2009 saw the launch of several smartphone (mostly iPhone) apps by U.S. insurers. Many of these applications are for private passenger auto or homeowners, but potential applications exist across a wide range of product types.
While we don't believe that smartphone apps are a do-or-die competitive necessity at this stage for most insurers, the adoption rates in banking and some of the innovative applications launched by insurers in 2009 point the way to smartphones taking an important place in a multi-channel communication strategy in the near future.
There are three major capabilities of smartphones that insurers should keep in mind that differentiate smartphone apps from Web applications.
1. Convenience. The smartphone is almost always in your pocket, almost always on and almost always connected. Anything that is time-sensitive and able to be resolved using short messages is a good fit for a smartphone. Anything complex or requiring a lot of text is not.
2. Camera. Two of the most innovative smartphone apps, StateFarm's PocketAgent and USAA's check capture app, take advantage of the fact that people now have networked digital cameras on them at all times. Since most smartphones also have video, insurers may consider incorporating video into future applications.
3. GPS. Individuals can now easily broadcast or confirm their locations. Can you send a repair vehicle or adjuster without utilizing a call center to ask for the customer's location? Can you use a combination of GPS and cameras to validate underwriting information, loss control or first-notice-of-loss data?
Another issue in smartphone apps is what platforms to support. While the iPhone currently leads the way in terms of consumers using their smartphones for financial services, by far the most widely used smartphone platform is the Blackberry, though today iPhone users are far more prolific application downloaders.
Other key platforms that insurers will want to consider include the Android (whose relatively small footprint is growing rapidly) and Windows Mobile (which, while widely used, has not seen quick adoption of application downloads - yet). While this may seem daunting to carriers new to the smartphone world, these apps tend to be relatively simple, and often a single developer or small development team can support all of these platforms.
In the longer term, it may make more sense for insurers to focus their efforts on phone-agnostic Web applications. In some ways, insurers are back in 1996. Do you support a popular, company-specific platform such as AOL or CompuServe that is racking up the early adopters (i.e., iPhone or Blackberry apps), or do you make a bet on this thing that not that many people have yet, but seems to be growing quickly (i.e., phone browser-based apps)?
In the near-term, the ease of use, performance and other attributes of smartphone apps over mobile Web applications mean insurers should start there. This also will likely mean that at least for the key mobile operating systems, carriers will need to create multiple versions of their applications if they want to reach beyond the iPhone market.
In short, supporting today's platforms reaches today's customers, and gets insurers cool-points - and free publicity - with the media.
But building for the future in parallel is absolutely critical. Remember, while it was great - and cool - to have an AOL-only presence instead of a Web presence in 1996, by 1999 it wasn't so good. Many of the financial institutions that quickly succeeded on the Web in the late 90s were those that cut their teeth on early AOL or CompuServe applications, then adapted to the changing environment and transitioned over time to the broader Internet; this same pattern may be repeated with the mobile Web. But for every Bank of America, there was also a 2Market, the AOL partner and e-commerce pioneer with a very cool proprietary application for online shopping. Few remember them, since they never adapted to the Internet world.
Carriers wanting to leverage the new smartphone channel in the short term should immediately work on platform-specific apps, while looking ahead at how to break out of being tied to a single platform, or supporting multiple platforms for their mobile strategies.
Matthew Josefowicz and Chad Hersh are the director and senior principal in the insurance practice at New York-based Novarica. This article is adapted from their executive brief "Consumer Smartphone Apps and US Insurers." They can be reached at mj@novarica.com and chersh@novarica.com.
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