Insurers' 4 Most Promising Tech Initiatives

Of the four technologies insurers currently are investing in and undertaking new initiatives with, new mobile computing capabilities are generating the most excitement, according to “Three Paths to ‘Cool’ for Insurer CIOs,” a report from industry researcher Novarica. Cloud computing, Web portals and business intelligence, in tandem with predictive analytics, also appear promising, respondents said.

As with many new technologies, the business case and return on investment (ROI) were not always clear or well-defined, but the initial feedback was strongly positive for these initiatives. Ironically, despite the media attention that they’ve received, very few of the respondents cited efforts related to social media or big data.

Twenty percent of the Novarica survey respondents provided an example of new mobile applications, many of them for policyholder self-service, such as reviewing auto premiums, making online payments, and reporting claims. One insurer reported a 200-percent improvement in self-service usage as a result of new web and mobile programs.

Other mobile apps have been rolled out for agents, enabling them to offer quotes and calculate premiums. Based on feedback from reps, these applications were cited as having a positive impact on sales. In addition, a few survey respondents said they had introduced new mobile applications for underwriters, such as trip reporting and risk engineering.

A striking example of how mobile technology can help P&C insurers effectively respond to large-scale disasters comes from State Farm during the tornados and severe weather that caused havoc in six Midwestern states earlier this month.

A State Farm spokesperson said the insurer received more than 7,500 homeowners’ claims across the six states. In addition to sending reps and catastrophe response vehicles onsite, the spokesperson said that a new smartphone application called PocketAgent played an important role, enabling policy holders to file claims quickly from remote locations.

Economics are an important driver behind the push to offer mobile and online self-service, and first-notice-of-loss (FNOL) applications are now table stakes for large personal lines P&C insurers, says Donald Light, Celent's director for its Americas property and casualty practice.

Another reason mobile claims applications are increasingly successful is that they are not very complicated to build, offers Mark Breading, partner at insurance research and consultancy Strategy Meets Action. "They're usually a front end to existing applications. The transaction processing logic and database management is already in place. Simple mobile apps just enable those existing capabilities to be available via a mobile interface,” he says. There are, however, more sophisticated mobile applications that “rethink the user experience and may also result in some changes to the back-end systems," he adds.

The other technology wins cited by the Novarica study included cloud computing, Web portals and business intelligence combined with predictive analytics. Several IT executives reported successfully migrating various global applications to a cloud environment, where they reportedly ran up to four times as fast at a significantly lower cost.

A few others described using Web portals to overhaul their point-of-sale systems for independent agents by launching new Web-based FNOL systems for P&C claims. One insurer reported launching new portal capabilities for customers, agents and staff to handle catastrophe response and automated dispatching. The features can be used on any platform and offer continual updates to policy holders. Still others discussed efforts to make their portals more sophisticated by adding intelligent links to third party resources along with automated logging and escalation rules to ensure compliance.

One study respondent described an “affiliation portal” that makes use of Web services to "plug into the quoting system of another carrier that doesn't write our line of business. This allows that carrier to offer a needed coverage that they don't understand or choose not to write and offers us a low-cost look at business we wouldn't normally write. We leverage the agent relationships and risk selection philosophy of the other carrier while still maintaining our underwriting discipline.”

A number of CIOs said they have only just begun working on analytic roadmaps, but several cited recent wins in business intelligence or predictive analytics focused on distribution optimization or improved internal reporting. And one midsized reinsurer reported using BI to develop a homegrown catastrophe pricing tool.

The research consisted of interviews with 73 insurer CIOs and senior IT executives on the most promising new initiatives that they’ve undertaken during the past 12 months.