Potential Is Rich, As Industry Inches Toward Mobile Utilization
From a number of perspectives, it would seem that the insurance industry is ideally suited to the use of mobile computing technology.
The nature of the business traditionally has lent itself to the use of professionals in the field for the sale and service of insurance products. In many cases, an insurance company representative needs to visit a potential client, actually inspect a claim or review a risk for underwriting purposes.
Depending on the carrier, the geography they need to cover can be regional and include only a few states, or global, covering several continents. So, with all this perceived need, what is the current state of mobile information technology utilization in the insurance industry?
At this point, there is great temptation to expound on the latest wireless gear and how carriers and their stakeholders are using, or could be using, this equipment to meet the needs of their customers. What is the status of wireless networks? Which new handheld devices really hold up in the field? How could we be using mobile technology? What about security for wireless devices or even ones that are just mobile like laptops?
Regardless, the complexity of insurance operations and the nature of the business are worth a brief review to place all this capability in the appropriate perspective.
The need for information at each of the aforementioned junctures has changed over time, along with the clients expectations of how each transaction should proceed. The amount and quality of data collected has also progressed as the need for underwriting precision increased and the need to make use of marketing opportunities rapidly grew.
New regulations and the realities of a changing world have also thrust new tasks on the industry. In spite of these universal changes, however, the business of insurance basically has remained the same. Insurers need to provide service contracts that mitigate the risk of everyday events as well as periodic disasters. To accomplish this, carriers need to market, price, sell, underwrite, and service products efficiently enough to make a profit and meet regulatory requirements.
A certain number of insurance professionals have always needed to be in the field with their customers. Unlike the rest of financial services, insurance, in many cases, needs to be sold and serviced in person.
Over the years, and including the present period, there remain very few transactions that actually need to happen anywhere close to real time (i.e., immediately). Insurance can happen asynchronously (The intake, processing and posting of information can be separated by relatively long periods of time.) without creating too many problems. In fact, this situation has be the norm for many years.
What has changed recently is the need for insurance carriers and their business partners to compete in a broader financial services and consumer market where real-time delivery is becoming the norm.
This new level of competition and the broader expectations of consumers in a more fully connected world are compelling insurance companies to close gaps in their asynchronous processes. In this way, they not only wring increased efficiency out of their operations, but also show that they are keeping pace with the rest of the services industry. One of the best ways to accomplish these goals is to leverage mobile technology.
During the recent “technology boom,” there was a perception (driven mostly by greed or even just fiscal prudence) that real-time connectivity to stock brokers would allow greater control over a persons portfolio. This situation drove the concept of handling retail financial transactions over handheld devices such as cell phones or personal digital assistants (PDAs). After the market bust, this concept is not so widespread, or even needed.
At its height, the success of the mobile channel for retail financial services implied that insurance might benefit from this type of connectivity. The reality was (and is) that few people wake up in the morning with the idea of making an instant gratification purchase of an insurance product.
Even if they did, they certainly would not want to do it on a 2″ by 2″ screen on a cell phone. The real place for mobile devices in the insurance sales arena lies in supporting agents during visits to homes and businesses.
In that area, devices can include handheld e-mail units like Research In Motions Blackberry and all its OEM forms. This device, when combined with a cell phone (either as part of the device or as a separate unit) can provide a sufficient level of connection for an agent.
The next step up would be the use of wirelessly enabled devices that have computing power such as a Microsoft-specified Pocket PC to run sales force automation software or a Web browser for connection to thin client agency automation products.
What agents need in the field is access to information that supports customer knowledge. That can be done asynchronously by loading a device such as a laptop or PDA with the customers information before traveling to the clients location.
The real success story for mobile technology in the insurance space is for service issues such as claims adjusting and underwriting. The recent improvement in devices in terms of processing power, ruggedness and increases in mobile bandwidth are making mobile computing much more attractive and practical for insurers.
The burgeoning deployment of 802.11B (WirelessFidelity, a.k.a. Wi-Fi) technology and all its variants for wireless connectivity, combined with improvements in cellular technology, are allowing field professionals to access data and applications in very useful ways.
The real goal for carriers that are exploring the use of mobile information technology is to select the correct applications and the most robust tools for their needs. This includes determining the coverage areas, uptime guarantees and security that various providers offer. Prudent carriers will research existing customers and perform real-world pilots.
As far as cool devices go, the emphasis from carriers that are actively using mobile and wireless technology is to select devices and applications that enable service goals and enhance employee effectiveness. The bevy of new combination devices that incorporate cell phones, digital cameras and PDA functionality make the mobile proposition much more practical than ever before.
Carriers approached mobile technology with the skepticism of true risk managers. Companies that tend to accept technology risks were among the first to use mobile devices and also the first to learn their limitations.
Those less eager to jump into this technology-rich environment gain from the experience of their peers and probably enjoy cost savings as well. What is clear is that mobile technology is here to stay for the insurance industry.
is senior analyst, insurance, for TowerGroup, a research consultancy based in Needham, Mass. He can be reached at Jbisker@towergroup.com.
Reproduced from National Underwriter Edition, July 14, 2003. Copyright 2003 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.