As consumers look for simple and easy ways to buy insurance, Ana Paula Nacif takes a look at the recent advances in mobile technology.
As mobile technology becomes increasingly refined and consumers look for simple and quick ways to meet their insurance needs, the industry will have to press on with developing new ways to make best use of this channel.
Although the use of mobile technology has been steadily increasing over the past few years, when it comes to insurance its use is still limited. New mobile phones have all the technologies built-in to provide a full and seamless location-based customer experience, such as GPS, Bluetooth, mapping, camera, 3G mobile network access, wi-fi, and video conferencing. According to Emmanuel Viale, senior manager at Accenture, these would allow all sorts of uses that would benefit insurers and their customers, including claims notification and time-limited extensions of insurance coverage. Despite that, he says "mass adoption is not yet a reality".
One of the reasons is that most clients don't in fact have phones with the latest technologies. "So, targeting the high-end mobile devices" such as the Iphone, Blackberry, Windows Mobile or Google Android" has a limited return on investment as only a small percentage of the population uses such devices," Mr Viale explains.
However, some insurers are already reaping the benefits of mobile technology, especially in the travel insurance arena; while others are also using it to boost other books of business, such as motor insurance.
People want portability
Last year, Swiftcover claimed to be the first company to provide car insurance quotes through a mobile phone.
And Perry Wilson, managing director of Insure and Go, believes that mobile technology is a way forward for low-ticket items such as travel insurance. "One third of people go on holiday without travel insurance," he says. "So, perhaps we can reach them in the airport with mobile technology, hence the reason why we built the platform to do it."
He points out that those using their mobile phones to look for insurance don't necessarily want just information. "They want to make the payment as well. People want portability."
This is not something everyone agrees with. LV, for example, has just developed a mobile site which offers information on the company and its products. But, according to Guy Hedger, marketing director of LV, the insurer is not planning to introduce a mobile quote service for its motor insurance. "Travel works well because there is a short question set but the problem with offering a mobile quote service on motor is that we don't believe it's a very user-friendly experience."
He explains that, to supply an accurate motor quote, insurers need a considerable amount of information that would be tiresome to input on a mobile phone. "The current online quotation services that are available are only offering indicative prices, which means the user still needs to go onto the full website to make a purchase and the price may well change, so it's quite a disjointed experience."
It also seems that major personal lines insurers are not going in for the kill just yet. "While this is not an area we have focused on, we continue to watch with interest the developments regarding the mobile channel," says an Aviva spokesman.
Consumers want the process to be quick and simple, says Tina Shortle, marketing director at Swiftcover. And while this may be possible with some products, such as travel insurance, when it comes to more complex quotation processes, the industry is "struggling to come up with an application to fulfil that need".
She adds: "With Swiftcover, consumers can get a quote for car insurance answering just eight questions. We found that, since last July, the interest is growing as more people are using their downtime, particularly when commuting, to use their mobile."
Although Swiftcover is able to deliver a quotation over the mobile phone, consumers are not able to complete the transaction. "The process to purchase includes various steps required by the Financial Services Authority, including terms and conditions, which is not easily done on a mobile," Ms Shortle points out. "However, people can access their quotes on a computer through a link and they don't have to enter their details again."
She is keen to emphasise that the objective is not only to get people to buy insurance using their mobiles. "We use it as a marketing tool to raise brand awareness. Having said that, the amount of quotes we delivered has doubled from August last year to May this year."
Apart from brand awareness, insurers can also benefit from using mobile technology to enhance customers' experience. Andy Watts, director of insurance at SSP UK, emphasises that it is not just about sales. "The industry needs to think about how they can improve their services. Mobile technology is not only a sales tool."
In fact, some believe that the use of mobile phones should be optimised to create an integrated approach. Nicholas Thurlow, founding director of Text 2 Insure, explains that the company's proposition is to be completely multi-channel, with SMS (text messaging) and mobile technology increasingly playing a part, as there is evidence to suggest that "no single channel can necessarily be all things to all people at all times".
He adds: "We want to deliver products in whichever way suits our customers. It might be that mobile technology has a key part to play in the early stages of engaging a customer" for example, by reminding them their insurance is due to be renewed" or it might be later on with a confirmation of their policy number."
As an example of how insurers can improve their offering, especially in terms of claims handling, Dorothy Kelly, senior manager at Distinct Business Consulting, mentions Nationwide, a US financial institution that has developed an application specifically for the Iphone. If a policyholder has a motor accident, they can log on to the application, which has a checklist of what they need to do. It also allows them to take pictures. "This is a nice way of using mobile technology in a customer-focused way, which also facilitates customer care and claims handling," she says.
Ms Kelly believes these are the sort of applications the insurance industry should be looking at. "Claims experience can either make or break an insurer. Helping the customer to gather the information they need to make a claim is a real opportunity."
And, if for some insurance products, the mobile channel can be a tricky way to generate new business, Mr Thurlow suggests that insurers could tap into the comprehensive record they already have to benefit both themselves and their customers. "In terms of new business, we deliver a travel insurance quotation with two or three pieces of information, whereas with motor and household insurance there are a number of factors that can affect premium," Mr Thurlow says. "But perhaps we should think about how to use the comprehensive records we have of customers to create renewal quotes."
As an example of how integrated systems could work, he mentions a Dutch travel company that wanted to increase the level of travel insurance take up. Earlier this year, it set up a pilot with Fortis Insurance in Holland, whereby an integrated SMS system would send out messages to customers 24 hours before they travelled, reminding them that they only had to text 'yes' if they wanted travel insurance. "It had 10% of people buying insurance through this route. They found out that the reason people bought was convenience."
Mr Thurlow says that, due to FSA regulations, he is not sure how companies could replicate the same experience in the UK. However, he emphasises: "There are a lot of barriers to new ways of doing things. Not all solutions will be a one-word SMS, but we need to make it easier for the customer."
FSA regulations and other factors may well get in the way and those in the industry willing to push the boundaries will have to contend with those. One of the difficulties, according to Mr Thurlow, is systems integration. "We are looking to deliver solutions for brokers and customers through their channel of choice and we worked hard to integrate legacy systems into our platform to be able to do that."
This, he says, may be one of the difficulties other players may be experiencing. "It could be that they are not quite ready to manage that level of integration. Perhaps they have channels that are clearly defined and don't necessarily complement each other."
Mr Watts agrees that legacy systems continue to be an issue. "Some of these back office systems are quite complex, old and not accessible to the outside world."
In terms of technology, the challenge with insurance applications in general is that they deal with complex transactions, explains Geoff Galat, vice president of marketing and product strategy at Tealeaf: "Insurers will have to simplify the process and make it easier for consumers."
Last, but not least, the industry will have to keep an eye on security issues. Emily Freeman, executive director of the technology, media and telecom practice at Lockton, points out that insurers and their clients need to be aware of the security pitfalls in terms of personal data. "Security is something they should be very concerned about," she says. "We are talking about key pieces of personal data, so consumers need to ensure they are communicating with a genuine source. This is an important consideration for the insurance industry."
However, some experts point out that accessing data on a mobile phone can be as secure as doing it from a desktop computer. "The mobile web is as, if not more, secure," argues Mr Galat. "It is fully digital and not something that could be broken into by the average hacker down the street." But he does concede that security concerns regarding mobile technology will not go away.
Mr Thurlow agrees that mobile applications can be secure but adds that there is a clear demarcation between these and SMS, "which should not be used for sensitive information".
Despite the challenges, some are optimistic about the future of mobile technology and the opportunities it may bring to the insurance industry. Mr Galat points to certain inevitabilities that will come with technology improvements and more people using the mobile channel: "Rather than mobile web, it's only a matter of time before we refer to all web-based communications as just the web. And you can see people using their mobile to check insurance cost before purchasing a new vehicle at the dealer's location, for example."
But, if insurers are to exploit the full potential of mobile technology, much more needs to be done. "Some people in the industry are pushing the barriers and considering how they can do that," says Ms Shortle. "But, unfortunately, a lot of insurance companies don't want to push those boundaries."
In Mr Wilson's view, the industry needs to catch up sooner rather than later. "The majority in the industry are still dinosaurs," he concludes. "We need to take the industry to the 22nd century, let alone the 21st."
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