Why Mobility Matters to U.S. P&C Insurers

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Insurers that holistically embrace mobility to improve customer service and internal operations can gain competitive advantage, even in a difficult economy.

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Why Mobility Matters to U.S. P&C Insurers

  1. 1. • Cognizant ReportsWhy Mobility Matters to U.S. P&C InsurersInsurers that holistically embrace mobility to improve customer serviceand internal operations can gain competitive advantage, even in a difficulteconomy. Executive Summary ability to offer usage-based premiums, build The property and casualty (P&C) insurance indus- long-term customer relationships and prevent try is facing its biggest technological shift in fraudulent claims. recent times. The proliferation of smart devices and their rapid adoption by customers are prod- While aggressive players are proactively explor- ding an industry that has traditionally adopted ing new ways to tap into mobility for competi- a “wait and watch” approach to technological tive advantage, a majority of P&C insurers have progression. yet to seriously consider mobility platforms and devices. Trends such as the volatile and immature Advancements in mobile technology and the nature of mobile technology, as well as quickly increasing capabilities of smart devices present evolving consumer and business needs and promising opportunities to insurers struggling to expectations, are keeping many industry players meet evolving customer needs, gain market share mired in analysis paralysis. Given the growing and reduce costs through new efficiencies across popularity of mobile solutions among custom- the insurance value chain, especially in claims ers and employees, however, more carriers are management. From self-service apps that allow beginning to realize the important role mobility customers to initiate a claim from the accident will play in keeping new-age customers loyal and site, to smartphones and tablets that connect employees productive. on-the-go adjusters with back-office systems, mobile solutions are beginning to play a key role Getting there won’t be easy. The road to mobil- in improving all aspects of customer service. ity is strewn with a multiplicity of challenges. Protecting sensitive customer data is, of Technologies such as satellite imaging and course, the biggest challenge, followed by the augmented reality are also being employed to technological complexity involved in extending simplify complex loss estimations and prevent enterprise applications to mobile devices, as well claims leakage. Telematics — even in its infancy — as the need to revamp existing systems to support can be a game-changer, providing insurers the mobile applications. Managing heterogeneous cognizant reports | august 2012
  2. 2. devices and operating systems to deal with the As insurers combat a soft market, tightenedgrowing BYOD (bring your own device) movement regulations are requiring them to invest inis yet another obstacle that must be conquered. upgrading their core systems. Meanwhile, fierce competition is forcing the commoditization ofThese challenges can be overcome by carefully insurance products. To face these challenges,aligning the mobility journey with key organi- insurers see mobile solutions as an importantzational goals. This starts with developing a lever in improving operational efficiencies,holistic mobility strategy that takes into account reducing costs and enhancing customer service.customer needs, as well as a proactive approach Further, it is estimated that personal lines P&Cfor complying with data security and privacy insurers that do not offer online and mobileregulations and evolving BYOD policies that flex transaction capabilities will lose 25% of theirwith employee needs and expectations, while current market share by the end of 2015.1capping costs and mitigating operational risk.Only then can mobility’s benefits be achieved What follows is a point by point discussion of theacross the insurance value chain. key forces moving insurers to embrace mobility.For insurers with limited in-house IT capabilities, Consumerization of ITpartnering with solution and service providers Half of all U.S. mobile subscribers own a smart-that can deliver complex technology integration phone, according to a Nielsen study conductedand management across the IT stack, as well as in February 2012.2 Smart handheld devices, witha platform that enables device heterogeneity, is innovative features and sophisticated capa-critical to moving the mobility discussion from bilities, have empowered customers, allowinglofty concept to a strategic element of business them to perform a host of activities at any timetransformation. And for sure, mobility will be a and from anywhere. Mobile devices are now anprimary component of transformation within the integral part of many consumers’ lives, especiallyinsurance industry. millennials (see Figure 1). With older genera- tions also gradually taking to these devices (seeDriving Forces Figure 2, page 4), demand for mobile servicesInsurers are being driven to adopt mobile solu- across the board is expected to rise.tions, thanks to the proliferation of affordablesmart handhelds with embedded computational To be sure, consumers are already compar-capabilities and consumers’ growing use of mobile ing mobility services provided by insurers withdevices for a wide array of functions. those of companies in other industries, and areSmartphone Ownership by Age Group80% 71%70% 67%60% 54%50% 44%40% 31%30%20% 13% 10% 0% 18-24 25-34 35-44 45-54 55-64 65+ AgeSource: Pew Research, February 2012Figure 1 cognizant reports 2
  3. 3. demanding increased sophistication in the way customers. This is pushing insurers to identifytheir carriers reach out to, communicate with ways to significantly reduce costs and improveand serve them. Agents are demanding continu- process efficiencies.ous access to business applications, as well, andare keen to use their personal mobile devices to The Need to Differentiateinteract with clients and carry out business The days of depending on product differen-transactions (see sidebar, below). tiation are over, due to fierce competition that has resulted in a commoditization of insuranceChallenging Operating Environment products. While pricing can play a key role inThe P&C insurance industry continues to operate attracting customers, the job of building andin an uncertain economic climate, with reduced retaining customer loyalty requires insurers topremium growth and investment yields that have differentiate on qualities beyond specific productdeclined over the past 15 years — from 5.7% in offerings.1996 to under 3.8% in 2011, according to Fitch.3Additionally, compliance with the Dodd-Frank Mobility helps insurers in this pursuit byWall Street Reform and Consumer Protection Act providing an easy and efficient way to meetand the expected impact of Solvency II beyond the rapidly evolving needs of their customersEuropean Union borders may require U.S. insur- and offer personalized offerings and stand-outers to invest in enterprise risk management services. It enables customers to carry outand related support systems, adding to already numerous self-service tasks, ranging from renew-strained operating costs.4 ing policies to filing and checking the status of a claim. Insurers that offer innovative mobileThere has also been an increase in the capabilities can not only attract and retainfrequency of natural catastrophes (see Figure 3, existing customers, but they can also gain newpage 5) and, consequently, in the cost of serving customers via social referrals. Quick TakeThe BYOD BoonThe concept of employees using their personal devices for work activities is steadily gaining momentum.Employees often believe they can do more with their personal smartphones and tablets than with thetechnology provided by their employers. As more digital natives join the workforce, there will be evenmore pressure on organizations to support a variety of personal devices.The finance/insurance and healthcare industries are leading the way with BYOD, even as theyadhere to stringent data security regulations, according to a report by Good Technology, a providerof mobile solutions.5 However, this is limited to large and very large organizations; data security andprivacy concerns are prompting many other players to sit on the fence. Further, creating a robust andscalable IT infrastructure to support numerous devices running on multiple operating systems will be amajor challenge for IT departments. (For more details, see Making BYOD Work for Your Organization.)Yet the benefits offered by BYOD are immense and well worth considering. Allowing agents andsales personnel to connect to enterprise applications from their devices at any time and fromanywhere will provide flexibility, boosting productivity and satisfaction and helping to attract andretain talent. While BYOD demands an initial investment, it reduces the cost of owning devices fororganizations (which is about $80 per device monthly).6 In an industry where customer service iskey, BYOD helps agents and adjusters respond to customer queries even after work hours and duringweekends with devices of their own choosing. cognizant reports 3
  4. 4. Key Areas for Mobility Solutions Most other insurers are still grappling withInsurers’ foray into mobility began with field per- mobility or are in the early stages of theirsonnel using digital cameras, laptops, portable mobile journey. They primarily offer basic mobileprinters and satellite communication-enabled functionality for customers, adjusters andvehicles to expedite claims processing during agents, according to a Strategy Meets Actionnatural disasters. P&C insurers pioneered the use December 2011 report, "The Mobile Technologyof smart handhelds, with solutions that enabled Universe: Current Usage and Future Opportuni-their field personnel to enter and manage claims. ties for Insurers” (see Figure 4, page 6).While initially these solutions only providedinformation access, later they evolved to include With demand for mobile solutions expectedtransactional capabilities, as well. to grow, insurers employing a wait-and-see strategy must act fast and develop a mobilityToday, a new generation of smart handheld roadmap to offer differentiating solutions todevices with large displays, powerful comput- extend their competitiveness. The risks ofing capabilities, improved cameras, near-field inactivity are high, especially in the fast-pacedcommunication functionality and GPS, among mobility market, given how quickly a companyother features, offers insurers a wide range of can fall behind more proactive competitors.strategic possibilities. Early adopters that haveachieved business results are exploring new Key areas where mobile solutions can createways to extend their competitive advantage significant efficiencies include:across the insurance value chain, allowingcustomers to complete activities such as • Salessubmitting bills, viewing policy details and • Insurance underwritingreporting accidents using their mobile devices, • Claims managementwhile aggressively providing mobile solutions • Enhanced agent capabilitiesfor their adjusters and agents. For instance, • In-vehicle devices (telematics)among auto insurers, State Farm wasconsidered to have the best mobile site, while SalesUSAA, GEICO and Progressive led the pack Tablets are transforming the way insurancein the mobile apps segment, according to a products are sold, freeing sales personnel andsurvey in 2012 by Key Lime Interactive (KLI), agents from having to carry bulky laptops anda leader in mobile experience testing.7 offering a more colorful and impactful way of presenting various options and complex policySmartphone Growth Forecast by Age 65 22.9% 55 Subscribers in millions 45 10.9% 14.4% 35 9.7% 25 18% 19.1% 15 22.3% 5 2011 2012 2013 2014 2015 2016 0-11 12-17 18-24 25-34 35-44 45-64 65+Note: Individuals who own at least one smartphone and use it at least once per month.Source: eMarketer, April 2012Figure 2 cognizant reports 4
  5. 5. details to customers. Equipped with dynamic service is crucial for creating a sustainable cus-calculators and real-time illustration tools, these tomer relationship. However, claims processing issmart devices allow salespeople to demonstrate highly complex and involves multiple functions,how a product actually works and more clearly applications and processes that typically run onpresent policy options. unwieldy legacy systems. This can result in dupli- cation of effort and increased turnaround times,The use of these devices also reduces paperwork. leading to poor customer service experiences.Contracts can be signed on touchscreens, boost-ing convenience for customers, while enhancing As claims account for about 80% of insurers’the salesperson’s chances of clinching the deal. costs, even a slight improvement in the process can result in significant savings, as well as anUnderwriting improvement in customer satisfaction. MobilityUnderwriters typically work indoors. However, can play a key role in creating new efficienciesusing mobile solutions allows them to connect in claims management by empowering custom-with field sales personnel, agents and customers ers, claims adjusters and back-office employeesto improve and expedite property evaluation. through improved connectivity and collaborationFor instance, using mobile real-time videos, that can reduce turnaround time and the overallunderwriters can guide new sales personnel or cost of serving customers.the insured on evaluating a subject propertymore accurately. Virtual inspection tools let Empowering Adjustersunderwriters confirm property location and A well-informed adjuster is the key to pre-examine properties, including their shape, size, empting customer dissatisfaction, extendingmaterials used, etc., and determine whether an superior customer service and avoiding legalon-site inspection is required.8 hassles. As they are out in the field, adjusters need continuous access to key information, suchThis improved communication has the potential as the carrier’s claims policy, customers’ policyto reduce fraud associated with property evalua- details, limits, deductibles, forms and FAQs totion and improve customer relationships through appraise the damage quickly and correctly.a more transparent underwriting process.It also helps sales personnel respond to customer Claims estimation applications on mobile devicesqueries more quickly, increasing the chances of come in handy when adjusters are working insecuring their business.9 far-flung areas and during natural catastrophes when there is an abrupt spike in claims. EquippingClaims Management adjusters with the ability to capture, send andClaims are the heart of a P&C insurer’s annotate photographic images, obtain electronicoperations. Moreover, the efficacy of claims signatures and submit applications from the siteU.S. P&C Insured Catastrophe Losses (2002-2011) 30 40 T-storms Insured Loss ($B) 26.25 35 22.5 30 18.75 25 PCS Events 15 20 11.25 15 7.5 10 3.75 5 0 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 T-Storm Winter Fire Tropical T-Storm Insured LossSource: Towers WatsonFigure 3 cognizant reports 5
  6. 6. of accidents will hasten claims settlement and in situations where an adjuster is assessing acreate a positive experience for customers. damaged building or a roof. In the case of catas- trophes, satellite imaging provides a view of theThe latest claims estimation applications (both damaged areas. This can be used to deploy adjust-packaged and custom) allow adjusters to take ers to those areas where claims are expected to beroom measurements, record voices, estimate filed, thus saving resources. Satellite imaging alsolosses, find replacement costs and generate provides adjusters directions to reach a particularestimates using their mobile devices, thus location during a catastrophe and record physicalenabling them to settle a claim on the spot. settings. With the help of satellite imaging-basedLoss estimation tools such as XactScope have underwriting, adjusters can validate a claim forbuilt-in sketch technology that lets estimators structural damages by comparing pictures ofsketch loss sites, complete floor plans, add rooms, the structure before and after the damage, thusidentify missing walls, staircases and other struc- preventing fraudulent claims, which cost thetural features, access live local pricing for repairs, industry $30 billion annually, according to theand generate the estimate report based on the Insurance Information Institute.11customer’s policy and claim details.10 Innovative mobile apps that enable game-chang-Photo capture solutions make image association ing services such as augmented reality technolo-(with a particular claim) easy and error-free and gies can improve the claims process and reducereduce the time adjusters spend on processing losses arising due to claims leakage.12 In the caseand integrating images. Further, in the case of of an accident, augmented reality applicationsan unclear or seemingly faulty claim, adjusters such as Autonomy’s Aurasma allow adjusterscan validate it using the devices or upload video to immediately see what the damaged vehicleand photographs from the site to their office looked like before the accident and determine thesystems and quickly receive clarification and other impact and repair estimates more accurately.13guidance to investigate the claim. This eliminatesthe need to return to the office for additional With claims leakage costing the industry nearlyinformation and follow-ups, thus reducing cycle $50 billion annually,14 the use of such technolo-times. It also gives the back-office real-time infor- gies can result in significant cost savings.mation about the incident, enabling better guid-ance for the adjuster. Enhancing Customer Experience Personal automobile insurers were quick to lever-Satellite imaging allows insurers to better age the benefits of mobile devices, setting aunderstand the extent of damage, especially new benchmark in customer service when theyThe State of Insurance Mobility Mobile Apps for Consumers Mobile Apps for Employees and Agents No mobile app 53% No mobile app support, 24% support other than voice other than basic voice and text Support for outbound Mobile app support SMS text messaging 29% for horizontal apps like 67% and/or e-mail e-mail and contact Customer-facing apps Custom mobile apps for for product information 22% employees, including captive 15% and quotes agents and adjustersCustomer-facing apps for Custom apps for business servicing, such as billing 18% partners such as independent 13% and/or claims agents and third-party adjustersSource: Strategy Meets Action, December 2011 report, “The Mobile Technology Universe: Current Usage andFuture Opportunities for Insurers.”Response Base: 46 insurers and more than 20 North American insurance executives.Figure 4 cognizant reports 6
  7. 7. introduced claims applications that allowed using a picture of the car’s vehicle identificationcustomers to initiate a claim from their mobile number (VIN) barcode, as well as comparativedevices. Offered as free downloadable software, costs for up to three different models.16these apps use GPS capabilities to locate the siteof the incident, arrange for help for victims, pro- However, as is often the case, insurers end upvide first-aid tips and guide roadside assistance offering mobile versions of their Web sites withoutto the accident site. They instruct customers optimizing them for various mobile devices andon how to collect necessary evidence, including platforms, resulting in poor customer experience.obtaining images of the incident, preparing a list A better alternative is to either offer more user-of damages and submitting claims from the acci- friendly apps for executing self-service transac-dent site. Customers can also connect to a claims tions or provide mobile versions of the Web thatrepresentative, locate agents and the nearest are optimized for better user experience.repair centers and record sound in order to keepnotes about important events at the crash site. Mobility for Agents The growth of online insurance purchases canThis frees customers from having to visit a claims undoubtedly create a sense of insecurity amongcenter, as they can track the status of their claim independent agents, who still play a major role inright from their mobile devices. Customers have the distribution of insurance products, given theirbeen quick to embrace this functionality, as experience and their ability to build long-termevident from Travelers Insurance’s experience customer relationships. Hence, insurers must dowith its mobile application, Auto Accident Help, all they can to help agents deal with potentiallaunched in early 2010 for iPhone, BlackBerry channel conflict to attract and retain the mostand Android devices. The carrier saw claims filed talented agents.through mobile devices triple during the firstfour months of 2011 compared with 2010, with Since most independent agents do not have theauto-related claims accounting for 70% of the requisite resources to create and update Webtotal claims, followed by personal insurance portals and their mobile versions, insurers canproperty claims (28%) and business insurance help agents create and manage their own Webproperty claims (2%).15 portals cost-effectively and highlight these on their Web sites. Online shoppers can then beAs customers initiate a claim, the process is directed to the most relevant agent’s landingstarted immediately, reducing cycle time and the page, based on the customer’s search criteria, sooverall cost of claims processing. This is useful, that customers are offered appropriate products.especially when there is a growth spurt in claims, By providing tools such as video and live chat,as is usually the case in the event of a natural as well as sales and quote generation apps ondisaster. It is also useful for identifying complex their mobile devices, agents can connect withclaims that can then be allocated to experienced prospective customers on the go, understandclaims adjusters. their needs better and tailor the products accord- ingly. Further, a self-service portal for agents thatA key advantage of mobile solutions over other can be accessed via mobile device reduces costschannels is their ability to provide customers with and process complexity for insurers.real-time information, such as discount and policyupdates and the status of repairs in progress, in Lastly, agents must be trained to leverage socialaddition to self-service tools, such as payment- media, blogs and other channels and given accesson-the-go, instant car insurance, electronic funds to the latest policy news and updates, commis-transfer, etc. Using geographical information sion details, training materials, etc. Insurers mustsystems (GIS), customers can be alerted about ensure that agents and various channels, such asextreme weather conditions in advance and call centers, social media and the Internet, workprovided guidance on mitigating losses, which cohesively to provide effective and seamlesscan help to reduce claims cost for insurers. customer service.Further, customers can also use apps that pro- Telematicsvide estimates on the cost of insuring vehicles. Telematics, touted as a game-changing technol-For example, Progressive Insurance’s VIN Capture ogy for the auto insurance industry, combinesapp provides the insurance cost of a new car by telecommunications, informatics and vehicle cognizant reports 7
  8. 8. monitoring systems to capture and transfer below that of non-telematics users, on average.17real-time vehicle information, which is then used As telematics adoption increases, there mayto determine a driver’s insurance premium. This be additional reduction in the accident-relatedUBI (usage-based insurance) is in contrast to claims amount paid out by insurers.the traditional method of relying on driver andvehicle information. (For more details, read The Within the organization, telematics can be usedTelematics Advantage: Growth, Retention and to monitor the driving behavior of field personnel.Transformational Improvement with Usage-Based Features such as GPS and geo-fencing will helpInsurance.) track adjusters and agents in real-time, and tasks can be assigned based on the proximity toTelematics devices installed in cars send real-time the insured. New assignment details, includingdriving details, such as speed, acceleration, hard location specifications and other information, canbraking and cornering, as well as time of driving be sent to their mobile device at any time, thusto insurers’ systems. This data is then used to optimizing resource utilization, reducing travelgenerate the driver’s road safety score. The score times and CO2 emissions, as well as improvingis used to determine the premium; discounts are customer service.often offered to safe drivers, encouraging theirbehavior. Drivers can log in and check their score Key Challengeson the insurer’s Web site and modify their driving While offering numerous opportunities andhabits accordingly. Parents of young drivers can benefits, mobility also presents insurers with itsmonitor their children’s score and take appropri- share of challenges. These include:ate measures. • Protecting sensitive customer data.Integrating smartphones with telematics devices • Modernizing legacy systems to accommodateoffers immense value to both drivers and new technologies.insurers. Drivers can receive real-time feedback • Dealing with complex technology integration.on their driving and thus avoid accidents. They canalso obtain information about fuel consumption, SecurityCO2 emissions and other data that helps reduce The U.S. insurance industry is governed by strin-premium costs. Further, insurers can develop gent data security and privacy norms, a majorapps or programs to use smartphones with GPS impediment for companies that want to quicklyand accelerometers as telematics devices to deploy mobile solutions. The issue is furthercapture driving information, thus reducing the compounded by the growing BYOD phenom-cost of deploying telematics devices. enon. According to ISACA’s 2011 IT Risk/Reward Barometer — a North American survey of aboutLike an airplane’s black box, telematics provides 940 business and IT professionals — 56% believeaccurate data about what occurred during an that employee-owned devices pose greater riskaccident, enabling insurers to better handle to organizations when compared with company-claims. Fraudulent claims can be identified supplied devices (see Figure 5, next page).early, as the FNOL (first notice of loss) isautomated while GPS and driver behavior details Hence, storing and transferring sensitiveare recorded. Also, insurers can connect to customer information using handheld devicesemergency services in the event of an accident. requires insurers to deploy robust security mech- anisms, such as encryption techniques, mobileTelematics technologies such as automatic device management (MDM), mobile applica-crash notification and stolen vehicle recovery tion management (MAM) and related solutions.can reduce claims. The use of telematics can Furthermore, insurers must ensure that thealso reduce the number of crashes, as reported networks used for data transmission are secureby Co-operative Insurance in a UK-based analy- and consistent, and must be prepared to handlesis of the driving behaviors of 10,000 telematics any misuse or theft of devices such as erasinginsurance customers aged between 17 and sensitive data when a device is lost. Alterna-25 years. Telematics insurance customers had tively, companies can create virtual desktops and20% fewer accidents compared with custom- on-demand applications, which allow usersers with ordinary insurance. The accidents were to store data on back-end servers and access itless serious, and the cost of the claims was 30% from their mobile devices. cognizant reports 8
  9. 9. Upgrading Legacy Systems enterprise applications to run on mobileOver the decades, as insurers grew via mergers devices, mobile middleware must be deployed toand acquisitions, they accumulated and consoli- provide smoother device-to-device interaction.dated systems. Core systems that were built using IT departments must have the requisiteolder technologies were patched and upgraded knowledge to work with various device models,to comply with new regulations and support operating systems, device-specific features, etc.new billing and claims management systems,as well as new applications. This resulted in a Apart from the costs and complexity involvedcomplex environment filled with aging systems in deploying, managing and supporting mobil-and disparate databases and applications. ity, insurers are also constrained by the limited talent available within their IT departments.Insurers running legacy systems will surely Developing apps and supporting device-platform-find it difficult to deploy mobile solutions, as the app combinations for employees and customersold systems may not support new technologies, require deep technical know-how. Further, rapidreal-time access to the organization’s applications advancements in mobile technology in terms ofand seamless transmission of data. Moreover, security and platform evolution requires contin-legacy systems create significant maintenance ual investment in upgrading the skills of in-housecosts, impact efficiency and reduce employee staff and choosing partners wisely.productivity. A Holistic Approach to MobilityNo doubt modernizing core systems costs Overcoming the aforementioned challengesorganizations money, time and effort, but it also requires a holistic mobility strategy based on aenables insurers to create a more robust and fundamental understanding of customer needs,flexible IT infrastructure that facilitates smooth organizational requirements and the benefits ofintegration of new technologies with enterprise mobility across the entire insurance value chain.mobility solutions. Eliminating legacy systems Such an enterprise mobility strategy should:is also important to consolidate claims manage-ment into an integrated application that provides • Clearly define business goals and how mobil-a consolidated view. ity can help achieve them. • Identify the user groups in the organizationIntegration Travails and the customer segments that need mobileExtending enterprise applications to mobile solutions, as well as the associated risks anddevices entails new challenges. To enable rewards.BYOD RiskWhich device poses the greatest risk to your organization? 56% 33% 6% 4% Work-supplied Any employee-owned None Others devices* mobile device (Percent of respondents)* Includes laptops, tablets/netbooks, smartphones, broadband card or flash drivesSource: 2011 ISACA IT Risk/Reward Barometer, North America, ISACAFigure 5 cognizant reports 9
  10. 10. • Prioritize the customer-facing applications adjusters to shoot and upload photos and videos that should be mobilized; decide what form directly to insurers’ claims systems. This also these should take. eliminates the need to carry a laptop and a digital• Identify the mobile devices and operating camera and transfer photographs when submit- systems to support and establish guidelines ting a claim. to manage the supported devices and mobile applications, as well as enable flexibility for However, creating apps can be complex and future devices. challenging for the following reasons:• Define how mobile applications will be developed, including: • The costs involved in developing mobile apps > Customizing various stages in the and creating or implementing and subsequently application development lifecycle to ensure integrating a middleware layer (MADP)18 with the applications run smoothly on mobile the organization’s IT infrastructure. devices. • The cost of dealing with heterogeneity. Carri- > Determining how applications are accessed ers must ensure that the apps run on different — entirely from the device or entirely from mobile devices and multiple platforms and that the cloud or a mix of both. the existing infrastructure supports apps. > Deciding how they will be discovered • Changes to the back-end software that might and deployed, either on public-facing or impact app performance. enterprise app stores or via other market- ing mechanisms. On the other hand, the mobile Web (connecting• Establish a comprehensive security frame- to office systems via the Internet from a mobile work that addresses security requirements for device) provides only the essential components mobile application development, at all points of the claims systems on an adjuster’s mobile where mobile applications communicate with device. Hence, there is no significant maintenance enterprise systems and interact wirelessly. cost involved. However, the mobile Web does• Address BYOD and device heterogeneity require modern office claims systems that permit issues based on user expectations, business Web access. Further, with this option, the lack of needs and IT capabilities. Internet connectivity, particularly in rural areas• Create a roadmap for establishing learning with spotty coverage, can undermine process centers for training employees and other key consistency and the benefits of mobile solutions. stakeholders on various tools and applications. Both approaches have pros and cons. IT depart-Clearly, most insurers cannot do all of this in ments should evaluate both options, keepingparallel. They will need to prioritize their in mind the end goal of providing remote connec-objectives and make certain decisions quickly tivity to claims adjusters; they should be preparedto stay in front of customer requirements, as well to provide a combination of both access typesas employee needs and expectations. where it makes sense to do so.Building Apps vs. Mobile Web Cloud-Based Managed ServicesCarriers must also choose between building an As insurers battle a tough business environmentapp for smart devices and connecting the devices that constrains their Cap-Ex budgets, cloud-basedwith existing back-office applications via the mobility managed services provide a simple andInternet. flexible way to go mobile. Insurers can enjoy the rewards of mobility without owning the infra-In many ways, mobile apps are more effective, as structure and the costs associated with devel-they are developed explicitly for mobile platforms oping and maintaining applications. The majorand offer greater integration with mobile device advantage of this approach is that the fixed costscapabilities such as cameras. They also allow involved in providing enterprise mobility servicesadjusters to stay connected to back-office claims are converted into variable costs. For instance,systems even when they are working in far-flung small insurers can use cloud-based claims admin-areas where Internet connectivity may be limited. istration systems when entering new markets asApps on tablets are easier to use, provide a better a cost-effective option.viewing experience than smartphones and allow cognizant reports 10
  11. 11. Insurers’ Investment Plans for Mobile Apps Distribution (agents, insured) 62% Claims 56% Marketing 51% Policy Servicing 41% Underwriting 39% Billing 28% Enterprise Services 18%(HR, Financial Management, IT) Investment Management 3% 0% 10% 20% 30% 40% 50% 60% 70% Percent of insurers citing as a top investment prioritySource: Strategy Meets Action, December 2011 report, "The Mobile Technology Universe: Current Usage andFuture Opportunities for Insurers.”Figure 6To realize the full benefits of such services, hosted software to quickly and cost-effectivelyinsurers must consider entering into strategic gain new mobile capabilities, such as e-signatures.partnerships with Tier-1 technology providers Insurers would do well to choose and control theirthat offer focused mobile capabilities to guide own data security and encryption and reserve theinsurers in their mobile journey through cloud- right to be custodians of the encrypted data tobased infrastructure provisioning and mobile app avoid security issues.19development. This arrangement allows insurersto effectively keep up with device and operating Employees and agents will continue to demandsystem heterogeneity, the rapid advancements access to more enterprise solutions on theirin software, devices and networks, and deal with personal devices. Insurers are taking baby stepsother complexities while transferring the risk of in this direction. They should, however, design atechnology volatility and immaturity to a partner. comprehensive BYOD policy that clarifies which devices and operating systems to support,The Road Ahead data security, level of access to employeesTier-1 insurers will continue to leverage the based on their requirements and designation, riskmobile revolution to provide innovative prod- tolerance and employee privacy concerns.ucts and services to customers, agents andemployees. Distribution- and claims-related apps Mobility is no longer an option but rather a keywill see major investments in the near future (see strategy to optimize processes and resourcesFigure 6), according to Strategy Meets Action. and create greater efficiencies that allow insurers to compete effectively in a difficultAdvancements in mobile technology such market. As mobility becomes pervasive andas machine-to-machine communication and customer expectations grow, aggressive playerstelematics will see insurers moving away from with superior mobile offerings will forge aheadsimply compensating customers on claims, to by attracting and retaining customers andpreventing accidents altogether. Cloud comput- employees.ing will gain prominence as insurers look to use cognizant reports 11
  12. 12. Footnotes Derry N. Finkeldey, “Revolutionary Road,” The Who’s Who of Financial Services, June 2012.12 “Smartphones Account for Half of All Mobile Phones, Dominate New Phone Purchases in the U.S.,” Nielsen, March 29, 2012.3 Bill Kenealy, “P&C Investment Income Woes Predate Financial Crisis,” Insurance Networking, Nov. 11, 2011.4 “U.S. Property-Casualty Insurance Outlook,” Ernst & Young, 2011.5 “Good Technology State of BYOD Report,” Good Technology, 2011.6 Ibid.7 “State Farm Insurance Ranks First for Best Mobile Site; USAA, GEICO and Progressive Lead for Best Mobile App,” Key Lime Interactive, July 25, 2012.8 “Verisk Virtual Inspection Help Insurers Confirm Property Location, Characteristics,” Property Casualty360, May 21, 2012.9 ”Underwriting on the Move: How Mobility Can Streamline the Underwriting Process,” Property Casualty360, July 27, 2011.10 “Xactware Adds Sketch to Latest Version of XactScope,” Prwebcom, Feb. 29, 2012.11 Insurance Fraud, Insurance Information Institute, June 2012.12 Claims leakage occurs when an insurer pays the insured more than the eligible amount due to human error, poor processing, fraud, etc.13 Barry Rabkin, “Making Augmented Reality a Reality Can Benefit Insurers,” Ovum, March 27, 2012.14 SEC Filing of Guidewire Software, Inc., Sept. 2, 2011.15 Lynnette Khalfani-Cox, “More Mobile Devices Used for Auto Insurance Claims,” Aug. 11, 2011.16 ”Progressive’s New Mobile Services Put Car Insurance in the Palm of Your Hand,” Progressive Insurance, July 25, 2011.17 Jill Insley, “Car Insurance: Satellite Boxes `Make Young Drivers Safer´” The Guardian, April 5, 2012.18 A mobile application development platform (MADP) is a set of products and services used to develop, test, deploy and manage mobility applications running on various mobile devices.19 “Global Multi-Line Insurance Company and Subsidiaries Use SecureCloud for Customer Innovation,” Trend Micro, November 2011. cognizant reports 12
  13. 13. References• Kennen Burkhart, “Mobile Claims: To App or Not to App,” Insurance Networking News, April 01, 2012.• Bill Kenealy, “Insurance Untethered,” Insurance Networking News, Feb. 1, 2012.• Nathan Golia, “The Best Insurance iPad Apps,” Insurance & Technology, Sept. 12, 2011.• Michael P. Voelker, “Yesterday’s Toys; Today’s Tools,” PropertyCasualty360, June 2011.• Nathan Clevenger, “iPad in the Enterprise Part III: Developing a Mobile Application Roadmap,” Tablet PC Review, 2011.• “Anticipating the Next Phase of Enterprise Mobility,” PricewaterhouseCoopers, 2011.• Alex Laurie, “Telematics – The New Auto Insurance,” Towers Watson, 2011.• “Telematics: The Game Changer,” A. T. Kearney, 2010.Author and AnalystVinaya Kumar Mylavarapu, Senior Research Analyst, Cognizant Research CenterCreditsCognizant Research Center would like to acknowledge the contributions of Jeff Wallace,Assistant Vice President and North American Practice Leader for Cognizant Mobility, to this report.DesignHarleen Bhatia, Creative DirectorSuresh Sambandhan, DesignerAbout CognizantCognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business processoutsourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquarteredin Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deepindustry and business process expertise, and a global, collaborative workforce that embodies the future of work.With over 50 delivery centers worldwide and approximately 145,200 employees as of June 30, 2012, Cognizant is amember of the NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among thetop performing and fastest growing companies in the world.Visit us online at www.cognizant.com for more information. World Headquarters European Headquarters India Operations Headquarters 500 Frank W. Burr Blvd. 1 Kingdom Street #5/535, Old Mahabalipuram Road Teaneck, NJ 07666 USA Paddington Central Okkiyam Pettai, Thoraipakkam Phone: +1 201 801 0233 London W2 6BD Chennai, 600 096 India Fax: +1 201 801 0243 Phone: +44 (0) 207 297 7600 Phone: +91 (0) 44 4209 6000 Toll Free: +1 888 937 3277 Fax: +44 (0) 207 121 0102 Fax: +91 (0) 44 4209 6060 Email: inquiry@cognizant.com Email: infouk@cognizant.com Email: inquiryindia@cognizant.com©­­ Copyright 2012, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by anymeans, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein issubject to change without notice. All other trademarks mentioned herein are the property of their respective owners.

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