Mobile services can help insurers increase revenues, decrease loss expenses and reduce risk, according to “Make The Business Case For Mobile Insurance,” a white paper by Ellen Carney at Forrester Research. However, justifying the expense of app creation, aligning the mobile business case to organizational priorities and setting realistic expectations for costs and risks, are critical to their success, Carney says.
“Mobile strategy has gone from being an app that could be built on the cheap by college kids to being a major line item in many insurance companies’ digital and technology management budgets,” Carney said. “With departments with long wish lists vying for finite budget and resource allocations, mobile insurance teams want more funding but need to justify their planned mobile spending with sound business cases.”
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Mobile budgets are increasing, according to Forrester. Last year, 52 percent of insurers surveyed said they would increase mobile budgets by at least 5 percent and 14 percent said they would increase more than 10 percent, as insurers’ market positions increasingly depend on mobile strategies. Insurers also are responsible for responding to evolving customer demands in order to increase market share and build brand loyalty. As a result of these and other factors, mobile has become business critical for insurers.
Deployed successfully, mobile applications can help insurers accomplish three objectives:
- Increase revenues. Mobile strategies can help insurers increase premium revenues through customer acquisition and incremental purchases from current customers. For example, Progressive Casualty Insurance launched a mobile photo quoting function; in 2013, almost a fifth of Progressive’s customers had interacted with the company through a mobile device. When Progressive launches mobile photo quoting in a state, the company has seen 8-percent increase in quoting activity, Forrester said.
- Decrease loss expenses. In 2012, nearly 10 percent of auto premiums went to the cost of claims adjusting, Forrester said. To reduce loss adjustment expenses and increase customer satisfaction insurers are turning consumers into adjusters. Allstate Insurance, for example, launched its QuickFoto Claim mobile app, which enables customers to photograph auto damage and settle claims without an adjustor’s involvement and saves Allstate $50 for every hour of adjuster time not needed.
- Reduce risk. CoreLogic’s EQECAT and WSI’s WeatherFX Alert are mapping apps that warn policyholders about natural hazards, enabling more-informed decisions about home investments and improvements. There are big potential savings from offering hail-storm alerts, for example. The average loss for hail-related auto damage is $3,100.
Well designed and deployed mobile strategies also offer many soft benefits, Forrester said, including better customer service, through apps such as mobile bill payment; more frequent engagement, through apps such as MetroMile’s street sweeping parking alerts; improved productivity, though tablets and collaborative apps; and increased job satisfaction as the end user experiences more closely resemble those offered by other consumer facing businesses.
To offer successful mobile apps, insurers will need to build talent and tweak developers’ skills, and competing projects will demand increasing programmer capacity, Forrester said. Mobile projects also will test the legacy applications, as they typically were not initially designed with customer experience in mind. The demands of mobile application development also will change insurers’ approach to core applications, which otherwise may not be up to the demands of mobile-enabled transactional processes.
On average, customer mobile apps cost between $50,000 and $150,000 Forrester said, which is about 35 percent of the true two-year cost. And, given the rate of change for mobile technologies, planning for regular updates and measuring performance are critical to increasing mobile capabilities in a cost effective manner.
“Mobile can accomplish many of the business objectives that digital insurance executives are tasked with executing, from growing market share and premiums to reducing claims leakage and providing greater consumer control over key insurance business processes,” Forrester said. “But a strong mobile strategy does more than that: It will affect all your other channels, change your relationship with your customers, alter how your workforce spends the day, and cause a ripple effect throughout your partner networks.”
