u p erin te n d en t o f D o c u m e n ts, U .S . G o v e r n m e n t Printing O ffic e , W a s h in g t o n , D .C ., 2 0 4 0 2 - Price 4 5 cents Preface Under the Manpower Development and Training Act of 1962, the Secretary of Labor is required to establish techniques and methods for detecting in advance the potential manpower impact of automation, techno logical progress, and other changes in the structure of production. This type of early warning system could be of great assistance to management and union leaders, educators, government officials, economists, and others in planning programs to cushion the impact of change. Electronic computers afford opportunities for impressive advances in productivity in clerical work. Computers are being adopted on an increas ingly wider scale in industry and business. The future outlook for office employment in many parts of the economy is likely to be affected signifi cantly by this innovation. This bulletin deals with the impact of electronic computers in insurance, a major white-collar industry which pioneered in the application of office automation. The study covers the extent and pace of office automation over 1954-63, probable developments, and their implication for employment and occupational requirements. The chief sources of information for this bulletin were two mail surveys in 1963, covering over 400 companies having nearly 90 percent of the industry’ s employment. The Bureau of Labor Statistics is grateful to the many insurance company and industry associa tion officials who assisted in the planning of the study. The cooperation of the several hundred insurance companies which participated in the mail surveys is deeply appreciated. The report was prepared by Audrey Freedman, with some assist ance by J. Stephen Keyes and Mable Elliott, under the supervision of Herman M. Sturm. The study was made in the Bureau's Division of Techno logical Studies under the direction of Edgar Weinberg, Chief, as part of the Bureau's research program on productivity and technological developments under the general direction of Leon Greenberg, Assistant Commissioner. in Contents Page Chapter 1. Introduction, summary and highlights-----------------------------Employment in insurance in d u stry ----------------------------------------------Growth and changes in insurance industry ----------------- ---------------Scope, method, and lim itations---------------------------------------------------Summary and highlights ---------------------------------------------------------------Chapter 2. Extent and pace of office autom ation-------------------------------Extent of computer use ----------------------------------------------------------------Pace of introduction --------------------------------------------------------------------Utilization of computers ---------------------------------------------------------------Computer applications by life insurance com p an ies------------------Computer applications by property com panies---------------------------Pace of conversion to E D P -----------------------------------------------------------Chapter 3. Developments and outlook in office autom ation--------------Greater use of optical scanners --------------------------------------------------Use of pre-authorized check plans ----------------------------------------------Mark sensing equipm ent---------------------------------------------------------------Extension of data transmission systems -------------------------------------Trends toward consolidation and reorganization------------------------Chapter 4. Employment in electronic data processing jobs -------------Number employed in EDP u n its ---------------------------------------------------Occupational structure of EDP units ------------------------------------------Planning and programing personnel ---------------------------------------Computer operators ----------------------------------------------------------------Input personnel ------------------------------------------------------------------------Supporting clerical employees ------------------------------------------------Supervisory and related personnel ----------------------------------------Maintenance employees -----------------------------------------------------------Source of EDP s t a f f ----------------------------------------------------------------------Women in EDP jobs ----------------------------------------------------------------------EDP and shift work ----------------------------------------------------------------------Chapter 5. Impact of EDP on employment trends in the insurance in d u stry --------------------------------------------------------------------------------------------Trends in insurance office employment and productivity-----------Effect of EDP on insurance office occupations---------------------------Recent impact on selected occupations-----------------------------------Trends in insurance occupations--------------------------------------------------Tabulating-machine operators ------------------------------------------------General clerical workers -------------------------------------------------------Keypunch operators ----------------------------------------------------------------EDP personnel--------------------------------------------------------------------------Chapter 6. Outlook and implications for the next d ecad e------------------Prospects for next decade -----------------------------------------------------------Manpower implications ----------------------------------------------------------------- v 1 1 2 2 4 7 7 9 13 15 18 18 20 20 20 22 22 23 25 25 25 25 28 28 28 30 30 30 30 32 34 34 37 37 40 40 40 40 43 44 44 45 Contents— Continued Page Appendixes: A . Notes on survey m ethods---------------------------------------------------------B. Selected bibliography---------------------------------------------------------------Tables: 1. Extent of computerization among 410 insurance companies, March 1963 ...................- ................................................ ...................... 2. Size of largest computer operating, by size of company, late 1963 ............................................................ - - ............................... 3. Number of responding companies with computers and total number of computers in operation, by year, 1954-63 -------4. Number of computer applications, 206 companies, 1963 -----5. Occupational grouping of employees working directly with EDP systems in 206 companies operating computers, January 1963 --------6. Source of 1963 EDP staff, by occupation -------------------------------7. EDP shift practices in home offices of companies with computers, by size of office employment, 1963 ----------------8. Office employment growth in surveyed insurance companies, 1954-63 .............. ................................... - ............... .............................. 9. Percent change in policies in force, office employees, and policies per office employee in 17 life insurance companies, 1956-59 and1959-62 ------------------------------------------10. Effect of introducing the EDP system on specific occupa tional groups (as of1963) ----------------------------------------------------11. Employment changes expected for occupational groups during 1963-66, among 206 companies with computers in early 1963 ------------------------------------------------------------------------------12. Expected change in total employment in two selected occupa tional groups by 1966, by employment in each group, all surveyed companies which responded in 1963 --------------------Charts: 1. Computers installed and retired, 226 insurance companies, annually, 1954-63 -----------------------------------------------------------------2. Insurance companies acquiring their first computers, by size of office employment, for specified periods, 1954 to 1964 ---------- ------------ ................................................ - .......................... 3. Computer applications, life insurance carriers, 1963 ---------4. Computer applications, property insurance carriers, 1963 - 5. Occupational makeup of the EDP unit, 206 insurance com panies with computers, 1963 ----------------------------------------------- vi 46 68 8 7 11 14 26 31 33 35 37 38 40 42 10 12 16 17 27 IMPACT OF OFFICE AUTOMATION IN THE INSURANCE INDUSTRY Chapter 1. Introduction, Summary, and Highlights Insurance companies were among the first business firms to use electronic computers. Several of the companies began in the early 1950!s to study the possibilities of computers. A few insurance companies installed computers in 1954. Within the next 10 years, companies in all branches of the insurance industry adopted electronic data processing (EDP) and applied it to various functions and operations. Employment in Insurance Industry As an employer, the insurance industry ranks among the largest in the United States. In 1964, the number of employees of insurance carriers averaged 884,700. Operations of "Insurance Carriers" (SIC 63) include activities in home offices and field establishments of companies that under write various types of insurance, providing guarantees of financial protec tion against specified risks or loss to life and property. Allied to "Insurance Carriers" are "Insurance Agents, Brokers and Service Organizations" (SIC 64), employing about 225,000 persons in insurance sales activities performed by independent contractors (or their employees) who deal with or represent insurance carriers. Insurance carriers, for the purpose of this study, were classified into three groups: life insurance carriers, the largest group, which employed about 470, 000 in 1964, or more than half of all insurance company employees; property insurance carriers, handling fire, marine, and casualty insurance, surety insurance, and title insurance, all of which employed a total of over 350,000 employees; and accident and health insurance carriers, which employed the remainder. (This latter type of protection is referred to in this study as "health insurance, " to avoid confusion of strictly personal dis ability risk coverage with automobile accident coverage, included under casualty insurance.) About 70 to 75 percent of all employees in insurance carriers are engaged in office work; the rest, in sales, custodial or similar work. Office work involves a wide range of skills, from those required for routine record keeping, typing, and office machine operation to those necessary for complex actuarial and statistical work, management, and claims investigation. Nearly half of all insurance carrier employees are women, most of whom work as typists, clerks, office machine operators, and bookkeepers. 2 Growth and Changes in Insurance Industry Insurance carriers over the 1954-64 decade experienced a substan tial increase in business. Concomitantly, total employment rose approxi mately 32 percent between 1954 and 1964, most of the increase occuring in the first 5 years. This rise was significantly greater than employment gains in the nonfarm sector as a whole. Rising population, growth of personal income, and increasing com plexity of legal and economic relationships have contributed to an increasing demand for insurance. The increasing numbers of families and higher family incomes have generated demand for personal insurance against risks of death and disability. Spread of home and automobile ownership and financing, along with many other factors, have stimulated a rise in the volume of property insurance. Purchase of insurance by business enterprises has risen greatly. Fundamental changes in industry organization have taken place since 1945. Less than 20 years ago, State regulations strictly limited the types of insurance a single company could sell. Now, all types of nonlife insurance can be sold by one carrier, which may affiliate with a life carrier to sell "a ll lin e s ." When State regulations were changed a decade ago, consolidations and mergers followed and former single line companies diversified. Marketing of insurance has also been modified. For example, pack aging and simplification of coverages (risks) into a single comprehensive policy, such as the fast-growing "homeowners" policy, eliminates coverage overlap for consumers, increases selling efficiency, and reduces office servicing costs. In addition, a wide variety of new coverages--from dental care to nuclear accident--are being introduced. A variety of advertising media are now used to reach a mass market and direct selling to consumers is done by some carriers. Finally, sales on a standardized group contract basis have added millions of policy certificates without the necessity to "s e ll" each individual covered. As companies increased their scale of activities, office operations were rationalized and the feasibility of computer application was established. In turn, the potential benefits and efficiencies of an integrated data-processing system may have encouraged some marketing and structural changes. For example, a company can now sell life, automobile, and homeowner's coverage through a single agent, charge the policyholder on a single bill, process claims and loans, and pay dividends using only a single basic record. Scope, Method and Limitations This study deals with the extent and pace of the adoption of electronic data-processing technology among insurance carriers, and with its effects on insurance office employees. Electronic data processing encompasses 3 extremely high speed, automatic manipulation of information by computers, and a variety of auxiliary equipment--'‘input” devices, which accept, trans late, and transfer information into the computer; and noutput” devices, to adapt the computer's product to office use--usually by printing it. This study does not cover the impact of the use of mechanical or electrical office equipment, such as electric accounting machinery or punchcard tabulating equipment, which have long been used in insurance offices, or such machines as copiers, centralized dictation systems, mailing, and checkwriting devices. Since sales agents, custodial, and related employees are not directly affected by the spread of EDP, they were not covered by this study. The focus of the report is on office employees. Method of Data Collection. The principal source of information for the study was a mail survey conducted in two stages. First, in the spring of 1963, questionnaires were mailed to every insurance carrier having an establish ment with 250 employees or more, and to 150 smaller firm s. A total of 410 firms was solicited, representing about 89 percent of all insurance carrier employment. The response to this questionnaire provided summary infor mation on firms with EDP for use as "screening data" in planning the second stage. Thus, the second mailing, in late 1963, covered only the firms that reported they were using computers or had them on o rd e r--305 in number. This questionnaire requested detailed information, and had a slightly lower response than the first. (Further information on the methods and limitation of these surveys is provided in appendix A .) Additional detailed data on the spread and use of EDP in the insur ance industry and some of its implications were collected through interviews with industry authorities, both before and after the mail surveys. Among those interviewed were executives of 13 large and middle-size insurance companies that accounted for about 20 percent of all insurance carrier employ ment. In addition, pertinent reports about insurance EDP, appearing in trade publications and other published sources, were analyzed. Limitations of the Study. Some limitations of this study should be observed. Some important manpower aspects of the impact of EDP could not readily be studied by means of mail questionnaires. For example, detailed information was not collected on employee adjustment to the changeover; the procedures adopted to facilitate the introduction; or the psychological reactions of indi vidual employees to change. Such subjects are more adequately investigated through the intensive personal interviews that are generally conducted in case studies. Some of these case studies are listed in appendix B. Because of the complexity and difficulty in defining the output of this service industry, it was not feasible in the course of this study to collect quantitative data that would be adequate for the measurement of industry and company production, and productivity trends. The discussion of these topics 4 in this bulletin, therefore, is highly tentative. Further research will be necessary to develop more definitive information on these aspects of techno logical change in the insurance industry. Summary and Highlights Use of computers in insurance is widespread. By early 1963, about 10 years after computers were first introduced in private industry, insurance compa nies accounting for 80 percent of total insurance carrier employment had installed computers; those accounting for another 5 percent of employment had ordered EDP or were using computer service bureaus. The numerous small companies which, together, accounted for less than 15 percent of all industry employment were not using EDP, but a substantial proportion of these companies had plans to install computers by 1968. An estimate for the entire industry indicates that about 800 computers were operating in about 300 insurance companies in 1963. EDP applications are extensive; trend is toward an integrated, computercentered system. Computer applications include most major insurance office operations that are done on a volume basis; primarily premium bill ing and accounting, commission accounting, and related recordkeeping. A developing trend is the consolidation of individual applications into one record keeping flow, in which a single basic policy record can be used--inside the computer--to accomplish all major insurance tasks. About one-third of the companies surveyed were already using this type of consolidated records system. Automation of input, and the use of data transmission networks, will grow. Automatic translation of source documents (such as premium notices, or policy applications) to punchcards or tape will continue to grow. At the time of this study, optical readers were already being used to reduce the amount of manual keypunching in 8 companies; these machines were expected to be installed in another 32 companies. Several other techniques for reduc ing input preparation (among them: magnetic ink encoding equipment, mark sensing automatic punchers, and the use of turnaround punchcards) had been used by a number of companies. Data transmission by telephone and telegraph lines, enabling field offices to transmit a large volume of information rapidly to the home office computer, was in operation in 18 companies; 29 others had plans to install these systems. They have the effect of reducing files and recordkeeping in field and branch offices, decentralizing, and speeding service and collection of premiums. Computer units in responding companies employed about 15,000 persons; but E t)!3 units represented only a small proportion of total office stafT. Employ ment in computer units soared from about 600 in 1954 to about 16, 000 by 1963. EDP employees, however, represented only about 4 percent of total office staff in computerized companies. New jobs, such as those of the systems 5 analyst and programer, computer and peripheral equipment operator, com prised over a third of EDP staff. Keypunch operators comprise nearly twofifths, and other clerical workers one-fifth of EDP employees. Most women in EDP units worked as keypunch operators or in clerical jobs; a small pro portion were programers. Over 70 percent of the EDP employees were recruited from inside the company. Ninety percent of the console operators and EDP supervisors and 80 percent of the clerks, secretaries, and peripheral equipment oper ators were recruited from within. Some console and peripheral equipment operators, and occasionally keypunch operators were employed for evening or night work, particularly in large companies with extensive EDP installations. Other office workers were rarely employed on shift work. Survey results indicate that the growth rate of office staff declines in com puterized companies. After the initial conversion to EDP was completed, the annual rate of growth in office employment in surveyed companies declined from 4. 2 percent to 2. 4 percent a year. Those responding compa nies which had more recently installed computers experienced a constant rate of increase in office employment. The comparison indicates that after an initial adjustment period (and perhaps after attrition has begun to affect growth), EDP begins to break the rapid growth in office staff otherwise experienced by many insurance companies. EDP jobs were expected to increase, while a substantial proportion of compa nies expected no increase in general clerical workers. More than half of the responding companies indicated in 1963 that they expected planning and pro graming and EDP machine operation jobs to rise by 1966; most of the rest expected no change. On the other hand, general clerical groups, who comprised nearly two-thirds of all employees, were expected to decline in about 26 percent of the companies; to remain the same in 28 percent. Sub sequent information suggests that these trends are probably valid for the 1966-70 period. Keypunch operators were expected to decline in companies with optical scanners. Companies with optical scanners or plans to install them, antici pated some decline among keypunch operators. Completed EDP conversions and the use of other automatic input equipment, as well as turnaround punchcards, were also expected to reduce card punching. About half of all surveyed companies expected a decline or no change, in this occupation. EDP reduced employment of punchcard tabulating machine operators, calcu lators, and routine clerical recordkeeping employees. About seven-tenths of responding computer installations reported a decrease in employment of tabulating-machine operators when operations were consolidated within the EDP system, eliminating many machine tabulation units, often scattered throughout the company. Routine clerical recordkeeping declined in 6 two-thirds of the companies, where file maintenance--including checking, transcribing, sorting, and searching--is now automatically done by com puters. Employment of calculating-machine operators decreased in slightly more than half the offices, as the computers assumed their function. Slowdown in growth may reduce office opportunities for new job seekers. Survey and interview results indicate that insurance offices may not continue to provide a substantial number of openings for young women high school graduates each year. In communities where this type of work has been relied on for a large and steady source of openings, employment counselors may have to consider other types of jobs in order to place succeeding high school classes. Adjustment of the office work force may require more planning in the future. Until recently, the high rate of attrition among large clerical staffs, combined with continued growth in office work force requirements, permitted insurance companies to adjust workers to the new technology through retraining and attrition. Such adjustments are becoming more difficult, as the EDP system reaches further into all departments of the company, and as branch and field office workloads are decreased or altered in worker skill requirements. Office employment will probably increase only 5 to 10 percent over the next decade (1965-75). EDP will have an increasing impact on unit labor require ments as the "total system, " into which all major office operations have been integrated, evolves out of current computer applications. The sales compo nent, however, will not be greatly affected by EDP, and is expected to grow with increasing business. Total insurance carrier employment will not rise as fast during 1965-75 as it did during 1954-64. 7 Chapter 2. Extent and Pace of Office Automation By 1963, practically all large and medium size insurance carriers had acquired electronic computer installations. The few who had not were either awaiting installation of equipment that had been ordered or were using the services of firms that offer their EDP installations for hire on a time basis. During recent years, insurance carriers have responded to the development of improved computers by replacing or supplementing early models of equipment with new models. Beyond a count of the number of computers installed, the extent to which major insurance office functions have been converted to EDP indicates how rapidly this new technology has been applied— and what tasks the coming "total system1 EDP will encompass. 1 Extent of Computer Use On the basis of responses to the first screening survey, covering 410 companies with 89 percent of total insurance industry employment, it is estimated that for the industry as a whole, about 800 computers were in stalled (or scheduled for installation) in 300 insurance companies, accounting for nearly nine-tenths of all industry employment in January 1963. By March 1963, 253 of the responding companies had computers (table 1). These companies accounted for nine-tenths of all employment covered by the survey, and 94 percent of all office employment represented by surveyed companies. Another 25 companies, representing about 2 per cent of all office employment covered in the survey, were awaiting delivery of their first computers, already on order. About as many companies, r e porting a similar proportion of employment, were using computer time rented from EDP service bureaus. The remaining 105 companies in this screening survey had less than 3 percent of all office employment reported. Among these small carriers, computer plans were being made by 30 companies. The distribution of companies by size of computer is shown in table 2. In general, the larger companies were using the large computers; smaller firm s, computers of lower capacities. Table 2. Size of Largest Computer Operating, by Size of Company, Late 1963 Companies with office employment o f - 1 . 4 9 9 ------------------------------5 0 0 - 1 , 499 -------------------1, 500 and over------------- Percent of companies with - Total 100 . 0 100.0 100 . 0 Large computer Medium computer Small computer 8 .6 21. 7 62. 3 n. 4 32. 5 24. 5 80. 0 45.8 13. 2 T a b le 1. a : 1 c o m p a n ie s 1 N um ber N u m b er (th ou sa n d s) P er cen t C om p a n ies with c o m p u te rs on o r d e r as o f M a rch 1963 Coin p a n ie s with c m p u te rs ;o Off:ice e m p lo y e e s 1 Item E xtent o f C o m p u te riz a tio n A m on g 410 In su ra n ce C o m p a n ie s , M a rc h 1963 O ffi ce e m p lo y e e s 1 N um ber Numbe r (thou san ds) P er cent C o m p a n ie s ren tin g c o m p u te r tim e f r o m s e r v i c e b u re a u s o n ly O ffic e e m p lo y e e s 1 N um ber N um ber (thou san ds) A ll c o m p a n i e s ----- 410 484 . 0 1 0 0 .0 253 454. 9 94. 0 25 9. 1 L i f e --------- -------------------H e a l t h ------------------------P r o p e r t y ------------------- 181 36 193 184. 1 24. 1 275. 7 100 . 0 100 . 0 100 . 0 101 32 120 175. 2 22. 6 257. 1 95. 2 9 3 .5 93. 2 12 3 .5 .6 5. 0 1 12 P er cen t B e c a u s e o f rou n d in g , su m s o f in d iv id u a l item s m ay not equal 1 0 0 .0 . C o m p a n ie s with no co m p u te r p lan s O ffic e e m p lo y e e s 1 O ffic e e m p lo y e e s 1 O ffic e e m p lo y e e s 1 N um ber N um ber (th ou san ds) P er cen t N um ber N u m b er (th ou san ds) P er cen t N um ber N um ber (th ou san ds) P er cen t 6. 4 1. 3 1 .9 27 9. 0 1 .9 30 4. 6 1 .0 75 1 .9 2. 4 1 .8 14 2 11 1 .0 .7 7. 3 .5 2. 7 2. 7 19 1 10 2. 2 .3 2. 0 1 .2 1 .3 .7 35 2. 1 1. 1 40 4. 3 1 .6 1 E m p lo y m e n t data a r e f o r the p a y p e r io d ending n e a re s t Jan. 15, 1963. N ote: C o m p a n ie s planning to in s ta ll co m p u te rs b e fo r e 1968 P e r c e n t a g e s ca lcu la te d f r o m un round ed data. 9 P ace of Introduction D etailed in form ation about the pace of com puter introduction is available only fo r those com panies which responded to the second qu estion naire: 206 com panies which already had installed com p u ters, 20 com panies which w ere awaiting d eliv ery of their fir s t m achine, and another 20 c o m panies which w ere renting com puter tim e fro m s e rv ic e bureaus. In form a tion in the rem ainder of this bulletin is based on these re sp o n se s; the data are not inflated to c o v e r com panies that answ ered only the b r ie f screen ing que stion n aire. The p r o g r e s s o f e le ctro n ic data p ro ce ssin g among insurance c a r r ie r s , as indicated by the number of com panies introducing com puters each year and the number o f com puters installed, is shown in table 3. In the fir s t 2 y e a rs , 1954 and 1955, 17 com panies installed com p u ters. The average size of the o ffice w ork fo r c e in these pioneering com panies was clo s e to 10,000. The p ra ctica b ility o f using com puters fo r insurance functions was established by these key com panies and their exp erien ce was rep orted widely.. A fa irly rapid diffu sion of the new technology follow ed o v er the next 8 years (chart 1). F ro m the beginning of 1956 to the end o f I960, a total of 109 com panies installed com p u ters, o r an average of about 22 p er yea r. B ecause m ost of these com panies w ere v ery la rg e , m o re than half o f all insurance em ployees w ere working in com panies with EDP by I960. A s new and greatly im proved m odels w ere introduced, the number of com panies installing com puters in crea sed from 19 in I960, to 34 in 1961, and 41 in 1962. By the end of 1963, a total of 226 insurance com panies had either installed com puters or scheduled them fo r installation. The diffu sion of the technology throughout the industry was evidenced by the in creasin g number o f sm all com panies introducing com puters in the decade between 1954 and 1964. (Chart 2 .) Another m easu re of the p r o g r e s s of e le ctro n ic data p ro ce ss in g was growth in the total number of com puters installed (see table 3). Since many com panies acqu ired m ore than one com puter, the number o f com puters in crea sed m ore rapidly than the number of com panies installing them . In 1954, only two com puters w ere in operation in two fir m s ; by the end of 1963, 673 com puters w ere in use by 226 firm s ; m ore than half w ere installed after I960. The average number had ris e n to three p er com pany by the end of 1963. The average life insurance com pany used 3 .2 com p u ters, p rop erty c a r r ie r s used 2 .7 , and health insurance com panies 2. Although health com panies operated the few est com p u ters, they had tw ice as many m achines p er 1,000 o ffice em ployees as p rop erty com panies, and ov er 1^ tim es as many as life c a r r ie r s . 10 rt 1. COMPUTERS INSTALLED AND RETIRED, 226 INSURANCE COMPANIES, ANNUALLY 1954-63 of computers 00 8 0 Installed Retired 60 40 20 00 8 0 60 40 20 0 1954 1955 1956 1957 In 1963 includes installed and on order. 1958 1959 11 T a b le 3* N u m b er o f R e s p o n d in g C o m p a n ie s w ith C o m p u te r s and T o ta l N u m b er o f C o m p u te r s in O p e r a tio n , b y Y e a r , 1 9 5 4 -6 3 Y e a r ending N u m b er o f c o m p a n ie s w ith c o m p u te r s N u m b er o f co m p u te rs in o p e r a t io n at s o m e t im e d u rin g the y e a r 1 9 5 4 ---------------------------- 2 2 1955 1956 1957 1958 ------------------------------------------------------------------------------------------------------------1 9 5 9 ---------------------------- 17 35 57 78 107 24 64 99 141 185 i 9 6 0 ---------------------------1961 ---------------------------1 9 6 2 ---------------------------1963 ---------------------------- 126 160 232 387 544 1 673 l 201 1 226 I n s t a lle d o r s c h e d u le d fo r in s t a lla t io n . A verage num ber of c o m p u te r s per com pa n y 1. o 1 .4 1.8 1. 7 1.8 1 .7 1.8 2. 4 2. 7 3. 0 12 Chart 2. INSURANCE COMPANIES ACQUIRING THEIR FIRST COMPUTERS, BY SIZE OF OFFICE EMPLOYMENT, FOR SPECIFIED PERIODS, 1954 to 1964 N um ber of Companies 50 40 30 20 I0 0 1 9 5 4 -5 7 1 9 5 8 -6 0 1 9 6 1 -6 4 13 Of the com puters operating in responding com panies during 1963, about 100 w ere in com panies operating only one m achine; m ost o f the rest w ere functioning as parts of m ulticom puter system s in hom e o ffic e s o f the la rg e r com p an ies. Only nine respondents, all la rge life o r p rop erty c a r r ie r s with hom e o ffice com p u ters, rep orted additional com puters in fie ld o ffic e s . One com pany, how ever, reported as many as 28 fie ld c o m puters in stalled o r scheduled fo r installation. Although these figu res gen erally m easure the rapid diffusion of e le ctro n ic data p r o ce ss in g , they do not fully indicate the sharp growth in computing capa city. An im portant trend, beginning in 1957 and a c celeratin g after I960, was the replacem ent o f p reviou sly installed c o m puters with m ore recen t im proved m odels. At fir s t, la rg e r capacity c o m puters w ere adopted to rep la ce sm a ller m od els. A fter I960, many com panies rep la ced th eir com puters with vastly im proved "se co n d g en era tio n " m achin es. T hese later m odels in corp orated tra n s is to rs in place of vacuum tubes, and had m em ory cap a cities and tape speeds many tim es higher than previou s com p u ters. In som e in stan ces, they w ere available at low er rental o r purchase p r ic e s than had been charged fo r e a rlie r m odels of sm a ller capacity. Looking ahead, a wave of replacem ent o f "secon d gen eration " com puters may be anticipated ov er the next few y e a rs . New m odels o f com p u ters, now being placed on the m arket, u tilize m ic ro e le c tro n ic circu its and have m em ory capacity and speeds many tim es those of the tra n s is to rize d generation. The cost and tim e needed to re p ro g ra m fo r the new com puter system s w ill be im portant fa cto rs affecting the extent and pace o f replacem ent of old er m od els. U tilization of C om puters In a ssessin g the pace o f introducing e le ctro n ic data p ro ce ss in g , the extent to which com puters are applied to different w ork functions within in surance com panies is im portant. Only a sm all part of the d a ta -p ro ce ssin g w orkload su sceptible to com pu terization is affected at the outset o f a chan geover. Each com puter application requ ires extensive analysis o f existing p ro ce d u re s, developm ent and testing of p ro g ra m s, and the re tra in ing of em p loyees. T o determ ine m ore p r e c is e ly how intensively e le ctro n ic data p r o c essin g was utilized, each com pany was asked to indicate w hich o f 22 d if ferent d a ta -p rocessin g operation s w ere handled by a com puter, and which would be com p u terized ov er the next few y e a rs . The resu lts suggested that insurance com panies w ere steadily extending the application o f com p u ters, but that full use of the com p u ter's potential was still in the future. The m edian number of applications in 1963 was nine (table 4). Such a count of applications, how ever, is greatly affected by the number of com panies which either do not p e rfo rm som e functions at all, o r 14 Table 4. Number o f Com puter A pp lication s, 206 C om panies, 1963 Number o f applications None reported 1 .............................. 2 ................................................... - 3 .....................4 ..................... . 5 ..................... 6 .............................. 7 ..................... 8 ....................... . 9 ..................... . 10 ........................... 11 . 12..... ........................ 13 .............. .. 14 .................... 15 .................... 16-22 ............ . Total number of com panies 5 3 8 4 10 15 7 17 17 25 23 17 13 11 12 7 12 15 which have such a low volum e in som e functions that com pu terization would not be w orth the expense of program in g and co n v e rsio n . F o r exam ple, som e com panies r e ly on brok erage firm s fo r sales and th e re fo re would not have such applications as p olicy h old er billing o r c o m m issio n accounting fo r each agent. Mutual com panies would not ord in a rily have stockholder file s , nor would m ost stock com panies p r o c e s s p olicy h old er dividends. A ccord in g ly , the extent o f utilization o f com puters m ay have been s o m e what understated. Charts 3 and 4 show the extent to which EDP was applied in each o f the 22 different functions by 86 life com panies and 93 prop erty c o m panies that rep orted on com puter application s. The types of applications d iffer between life and prop erty c a r r ie r s . In both types, how ever, 8 of the 22 w ork functions w ere com p u terized by m o re than half o f the c o m panies by the end of 1963. C om puters w ere also being applied fo r all other listed functions by som e com p an ies, but not as w idely. Com puter A pplications by L ife Insurance C om pan ies. Among life insurance com p an ies, the two m ost frequent functions to which com puters w ere applied w ere prem ium billing and prem ium a ccou n tin g --ta sk s which fo r m e rly r e quired la rge num bers of cle r k s handling file s involving fr o m a few hundred thousand to tens o f m illion s of p o lic ie s . T hese la rg e volum e task s, ty p i ca lly cen tra lized at the hom e o ffic e , w ere pa rticu larly adaptable to the com p u ter's trem endous speed o f calcu lation and printing. B esides la bor savings, intangible con sideration s o f better management co n tro l o v e r this m a ssiv e task, fa ster co lle c tio n s , and im proved cu stom er s e rv ic e w ere p roba bly fa cto rs in introducing com puters in these operation s. Since the calcu lation o f agents' co m m issio n s (based on types and siz e s o f p o lic ie s sold) is c lo s e ly related to the sam e p o licy r e c o r d fro m which prem ium b ills are derived , co m m issio n accounting was also among the m ost frequent functions fo r which com puters w ere used by life c a r r ie r s . Inform ation on com m ission s earned is a "by p rod u ct" of the billing o p e r a tion. Many life com panies planned to extend e le ctro n ic data p ro ce ssin g to two in terrelated functions: P o lic y issu e and p o licy loan accounting, w hich are within the sam e b a sic r e c o r d flow . B esides applying com puters to recordk eepin g task s, involving m a ssiv e, d a y -to -d a y workloads, som e life c a r r ie r s w ere utilizing c o m puters in product d ev elop m en t--th e con stru ction o f new co v e ra g e s , packages, o r rates which might expand th eir m ark ets. A ctu arial analyses and m o r tality o r m orbidity studies are essen tial fo r this p u rp ose. In som e o f these applications, com puters afford actuaries and statisticians the opportunity to p e rfo rm calcu lation s hitherto not e con om ica lly fe a sib le . The gradual s te p -b y -s te p extension o f e le ctro n ic data p ro ce ss in g within an organ ization is illu strated by the ex p erien ce o f a la rge life 16 Chart 3. COMPUTER APPLICATIONS, LIFE INSURANCE CARRIERS, 1963 Number of Companies APPLICATION Premium billing Premium accounting Commission accounting Valuation of reserves Agency (producer) statistics Actuarial analysis Policyholder dividend accounting Policy loan accounting Payroll Unearned premium reserves Mortgage loans M ortality and/or morbidity studies Policy issue General accounting Miscellaneous Claims processing Stockholder dividend accounting Reserve for unpaid claims Investments other than mortgages Personnel records Reports to statistical (experience rating) agent Underwriting 0 10 20 30 40 50 60 70 80 90 17 Chart 4. COMPUTER APPLICATIONS, PROPERTY INSURANCE CARRIERS, 1963 Number of Companies APPLICATION Unearned premium reserves Agency (producer) statistics Premium accounting Reports to statistical (experience rating) agent Premium billing Reserve for unpaid claims Commission accounting Claims processing Policy issue Payroll General accounting Miscellaneous Policyholder dividend accounting Actuarial analysis Investments other than mortgages Valuation of reserves Personnel records Underwriting Stockholder dividend accounting Policy loan accounting Mortgage loans Mortality a n d /o r morbidity studies 18 insurance com pany which installed its fir s t com puter during the m id -1 9 5 0 's . During the fir s t few y e a r s , the com pany con verted three operations to EDP: actuarial an alysis, valuation o f r e s e r v e s , and m orta lity studies. Since these functions are not d ire ct s e rv ic e s to p o licy h o ld e rs , it was felt that experim entation would not disrupt cu stom er relation s. The next stage was the con v e rsio n o f m a jo r recordk eepin g functions which requ ired , despite m echanization, a large num ber o f c le r ic a l w o rk e rs . These functions included prem ium b illin g, prem ium accounting, p o lic y h older dividend paym ents, and agent's c o m m issio n accounting. These four separate file s (each containing a part o f the p o lic y r e c o r d of m illion s of p o licy h old ers) w ere converted to com puter p r o c e s s in g . Subsequently, the fou r separate file s w ere repla ced by a single integrated file , fro m which all fou r functions have since been handled. In 1965, additional tasks requiring re fe re n ce to the b a sic p o lic y r e co r d (such as p o lic y loan accounting) are being p r o c e s s e d by the com puter using the sam e m a ster file . A third phase o f the con v ersion to e le ctro n ic data p ro ce ss in g at this com pany was the establishm ent of com puter cen ters away fro m the hom e o ffic e , linked with the hom e o ffice by w ire com m unication. Com puter A pplications by P rop erty C om pan ies. Am ong p rop erty c a r r ie r s , m a jo r functions fo r which com puters w ere used included prem iu m , r e s e r v e , and claim s accounting, prem ium billing and co m m is s io n accounting. Another im portant task gen era lly com p u terized was the preparation of agency accounts and sales r e c o r d s . The v a riety and com p lexity o f com pany organization, and frequently le s s d ire ct m ethod of prem ium co lle ctio n , among p rop erty c a r r ie r s had somewhat slow ed their p r o g r e s s toward integrated com puter p r o ce ss in g . H ow ever, as indicated on chart 4, the p rop erty c a r r ie r s surveyed used EDP on as wide a s e le ctio n o f tasks as the life c a r r ie r s . An illu stration of the con v ersio n to EDP at a p rop erty com pany is the experien ce of an autom obile casualty com pany. The firs t two operations c o m p u te r iz e d --r e s e r v e fo r unpaid claim s and unearned prem ium r e s e r v e s - w ere large sca le c le r ic a l operation s, converted fr o m manual operation s. M anagem ent's d e cis io n to con vert claim s p r o c e s s in g , the third application, was based on a d e sire to analyze its underwriting ex p erien ce to develop c r ite r ia fo r rejectin g high risk p o lic y ap plication s. This EDP application was intended to im prove the com pany's lo s s r e c o r d rather than to save c le r ic a l m an -h ou rs. P a ce of C on version to EDP. The com panies which installed EDP before 1958 m oved v e r y slow ly at fir s t in converting functions to EDP. The num b e r of functions converted during the fir s t 2 yea rs after EDP installation in crea sed fro m th ree, fo r com puters acqu ired in 1955, to o v e r seven, fo r com puters in stalled between 1961 and M arch 1963. This reduction in c o n v e r s io n tim e was due to the sm a ller size o f com panies that installed EDP 19 in later y e a rs ; the fact that pioneering EDP com panies shared their e x p e r i ences with oth ers; im proved program ing m ethods and better EDP equipment; consultant help in program ing and system s an alysis, which com puter m anufacturers and management s e r v ic e s firm s had begun to provid e; and in crea sed fa m ilia rity with EDP on the part of com pany management and em p loyees. 20 Chapter 3. Developments and Outlook in Office Automation With e le ctro n ic data p ro ce ssin g virtually u n iversally installed, tech nical advances in the insurance industry a re expected to m axim ize e fficie n cy in the utilization of com puter capacity. One advance w ill be in g rea ter autom ation o f input through optical scan n ers; a secon d is the auto m ation of inform ation tra n sm ission , while a third, and perhaps m o st im portant, is con solidation of functions and file s into a "total system . " G reater use o f Optical Scanners Optical sca n n ers— e le ctro n ic d evices which "r e a d " code sym bols (bars o r dots), alphabetic, o r nu m erical c h a ra cte rs — provide a m eans o f saving c le r ic a l la b or in preparing data fo r e le ctro n ic data p ro ce ss in g . As of m id-1963, only 8 com panies had in stalled equipment but 9 had o rd e re d and 23 definitely planned to o rd e r this equipment. T hese 40 com panies em ployed about 27 p ercen t o f the o ffic e em ploym ent in 226 com panies that had, or had ord e red com p u ters. M ore im portant, they em ployed o v e r 2, 000 keypunch o p e ra tors. The optical scanner afford s opportunities fo r elim inating a substan tial volum e of docum ent tra n scrip tion done by keypunch o p e ra to rs. The eight com panies that had in stalled optical scanners w ere using them p rim a rily fo r record in g prem ium paym ents. In this application, the com puters print p r e m ium bills on a "turnaround fo r m " — a fo r m designed to notify the p o lic y holder o f the amount due, after which it is returned by the p olicyh old er when he rem its the payment. The fo rm , when returned to the com pany, is p r o c e s s e d through the optical scanner which " r e a d s " the amount due and p o licy identification m a teria l, and tra n sfers the inform ation to cards or tape to be fed into the com puter to make the appropriate accounting en tries. In two com panies which had optical scanning equipment, about 10, 000 prem ium co lle ctio n stubs w ere scanned each day. The keypunch and v e r ifie r op era tors w ere no lon ger needed. Only two o p e ra to rs, having about the sam e skills as keypunch o p e ra to rs, w ere needed on the optical scan n er, ch iefly to p r o c e s s re je cts and initiate m achine runs. Use o f P re-a u th orized Check Plans A developm ent which redu ces the amount of prem ium billing w ork is the p re-a u th orized ch eck plan. T his technique allow s the c a r r ie r , when authorized by a p olicy h old er, to draw a ch eck on the p o lic y h o ld e r 's bank account to pay prem ium s as they fa ll due, often once a month. In o rd e r to facilitate bank handling o f these ch eck s, insurance com panies m ay " e n c o d e ," or print the ch eck s, with m agnetic ink ch a ra cters that a re readable by bank sorting m achines. A total of 16 com p an ies— 15 life and 1 health— w ere using m agnetic ink encoding equipment in this way in 1963. Two m ore com panies 21 O ptical scanners coupled with data transmission facilities enable one insurance carrier to update, in its home office computer, premium records from hundreds of its field offices overnight. 22 had o rd e re d , and six had definite plans to o rd e r this equipment. Apart fro m its use in co lle ctio n and banking of p rem iu m s, m agnetic ink equipment has lim ited potential in insurance c a r r ie r s . M ark Sensing Equipm ent F ourteen com panies u tilized m ark sensing m achines to reduce input preparation. T hese d ev ices autom atically punch card s on which m arks have been m ade by a pen cil with a s p e cia l type o f lead. F our com panies had o r dered such d ev ices and five definitely planned to o rd e r. These 23 com panies had 16 p ercen t o f the o ffice em ploym ent in the 226 com panies that had in stalled o r ord ered com p u ters. M ark sense cards a re used by agency o ffic e s to make inquiries on p o licy status fro m the com puter file s , or to make changes autom atically in p o lic y r e co r d s kept on tape o r punched card file s in the hom e o ffice . An agent or other field em ployee m arks a ca rd and sends it to the hom e o ffice . M ark sensing equipment autom atically punches the m ark s, creating a punchca rd which can then be m achine translated into m agnetic tape. M arked cards can thus elim inate a typed business le tte r, o r som e other manually produ ced fo r m o f inquiry which would requ ire a coding c le r k and a keypunch op era tor fo r translation to com p u ter-u sable fo rm . M ark sensing equipment m ay eventually be supplanted by m ark re a d ing equipment. In such a c a s e , an ordin ary pencil could be used to m ark ca rd s, which cou ld then be read to produ ce either card o r tape in qu iries o r change o rd e rs to the com puter. E xtension of Data T ra n sm ission System s Data tra n sm ission equipment for sending inform ation over telephone or telegraph circu its in conjunction with e le ctro n ic data p ro ce ssin g are e x pected to have a profound im pact on the distribu tion o f r e c o r d s , w orkload, and em ploym ent between field and hom e o ffic e s . Eighteen com panies had this equipm ent— typically la rg e com pan ies, with long exp erien ce in EDP and s e v e ra l la rg e com p u ters. Six com panies had o rd e re d and 23 others definitely planned to o rd e r such system s. These 47 com panies had 206, 000 em p loyees, or about 52 percen t o f o ffic e em ploym ent in 226 com panies that had installed o r o rd ered com p u ters. Data tra n sm ission system s provide a m eans of rapid interchange of in form ation between outlying branch o ffice s and the hom e o ffic e com puter cen ter. F or exam ple, branch o ffic e s o f p rop erty com panies m ay c o lle c t p rem iu m s, deposit them in lo c a l banks, and transm it inform ation to the hom e o ffic e to indicate which p o lic ie s a re paid, and the amount deposited. Hom e o ffice com puters m ay then use these data to update, their m aster accounts and p o licy r e c o r d s . F ield o ffic e s which have the pow er to settle claim s m ay use the tra n sm ission system to com m unicate the authorized cla im amount to the hom e o ffic e , w here a check is m ailed through the EDP accounting p roced u re. 23 In health insurance com p an ies, field o ffice s use data tra n sm ission system s to ask the hom e o ffice s whether a particular patient is a p o licy h o ld e r, and to what type of plan he has subscribed . Data tra n sm ission system s, still in an early stage o f u se, m ay r e sult in significant econ om ies o f tim e and la b or. B efore 1970, com panies m ay be using " r e a l tim e" system s in which data tra n sm ission and fast ran dom a c c e s s com puter m e m o rie s would handle each inquiry or transaction fro m a la rge network of field stations as fast as the inquiry o c c u r s . Rapid a c c e s s to the hom e o ffice com puter would substantially reduce fie ld o ffice p ro cessin g and r e co r d s . Trends Tow ard Consolidation and R eorganization One o f the m ost significant developm ents accom panying the in tr o duction o f EDP is the trend toward consolidation o f many separate files* and re co rd s into a few m aster file s . In 1963, o f 226 com panies that had installed com p u ters, 66 com panies accounting fo r 46 p ercen t o f o ffic e em ploym ent, had consolidated EDP system s, in which m a jo r functions w ere p r o c e s s e d by the com puter through one b a sic file . Few o f these sy ste m s, h ow ever, had reached their fu llest potential of consolid ation ; about half of these w ere in life com panies, a third in property com panies, and a sixth in health com panies. B efore EDP, separate operating departm ents maintained separate sets o f file s for such functions as billing, loan accounting, dividend a c counting, cla im s, and agents com m ission s. One com pany rep orted that it had em ployed a substantial number o f cle rk s to maintain and update 14 se p arate files — each containing som e fragm ent o f in form ation about a single p o lic y --d is tr ib u te d among agents; branch o ffice s ; and actu aria l, loan, d iv i dend, disability cla im , and legal departm ents. A change in the p o licy often meant changing som e item s in each of these 14 file s , with the attendant p o ssib ility o f e r r o r s . H ow ever, this was con sid ered an e ffectiv e way to maintain adm inistrative con trol ov er the la rg e num bers o f person s and the m ass of w ork involved. M inim um , lim ited training a lso m itigated the effects of high turnover among the fem ale high sch ool graduates who w orked only a few y ea rs. As r e co r d s and operations a re consolidated into the EDP system , functions which once requ ired the cooperation o f three departm ents (such as prem ium billin g, w here loan and dividend file s w ere a lso n e c e s s a r y to ca lcu late the bills) a re c a r rie d through a ll steps and re con cilia tion is handled in side the com puter. Bulky card file s a re elim inated, tabulating equipment is retired , few er con trols and audits a re requ ired , few er fir s t -lin e su p erv isors are needed. A m a jor resu lt o f consolidation w ill be reduction in the num ber o f cle r k s . 24 The effects o f a con solid ated system on em ployees of one la rg e life insurance com pany is d e s crib e d by an o fficia l: A s inform ation becam e available in com plete fo rm in the hom e o ffic e , rather than in the fo rm e r segm ented form with loan, d iv i dend, values, and prem ium data in different departm ents, the lim ited sp ecia list cle rk s disappeared. So too did m any o f the old concept w ork su p erv isors disappear as the la rg e r repetitive c le r ic a l w ork staff disappeared. In their place cam e personn el trained and fa m ilia r with a full package o f in form ation about the p o licy . . . . The m ost dram atic change in field operation s o c c u r r e d with the centralization o f the m oney flow p r o c e s s e s of prem ium and other co lle ctio n s and with it, o f co u rs e , all related accounting and s e rv ic e requ ests . . . . Thus m uch r e c o r d r e fe r ence and posting activity w as elim inated in the fie ld o ffic e . . . . Typing activity too disappeared in con sid erab le m easu re as re p o rts becam e u n n ecessa ry . . . . The im pact o f the com puter p r o c e s s e s on fie ld o ffic e through elim inating volum e transactions and reducing ju n ior staff, while m aking m o re sophisticated tools and in form ation d ire ctly a v a il able to the agency and agent has m a te ria lly redu ced the r o le o f the fie ld o ffice staff to that o f a re la y station except fo r that ro le p e rfo rm e d only by com petent sen iors with s e rv ic e skills and insurance understanding. 1 A casualty com pany o ffic ia l d e s c rib e s the system s in his branch o f the industry: The p roced u res we build now can help us to rea ch an eventual con solid ated system in which all in form ation pertaining to a single p o lic y h o ld e r --fr o m p relim in a ry r is k evaluation data through endorsem ent, rev ision , prem ium , dividend, and lo s s h istory fo r each type of cov era g e c a r r ie d --a ll w ill be on one m aster r e c o r d . . . . rep la cin g variou s file s needed fo r each policyh old er even with the m uch im p roved p roced u res now in effe ct. 2 In short, the con solidation o f file s into one m a ster file , p r o c e s s e d on the com puter, m ay resu lt in savings in c le r ic a l labor m uch greater than the introduction o f the com puter its e lf. 1 R ich a rd D. Dotts, "Im pact and O p p ortu n ities--C om p u ters and F ie ld O perations, " in P roceed in g s o f the L ife O ffice M anagement A sso cia tio n , 1963, pp. 220-224. New Y ork, N. Y. , the A sso cia tio n , 1963. 2 Raym ond Deck, Senior V ice P resid en t, A m e rica n Mutual L iability Insurance Company, as quoted in "Insuring P rofita b le P o l i c i e s ," by R ich ard D. Kornblum , B usiness Autom ation, June 1965, pp. 54-59, 70, 72. 25 Chapter 4. Enployment in Electronic Data Processing Jobs One o f the m ost im portant resu lts o f the introduction o f e le ctro n ic data p rocessin g is the crea tion o f a group of new jo b s in each o ffice to m an age, p rogra m , operate the equipment, and p e rfo rm the c le r ic a l tasks n e c e s sary fo r preparing data for the com puter. The num ber and type o f these jo b s in the insurance o ffic e s surveyed, and so u rce s o f recru itm en t are d iscu sse d in this chapter. Number E m ployed in ED P Units An estim ated total o f about 15, 000 p erson s in January 1963 w ere working d ire ctly with EDP in insurance c a r r ie r s , contrasted with only about 600 em ployees in EDP units in 1954. Em ploym ent in EDP jo b s constituted about 4 p ercen t o f total o ffice em ploym ent in insurance com panies surveyed in 1963. F o r all insurance c a r r ie r s , the estim ated num ber o f EDP em ployees was around 19, 000. The average (mean) number of em ployees in EDP units was 74, but the s iz e o f the units ranged fro m 5 to 1, 391 em p loyees. Com panies operating la rg e com puters had substantially la rg e r EDP staffs than those using sm all com puters only. The average EDP em ploym ent in com panies operating large com puters was 123; in those using sm all com puters only, 38. O ccupational Structure o f EDP Units The w ork involved in ele ctro n ic data p ro ce ssin g requ ires em ployees who have a wide range o f s k ills , ranging fro m routine c le r ic a l ab ilities to the com p lex skills o f system s analysts. Em ploym ent, by occupational group, of o v e r 15, 000 em ployees working d ire ctly with EDP system s in 206 com panies that had in stalled com puters is shown in table 5 and chart 5. Although the few com panies that w ere awaiting installation or using outside s e r v ic e bureaus had a few EDP em p loyees, ch iefly p ro g ra m e rs and system s analysts, they w ere not included in this distribution. Planning and P rogra m in g P erson n el. These key em ployees accounted fo r a little o v e r on e-fifth o f all EDP em ployees in the 206 com panies stu died .3 Included w ere p r o je c t planners, who design organizational, p roced u ra l, and w ork flow plans; system s analysts, who analyze data p ro ce ssin g p rob lem s to devise com puter system requirem ents and develop program ing p ro ce d u re s; and p ro g r a m e rs , who con vert the an alysts' statem ents o f tech nical o r business p roblem s into its exp licit instructions which guide the c o m p u te r's actions. 3 F or detailed d escrip tion s o f jobs in e le ctro n ic data p ro ce ss in g , see the 1965 edition of the D ictionary o f Occupational T itles (U. S. E m p loy m ent S e rv ice , Bureau of Em ploym ent S ecurity, Washington, D. C . ). 26 Table 5. Occupational Grouping of E m ployees W orking D irectly with EDP System s in 206 Com panies Operating C om puters, January 1963 Total em ploym ent Occupational group A ll EDP em ployees Planning and program ing personnel: P r o je c t plann ers, system an alysts, p r o g r a m e r s -------------Com puter o p e r a t o r s ________________ C onsole o p e r a t o r s . ____ ___ P erip h era l equipment op era tors __ ___________ ____ Input person n el (keypunch op erators and v e r ifie r s )______ Supporting c le r ic a l w ork ers __ __ Tape lib ra ria n s, ca rd and tape file clerk s S e cre ta rie s , typists, and recep tion ists __ __ ____ Coding clerk s and gen era l c le r ic a l em ployees „ ___ S u pervisory and related m anagerial and p ro fe ssio n a l em ployees ______________ __ M aintenance engineers (e le ctro n ics m ech a n ics)___________ W omen P ercen t o f total in Number each o c c u pation or group Number P e rce n t d is t r i bution 15,238 100. 0 9, 280 60. 9 3,2 90 21. 6 509 15.4 2, 221 1,025 14. 6 6. 7 289 106 13. 0 10. 3 1, 196 7. 8 183 15. 3 5, 631 37. 0 5 ,5 9 9 99.4 3,4 2 9 22. 5 2, 818 82. 2 382 2. 5 306 80. 1 335 2. 2 335 100. 0 2, 712 17. 8 2, 177 80. 3 598 3. 9 64 10. 7 69 .5 1 1.4 27 Chart 5. OCCUPATIONAL MAKEUP OF THE EDP UNIT, 206 INSURANCE COMPANIES W ITH COMPUTERS, 1963 Computer maintenance Because o f rounding, the figures in th is ch a rt do n o t to ta l 100.0% 28 The average (median) num ber o f em ployees in this occupational group in insurance c a r r ie r s surveyed was eight. The total number in the group, h ow ever, ranged w idely among the c a r r ie r s , fro m 1 to 191. O ffices using la rg e com puters em ployed an average (median) o f 22 planners, ana lysts and p ro g ra m e rs ; m o re than tw ice the staff fo r m edium size com puters and m o re than five tim es the avera ge sta ff fo r sm a ll com p u ters. Since the la rg e com puters w ere u tilized ch iefly by la rg e com p an ies, with extensive ap plication s, a rela tively la rg e sta ff o f p ro g ra m e rs and system s planners was required. Com puter O p era tors. About 15 p ercen t o f a ll EDP em ployees w ere engaged as console, op era tors o r peripheral-equipm ent o p e ra to rs. C onsole op era tors m o n itor and con trol e le ctro n ic com p u ters. P erip h eral-equ ip m en t op era tors (who accounted fo r m ore than half o f this occupational group) included high speed prin ter o p e ra to rs, who operate equipm ent which con verts inform ation on tape into printed r e c o r d s ; and con v e rte r o p e r a to r s , who operate m achines that tra n sfer data fro m card to tape. Com puter units em ployed about 3 (median) co n sole and 3 (median) p erip h eral-equ ipm en t o p era tors. The range in the num ber o f co n sole o p e r ators was rela tiv ely n arrow , fr o m 1 to 37; that o f p erip h eral-equ ipm en t o p e r a to rs , 1 to 63. The m edian size o f operating staffs at com panies using la rg e com puters was not m uch la rg e r than at com panies using m edium and sm all com puters. E lectron ic d a ta -p ro ce ssin g equipment operates with a high d egree o f autom ation, requiring a m inim um num ber of attendants. Thus, the size o f operating staff m ay not grow p roportion ately as equipment is added. Input P erson n el. Keypunch and v e r ifie r op era tors w ere the la rg e st o ccu p a tional group studied, represen ting 37 p ercen t o f a ll em ployees in EDP o c c u pations. T hese em ployees operate keypunch m achines to tra n scrib e account ing and sta tistical data fr o m sou rce docum ents onto tabulating ca rd s. This w ork is highly repetitive and routine, but at this stage o f technology, a n e c e s s a r y p relim in a ry step in com puter p ro ce ss in g . The average (median) num ber o f keypunch and v e r ifie r op era tors was 19. Among c a r r ie r s with la rg e com p u ters, the average (median) was 31; with m edium s iz e com p u ters, 17; and with sm all com p u ters, 11. The num ber o f input p erson n el depends ch iefly on the volum e of transactions handled. Supporting C le rica l E m p loy ees. In addition to the la rg e group o f c le r ic a l em ployees engaged in d ire ctly preparing input data, a staff o f 3,429 c le r ic a l em p loyees, com p risin g about 23 p ercen t o f the total EDP person n el, w ere engaged in supporting tasks. They included coding c le r k s , who con vert in form ation into predeterm in ed codes fo r subsequent u se by keypunch op era tors; tape lib ra ria n s, who c la s s ify , catalog, and m aintain a lib r a r y o f re e ls of m agnetic o r punched paper tapes used in e le ctro n ic data p ro ce ssin g ; and a sm all group o f scheduling c le r k s , s e c r e ta r ie s , typists, and recep tion ists. 29 Demand for computer console operators and peripheral equipment operators in the insurance industry is expected to increase. 30 S u pervisory and R elated P erson n el. S u pervisors o f e le ctro n ic data p r o cessin g system s and related management and p ro fe ssio n a l staffs represen ted about 4 p ercen t o f total EDP em ploym ent. They coordinate a ctivities o f e m p loyees who operate com puters and peripheral equipment. Some planning and program ing person n el m ay have su p e rv iso ry functions as w e ll as EDP duties. M aintenance E m p loy ees. Only six com panies em ployed their own e le ctro n ics m ech anics o r engineers to test and maintain EDP equipment. M ost com panies con tracted com puter m aintenance to the equipment m anufacturer; no estim ate o f the extent of m aintenance em ploym ent can th e re fo re be m ade. Source of EDP Staff The gen eral pattern follow ed in filling jo b s in e le ctro n ic data p r o cessin g was to retrain and tra n sfer em ployees fro m other w ork in the in s u r ance com pany. About 72 percen t o f em ployees in EDP jo b s w ere selected fr o m within the com pany. (See table 6.) This p roced u re utilized em ployees with a knowledge o f the com p a n y 's p ra ctice s rather than o f EDP. The only jo b s fo r w hich m ost o f the em ployees w ere recru ited fro m outside the c o m pany w ere the few e le ctro n ics m echanics position s which requ ire sp ecia l training and exp erien ce not lik ely to be found among previou s em p loyees o f insurance com p an ies. R elian ce on the com p an ies' own em ployees was pa rticu larly m arked in fillin g position s fo r system s analysts, EDP s u p e rv iso rs , con sole and perip h eral-equ ip m en t op e ra to rs, and supporting c le r ic a l jo b s . Since m o st com panies shifted to e le ctro n ic data p ro ce ssin g after som e years of e x p e r i ence with punchcard tabulating system s, personn el readily adaptable to these EDP positions w ere probably available within the com panies. A rela tively high prop ortion (but le s s than half) of p ro g ra m e r jo b s w ere fille d by p erson s fro m outside. A ls o , a num ber of keypunch o p e ra to rs, a rela tively low paying entry position , w ere recru ited fro m the outside. W omen in EDP Jobs W om en co m p rise d about 61 percen t o f all EDP em ploym ent in the 206 com panies studied (table 5). M ost wom en E D P e m p lo y e e s --a b o u t 90 p e r c e n t--w e r e engaged as keypunch op era tors and in supporting c le r ic a l jo b s such as tape lib ra ria n s, data typists, codin g, scheduling, ca rd or tape file c le r k s . They rep resen ted about 93 percen t o f all em ployees in these o ccu p a tional groups. R elatively few wom en w ere em ployed as p r o je c t planners, system s analysts, o r p ro g r a m e rs , accounting fo r only 15 p ercen t o f the em ployees in these rela tively higher sk illed occu pation s. W omen a lso rep resen ted only sm all p roportion s o f the con sole and perip h eral-equ ipm en t op erators and EDP su p e rv iso ry staff. 31 Table 6. Source of 1963 EDP Staff, by Occupation P ercen t Occupation A ll ED P em ployees System a n a ly sts___________________ P r o g r a m e r s ________ ______ EDP s u p e rv iso rs _____ C onsole op era tors ______ P eriph eral-equ ipm en t op erators E le ctron ics m ech anics __ _______ Keypunch o p e r a to r s _______________ Tape lib r a r ia n s ___________ ______ R ecep tion ists, s e c r e t a r ie s ________ Coding, other cle rk s _______ ____ A ll em ployees E m ployees se le cte d fro m within the com pany E m ployees recru ited . fro m outside 100 . 0 71. 7 28. 3 100 . 100 . 100 . 100 . 0 0 0 0 77. 60. 90. 89. 22. 4 39. 5 9 .4 10.4 100 . 100 . 100 . 100 . 100 . 100 . 0 0 0 0 0 0 80. 5 13. 3 63. 0 75. 7 82. 0 82. 1 6 5 6 6 19. 86. 37. 24. 18. 17. 5 7 0 3 0 9 Source: Based on returns from 35 com panies, coverin g 7, 191 EDP e m p loy ees, which reported usable inform ation. 32 EDP and Shift W ork A rela tively high p roportion of c o m p a n ie s --55 p e r c e n t—w ere operating their com puters on a m ultishift basis; 85 percen t o f the la rg e st com panies w ere doing so. (See table 7.) About 25 p ercen t w ere on 2 shifts; 30 p ercen t, on 3 shifts. About 70 p ercen t o f the com panies using shifts fo r EDP units had non ED P o ffice w ork ers on a day schedule only. One fa cto r inducing intensive use of the com puter is the d e sire to get the m axim um use of expensive equipment. M o re o v e r, in som e in stan ces, w ork a fter regu lar o ffice hours has b ecom e part of an efficien t cy cle o f o p erations on certain routine functions, such as billing. F or exam ple, in a num ber o f com p an ies, the com puter was used during evening and night shifts to p e rfo rm a routine run of thousands o f p o lic ie s to produce prem ium b ills . In the m orning, the c o m p u te r 's output o f bills was ready fo r m ailing by the regu lar daytim e o ffic e staff. Shift w ork was introduced in som e com panies during the p eriod o f consolidating and converting r e c o r d s to punchcards, p r io r to the start up o f the com puter installation. This extensive jo b frequently required nightwork by la rge num bers of keypunch op era to rs. By 1963, h ow ever, usually only the com puter-equipm ent op era tors w ere on shift w ork. The co n sole operator and one o r two prin ter o r con v erter o p era tors m ay have m ade a night "ru n " on one or two application s. In som e com p an ies, keypunch op era tors m ay a l so have been on shift w ork. P ro g ra m e r s , system s an alysts, and supporting c le r ic a l em p loyees, h ow ever, seldom w orked on extra shifts, on a regular ba sis. T able 7. EDP Shift P ra ctic e s in Hom e O ffices of Com panies with C om puters by Size of O ffice E m ploym ent, 1963 Com panies with o ffic e em ploym ent o f - iv l .l com panies 500-1, 499 1-499 Item 1, 500 and over Number P ercen t Number P ercen t Number P ercen t Number A ll com p an ies with E D P ---------------C om panies with one EDP shift on ly: A H ------------------------------With oth er o ffic e w ork ers on m u ltish ifts1----------------------- 206 100.0 70 100. 0 83 100. 0 53 100. 0 93 45. 1 47 67.1 38 4 5 .8 8 15. 1 10 4 .9 3 4. 3 6 7. 2 1 1.9 113 54 .9 223 32. 9 45 54. 2 45 8 4 .9 52 25. 2 15 2 1 .4 28 33.7 9 17.0 61 29 .6 8 1 1 .4 17 20. 5 36 67.9 79 38. 3 19 27. 1 36 43. 4 24 45. 3 34 16.5 4 5 .7 9 10.8 21 39.6 C om panies with m ore than one ED P shift: An jtVJLL ... .... „ Two EDP s h ift s -----------------T h ree EDP s h ift s -----------------With no other w ork ers on shifts — With other o ffic e w ork ers on s h ift s ----------------------- 1 F ig u re s fo r this category are not included in tota ls. N O TE : P ercent B ecause o f rounding; sum s of individual item s m ay not equal tota ls. 34 Chapter 5. Im pact of EDP on Employment Trends in the Insurance Industry In appraising the im pact o f e le ctro n ic data p ro ce ss in g on e m p loy ment trends in the insurance industry, it is im portant to re co g n ize the d if ficu lty o f isolating the com p lex effects o f this sp e cific tech n ologica l change fr o m those resulting fr o m m e rg e rs and con solid ation s, internal re o rg a n iz a tion, changes in types o f p o lic ie s sold, and other changes that o c cu rr e d at the sam e tim e. Although p r e c is e m easurem ent o f the im pact o f EDP is not p o ssib le , sev era l approaches to analyzing the effects are set forth. T rends in Insurance O ffice Em ploym ent and P roductivity O ffice em ploym ent in surveyed com panies in crea sed by 32 p e r cent between 1954 and 1963, totaling nearly 366, 000 in January 1963. In o rd e r to d isce rn the effect of EDP on o ffic e em ploym ent growth, em ploym ent trends in com panies which had com puters fo r 5 yea rs or m ore w ere com p ared with those in com panies with le s s than 5 y ea rs of EDP e x p e rien ce. The 5 -y e a r p eriod was selected as a basis fo r com p a rison because within that tim e, m a jor con version s would have been com p leted . During the early stage of the tran sition to EDP, som e com panies found it n e ce s s a ry to em ploy additional tem p ora ry cle rk s fo r con v ersion operation s, so that labor trends in the firs t 5 y ea rs would not be useful in predictin g lo n g -te rm resu lts. Table 8 shows the percen t change in o ffic e em ploym ent ov e r 3 -y e a r in tervals follow in g 1954 and o v e r the 9 -y e a r p eriod . O ffice em ploym ent in com panies with 5 o r m ore yea rs o f EDP e x p erien ce in crea sed by 31 percen t o v e r the 1954-63 p eriod , a somewhat low er in crea se than fo r com panies with sh orter EDP ex p erien ce. It is p a rticu larly noteworthy that the percent in cre a se in em ploym ent in the m ost recent p eriod among exp erien ced com panies is significantly sm a ller than among com panies with le s s ex p erien ce. A lso, the percent gain declined fo r these experien ced com panies in each p eriod after 1954-57, while it rem ained fa irly steady fo r those with sh orter exp erien ce. This analysis suggests that the low er growth rate in em ploym ent fo r com panies with long EDP exp erien ce r e fle c ts the effects of greater produ ctivity. In other w ord s, it was p o ssib le to handle an in creasin g w orkload without in crea sin g em ploym ent as m uch as would have been n e c e s sary if EDP had not been introduced. Another p o ssib le explanation is that the volum e of business among the com panies with long EDP e x p e r ie n ce --g e n e ra lly la rge c a r r i e r s - - d id not in crea se rela tiv ely as m uch as bu siness among the com panies with short exp erien ce. Other inform ation, how ever, indicates that this fa ctor alone was not enough to cause all of the d iffe re n ce in em ploym ent growth between the two groups. T able 8. O ffice Em ploym ent Growth in Surveyed Insurance C om panies, Surveyed com panies 1 1954-63 P ercen t change in o ffic e em ploym en t1 Number O ffice e m p lo y ment J anuary 1963 207 365,911 12. 2 8. 2 8 .4 31.5 54 215, 473 13. 1 8. 2 7. 3 31.3 127 136, 594 10.7 10. 2 10.6 35.0 16 6, 019 14. 0 3.1 20.8 42. 0 10 7, 825 9 .6 -1 3 .7 -5 . 5 -1 0 .6 Item A ll su rveyed com p an ies 2---------------C om panies with 5 y ea rs o r m o re o f EDP e x p e r ie n ce by 1963 -----------C om panies with EDP ex p e rie n ce o f le s s than 5 y e a rs by 1963---------------------------C om panies with EDP on o r d e r as of 1963------------C om panies using an EDP s e r v ic e bureau in 1963 ---------------------------- 1 January data used throughout table. 2 Only com panies which provided o ffic e I960, 1963) w ere included. 1954-57 1957-60 1960-63 1954-63 em ploym ent data fo r all 4 y ea rs (1954, 1957, 36 Although definitive quantitative data on output o f the com panies surveyed w ere not readily available, som e evidence obtained in the survey points to significant in cre a s e s in output per em ployee in variou s operation s w here EDP was applied. O fficia ls o f a number o f large com panies r e ported that EDP m ade it u n n ecessa ry fo r them to h ire additional c le r ic a l em ployees fo r billing, accounting, and c o lle c tio n operation s when the volum e o f bu siness in crea sed . One com pany o ffic ia l estim ated that the com puter perm itted em ployees to p r o c e s s two o r three tim es m ore w ork on a particu lar operation than they could on e le ctrom ech a n ica l datap ro ce ss in g equipm ent. Meaningful quantitative data on the volum e o f w ork done b efore and after EDP (such as the number of prem ium in v oices prepared ), - - in relation to number of m an-hours o r em ployees engaged in such o p e ra tio n s- w ere not readily available. S everal com panies indicated that these c o m parison s w ere difficult to make becau se of organ izational changes, d e v e lo p ment of new types of p o lic ie s requiring data p ro ce ss in g not hitherto done, and lack of adequate r e c o r d s . A number of com panies rep orted that their ex p erien ce was too short to estim ate the full im plication s o f EDP on produ ctivity. One m easu re som etim es used as an in dicator of the o v e ra ll volum e of w ork done by life insurance c a r r ie r s is the number of p o lic ie s in fo r c e . Since this is a net figu re, changes in that number do not d ire ctly re fle ct the num ber of new p o lic ie s and the number of can celled p o lic ie s , which presum ably re fle ct w ork done. A lso, group p o lic ie s , which are frequently b illed and otherw ise handled on a m ass basis and which lack many s e rv ic e fea tu res, must be counted as life p o licie s even though the different fo rm s requ ire differing amounts o f o ffice w ork. Among other production item s not p rop erly accounted fo r in such a m easure a re : loans p r o c e ss e d , annuities paid, pension plans adm inistered, con version s and p o licy changes, billing frequ ency, and the va riety o f group and individual health p o lic ie s also sold by life c a r r ie r s . Changes in the num ber o f p o lic ie s in fo r c e per em ployee are used as a rough guide to tren ds in e fficien cy , reflectin g not only the effects of the in troduction of ele ctro n ic data p ro ce ssin g in a lim ited number of operation s, but also tech n ical and organ izational changes that affect the total com p lex of c a r r ie r operation s, including som e changes that in cre a se unit labor requ irem en ts. T able 9 shows the percen t changes in p o lic ie s in fo r c e , em ployees, and p o lic ie s in fo r c e per em ployee fo r 17 life insurance com panies that had acqu ired EDP in 1954 through 1956 and th e re fo re had had the longest e x p erien ce with EDP. The ratio of p o lic ie s p er em ployee fo r the group as a whole declined between 1956 and 1959 and then r o s e between 1959 and 1962. Employment a lso in crea sed between 1959 and 1962 but not to the sam e e x tent as the num ber of p o lic ie s in fo r c e . 37 Some of the 17 com panies, h ow ever, did not show an in cre a se in the ratio. The group included both large and sm all com panies. Of the 17 c a r r ie r s , 11 showed in crea ses in the p o lic ie s per em ployee ratio, between 1959 and 1962; 6 showed d e c r e a s e s . O fficials o f som e of the large firm s that showed a decline in the ratio of p o licie s per em ployee, h ow ever, in d i cated in interview s that because of organizational changes and shifts in types of p o lic ie s , figu res on p o licie s in fo r c e w ere not fully representative o f the w ork output in these com panies. Table 9. P ercen t Change in P o lic ie s in F o r c e , O ffice E m p loyees, and P o lic ie s P e r O ffice E m ployee in 17 Eife Insurance C om panies, 1956-59 and 1959-62 1 P ercen t change Item 1956-592 P o lic ie s in f o r c e ---------------------------------------------------O ffice em ployees -------------------------------------------------P o lic ie s per o ffice e m p l o y e e -------------------------------- 1959-622 + 3. 5 + 6 .8 - 3. 1 + 3.7 + 1.6 + 2. 1 1 The 17 life insurance com panies em ployed about 98, 000 o ffice em p loyees. D ecem ber 31 data used fo r p o lic ie s in fo r c e ; succeeding January 15 data used fo r o ffice em p loyees. E ffect of EDP on Insurance O ffice Occupations To a s s e s s the effect o f EDP on s p e cific occupational groupings, the com panies surveyed w ere asked, fir s t , about recen t changes in e m p lo y ment of selected groups of insurance em ployees as a result of EDP; second, about p rosp ective trends at the tim e, in em ploym ent in various occupational groups. Recent Impact on S elected O ccu pation s. Table 10 shows the p rop ortion of com panies indicating whether the com puter resulted in em ploym ent d e c r e a s e , in cre a s e , or no change, fo r each of five m ajor occupational groups. A m a jority of com panies reported declin es in three occupational groups: tabu lating-m achine operating; routine c le r ic a l recordk eepin g, and calculating m achine operating jo b s . T able 10. E ffect o f Introducing the EDP System on S pecific Occupational Groups (as o f 1963) O ccupational group T abulat ing - m ac hine o p e r a tin g -------------------------Routine c le r ic a l r e c o r d keeping ---------------------------C alculating -m ach in e o p e r a tin g -------------------------Keypunch op era tin g-----------S u p erv isors of above g ro u p s ------------------------------NOTE: P ercen t of com panies reporting that EDP caused em ploym ent t o - - P ercen t of com panies not r e sponding to this item A ll com panies operating com puters D ecrea se R em ain the sam e In crease 100. 0 69. 5 19. 7 9 .4 1 .3 100. 0 66. 5 23. 2 6 .9 3. 4 100. 0 100. 0 53. 2 12. 4 39. 5 36. 5 3, 0 48. 5 4. 3 2. 6 100. 0 16. 7 63. 5 14. 6 5. 2 B ecause o f rounding, sums o f individual item s may not equal 100.0. 39 The elim ination o f position s in these groups did not n e ce s s a rily result in the lo s s of em ploym ent fo r those affected. Although the m ail survey did not c o lle c t data about effects on individual w o rk e rs, in fo rm a tion fr o m in terview s with p erson n el o ffic ia ls ; case studied by the Bureau of L abor S tatistics, State agen cies, and un iversity r e s e a r c h e r s ; and d iscu ssion s in trade jou rn als have supported the gen eral con clu sion that few individuals in the in surance industry w ere laid o ff as a d irect result of the introduction o f EDP. Jobs had gen erally been elim inated without r e co u rse to la yoffs through the use of attrition and t r a n s fe r --p r o c e d u r e s that w ere p ossib le becau se of the high rate of turnover among young wom en c le r ic a l em p loyees, industry growth, and the crea tion o f som e new EDP jo b s . Thus, in form ation fr o m various so u rce s suggests that som e tabulating-m achine op era tors (m ore than half w ere m en )—w ere tra n s fe r r e d to EDP units and retrained as co n sole and peripheral-equipm en t op era tors and p ro g r a m e rs . Since only a sm a ll prop ortion o f EDP co n so le and periph eral-equ ipm en t op era tors are wom en, it may be presum ed that wom en tabulating-m achine op era tors who rem ained in the o ffice w ere shifted to other types o f w ork. Among routine c le r ic a l em ployees, who rep resen ted a m ajor prop ortion of insurance o ffic e em ploym ent, and calcu latin g-m ach in e o p e r a t o r s , a high rate of turn over probably fa cilitated adjustment without la y o ffs . Some o ffic e s rep orted that the elim ination o f som e position s because o f EDP provid ed p erson n el to fill jo b s fo r which no sa tisfa cto ry applicants w ere available fr o m the outside. The im pact o f EDP on em ploym ent of keypunch o p e ra to rs, on the other hand, was a ffected by varying requirem ents fo r this group of e m ployees at different stages o f com puter tech nology. About half the resp on d ing o ffic e s rep orted that installation o f EDP resu lted in an in cre a se in keypunch staff; about on e-th ird rep orted no change; the rest reported a d e c r e a s e . In the early stages o f the transition to EDP, o ffice s som etim es needed to enlarge their staff of keypunch op era tors in o rd e r to convert and consolidate old file s to punchcards. Once this initial r e co r d s con version was com pleted, the tem p ora rily large keypunch staff could be reduced. In addition, com panies which fo r m e r ly required a keypunch group in each o f many tabulating-m achine units could re tire these units as their o p e r a tions w ere absorbed by EDP. R egarding the im pact on c le r ic a l s u p e rv iso rs, a large proportion of o ffice s surveyed rep orted little o r no change in em ploym ent. About 17 percent, how ever, indicated that su p erv isors declined in number as routine c le r ic a l job s w ere reduced. Because of low er turnover in these position s, adjustm ents fo r su p erv iso rs (particu larly o ld e r em ployees) probably constituted one o f the m ore difficult p erson n el p ro b le m s. Table 11. Em ploym ent Changes Expected fo r O ccupational Groups During 1963-66 Am ong 206 Companies with C om puters in E arly 1963 O ccupational group T abulating -m achine o p e ra to rs ----------------S ten ogra p h ers, s e c r e t a r i e s -------------G en eral c le r ic a l w o r k e r s --------------------Keypunch o p e ra to rs —EDP P erson n el: P ro g ra m e r s, analysts, o p e r a t o r s ------------- Total P ercen t of P ercent of responding com panies com panies expecting that em ploym ent would — not r e sponding R em ain to this Increase D ecrea se the sam e item P ercen t of total o ffice em ploym ent in each o c cupational group 1 100. 0 8. 3 63. 1 22. 8 5.8 i 100. 0 38. 3 4 .9 49. 0 7. 8 7 100. 0 100. 0 39.8 51. 5 25. 7 14. 6 27. 7 31. 1 6 .8 2 .9 62 2 100. 0 55. 0 3. 1 37. 7 4. 2 1 1 R em aining 27 percen t of o ffice em ploym ent is distributed among m anagerial, p r o fe s sional, tech n ica l, and su p erv isory groups. NOTE: B ecause of rounding, sums of individual item s may not add to 100. 41 Trends in Insurance Occupations Com panies using com puters w ere a lso asked about em ploym ent p ro sp ects fo r key occupational grou p s, as fo r e s e e n at the tim e of the survey. Table 11 shows the prop ortion of responding com panies that e x pected em ploym ent in five m a jor occupational groups to in cre a s e , d e cre a s e , or rem ain the sam e between 1963 and 1966. On the ba sis of subsequent d is cu ssion s with industry exp erts, it is believed that the trends as seen in 1963 are still valid fo r the 1966-70 p eriod . Tabulating-M achine O p era tors. About tw o-th irds of the com panies operating com puters responded that this sm all group would d e cre a se fu rther. Machine accounting units, p a rticu la rly in life and health insurance com p an ies, ap par ently w ere scheduled fo r disbandment as their functions are taken o v er by EDP. G eneral C le rica l W o rk e rs . This group, which co m p rise d the m a jo r p r o p o r tion of o ffice em ploym ent, would d ecre a se o r rem ain the sam e, accord in g to a m a jority of the responding com panies. Exam ples of w ork ers in static o r declining c le r ic a l job s are prem ium led ger card cle rk s who keep r e c o r d s , prem ium a cce p to rs who r e co r d paym ents, and p o licy evaluation clerk s who calculate cash su rrender and loan values of p o lic ie s , using rate books and manual ca lcu la tors. H ow ever, it is noteworthy that about tw o-fifth s of the com panies reported that em ploym ent would in cre a s e , presum ably becau se of business expansion in operations that had not been a ffected by EDP, the introduction of new autom obile rating stru ctu res, and the application of new underwriting standards. Keypunch O p e ra to rs. E xpectations fo r this occupational group w ere about evenly divided. Slightly m ore than half of the respondents expected an in crea se in em ploym ent; about 45 percent expected either a d e c r e a s e , or stability. Some recen tly automated com panies com m ented that keypunch w ork would decline once their r e co rd s con version had been com pleted. When the expectations of com panies that had or planned to have optical scanners are com p ared with those that did not, the p o ssib le im pact of this innovation on keypunch op erators becom e apparent (see table 12). Among com panies that had scanners o r scanner plans, those com panies em ploying ov er 40 percen t of the keypunch op era tors expected a d e c r e a s e . Among com panies without scanner plans, those em ploying le s s than 20 p e r cent of the keypunch op era tors expected a d e c r e a s e - T able 12. E xp ected Change in T otal Em ploym ent in Two S elected O ccupational G roups by 1966, by Em ploym ent in Each Group, A ll Surveyed Com panies Which R esponded in 19631 Com panies which exp ected em ploym ent t o - N um ber of com pan ies responding O ccu pational group In crea se Number P er cent D e cre a se Em ploym ent Numbe r of com P er Numbe r panies cent R em ain the sam e E m ploym ent Numbe r of com P er Numbe r panie s cent Em ploym ent Number of com P er panie s Numbe r cent Keypunch o p e ra to rs -------------------- 226 8 ,2 5 2 100.0 120 3 ,9 7 0 48. 1 30 1,977 2 3 .9 76 2,305 2 7 .9 In com p an ies which had o r planned to have op tica l scan n ers ------------------------------- 38 2, 155 100.0 16 648 30. 1 12 944 4 3 .8 10 563 26. 1 In com p an ies which did not have or did not plan to have op tica l s c a n n e r s ------------------ 188 6,097 100.0 104 3 ,3 2 2 5 4 .5 18 1,033 16.9 66 1,742 28. 6 208 4,357 100.0 18 483 11. 1 137 3,4 2 8 7 8 .7 53 446 10. 2 T abulatin g-m achin e o p e r a to r s 1 - Some com p an ies ex clu d ed b eca u se of incom plete resp on se. 43 Requirements for keypunch operators will be reduced somewhat by increasing use of optical scanners and consolidated systems. E D P P e r s o n n e l. The m ost fa v o ra b le ou tlook w as r e p o rte d fo r EDP p e r son n el. About 55 p e rce n t o f the co m p a n ie s r e p o r te d that they ex p ected to in c r e a s e em ploym en t in this o ccu p a tio n a l g rou p (table 11); only 3 p e r cent e x p ected a d e c r e a s e . A d d ition a l co m p u te r a p p lica tion s and com pan y grow th p re su m a b ly w e r e c h ie f re a so n s fo r this a n ticip ated grow th. 44 Chapter 6. Outlook a Implications for the Next Decade nd In a ss e s s in g the outlook fo r insurance em ploym ent ov er the next 10 y e a rs , it is im portant firs t to review trends ov er the past decade. The p e rio d was one o f significant changes in the structure o f the industry and in the type o f s e rv ic e s sold , and w itnessed the fir s t steps taken in applying EDP technology to handle the trem endous volum e o f paperw ork that accom panied the in d u s try 's growth. Em ploym ent in crea sed significantly. D efinitive quantitative data a re not available to m easure the changes in labor re q u ire m ents in relation to the volum e o f insurance s e r v ic e s produced. P ro sp e cts for Next Decade O ffice em ploym ent w ill probably continue to in cr e a s e , but the rapid growth rate o f the past w ill probably be significantly dim inished. Contribut ing to o ffic e em ploym ent growth w ill be the r is e in p o licy sales as personal in com e, auto p u rch a ses, hom e ow nership, and a rising stock of insurable goods continue to in cre a s e . The age group 15-44 y e a r s , which has accounted fo r a m a jo r portion o f insurance pu rchases in recen t y e a rs , w ill be in crea sin g. New types of p o lic ie s , options, and packages w ill probably continue to be d evised , and m ay be expected to resu lt in in cre a se d em ploym ent. EDP w ill probably have a growing im pact in reducing unit labor requirem ents am ong o ffic e w ork ers in the industry. The firs t decade fo r EDP was a p eriod o f introduction, diffu sion, and im provem ents in EDP equip m ent, and gradual im plem entation of a "to ta l" EDP system by bringing m a jo r insurance operation s, one after another, into the com puter system . The potentialities of EDP w ere only beginning to be explored . The next decade w ill see the gradual introduction o f m ore pow erfu l, "th ird generation" c o m pu ters, and, perhaps m ore im portant, the m ore intensive utilization of com puters through the consolidation o f op eration s, data tra n sm ission system s, and input autom ation. As EDP is m ore fu lly developed, the rate of p rod u c tivity in crea se w ill probably a lso r is e . T hese tech n ologica l developm ents are expected to reduce substan tially the rate o f o ffice em ploym ent growth in the insurance industry. By 1975, o ffice em ploym ent in insurance c a r r ie r s , a ccord in g to estim a tes, w ill range fro m 700,000 to 735,000, representing an in crea se o f 5 to 10 percent o v er 1965. Total em ploym ent in insurance c a r r ie r s which in cre a se d about 32 p ercen t in the 1954-64 p eriod , m ay grow m o re rapidly fro m 1965 to 1975 than o ffice em ploym ent becau se of greatly in cre a se d p o lic y sales and sales fo r c e . O ffsetting fa c to r s , such as m e r g e r s , in crea sin g co v e ra g e o f group insurance and s e lf-in s u ra n ce , and use o f d ire ct selling techniques m ay have a retarding effect on the growth in sales person n el. It is assum ed that c o n tinued growth in insurance s e r v ic e s , in term s of p o licie s issu ed , w ill be at about the sam e rate as in the past few y e a rs , but that there w ill be at least a doubling in the rate o f in cre a se o f p o lic ie s per o ffice em ployee. Health insurance c a r r ie r s w ill probably show a higher growth rate than life o r p r o p erty c a r r ie r s , unless in creasin g health business is assum ed by these latter industry bran ch es. 45 This study suggests that em ploym ent in occupations d ire ctly related to EDP and m a n a g em en t--m a n a g ers, p ro g ra m e rs , system s analysts, con sole and other o p e r a t o r s --w ill r is e , that em ploym ent of keypunch op era tors m ay decline by 1970, and that the la rg est group of o ffice em ployees w ill continue to be the general c le r ic a l group. F or this latter group, the study indicates that the number of w ork ers em ployed for routine operations w ill be greatly reduced because of EDP, but that the number of those in job s requiring some judgment and d e cisio n m a k in g --jo b s that cannot be com p u terized , or that in volve individualized response to p o lic y h o ld e r s --w ill rem ain constant. M anpower Im plications Some of the findings of this study have im portant im plications fo r m anpower trends and developm ent for the econom y, fo r the insurance indus try, and for som e citie s w here the industry em ploys a substantial prop ortion of the w h ite -co lla r labor fo r c e . F irst: a slowdown in the rate o f em ploym ent in cre a se in a m a jor w h ite -co lla r industry could make the gen eral problem of adjustment to tech n ological change m ore difficu lt. Thus fa r, rapid growth of o ffice job s in insurance has provided many openings each year for young g irls graduating fro m high sch ool. Although this sou rce w ill not disappear, entry jobs w ill not be available to the same extent as in the past. At the same tim e, the number o f young wom en entering the labor fo r c e w ill be in creasin g rapidly. Second: slow er growth of c le r ic a l job s in insurance is likely to have p a rticu larly seriou s im pact in cities where insurance com panies have been one o f the m ajor sou rces of em ploym ent opportunities fo r young w o m e n --fo r exam ple, Des M oines, Iowa; Omaha, N ebr. ; H artford, C onn .; Jack son ville, Fla. ; Portland, M aine; and S pringfield, 111. V ocational guidance cou n selors and others in these and sim ila rly affected lo ca litie s w ill need to be prepared fo r these changing p r o s p e cts . Third: em ployee adjustm ents m ay becom e a m o re d ifficu lt personn el p roblem in the future than in the past, fo r em ployees and person n el dep art m ents. Since the recru itm en t o f young high sch ool graduates is expected to taper off, high la bor tu rn ov er--w h ich provided the basis fo r attrition p o licie s in adjusting to o ffice a u tom ation --m ay no lon ger be relie d upon to avoid d is placem ent of em ployees. As EDP is extended to additional a re a s , personn el m anagement w ill need to e x e r cis e a variety of m anpower adjustm ent techniques so that further advances in o ffic e autom ation w ill continue without seriou s p e r sonal problem s to the affected w ork ers. F inally, person n el offices w ill probably becom e m o re s e le ctiv e in their ch oice o f individuals fo r entry position s in insurance com panies. While ele ctron ic data p rocessin g reduces opportunities in routine c le r ic a l w ork, som e position s are crea ted in program ing, sa les, and other com plex w ork which requ ire lon ger training or m o re education. T hose who have the ca p a c ity to be trained for m ore resp on sib le w ork and a re seeking a c a r e e r m ay be p r e fe r r e d . 46 Appendix A. Notes o Survey M n ethods The m ethod of selectin g the com panies su rveyed , the developm ent o f the qu estion n aires, and the p roced u re s used in conducting the su rvey are d e s crib e d below . C opies o f the questionnaires and cov erin g letters are also presented. S election o f Sample A large cu toff sam ple was used in making this survey. The lis t o f com panies included in the su rvey was developed in part fro m establishm ent listings set up by State E m ploym ent S ecu rity agencies in connection with rep orts r e ce iv e d under unem ploym ent insurance p ro g ra m s. A ll e sta b lish m ents (or o ffic e s ) c la s s ifie d in SIC 631 (life in su ran ce); SIC 632 (accident and health); SIC 633 (fire , m arin e, and casualty); SIC 635 (su rety); and SIC 636 (title insurance) w hich rep orted a total o f 250 o r m ore em ployees w ere se le cte d as the ba sis fo r developing a lis t o f com pan ies. O ver 500 establishm ents w ere se le cte d and then grouped by com pany. This grouping yielded about 200 com p an ies, each with at lea st one establishm ent o f 250 w ork ers or m ore. Next, the nam es o f 200 sm a lle r com panies w ere added to the list. One hundred life insurance com panies w ere added b y selectin g e v e r y sixth name on a list (excluding those already chosen) entitled "Ranking o f 716 L ife C om panies" (1962), published b y the National U n derw riter. E v e ry 13th com pany was se le cte d from a list in B e s t1s Insurance R eports (F ire and Casualty edition, 1962), excluding those already chosen. A number o f these sm a ller com panies w ere later com bined with la rge com p an ies, having responded that they w ere su b sidia ry to, or otherw ide affiliated with, a large com pany. Com panies or com pany groups w ere p la ce d in that ca teg ory (life , health, p roperty) which accounted fo r the grea test p rop ortion o f their total bu sin ess. The final resu lt was a sam ple o f 423 com p an ies, with about nin etenths o f the industry* s em ploym ent. Survey Q uestionnaires and P ro ce d u re s Separate questionnaires w ere developed fo r two stages o f the study. A b r ie f screen in g questionnaire, designed to provide inform ation on the company* s em ploym ent and com puter status (see fir s t questionnaire in this appendix), was developed in consultation with industry association s and o fficia ls in charge of EDP operation s in a number o f insurance com panies. The screen ing su rvey also requested that com panies with m o re than one com puter center indicate the total number operating. The questionnaire was m ailed with a coverin g letter to the presiden ts o f 423 com p an ies. R espon ses w ere r e ce iv e d from 410 com panies or 97 p ercen t o f those su rveyed , with em ploym ent com p risin g 89 p ercen t o f all industry em ploym ent, as o f January 1963. R esults o f this su rvey are presen ted b y com pany, o ffice em ploym ent, and com puter status, in table 1. 47 The secon d stage of the survey involved co lle ctio n of detailed in fo r m ation about use o f the com puter system , effects on em ploym ent, and occu pation s. T hree v ersion s of a b a sic questionnaire w ere developed in con su lta tion with industry experts: one was s p e cifica lly designed fo r com panies which had their own com p u ters; a secon d fo r com panies which had o rd e re d their fir s t com puter, but had not yet in stalled it; and a third, fo r com panies which w ere renting tim e from a s e rv ic e bureau: Com panies which fit into m o re than one of these ca teg ories (for exam ple, the secon d and third), w ere placed in the ca teg ory with the low est num ber. To obtain inform ation about each com puter installation in com panies which m ight have sev era l EDP o ffic e s throughout the country, the qu estion naire fo r com panies in group (l) was designed so that a secon d part cou ld be sent in m ultiple co p ie s, one fo r each EDP installation. The questionnaires w ere p retested with five com panies in each of the three industry subdivisions. On the ba sis o f this tria l, the questionnaire was slightly m od ified . F rom resp on ses to the screen in g survey, a list of com panies was developed fo r the secon d stage. A ppropriate secon d stage questionnaires •were sent to 305 com panies: 253 to com panies with com p u ters; 25 to co m p a nies awaiting d eliv ery of their firs t com puter; and 27 to com panies renting tim e from a se rv ice bureau. The resp on se rate was 81 percen t fo r all com p a n ies; 81 percen t, com panies with EDP; 80 percent, com panies awaiting d e liv ery of their fir s t com puter; and 74 percen t, com panies renting tim e fro m a se rv ice bureau. Follow up letters w ere sent and telephone ca lls w ere m ade to nonresponding com p an ies. Since the questionnaire was detailed, resp on ses cam e in over a p eriod of sev era l m onths. To insure a ccu ra cy , a postediting follow up p roced u re was adopted. A fter the questionnaires had been edited fo r internal co n sisten cy, those with p ossib le d iscrep a n cies w ere returned to respondents fo r co rr e c tio n , if n e c e ssa ry , or explanation. A pp roxim ately 100 com panies w ere contacted in this way. In addition, after all resu lts w ere tabulated, a number o f com panies (with about a sixth of the su rvey em ploym ent) w ere visited by the analysts fo r inform ation which m ight be of help in interpreting patterns revealed by the data co lle cte d , p a rticu la rly in the area of future plans fo r EDP applications, and p ossib le em ploym ent effects of these plans. In tabulating the data, the cla s s ifica tio n of com puters into fTarge, n nm edium , n and " s m a ll" was based upon rental p r ic e range fo r the ba sic co n tro l unit. 48 U.S. DEPARTMENT OF LABOR B U R E A U O F LA B O R S T A T IS T IC S W a s h in g t o n 25, D.C. Dear Sir: For several years the Bureau of Labor Statistics has been studying the effect of electronic data processing on office work. Reports based on this research have been used by manage ment, educators, and industry associations, as well as by govern ment, in assessing the effects of office automation on personnel requirements, training, and personnel practices. One of our current studies is a survey of the extent, uses, and effects of electronic data processing in the Insurance industry. Before we send a detailed questionnaire to those com panies which use or have ordered computers, we need to have some preliminary Information. Therefore, we would appreciate it if you would let us have the data requested on the enclosed form. All information collected will be treated confidentially. No reports issued will identify individual companies in any way. Your cooperation will be of the greatest assistance to the Bureau of Labor Statistics. We should appreciate having your reply, if possible, by April 4, in order that we may complete this step in the survey. Sincerely yours, / / - / Ewan Clague // Commissioner of Labor Statistics Enclosure 49 U.S. DEPARTMENT OF LABOR BLS 2809 BUREAU OF LABOR STATISTICS W a s h in g t o n Budget Bureau No. 44*6302 Approval expires 12-31-63 25, D .C . Survey of Electronic Data Processing in Insurance Your reply will be held in strict confidence. Company code cm 1. Please give the number of employees, full- or part-time, on the payroll of this company (including home, branch, and agency offices) for the pay period ending nearest January 15, 1963. a. b. 2. Total employees for entire company (include agents on commission, office, and all other personnel)............ .. . _________ Total office employees (exclude agents and T o t a l ............ _ _ _ _ _ _ _ custodial employees, but include home office, Male • • • • • • • _ _ _ _ _ branch, and agency office personnel). Female _ _ _ _ _ Please check each of the following statements HyesM or MnoM according to whether it is, or is not, applicable to this company. a. This company owns/rents one or more electronic computers (or shares a computer owned/rented with other insurance companies). □ Yes No□ If checked nyesM , give number of locations (including home, branch, and field offices) at which computers are i nstalled............ _ _ _ _ _ _ _ b. c. d. e. This company rents computer time from a computer service bureau or other computer center............................... . . . . n This company has one or more computers on order (either alone or in a share arrangement)..................................... Yes No D No □ D This company plans to install one or more computers within the next five years, for which an order has not yet been placed. . □ Yes No D This company does not plan to install a computer within the next five years.............................................. .. Yes No D □ (Name and title of person to be contacted if questions arise concerning the report) (Address) 50 U.S. DEPARTMENT OF LABOR B U R E A U O F LA B O R S T A T IS T IC S W a s h in g t o n 25, D.C. Dear Sir: Several months ago you furnishe d us, in reply to our M a r c h 18 inquiry, some information conce r n i n g y our company's use of e l e c tronic data processing equipment. This i n f o r mation has been very useful and y our cooperation is very m u c h appreciated. As noted in our first letter, the form you fil l e d out was prelimi nary to a more detailed study. In order to c omplete the study we need to have the information requested on the e n closed q u e s t i o n naire. If affiliated or subsidiary companies share yo u r computer facilities, please respond for the group as a whole and list the included companies on a separate sheet. This survey is being conducted in response to wid e s p r e a d interest in the extent and implications of e l e ctronic data p r o cessing in businesses such as insurance. Your response will be kept c o n f i dential. Published findings of the survey will not identify individual companies in any way. We will greatly appreciate y o u r cooperation in compl e t i n g and returning this questionnaire. Sincerely yours, Ewan Clague C o m missioner Enclosures 51 Sent to companies with computers BLS 2809-11-A B U D G ET BUREAU A P P R O V AL NO. EXPIRES 44-6307 12-31- 63 U .S . D E P A R T M E N T O F L A B O R BUR EAU O F LA BO R S TA TIS TJC S W A S H IN G T O N 25, D .C . Survey of E le c tro n ic D ata P ro c e s s in g in Insurance Your reply will be held in strict confidence. Report for: 1. Please fill in the columns describing each computer now or previously owned or rented, or on order by this company or group, * using one line for each computer. (Use extra sheets if needed.) Describe computers which are: Currently installed; on order; previously used, but no longer in operation. Do not include card calculators and EAM equipment (sorters, tabulators, reproducers, collators, calculators— e.g., IBM 604, 609, 610; Univac 40, 60, and 120). Manufac turer Designation or name and model number of computer Insert applicable dates (month/year) Computer location (city /state) Date installed or to be installed Date retired from operation If machine retired from operation, indicate rea son, and designation of machine which replaced it (if any) Ownership arrangement (check one) Rented Owned □ □ □ □ □ □ □ □ □ □ from Manuf. from other source □ □ □ □ □ □ □ □ □ □ □ □ n a □ □ a □ □ □ *Note: If a computer is shared with other companies, please list names of other companies below, but complete the description of the computer in the table above. Name and model number of shared comouter: (co. name) (address) (co. name) (address) (co. name) (address) (co. name) (address) (co. name) (address) 52 2. If any offices of this company regularly rent computer time from an outside computer service bureau or from some other firm with a computer, please fill in the information requested below. From what source is time rented? Location of offices which rent computer time (city/state) Computer service bureau Other firm with computer □ □ □ □ n □ □ (if applicable) Do you expect to continue renting time when computers now on order are installed? Yes No !□ !□ □ a □ □ □ 3. If this company uses or is planning to use any of the types of equipment listed below, please fill in the information requested. Check if Yes Equipment Data transmission (e.g., datop bone, transceiver) Optical scanning Magnetic ink character recognition Mark sensing Have now Have on order Definitely planning to order □ □ □ □ !□ □ □ □ Functions for which equipment is/will be used (e.g., status inquiries, claim filing premium billing). n □ n __________________________________________________________ 1 53 4. Taking into account your expectations concerning business expansion (or contraction), as well as plans for EDP and other com pany changes, what is your estimate about changes in employment in the specified categories— the entire company in the for next three years? (Please do not limit your estimate to the EDP operations, or to any single sector of the company. We are here attempting to find out what sk ills will be most needed in this industry. We would appreciate further comments on the bot tom of this sheet.) Occupational category Estimated company employment Jan. 1963 * In next three years, expect total company staff, in this category, to Expand Remain same Decrease Zl n □ Cl n □ □ n □ □ □ □ □ a !□ Keypunch operators □ □ a □ □ n Electronic data processing operators (e.g., console op.) □ Stenographers and secretaries □ □ □ □ □ □ n □ □ Professional and technical Programers Systems analysts All other, prof. & tech. Sales (agents, etc.) Managerial (company officers, dept, managers, etc.) Clerical Conventional-type EAM operators Supervisory All other clerical (e.g., typists, clerks, etc.) □ Estimates should approximate total employment figures given in question 5. Reason or assumption on which this expectation is based (e.g., "business growth", "merger", "EDP adoption") 54 5. Employment: Please give number of full and part-time employees on the payroll of this company (including all branch and com pany agency offices) during the pay period ending nearest January 15, for each of the requested years. Payroll period ending nearest January 1 5 ,____ 1963 I960 1957 1954 All employees, total for entire company (include agents on commission if employees, office and EDP personnel, and all other employees) Office employees, total for entire company Total Male Female Agents, if employees (a) Custodial and other non-sales, non-office employees Total number of employees performing work directly associated with the EDP system (b) (a) Do not include agents acting as independent contractors. (b) A list of EDP occupations appears on the yellow sheet enclosed with the individual installation form. FOR L IF E COMPANIES O N L Y For December 31 in each of the listed years, please fill in the requested information below. December 31, 1962 December 31, 1959 Total number of individual policies in force Life Other Total number of group certificates in force Life Other Total dollar amount of life insurance in force (Name and title of person to be contacted if questions arise concerning the report.) (Date of report) December 31, 1956 December 31, 1953 55 BLS 2809-II-A (Cont’d.) Individual Installation Form U.S. D E P A R TM E N T O F LA B O R Bureau of Labor Statistics Washington 25, D.C. B U D G E T B UREAU AP P R O V A L N O . 44-6307 EXPIRES 12-31-63 Survey of E le c tro n ic D ata P rocessing in Insurance Your reply will be held in strict confidence. These questions, 6 through 9, refer specifically to individual computer installations. P lease fill out a separate set of answers for each location. Report for: Location of this installation (office) __________________________________________________________________ (city, state) Name and model number of computer(s) at this installation 56 6. Please indicate any current or planned applications of the EDP system in this office by checking one box on each line. Application or function a. Policy issue b. Underwriting c. Premium billing d. Premium accounting e. Policy loan accounting f. Policyholder dividend accounting g. Stockholder dividend accounting h. Investment records: Mortgage loan accounting i. Other investments j. Valuation of reserves k. Reserve for unpaid claims h Unearned premium reserves m. Agency (producer) statistics n. Commission accounting o. Claims processing p. Actuarial analysis and policy development q. Reports to statistical agent (fire & casualty) r. Mortality and/or mor bidity studies s. Personnel records t. Payroll u. General accounting Others (specify) V. w. V V. _ Not now operational in EDP system, but planned for EDP Now fully operational on EDP system (give year in which placed on EDP) Not appli cable in this company Not now affected, and not planned for EDP □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ n □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ n □ □ n □ _ _.._ □ n □ n ! □ 1 ___ _ [j j | 1 --------J _ Within 1 year from now Within 3-5 yrs. from now Inde finite plan □ □ □ □ □ □ □ ..................................... Within 2-3 yrs. from now □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ n □ □ □ □ □ □ □ □ ni _ i □ □ □ At this location, is a consolidated (integrated) systems approach in effect (i.e., in which all major functions are processed through a consolidated master record file)? Yes No I f yes, on what date did the consolidated system become operational? _ (month/ year) 57 7. P lease fill in requested information for full and part-time employees in occupations directly associated with the EDP system in this office during the payroll period ending nearest January 15, 1963* Brief guideline definitions of occupations are given on the enclosed yellow sheet. Number of EDP personnel Occupations in EDP unit Total Male Female Source of personnel Number selected for EDP unit from within company Number recruited for EDP unit from outside A ll EDP personnel Project planners and systems analysts Chief programers, Programers I Programers II Supervisor, data processing system Console operators Coding clerks Keypunch and Verifier operators Peripheral equipment operators (e.g., high-speed printer and converter operators) Tape librarians, card and tape file clerks Electronics mechanics and other machine maintenance workers* Receptionists, secretaries, stenographers, typists Other (give titles) ♦Note: If machine maintenance is performed by outside employees (e.g., by manufacturer's employees, or a contracting firm), please check here Q ] If programming is done by outside contractor, please indicate proportion of programming work thus handled_____%. 58 So m e o c c u p a t io n a l g u id e lin e s for a n s w e r in g q u e s t io n 7. Em ployee should be counted in that occu pation in which he spends more than 50 percent of his time. P r o j e c t p la n n e r - P lan s and directs in stallatio n , m odification, and operation of EDP sy stem s. D esign s organization al, procedural, and work-flow p lan s, applying knowledge of management a n a ly sis techniques. P rep ares budget estim ate s; may particip ate in making d e cisio n s concerning personnel staffin g and promotions. S y s t e m s a n a l y s t — n aly ses data p ro ce ssin g problems to d e v ise computer system requirements, to plan A machine layout, and to develop programming procedures. P ro g ra m e r, c h ie f — P la n s, sc h e d u le s, and su p erv ise s preparation of programs to solve mathematical and tech n ical problem s, or to p ro ce ss b u sin e ss data by means of EDP equipment: a s s ig n s , outlin es, and coor din ates work of programers. P ro g ra m e r I — Converts or d irects conversion of sym bolic statem ents of technical or b u sin e ss problems into diagram s and language for solution by means of autom atic data p ro ce ssin g equipment. P ro g ra m e r I I — S e le c ts and m odifies standardized programs developed by p ro fessio n al programers. S u p e r v is o r , d a ta p r o c e s s in g s y s t e m — S u p erv ises and coordinates a c tiv itie s of workers who operate computer and its components and peripheral equipment. C o n s o l e o p e ra to r— Monitors and controls electronic computer by interpreting programming instructions and operates central control unit known a s a co n sole. C o d in g c le r k — Converts information into predetermined code for subsequen t use by keypunch operator. K e y p u n c h an d v e r ifie r o p e ra to r— O perates keypunch machine to transcribe accounting and sta tistic a l data onto tabulating card s. V erifier operator ch ecks accuracy of data punched on tabulating cards using keyboard-type machine which re je c ts incorrectly punched card s. Peripheral equipment operators: H ig h s p e e d prin te r o p e ra to r— O perates high sp eed printing machine to convert information previously recorded on re els of tape into printed records. C o n v e rte r o p e ra to r— O perates machine transferring data from one medium to another, such a s cards to tape. T a p e lib r a r ia n — C la s s if ie s , c a ta lo g s, and m aintains library of re els of magnetic or punched paper tape used for automatic data processin g p u rp oses. E le c t r o n ic s m e c h a n ic — T e s t s , re p airs, and a d ju sts electronic computers and auxiliary electronic equipment. May prepare technical reports describin g performance of equipment. 59 8. Please describe the current shift pattern of employees working directly with the EDP system at this office. If column spacing does not permit full reply, add description on the bottom of this sheet. I Day shift Characteristic II Aft.-Eve. shift III Night shift □ □ □ □ □ □ □ □ Weekend or other shift □ □ □ □ Hours (e.g., 9 a.m .-5 p.m.) — sp e c ify hours Days (e.g., Monday - Friday) —sp e c ify d ay s Scheduled weekly hours (e.g., 3 7/4, 35) — g iv e number o f hours Number of employees Functions performed during this shift: (Check appropriate bo xes) a , machine operation (including peripheral) b„ machine maintenance c. planning and programming d. other □ □ □ □ Do any office employees, other than those working directly with the EDP system, work an evening or night shift? Yes QNo 1 1 9. Has employment changed in any of the following categories because of the introduction of EDP in this office? Number of employees Increased Decreased □ □ □ □ □ □ □ □ □ □ No change □ □ □ □ □ Routine clerical recordkeeping Keypunch and verifier machine operating Electric accounting, tabulating, bookkeeping machine operating Calculating machine operating (adding machine, comptometer, etc.) Supervisors of above groups (Name and title of person to be co n tacted if q u estio n s a r ise concerning the report.) (Date o f report) 60 S en t to BLS 2809-II-B c o m p a n ie s r e n tin g tim e fr o m a c o m p u te r s e r v ic e U.S. DEPARTMENT OF LABOR bu reau B U D G E T B U R E A U A P P R O V A L B U R E A U OF LA B O R S T A T IS T IC S WASHINGTON 25, D.C. NO. E X P IR ES 44-6307 12-31-63 Survey of Electronic Data Processing in Insurance Report for: Your reply will be held in strict confidence. 1. Please fill in information below concerning each office in this company which rents computer time. From what source is time rented? Location of offices which rent computer time ( c ity /s ta te ) Computer service bureau Other firm with computer 3 3 □ 3 3 3 n 3 61 2. Please indicate, by checking the appropriate boxes, any applications for which computer time is rented. Application or function a. Policy issue Performed (whole or in part) on rented computer time Done on conventional equipment or manually in this company Not applicable in this company b. Underwriting Z Z Z Z c. Premium billing □ z z d. Premium accounting e. Policy loan accounting Z Z z f. Policyholder dividend accounting □ z z z g. Stockholder dividend accounting Z z h. Investment records: Mortgage loan accounting i. Other investments □ z j. Valuation of reserves □ k. Reserve for unpaid claims 1. Unearned premium reserves □ Z m. Agency (producer) statistics Z n. Commission accounting Z o. Claims processing p. Actuarial analysis and policy development q. Reports to statistical agent (fire and casualty) □ r. Mortality and/or morbidity studies z Z Z z z z z z z z z z z z z z z 13 z z z z 13 z z z z 33 z z z u. General accounting Others (specify) Z z z z V, □ z z w. n z X. ZI z z y • n z z s. Personnel records t. Payroll z z z n» - 62 3. Please fill in requested information for full and part-time employees on the payroll of this company (if any) who work with the (time rental) computers, using one line for each occupation. Number of employees during payroll period nearest Jan. 15, 1963 EDP occupation (e.g., programer, systems analyst, console operator) Total Male Female 4. Taking into account your expectations concerning business expansion (or contraction), as well as plans for EDP and other company changes, what is your estimate about changes in employment in the specified categories— the entire company for in the next three years? (Please do not limit your estimate to the EDP operations or to any single sector of the company. W are here attempting to find out what skills will be most needed in this industry. W would appreciate further comments e e on a separate sheet.) Occupational category Estimated company employment . Jan. 1963* In next three years, expect total company staff, in this category, to Expand Remain same □ ID Z ID ID ID Zl ZI ID ID Z] Zl □ ID ID Conventional type EAM operators □ □ ID Keypunch operators ID □ ID Electronic data processing operators (e.g. console op.) ID □ □ Stenographers and secretaries Zl n □ Supervisory Z1 □ □ All other clerical (e.g. typists, clerks, etc.) ID ID □ Decrea P ro fessio n a l and tech n ical Programers Systems analysts All other Sales ( agents, etc.) Managerial (company officers, dept. managers, etc.) C le r ic a l * Estimates should approximate total employment figures given in question 6. Reason or assumption on which this expectation is based (e.g'"business growth" , * "merger", "EDP adoption") 63 5. Taking into account your expectations concerning business expansion (or contraction), as well as company changes, please check the statement which best applies to your company. 1 1 This company probably will rent or buy an EDP system within the next five years. 1 I This company probably will remain on a time rental basis only, for the next five years. Remarks: 6. Employment: Please give number of full and part-time employees on the payroll of this company (including all branch and company agency offices) during the pay period ending nearest January 15, for each of the requested years. Payroll period ending nearest January 15,— 1960 1963 1954 1957 All employees, total for entire company (include agents on commission if employ ees, office and EDP personnel, and all other employees) Office employees, total for entire company Total Male Female ..----V=Jllll Agents, if employees (a) -r—j / —::... Custodial and other non-sales, non-office employees Total number of employees performing work directly associated with the EDP system (a) Do not include agents acting as independent contractors. FOR L IF E C O M P A N IES O N LY For December 31 in each of the listed years, please fill in the requested information below. December 31, 1962 December 31, 1959 Total number of individual policies in force Life Other Total number of group certificates in force Life Other Total dollar amount of life insurance in force (Name and title of person to be contacted if questions arise concerning the report.) (Date of report) December 31, 1956 December 31, 1953 ________________________ 64__________________________ BLS 2809-II-C nzn Sent to companies with their first computer on order BUDGET BUREAU APPROVAL U.S. DEPARTMENT OF LABOR N O . 44*6307 EXPIRES 12*31*63 B U R E A U O F L A B O R S T A T IS T IC S WASHINGTON 25, D.C. Survey of Electronic Data Processing in Insurance Your reply will be held in strict confidence. Report for: 1. Please fill in the columns describing each computer on order by this company or group, * using one line for each computer. Do not include card calculators and EAM equipment (sorters, tabulators, reproducers, collators, calculators— e.g., IBM 604, 609, 610; Univac 40, 60, and 120). Ownership arrangement Manufacturer Designation or name and model number of computer (check one) Date to be installed Planned computer location (c ity / state) (m onth/year) Owned □ □ □ □ □ □ □ Rented From From other manu source facturer □ □ □ □ □ □ □ □ □ □ □ □ □ □ ♦ Note: If a computer will be shared with other companies, please list names of other companies below, but complete the descrip tion of the computer in the table above. Name and model number of shared computer: ________________________________________________________ (co. name) (address) (co. name) (address) (co. name) (address) (co. name) (address) (co. name) (address) (co. name) (address) 2. If any offices of this company regularly rent computer time from an outside computer service bureau or from some other firm with a computer, please fill in the information requested below. From what source is time rented? Location of offices which rent computer time (c ity /s ta te ) Computer service bureau Other firm with computer (if ap p licab le) Do you expect to continue renting time when computers now on order are installed? Yes □ □ □ □ □ □ □ □ □ □ No □ □ □ □ □ □ □ □ □ □ 65 3. If this company uses or is planning to use any of the types of equipment listed below, please fill in the information requested. Check if Ves Equipment Data transmission (e.g., d a t a p h o n e , transceiver) Optical scanning Magnetic ink character recognition Mark sensing Have now Have on order □ □ □ □ □ □ □ □ used Definitely planning to order (e.g. s t a t u s inquiries, c l a i m filing, □ □ □ □ p r e m i u m billing). 4. Taking into account your expectations concerning business expansion (or contraction), as well as plans for EDP and other com pany changes, what is your estimate about changes in employment in the specified categories— r t h e e n t i r e c o m p a n y in t h e fo n e x t three y e a r s ? (Please do not limit your estimate to the EDP operations, or to any single sector of the company. W are e here attempting to find out what skills will be most needed in this industry. W would appreciate further comments on a sepa e rate sheet.) Occupational category Estimated company employment Jan. 1963* In next three years,, expect total company staff in this category to Expand Remain same Decrease Sales (agents, etc.) □ □ □ □ □ □ □ □ □ □ □ □ Managerial (company officers, dept, managers, etc.) □ □ □ Keypunch operators □ □ □ □ □ □ Electronic data processing4 operators (e.g., console op.) □ □ □ Stenographers and secretaries Supervisory □ □ n □ □ □ All other clerical (e.g., typists, clerks, etc.) □ □ □ Professional and technical Programers Systems analysts All other, prof. & tech. Clerical Conventional-type EAM operators "Estimates should approximate total employment figures given in question 6. Reason or assumption on which this expectation is based (e.g., "busin ess growth", "merger", "EDP adoption") _____________________________________________ 66_____________________________________________ 5. Please indicate any planned applications of the EDP system to be installed in this company by checking one box on each line. Planned for EDP operation Application or function Not applicable in this company Not planned for EDP application Within 1 year from now Within 2-3 yrs. from now Within 3-5 yrs. from now Inde finite plan a. Policy issue □ □ □ □ □ □ b. Underwriting □ □ □ □ □ □ c. Premium billing □ □ □ □ □ □ d. Premium accounting □ □ □ □ □ □ e. Policy loan accounting □ □ □ □ □ □ f. Policyholder dividend accounting □ □ □ □ □ □ g. Stockholder dividend accounting □ □ □ □ □ □ h. Investment records: Mortgage loan accounting □ □ □ □ □ □ i. Other investments □ □ □ □ □ □ j. Valuation of reserves □ □ □ □ □ □ k. Reserve for unpaid claims □ □ □ □ □ □ 1. Unearned premium reserves □ □ □ □ □ □ m. Agency (producer) statistics □ □ □ □ □ n n. Commission accounting □ □ □ □ □ □ o. Claims processing □ □ □ □ □ □ p. Actuarial analysis and policy development □ □ □ □ □ □ q. Reports to statistical agent (fire and casualty) □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ V. □ □ □ □ □ □ w. □ □ □ □ □ □ x. □ □ □ □ □ □ y- □ □ □ □ □ □ r. Mortality and/or morbidity studies s. Personnel records t. Payroll u. General accounting Others (specify) □ 67 6. Employment: Please give number of full and part-time employees on the payroll of this company (including all branch and com pany agency offices) during the pay period ending nearest January 15, for each of the requested years. Payroll period ending nearest January 1 5 ,____ 1963 1960 1957 1954 All employees, total for entire company (include agents on commission if employees, office and EDP personnel, and all other employees) Office employees, total for entire company Total Male Female Agents, if employees (a) Custodial and other non-sales, non-office employees Total number of employees performing work directly associated with the EDP system (a) Do not include agents acting as independent contractors. F O R L I F E C O M P A N IE S O N L Y For December 31 in each of the listed years, please fill in the requested information below. December 31, 1962 December 31, 1959 Total number of individual policies in force Life Other Total number of group certificates in force Life Other Total dollar amount of life insurance in force (Name and title of person to be contacted if questions arise concerning the report.) (Date of report) December 31, 1956 December 31, 1953 68 Appendix B. Selected Bibliography Computer Applications in Insurance Companies Anderson, D. L. "Electronic Underwriting, " The Spectator, October 1959, pp. 34-35, 63. "Automation Brings Branches Closer to Home, " Business Automation, September 1962, pp. 24-25. Baxter, Turner B. "Computer Success Story, " Best's Insurance News, Life Edition, April 1959, pp. 43-45, 54. Cass, Ronald A . "Automation in the Insurance Industry, " The Spectator, April 1959, pp. 24-25, 54. Donally, J. B. "Profit B uilder," Best's Insurance News, Fire and Casu alty Edition, September 1962, pp. 55, 66 -6?. "EDP Applications in Life Insurance Companies, " Automation Report No. 10, New York, Life Office Management Association, 1963. 32 pp. Elliot, Richard B. "Automated Policy W riting," Best's Insurance News, Fire and Casualty Edition, November 1962, pp. 70, 72, 84. Golden, Larry. "Conversion and Installation, " Best's Insurance News, Fire and Casualty Edition, November 1963, pp. 62, 64-65. Gould, G. E. "A Functional Approach, " Best's Insurance News, Life Edition, April 1961, pp. 76, 78-80. Hawkins, Don C. "Optical Scanning System, 1 Best's Insurance News, Fire 1 and Casualty Edition, December 1962, pp. 39, 52. "Instant Information, " Best's Insurance News, Life Edition, July 1965, pp. 27, 38. "The Insurance Man's Best F rien d ," Business Week, November 7, 1964, pp. 100, 102, 104. Jones, W. Everett. "The Effects of E lectron ics," Best's Insurance News, Life Edition, July 1961, pp. 67-70. Keller, Arnold E. "They do a Heap of Planning Down at State Farm, " Business Automation, May 1962, pp. 29-33. Kelley, John W. "Premium Payments Made Autom atically," The Spectator, April 1956, pp. 45-46, 84. 69 Kornblum, Richard D. "Insuring Profitable P o lic ie s ," Business Automation, June 1965, pp. 55-59, 70, 72. Kraegel, Wilfred A. EDP Organization in Life Insurance Companies, Life Office Management Committee, Automation Committee Report No. 2 (New York, Life Office Management Association, I960). 9 pp. , plus charts. Life Office Management Association. EDP in Life Insurance, Proceedings of Automation Forum (New York, Life Office Management Association, 1962). 544 pp. McGill, John C. "Automated P a y ro ll," Best's Insurance News, Life Edi tion, June 1963, pp. 31-33. McLaughlin, J. G. "Optical Scanning," Best's Insurance News, Life Edi tion, December 1962, pp. 31, 42, 44. Meacham, Alan D. and Thompson, Van B. , editors. Computer Appli* cations Service, Vol. I(Detroit, American Data Processing, Inc. , 1962). 2UU pp. Mitchell, G. M. "Why Automation P iecem eal?", Journal of Machine Accounting, March 1962, pp. 6 -8 , 10-12, 14. Phillips, A. E. "Success and F a ilu res," Best's Insurance News, Fire and Casualty Edition, October 1962, pp. 68, 70-72. Rummel, Harry J. "Task Force Approach, " Best's Insurance News, Life Edition, October 1964, pp. 65, 68-71, 78. Schaberg, Ralph P. "The Night Shift," Best's Insurance News, Life Edi tion, May 1958, pp. 25-27. Smith, Kenneth W. "Optical Scanning M ethods," Best's Insurance News, Fire and Casualty Edition, September 1963, pp. 59, 66, 67. Smith, William M. "Automation in the Life Insurance Business: A Case Study, " Michigan Business Review, March 1962, pp. 8-13. Volta, V. "Computer Feasibility Studies, " Best's Insurance News, Life Edition, February 1963, pp. 44-48. Case Studies: Effect of EDP on Insurance Personnel Bureau of Employment Security. A Large Life Insurance Company Automates, Automation Program Report No. 3, U. S. Department of Labor, April 1964. 82 pp. 70 Bureau of Labor Statistics. Adjustments to the Introduction of Office Automation, Bulletin 1276, May I960. 86 pp. ____________ . The Introduction of An Electronic Computer in a Large Insur ance Company. October 1955. 18 pp. Cibarich, August L. "An Insurance Company Automates, " Employment Security Review, July 1962, pp. 40-41. Faunce, William A . "Social Stratification and Attitude Toward Change in Job Content," Social F orces, December I960, pp. 140-148. Hardin, Einar. "The Reaction of Employees to Office Automation, " Monthly Labor Review, September I960, pp. 925-932. Jacobson, Eugene, and others. "Employee Attitudes Toward Technological Change in a Medium-Sized Insurance Company, " Journal of Applied P sy chology, December 1959> pp. 349-354. Scanlon, Burt K. 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And "Insurance Personnel in the United States, May 1 9 6 3 ," The Tally of Life Insurance Statistics, April 1964, pp. 1-4. Institute of Life Insurance. Life Insurance Fact Book, 1965. Institute of Life Insurance^ 12& pp. New York, Life Office Management Association. "Personnel Directors Describe Major Problems: Recruiting, Training, Salaries Top List as in Past, " Personnel Quarterly, March 1963, 16 pp. McAulay, A . H. "Forecast for the Seventies," The Spectator, Part I, July 1962, pp. 13-15, 49; Part II, August 1962, pp. 11-13, 91-92. Rennie, Dr. Robert A. "Insurance Distribution Methods, " Best's Insurance News, Fire and Casualty Edition, January 1964, pp~ 52, 54, 56, 68-71.-----Rennie, Dr. Robert A. "Obsolete Marketing Methods Blocking Successful Innovations in Insurance, " The Weekly Underwriter, January 25, 1964, pp. 59-60. ☆ U .S. GOVERNMENT PRINTING O F F IC E : 1966 O - 797-566