Vertical Snapshot: Mobility in Insurance

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Clik here to view.Mobility is an important technological advancement for the insurance market, offering unique opportunities for different types of insurance. To pinpoint these opportunities, one must take a closer look at insurance value chains.

Taking advantage of services offered by newer and better smartphones, the time is ripe for insurance companies to streamline internal processes and offer leading-edge services to mobile customers.

Mobility Opportunities in the Insurance Value Chain

Over the last few years, mobile devices have evolved into machines with formidable computing power. Packed with advanced features such as large touchscreen displays, faster multi-core processors, larger storage capacity, advanced imaging, and location awareness, these devices will play a major role in supporting applications for key stakeholder interactions in any organization. One of the offshoots of this significant advancement in mobile hardware technology has resulted in unlocking the mobile applications’ market potential, which some analysts expect to reach US $32 billion by 2015.

Mobility will transform every industry, and insurance is no exception. Identifying where mobility can be best utilized requires a fresh look at the insurance value chain. For simplicity, we will consider two value chains: life insurance (Figure 1) and property & casualty insurance (Figure 2).

As illustrated in Figures 1 and 2, mobility can play an extensive role in almost all business processes in the insurance value chain. Identifying these opportunities can help businesses create a roadmap to roll out mobility in phases across the enterprise. It is clear that mobility can help to add business value when these opportunities are harnessed. The way ahead is to translate these opportunities into mobile applications that cater to stakeholders’ needs.

Mobile Applications to Seize the Opportunity

Mobile apps can help all stakeholders—the insured, insurer, business partners do their jobs better, faster, and cheaper. Communication-intensive processes are the first to reap the benefits of mobility.

Self-service customer apps will continue to develop and become more user-friendly. Apps that provide insurance services, such as quick quotes, are already available. However, experts feel that the future belongs to convergent applications that provide an all-in-one interface for every kind of service. Clients can now compare the benefits of multiple insurance options. While processing claims, data that was missing from an initial capture can be easily populated by a customer using a mobile app. Another class of application relates to mobile telematics, which allow insurers to collect data as it is generated for specific products such as car insurance. Individual consumers will not be the only ones who benefit from such technology. Corporate clients could take advantage of applications that track and manage all employees that fall within a group insurance policy.

Among the key stakeholders, the demand for mobile applications will be the highest from insurance agents. Mobile applications (especially those that are tablet-based) such as Sales Force Automation (SFA) tools will facilitate new policy illustrations, provide straight-through processing of insurance applications, and create performance dashboards for sales cycle optimization. Another area of focus is applications that help in claims management, specifically in reporting and adjusting.

Employees of insurance organizations will benefit from mobile applications designed specifically for their needs. Applications that provide real-time prompts, such as catastrophe alerts and analytics dashboards to enhance decision making, will be especially differentiating. Agents in the field will be able to use mobile apps to collect data about the property to be insured and transmit it directly to the underwriters.

By providing mobile apps to agents and the sales team, insurers can reach out to new target markets faster, which can help grow their business. By improving self-service and pushing more tasks to agents, insurers can reduce calls to customer service and improve operational efficiency. Agents with access to more information, anytime, anywhere, can improve consumer satisfaction and close business more easily. Enabling claims capture from the field and providing real-time access to required information, including information from third parties or service providers will allow insurers to control and manage their losses better.

Some best-of-breed insurance organizations have already ventured in this direction by capitalizing on the opportunities that insurance business processes present them with. These organizations have spearheaded the creation of some applications that not only aid enterprises, but also add to organizational goodwill by helping customers. A few notable examples of mobile applications that are intended for the insurance organization’s use include needs analysis, illustrations, quick quote generation, product catalogs, claims assessment, and estimation applications. There are other apps intended for policyholder use, such as tools that provide 24/7 customer service, pension planners, and wellness apps for health insurance that help track whether individuals are meeting their health goals.

It is easier to demonstrate the benefits of mobility through examples. The following sections describe loss control and management applications such as mobile telematics applications and catastrophe claims management solutions. It is important to bear in mind that these examples are hypothetical; actual benefits will depend on factors such as business goals, priorities, existing technology ecosystem, and regulations.

Reducing Accidents with Mobile Telematics

Telematics is essential for the accurate calculation of premiums in usage-based insurance. Conventional telematics solutions involve fitting vehicles with special devices that directly feed information to the insurer’s systems. Fraudulent claims and expensive claims management costs due to long cycle times which lead to annual losses of around US $20 billion. Experts believe that this amount can be greatly reduced by adopting telematics systems. The catch is that implementations can be prohibitively expensive. Insurance players have always weighed the cost savings accrued against the expense of implementing these systems. But as the era of mobility unfolds, specialized smart applications running on mobile devices will make telematics available more widely. These applications can turn a smartphone into a cost-effective telematics device that provides much of the same functionality. Benefits can be extended not just to insurers but also to customers. This can be a win-win situation—the insurance company gets the benefits of a telematics unit and customers can use smartphones as a life-saving device – by helping prevent accidents and automatically notifying emergency services in the event of one.

Once installed, these applications run in the background. The moment a user’s vehicle moves, the location-aware system built into the smartphone invokes the application. The application gets information from the GPS to determine the vehicle speed, compares it with the speed limit for the area using stored values, and alerts the driver if he or she is speeding. The driver can also get traffic and weather updates. When the user is driving, the mobile device can answer incoming calls with a prerecorded voice message asking the caller to call back later. Needless to say, these features, when used together, reduce the risk of accidents. These applications also have accident detection algorithms that use the phone’s accelerometer. In case of an accident, a sudden change in g-forces is detected by the accelerometer, and the application deduces that a vehicle collision may have taken place. It can call for emergency services by automatically dialing a preconfigured emergency number and notify the insurer. When the call is placed, a prerecorded message informs the hospital’s emergency response unit about an accident in a certain location. Since this is a real-time scenario, the insurer is alerted immediately and can assist the customer faster. This also reduces the chances of fraud because the phone is with the user while driving. These types of applications run using contextual information from the phone.

Such applications can also leverage the power of social media, where drivers’ communities may be created to exchange tips on safe driving, better routes between places, and best practices such as ways to save fuel. Since the phone is being used as a telematics device, it can detect users’ driving patterns. This data could be used to award “safe driving points” to good drivers. Names of drivers with maximum points could be displayed on social networking portals. For example, these points could be calculated based on aspects such as the driver’s response to risk alerts or adhering to speed limits. Points could then be exchanged for discounts on insurance premiums. Not only does this promote safe driving, but it also reduces the number of claims. And, the lower the number of claims, the lower the combined ratio of the insurer. Figure 3 shows the overall benefits to both insurer and insured.

Managing Catastrophe Claims

According to the Insurance Information Institute, catastrophe claims are the second greatest source of insurance claim costs, after medical claims. The worst impact to the brand image of insurance companies stems from mismanagement of claims related to major calamities–a time when customers rely on their insurers to help them through a crisis. With catastrophes, managing customer expectations can be a daunting task. One of the ways this challenge can be handled is by deploying field adjusters to the affected sites and giving them information about customers. To this end, advanced catastrophe claims management systems that use mobile devices enabled with specialized smart applications can help adjusters.

Catastrophe Claims Management Systems consist of two components—the server component accessible to claims managers on a desktop, and the client component accessible to field staff from their mobile devices. The server component allows managers to track the development of potential catastrophes with GIS capabilities. The mobile component, on the other hand, allows field adjusters to access information such as client profiles related to claims records and updates to claim status. Field adjusters can visit damaged properties, take pictures, and upload them to the insurer’s database directly from the device. This kind of enterprise collaboration, through the use of collective intelligence, results in benefits for both the insurer and the insured.

By allowing insurers to proactively create claims records, not only for policyholders who are impacted by the calamity but also those who are likely to be affected, these types of catastrophe claims management systems allow insurance companies to assess how many field adjusters to deploy and what locations have been hardest hit by the event. This results in better deployment of emergency response units to the right places and ensures that impacted policyholders get the best possible service regardless of their ability to ask for it. As an additional aid to field adjusters, the mobile device client can map affected customers in a particular area that is likely to be impacted. It can also be used to communicate with customers using channels conducive to them such as mobile calls, email, and social networking tools and advise them about how to stay safe in affected areas. Another advanced feature is the use of augmented reality mashups, utilizing the power of GPS, maps, and camera images to locate affected policyholders easily. Figure 4 shows benefits for both insurers and policyholders.

Opportunities for Mobile Applications for Insurance

There is a significant scope for insurers to develop and deploy mobile applications and systems to tap into mobility-led innovations. Figure 5 depicts some examples of mobile applications.

As mobility makes inroads and the technology supporting its evolution matures, the insurance industry can greatly benefit by tapping into many opportunities. Some of the top insurance companies already view mobile technology as a trusted ally in their efforts to add business value. This is not to say that the opportunities for adopting mobility lie only with companies that sell life and property and casualty insurance. Reinsurance companies can also use mobility for many of their processes, both internal and external. Though the proliferation of this revolutionary technology in this line of insurance may not be as substantial as it would be in life or property & casualty, mobility will nonetheless find a place with workers such as claims adjustors. Insurance companies should take a closer look at their value chain, and assess where mobility can make a difference.

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