Wireless Technologies for the Insurance Sector

By Rajesh John and Michael Kaplan

Service providers and technology vendors are frequently evaluating how they can better address vertical segments. Insurance is a vertical that has traditionally been slow to adopt new technologies, but stands to benefit from a number of mobile and wireless solutions. To unlock this potential, it is critical to understand which insurance segments and business processes receive the greatest benefit from wireless capabilities and applications.

While this year’s debate over Healthcare Reform made health insurance the topic du jour, insurance is something the average person thinks little about – until an accident, problem or life event occurs. Wireless service providers, device makers and software developers, however, cannot take a reactive approach if they want effectively serve the insurance vertical.

We believe that insurers represent an untapped and underserved opportunity, where wireless connectivity can lead to competitive differentiation and significant cost savings for insurance carriers.  To help insurance carrier, wireless service providers and technology vendors understand these opportunities, this viewpoint aims to address three issues:

1. The specialized insurance business processes where wireless technologies can be leveraged.
2. The extent to which different types of insurers have adopted wireless technologies for their business.
3. The best practices insurers and vendors should consider when implementing wireless initiatives.

Opportunity Identification and Assessment

We identified six core business processes where insurers can leverage wireless capabilities (Figure 1).  Several of these processes and objectives – broker and agent sales, risk reduction and claims filing – are relevant only to insurance, and in some cases, a few other verticals. Others, such as customer service, take on heightened importance for insurers and their customers in certain situations.

Figure 1: Mobile/Wireless Solutions Applicability to Insurance Business Processes

There are additional nuances in the insurance market when considering the type of insurance being sold, such as Property and Casualty (P&C), Life and Health. Each of these insurance categories have their own market norms and the insurance carriers within each market face different business realities that impact the relevance of mobile and wireless solutions.

Two core insurance business processes – customer acquisition and claims assessment – illustrate this point. An insurers’ dominant acquisition model may be direct-to-customer, sales agent-driven or combine both approaches.  A direct-to-customer approach requires insurance companies to engage customers through multiple communications channels, with the mobile Web and applications considered emerging methods.  Insurers relying on geographically dispersed brokers and agents may want to focus on providing these brokers and agents with always-on connectivity to back-end sales and application processing systems.

In terms of claims assessment, insurance categories such as auto and life, leverage customer-led claims filing.  The need for wireless in these claims varies based on the type of information being collected and the importance of timeliness.  Higher value and more complex P&C claims (e.g., home or catastrophe) may be led by insurance assessors. Wireless technologies are highly relevant for insurance assessors filing claims using on-site image collection, filing forms and communicating with the corporate office.

Figure 2 illustrates key areas in which P&C, Life and Health insurers have adopted mobile and wireless technologies and provides examples of these implementations. 

Figure 2: Wireless Applications by Insurance Type

P&C insurers have been the most aggressive adopters of wireless technologies, with implementations prevalent for customer service/marketing, broker and agent sales, risk reduction, claims filing and VAS. We believe this is largely because wireless functionality strongly aligns with P&C insurance business operations. For example, beginning the claims filing process immediately following an automobile accident is time sensitive and mobile devices can be used to collect information.

Life and health insurers’ use wireless technology for many of these processes, but adoption has been slower and more experimental in nature. The complexity of many life insurance products, for example, makes it difficult to fully market to customers through the mobile channel. Additionally, health insurance claims are often filed by health provider offices, and while those offices themselves may benefit from wireless technologies, health insurers have not yet found a reason to embed wireless into their claims processes.  Life and health insurers are and will, however, continue to identify how wireless solutions can add value to their business.

One way to begin to measure where the best opportunities exist for insurers and their partners is to assess, for each type of application, where wireless technologies deliver greatest business value and the current industry adoption.  Figure 3 illustrates CSMG’s assessment of the overall benefit insurers receive from wireless technologies for varying application, and the extent to which these insurers have seized these opportunities through implementation.  This map categorizes each opportunity into “mainstream”, “growth potential”, “over-hyped”, and “limited potential.”

Figure 3: Opportunity Map

Overall, customer service, marketing applications, and claims filing applications for P&C insurers appear to be the most mainstream deployments. A significant opportunity exists for all types of insurers to deploy solutions and tools that enable brokers and agents to sell more effectively.  Health and P&C insurers should also evaluate how wireless technologies can reduce population risk (e.g., by measuring risk factors in real-time).  Insurers and service providers should prioritize evaluation of these applications and investigate how they can be implemented.

Insurance Wireless Case Studies

Several insurance companies have lead the industry in developing effective wireless technology-driven initiatives.  These examples provide a model and best practices for peers to consider when considering their own deployments.

• Nationwide iPhone App: Last year, Nationwide introduced a free iPhone mobile application that allows automobile insurance customers to begin the accident claims filing process directly from their iPhone. The application intuitively walks users through the claims completion process, including submitting photos of the accident by using the phone’s camera, and submits the claim directly to Nationwide using wireless connectivity.  In contrast to a customer calling Nationwide’s service center, the mobile app claims submission lowers Nationwide’s customer service costs and simplifies the process for the customer.
• Progressive M2M Telematics: Progressive uses an in-car telematics device to track driver behavior, such driving distance, speed, time of day and braking patterns as a central part to its MyRate program. MyRate allows opted-in customers to receive discounts for safe driving in exchange for allowing Progressive to track their patterns.  MyRate can be categorized as a form of Usage Based Insurance, which instead of charging customers based on past behavior and demographics, attempts to price insurance based on current usage and behavior. The program allows for potentially more accurate insurance pricing and encourages customers to reduce risky behavior.
• HealthPartners Mobile Messaging: HealthPartners implemented a two-way mobile messaging platform for its customers with their health care providers to enable highly secure, real-time communications between any type of mobile phone.  HealthPartners, which is both an insurer and a healthcare provider, is initially deploying the feature to high-risk patients, such as pregnant women and those with chronic illnesses that have been recently discharged from hospitals. These patients will likely use the messaging platform to ask care providers questions about their health and provide updates with changes in symptoms. By enabling real-time communications between doctor and patient, potential health risks can be quickly identified and problems can be treated before they escalate in significance.

The wireless initiatives of Nationwide, Progressive and HealthPartners all share a common theme in that they primarily target a discreet business process or goal (claims filing, end-user pricing, risk reduction). Other insurers should follow their lead – optimizing their wireless solutions for their own intended purpose and audience.

Next Steps for Wireless Providers

While wireless technologies hold great promise for the insurance industry, insurers have been traditionally slow and hesitant to adopt new technologies.  How can service providers and technology vendors work with their insurance customers to accelerate the sales process?

Four proactive steps will be particularly important to encourage adoption:

1. Service providers should identify key device and software partners to develop complete solutions for insurers.  These may include horizontal partners service providers work with today as well as insurance vertical specialists.
2. Service providers should educate insurers to help them understand how these technologies can be used within their business.  This can be accomplished by providing real-world examples from either direct competitors or peers in other insurance categories or verticals that customers may be less aware of. Customized marketing collateral with relevant industry metrics are needed to convince insurers that new technology solutions will work for them.
3. Service providers and technology vendors must also help drive end-user adoption.  Training may be required for insurance veterans, many of whom are technology averse and can hinder the success of a project.
4. Finally, service providers should consider specialized offers on devices and service for insurance carriers.  These offers should consider carriers’ key partners, such as independent brokers and agents, as they may be critical to the outcome of an implementation.

Focusing in these areas will help the insurance industry fully leverage many types of wireless technologies. Wireless providers that effectively execute their insurance go-to-market strategies stand to benefit from a sizeable revenue opportunity. Choosing to treat this market like just another vertical, as any insurer will tell you, is simply a risk not worth taking.