Wireless Adoption Outlook Is Bleak
Many of todays newest and coolest technology developments have been around wireless computing and communication, but the life insurance industry, it seems, remains unimpressed.
While use of wirelessly connected personal digital assistants (PDAs), laptops and other devices has seen some growth in other areas of the financial services industry, “Adoption is very light in the life insurance industry,” says Chad Hersh, senior analyst with the insurance practice of Celent Communications, based in Houston.
According to Hersh, use of wireless technologies in the life insurance sector stands at a miniscule “1% or less” at this moment. “Its kind of a bleak outlook,” he notes.
“Weve been scrounging for case studies [of wireless use in life insurance],” says Hersh. The few he has found generally involve individual agents using PDAs or laptops with wireless modem cards to access the extranet and illustration applications of a carrier. “But there is sporadic use of that,” he adds.
In life insurance, the primary usage of wireless technology is around customer service, giving agents the ability to respond to customer requests in the field, Hersh notes. The other major use”just barely starting to gain traction”is in worksite marketing, where an agent or agents go to job site and enroll insureds in real time. In that case wireless provides “completely accurate quotes right through the binding process.”
Hersh says such use is “limited, but some large carriers have started doing it.” Connecting up via a wireless modem or wireless LAN, agents at a worksite like an office building can have all covered employees sign up for benefits on the same day, he explains. The same technique could be used at the facility of a retailer to market insurance to customers at a store. Such a use, however, is “very rare, once in a blue moon,” he adds.
“Theres an opportunity to leverage wireless technology to do these things, but not much has been done yet,” states Hersh. The “good news,” he says, is that the technologys “traction” in claims for p-c insurers and agents “will hopefully bleed over into life.
“The real driver will be agents personal use of wireless,” says Hersh. In addition, development of the next generation of Wi-Fi technology and “hot spots,” which will cover up to 30 miles, will expand broadband access, making Web-based applications from carriers “suddenly available anywhere,” he notes.
Why hasnt wireless done better in life insurance up until now? Hersh points out that Web-based applications from life insurers “are only now just starting to mature.” He reasons that such insurers might view creating such applications and then putting in a wireless infrastructure might seem like biting off more than the carriers can chcw.
“Some carriers have an independent field force and they wont spend for it,” adds Hersh. “A captive field force is easier, because you supply the hardware, but how much business do you have to do to make it worthwhile? And if youre an agent, at what point are you willing to do business anywhere? If youre out at the park, are you going to whip out the laptop?”
According to Hersh, the most likely area for wireless growth in life insurance is in field sales and service. “The biggest driver for the carrier is if they knew everyone used the same Web-based illustration tool. Then they would know that everyone is using the same right version, also the latest version.
“The primary benefit is really accessibility of data,” he continues. Some software vendors are trying to market CRM wireless applications as well. “Theres a place for that, but its really a nice-to-have, rather than a need-to-have. Early adopter agents will like it if a carrier has it, but they will not pick their carrier based on it.”
While wireless offers some obvious benefits, he concludes, “theres just not a tremendous fit for wireless applications in life insurance. Where cost savings and revenue generation are to be had, it will be used. There is a place for wireless in life insurance, just not a big place.”
When it comes to wireless in insurance, James Bisker, senior analyst, insurance, for TowerGroup, Needham, Mass., agrees that the key question is: “What is the need, and what is the nice-to-have vs. the want-to-have?
“The basic thing is that the technology is improving, and it basically works,” says Bisker. “There has always been this enormous idea that the insurance industry is one of the best places to use wireless, but it has not materialized as much as we wanted.”
Bisker points to some use of wireless technology for p-c claims, but notes that, “theres no real need for immediacy” in the life insurance field. “Now you can get a life policy in days instead of weeks, but theres still not an immediate need.”
According to Bisker, because the claims aspect is not so immediate for life insurers, that “cuts off the majority of what wireless would do for you. The flip side is sales. A consumer with a handheld [device] could buy insurance wirelessly online, but that doesnt happen every day.”
The life sector can, however, benefit in customer service and support by wirelessly empowering agents to do a better job in the field, says Bisker. “Agents will visit you at home at your request. They can pull out a laptop [not a handheld] and show illustrations. They can also input in changes or test scenarios. It is impressive. Is it essential? No.”
Bisker concludes that, “The nature of insurance just isnt always real time.” He suggests, however, that as agents get into selling financial products beyond life insurance, wireless would be more relevant.
“Wireless is a nice-to-have; I dont know that its a need-to-have, especially in the life insurance industry,” says Bisker. “But, just because its not essential doesnt mean its not good.”
Reproduced from National Underwriter Edition, April 23, 2004. Copyright 2004 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.