By

Life insurance agents and brokers may love their cellular telephones, but few appear to be using wireless systems for much other than telephone calls and voicemail.

Fifty-eight percent of U.S. households have cell phones, and 17% of those “wireless households” can use wireless devices of some kind to send text messages, according to new figures from Taylor Nelson Sofres P.L.C., London.

Five percent of the wireless households can use wireless devices to reach the Web, and about half of the wireless Web users use the wireless Web for work, Taylor Nelson reports.

The Gartner Group, Stamford, Conn., is about to survey dozens of insurers to find out how they are using wireless.

For now, though, penetration figures for the life industry are scarce. The industrys technology experts have to make do with their own best guesses.

All agree that cell phone technology is a winner.

“I think the cell phone is pretty much standard,” says Jeff Kraber, a technology advocate at the National Association of Independent Life Brokerage Agencies, Fairfax, Va. “Everybody has a cell phone.”

“Agents are adopting this very heavily,” agrees Robert Lotter, chairman of eAgency Systems Inc., Newport Beach, Calif. “The phones become a pager and a phone. Its also becoming an answering service.”

But Lotter, whose company sells wireless sales force automation systems, says he is not yet seeing many producers using wireless data services to conduct serious business.

“My feeling is that wireless is not being widely employed in this industry,” echoes Stephen Forbes, senior vice president of research at LOMA, Atlanta.

Kraber estimates that the wireless data services penetration rate among the producers he meets could be as low as 5%.

Meanwhile, even in corporate technology planning offices, “almost all technology areas are getting more attention than wireless,” says Matt Josefowicz, a technology analyst at Celent Communications Inc., Boston.

Insurers and other companies are still interested in wireless, Josefowicz says, but he suggests that enthusiasm about implementing wireless projects in the near future might be lower now than it was a few years ago.

In some ways, Kraber observes, the life insurance industry may now be at an earlier stage in the adoption of wireless data services than it was in the adoption of electronic mail services back in the late 1980s.

At that time, Kraber says, many large life insurers were already using mainframe computers and minicomputers to run text-based electronic mail services.

Today, its still rare for life insurers to operate large, official wireless data communications systems, even for their own employees, experts say.

Everyone interviewed agreed that successful wireless services have the potential to increase producers productivity dramatically, but the experts also cited primitive technology, lack of standards, security concerns and producer psychology as daunting barriers.

Producers already know about the weakness of wireless communications technology from the way their cell phone signals fade in and out, or cut off altogether just as wealthy clients are about to commit to buying jumbo life insurance policies.

The technology limitations cause even more problems for the users of wireless data services: a human being might be able to overcome weak signals by using the time-tested “cell phone shout,” but a wireless data connection will simply operate more and more slowly, if it operates at all.

In practice, conventional wireless modems tend to operate at speeds of about 9,600 baud–roughly equivalent to the speeds landline-based modems boasted in the early 1990s.

Insurers who want to work with independent producers also face serious standards problems, according to Chuck Lownie, director of business development at iAnywhere Solutions, a unit of Sybase Inc., Dublin, Calif.

Despite all the gloom about insurers alleged neglect of wireless, “I think the insurance industry is one of the better agent automation verticals,” Lownie says. “Weve been working for many years to automate life insurance companies captive agents.”

But, when insurers try to reach out to independent producers, the job is trickier, because the insurers must decide how many types of wireless services and data devices to support, Lownie says.

Still another major concern is data security.

Some critics ask whether there are really many vans driving around the country full of phone hackers eager to intercept and use information from Aunt Sallys long-term care insurance application.

But, in the real world, security concerns are still so strong that only 51% of financial services companies allow wireless access to their corporate networks, according to TruSecure Corp., Norwood, Mass.

Federal laws and regulations, particularly the health data privacy and security provisions of the Health Insurance Portability and Accountability Act of 1996 and the Gramm-Leach-Bliley Financial Services Modernization Act of 1999 also play a role.

“The penalties for transmitting unsecure private information can be quite high,” Lotter warns.

“Privacy and security are major issues,” Josefowicz says.

Finally, the highest barrier of all might be producer skepticism about whether wireless data devices will do much to improve producers lives.

When producers have wireless technology, “people are expecting faster responses,” says Nathan Perlmutter, a Forest Hills, N.Y., broker who makes heavy use of wireless data services. “Not everyone wants to be held to that standard.”

In the property-casualty insurance industry, insurers are starting to use wireless devices equipped with cameras, because the ability to transmit photographs of accident scenes and other sights of interest has an obvious value to property-casualty insurers, experts say.

In the life industry, the most popular tool would probably be a wireless life insurance application system, Kraber says.

But most life insurers are still so conservative about issues such as use of electronic signatures that closing on life insurance sales through the Internet is still difficult. Because of all the compliance challenges, Kraber has a hard time imagining that many insurers will be selling variable universal life policies through PDAs any time soon.

At iAnywhere, however, Lownie says he thinks more producers are starting to lobby for wireless data connections.

“Theyre starting to say what they really want is wireless for the PDA,” Lownie says.

Brad Adrian, a senior research analyst at the Gartner Group, says insurers who want to set up wireless systems for producers should be prepared to offer more than one great application.

“You really need to have a suite of wireless capabilities,” Adrian says.

The Guardian Life Insurance Company of America, New York, is an example of an insurer publicizing its efforts to use wireless to make producers lives easier.

The company recently announced plans to work with iAnywhere.com to set up a wireless network for independent producers that will give the producers access to electronic mail, address books, calendars and other personal productivity tools.

Guardian will also use the system to send brokers alerts about important business events, such as failures by clients to pay their insurance premiums.

Guardian acquired the technology necessary to set up the system from iAnywhere in 2001, and putting the system together took only six weeks once the company got started, says Jamie Sguerra, a Guardian spokesman.

“The only question is the adoption rate by our crowd,” Sguerra says. “It doesnt help if you build a great system and nobody uses it.”

Guardian hopes to build agents interest in the system by introducing it to the most influential producers first.

“If that works, its going to trickle down,” Sguerra says.

Meanwhile, vendors are still developing and selling wireless-oriented systems.

E-Nable Inc., an affiliate of the MIB Group Inc., Westwood, Mass., emphasizes that agents who are underwriting life, long term care and disability insurance applicants can use MIBs underwriting databases in the field, simply by linking with the MIB databases using wireless modems plugged into their laptop computers.

EAgency has been working with Research in Motion Ltd., Waterloo, Ontario, the maker of the popular Blackberry family of PDAs, to set up wireless networks based on the Wireless Information Exchange standard, or WIX, an alternative to wireless Internet protocols.

Instead of expecting producers to use three-inch screens and arrow keys the size of flies to access the Web, eAgency helps insurers set up special databases containing producers address books, calendars and other pertinent information. Producers then use WIX-based software designed especially for PDAs to call up the information.

EAgency says it is especially interested in putting its user interface on cell phone/PDA hybrids.

“We believe the adoption rates will be high because its just another phone,” Lotter says.


Reproduced from National Underwriter Life & Health/Financial Services Edition, July 8, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.