Although mobile technologies occupy a very narrow part of the electromagnetic spectrum, their successful adoption presents a broad array of challenges to insurance companies.

With mobile devices fast becoming an expected medium for consumers interacting with any industry, insurers will have to follow suit. Indeed, in the past year insurance-specific mobile applications seemed to have made the transition from emerging technology to operational necessity. In a world where some 700,000 Android devices are activated daily, insurers ignoring the mobile application space do so at their own peril. Not surprisingly, many insurers recently have focused much of their energies on developing customer apps and mobile websites. From above, the current state of mobile development is analogous to the rush by insurers to establish a Web presence a few years back.

Much as traditional Web development advanced along an arc from static, vanilla Web pages to rich, transactional and interactive sites, mobile developers are working in a field where customer expectations and the technology supporting them are rapidly changing. Yet, unlike Web development, which coalesced around a single standard, mobile development is highly Balkanized, causing carriers to make tough decisions on form factors, operating systems, and versions thereof. Alternately, a carrier could avoid these decisions altogether and instead focus efforts on developing sites optimized for the emerging HTML5 language and mobile Web browsers, essentially opting for the universality and lower development costs of mobile Web over the richer, more immersive experiences that native apps enable.

The App Factory

With both Google's Android and Apple's iOS platform commanding a great deal of mindshare, and Windows Phone and Blackberry not to be discounted, many carriers are opting to develop for the platforms in parallel, which gives them greater reach but invites a host of challenges. For example, developers may face a great deal of redundant work developing the same app for multiple operating systems. Elsewhere a development team may be bogged down fixing bugs and perfecting an app, only to have an updated OS render it inoperable.

"The problem with a multi-platform strategy is that it costs more and there is a greater risk, but it may well be worth it," says Kevin Field, VP & CIO Hub International, adding that the primary challenge with developing for multiple operating systems is how best to manage finite development resources. "With the different operating environments, do we develop a core set of capabilities that work across each platform or do we maximize the robustness that each platform has to offer and develop more gripping user interfaces?"

One way around the scarcity issue may be emerging in new code-aggregating software platforms, such as the offering from Kony, which enables developers to establish a single code base that can be used to develop apps for all platforms. In this way, developers won't have to start from scratch when developing the same app for, say, iOS and Android. Yet, faster app development may not be an unalloyed good. According to a recent assessment by Gartner, mobile application development projects will outnumber traditional projects by a ratio of 4:1 by 2015. Thus, some worry that in the rush to develop apps, insurers have shoved architectural and security concerns to the back burner and may lack the basic security and integration skills necessary to successfully expose internal applications to mobile devices. While service-oriented architectures are well-established in the area of Web service, they remain largely absent for mobile applications. "We see a lot of carriers becoming an app factory," says Tom Kavanaugh, director at PwC. "They are not putting enough thought into the role mobile plays in their business model."

Field agrees that data integration complexities between mobile and enterprise applications are a key challenge. "How do you make your data available to a mobile platform?" he says. "We need to take a look at how we are architecting our data and the different tools that operate on top, moving and securing the data."

Even with these issues put to rest, a more existential one rears its head-what to develop and for whom? Kavanaugh says the answer to the question of for whom to develop will likely vary by line of business. "P&C insurers are farther out front on consumer-facing apps while life insurers are focusing their efforts more on the producer," he says.

In the case of customer-facing mobile applications, many of the earliest examples were minimalist, featuring bare-bones functionality that enabled a user to perform a singular function, such as look up the value of an annuity. Increasingly, insurers are developing apps that seek to replicate or even surpass the transactional functionality found on their website. Indeed, the geo-location and sensor capability of the common smartphone opens up new avenues for app developers to increase customer satisfaction. Considering what a fickle mistress consumer satisfaction is, developers may need all the tools in the toolbox. Many a customer will download an app, use it once, then ignore it or jettison it entirely. To combat this, developers are endeavoring to craft more compelling user experiences. One way to make an app stand out is to introduce "gamification" to engage the user and encourage return visits. Even so, we may be waiting a while for an insurance app as addictive as Angry Birds.

Kavanaugh is more optimistic about mobile applications on the producer end. "Retirement planning is a new space and that interaction paradigm is yet to be fully defined, so mobile can play a tremendous role in paving the way," he says. "Consumers are beginning to digest information in a much more visual manner and devices such as tablets are predicated on visual collaboration. When salespeople can visualize decisioning logic and the tradeoffs with things like slider bars, it's just vastly more impactful. So, there is quite a potential for a transformative experience."

Beyong the App

While pushing out new apps or enabling extant business processes to be executed remotely may add instant value, a more consummate mobile strategy beckons. What if mobility could significantly alter those processes or even redefine the value proposition of insurance itself?

Many see the raw data that insurers can derive from remote devices as the true game changer. Telematics, which pairs mobile technologies with analytic functions, is becoming increasingly common in personal lines auto, with carriers such as Progressive, Allstate and State Farm already offering usage-based or pay-as-you-drive policies. Proponents say the use of data derived from telematics also can be a boon to underwriting.

"We have always known historical data and always tried to predict what was going to happen and set our programs accordingly, but we never had the actual information about what was going on in the vehicles and what was driving those behaviors," says Jim Noble, line of business director - Motor Fleet, Zurich Services Corp. "Telematics completes the risk portrait for us and enables us to know what's happening inside the vehicle. This is the evolution that insurance companies have been looking to for quite some time."

Noble also sees telematics having an impact on claims by enabling a much more granular analysis of individual claims. "The more information we have about what was going on at the exact time of the crash the better we can handle the claim," he says. "Telematics itself is a very important area for how the complexion of the claims process will look in the future."

Yet mobile technologies may foster even more revolutionary changes. For example, as technologies such as mobile vehicle-to-vehicle communications mature, the possibility of a "crash-free" culture is possible. Longer term, Noble says mobile technology may usher in a more profound shift for insurers: moving from compensating insureds for accidents to actively helping prevent them. "The reason we do this is to help drive the risk out of the business," he says. "If you look at where we are with in-vehicle technology today, we are just skimming the surface."

Nor is this mobile vision by any means confined to auto insurance. A burgeoning legion of network devices attached to everything from bridges to buildings will provide insurers with vast amounts of data to assess and mitigate risk. Dubbed the Internet of Things, this galaxy of network-connected-devices will number 15 billion by 2015, according to the annual Visual Networking Index Forecast from Cisco. For example, a remote sensor included as part of a homeowners policy could help monitor pipes for leakage and freezing and stop a claim before it starts. Likewise, RFID-tagged construction equipment could help alert police while a theft is in progress (see this issue's A&A). "Telematics is a huge undiscovered country in property claims as well," says Richard Pankhurst, a director in the insurance advisory practice at PwC. "We speak of mostly automobiles, but from a combined ratio perspective, there is a more compelling business need in property."

Health insurers too, envision novel uses for mobility in areas such as patient monitoring. Devices such as the Jawbone Up, which pairs a wrist-worn device with a mobile app to measure patient health, could aid insurers by encouraging better adherence to prescription drug regimens, which could ultimately reduce health care claims cost.

Thus insurers, irrespective of line of business, find themselves in a similar place. They need to weigh the immediate, tactical needs for mobile applications today while eyeing the technology's potential to radically reshape business processes going forward. "Insurers need to go through a strategic exercise not only about the role mobility today but also three, five and 10 years down the line," Kavanaugh says. "You need to prioritize where the opportunities are."

To Bring or Not to Bring

Another large mobility challenge revolves around giving employees access to corporate networks and desktop applications via mobile devices. While the business logic for this is sound, as more employees seek access via their own personal mobile devices, a trend known as "bring your own device" (BYOD) introduces new management and security issues. Indeed, The 2011 ISACA IT Risk/Reward Barometer found that 58 percent of the 712 U.S. information security and IT audit professionals surveyed view mobile devices owned by employees as posing the greatest risk. By comparison, 33 percent viewed work-supplied smartphones as posing the greatest risk.

While many good arguments exist for and against employees storing company data locally on their handsets, if carriers opt against remote storage, a secure tunnel that provides access to enterprise data is a must. Here, insurers may be able to leverage existing investments in virtual desktops and cloud computing. "Virtualization can provide great speed to delivery capability," says Kevin Field, VP & CIO Hub International.

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