Question: Why should independent agents be flocking to mobile apps?

Answer: Enhanced customer bonding. Not only will customers get answers they want within seconds or minutes, avoiding the need to call customer service numbers or access the net; errors should be reduced, efficiency should increase -- and miscommunication involving policyholders, agents and carrier offices may fall dramatically.

That, anyway, is the hope of Andy Edwardson, CIO of Farmers Alliance Mutual Insurance in McPherson, Kan. Edwardson spoke about "strategies for building successful self-service mobile apps" at an information technology conference hosted by the Property Casualty insurance Association of America in Albuquerque in late September.

Farmers Alliance, which sells policies only through its independent agent network, has been rolling out its mobile app program to them over the past year; currently somewhere between 50 and 60 percent of them use the app, Edwardson notes. The company has relationships with about 625 agencies in eight states: Kansas, Oklahoma, Nebraska, Colorado, South Dakota, North Dakota, Montana and Idaho. It has 98,000 policies outstanding and $162 million in direct written premiums. "Our customers love the fact that our agents are using this app. We've had zero negatives resulting from our adoption of this program. They're thrilled that our agents can answer their questions on the spot when they bump into an agent in town or anywhere. We do believe it's a bit of a differentiator relative to our competition, improving customer service and benefiting everyone involved, whether it's the customer, agent or, Farmers Alliance. A lot of companies have been introducing an app either for customers, agents or their staffs over the past year, but we've had quite a bit of discussion on this internally over the past three years, quite a lot of time to make sure we're getting this right."

Focusing on Agents First

Farmers Alliance's program stands out in part because the company has chosen to introduce a mobile app first to agents rather than to its policyholders -- the strategy much of its competition is pursuing (the company is getting ready to introduce a product for policyholders and expects it to be available in the next 18 months). "We're a little unique because we've concentrated first on our independent agents, but we do see value in serving both of these audiences with an app, We've concentrated on our agents first because we want to empower them, and because they do constitute our only distribution channel, we've wanted to keep them in the loop from the get-go, whether we're talking about apps targeting them or our policyholders directly.

"Whatever we do we want to be acceptable to the agent," he emphasizes. "We want their sign-off."

The company's app has been in the works for over three years, Edwardson says; Farmers Alliance execs believe it's ideal for the rural farming communities that it serves.  "These are very tight communities -- everyone knows everyone -- and it's certainly not uncommon for one of our agents to bump into a farm customer who might say, 'Did you get my payment?' or 'when is my next payment due?' Or 'I've been meaning to ask you about this.' Now, because of our app, those questions can be answered right then and now, and answered to everyone's satisfaction, without a need to get back to them."

Keeping it Simple

In developing the app, Farmers Alliance has chosen to keep it relatively simple, in part because most agents access it through a smart phone -- "can you imagine having to key in over 100 data points if you're collecting data?" Edwardson asks -- and partly because it doesn't want its agents attempting to offer complex answers at the spur of the moment. "For example, we don't allow agents to quote insurance costs for policyholders buying a new car," he says.

Instead, Edwardson explains, “We've chosen to develop an app that is not highly transaction-oriented, but more inquiry-specific. We've noticed a lot of benefit in the realm of billing in rural markets. 'What do I owe and when?' 'What's my billing cycle?' And we can do the same sorts of things with claims. 'Is the claim being processed? When may I expect a check?'"

As the company readies itself to provide a mobile app directly for policyholders, it's taking pains not to threaten its agents. That means limiting what customers will be able to do and ensuring that agents are notified of everything a customer does with the app—whether it’s updating a mailing address or notifying the insurer of a change in banks.

"We understand that many customers no longer want to do business through the mail,” says Edwardson. “They're not asking specifically for a mobile app, but they do want services provided directly to them, and our app is part of how we're responding."

Are there risks involved? Very few, according to Edwardson: "We've worried a little about errors and omissions exposure, but there's nothing about the app that makes E&O stand out relative to anything else the agent doing," he notes.

Security and privacy issues are another concern. "What would happen if an agent lost the smart phone with the mobile app?" Edwardson asks rhetorically. But Farmers Alliance has dealt with issues like that before “”and think we have it in hand," he replies.

The CIO acknowledges that Farmers isn’t the only insurer experimenting with new app programs. "We're all still dipping our toes in this but apps are continuing to gain traction across carriers," he says. "For all of us, this is a work in progress."

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