Slow Adoption of Mobile Tech

Will the insurance industry ever shed its lamented sobriquet as the "Amish of the financial services sector" when it comes to technological innovation? Its latest opportunity will come in the form of something everybody seems to be talking about in 2012-mobile.

By Steve Tuckey

In a recent report, veteran insurance tech expert Mark Breading, partner at Strategy Meets Action, acknowledges some possibility in that regard but knows that challenges remain.

Now most insurance brokers, underwriters, claims specialists and marketers are addicted to their cell phones and Blackberries, calling and texting up a storm throughout the day, and even utilizing some of the latest cross industry applications to further enhance their productivity.

Cyber Liability 2.0 (05/07/13)
Adding Depth to Data Systems (06/01/13)
Social Engineering Targets (06/01/13)
SEC Addresses Facebook, Twitter Use (06/01/13)
Technology (06/01/13)

But investments in developing the kind of custom applications that could make a difference in areas such as claims, marketing and distribution have not been as evident as in other industries. "Insurers like to implement technology that is mature and secure, especially when it comes to emerging technologies," Breading said. "Most of them do not want to be on the bleeding edge." And mobile-technology innovation that touches agents, customers and other business partners presents further challenges because confidential information could be breached in the rush to be No. 1 with the latest customer applications. And for one simple reason. While in the past insurers may have had control over whatever innovation they used, "in the mobile world it's bring your own device."

But some carriers are nonetheless taking the plunge, with about 22 percent of insurers developing sales oriented mobile apps such as product information and quotes and 18 percent developing service-oriented apps for claims and inquiries, according to a survey conducted by Strategy Meets Action.

Much of the activity now is on the property/casualty side, but there are interesting developments on the life side, Breading said. For example, John Hancock provides financial advisors with a custom-based iPad-based application called i-Illustrate. "Illustrations should be a killer app for life insurance," he said. The ability to dynamically make changes in assumptions and parameters for complex financial products on the fly, and then present the results in a visually compelling manner could make it likely that Hancock will not be the last carrier to explore this option.

Managing such complex products could make for a valuable customer-facing application for the life industry in the near future, Breading said.

The majority of carriers developing customer-facing applications record more than $1 billion in annual premiums as they have the budgets and transaction volume to justify the research spends. One of the main challenges insurers face stems from the fact that most customers have relatively limited interaction with their insurer so for an app to gain traction it must bundle a number of functions, such as quoting, agent locater and first notice of loss.

To create prospects who will eventually turn into customers, insurers will need to capitalize on social media, games, videos, calculators and other lead generation devices to attract those customers who might find their attention drifting toward other financial-services providers, Breading said.

More importantly, advances in mobile applications have the potential to provide real-time information that will transform both underwriting and risk management.

"We will still use historical data, but now we will be managing risk real time, pricing real time and developing much more pro-active partnerships with our customers," Breading said.

STEVE TUCKEY has covered a wide range of insurance issues for more than 20 years. He can be reached at riskletters@lrp.com.

February 21, 2012

Newsletter Sign-up