While the outsourcing market for application development in mobile devices is still considered green, it's already clear that insurers will need to look outside the industry for innovation in order to keep up. Companies from all corners of the private sector are seeking developers working with smart phone- and tablet-specific capabilities in fresh ways.

Case in point, Progressive spotted innovative capabilities in a neighboring industry, and now its customers can receive real-time quotes and instant binding for coverage via images captured and submitted using an iPhone app. Progressive accomplished this by reaching out to Mitek Systems Inc., a provider of software that captures and reads data from mobile devices using proprietary technology, had gained traction by fulfilling the business possibilities mobile image capture offers, particularly in banking, where demand for mobile depositing has soared as of late.

"We saw remote deposit capture begin to take off with folks like Chase and PNC and U.S. Bank," says Matt Lehman, Progressive's mobile business leader, Image Capture mobile technology. "We recognized how that technology can be re-applied in our world, and looked at who was driving that technology on the back-end."

Mike Nelson, director of the mobile imaging platform at Mitek, lends one specific example of where insurers can look for upcoming trends and associated innovative developers: banking. According to Nelson, mobile banking remains a few years ahead of mobile insurance, and the cross-pollination of technology innovation is what brought mobile image capture to insurers.

Fellow financial services companies are not the only places to spot innovative trends and developers, however.

"We benchmark ourselves against others we think are really innovating in the mobile space overall. Folks like Amazon or eBay or Wal-Mart or Target or Chase or others, whether it's in financial services or retail," says Lehman. "That's who we are constantly measuring ourselves against, and who we look to for ideas, for ways that they're applying technology that could be re-applied in our space."

Despite the industry's conservative tradition when it comes to technology implementation in general, insurers are suddenly faced with the challenge of being technologically proactive, with little room for steep learning curves.

"I don't typically associate that approach with the insurance industry or the financial services industry," says Neff Hudson, AVP, Emerging Channels, USAA. "We tend to build stuff to be battleships, with 10- to 20-year views, and now we're up against competitors and trends that change, literally, within six months."

Hudson and USAA have established and integrated mobile into their enterprise-wide business infrastructure. But it has taken years to arrive at this point. Large insurers that have been in the game for some time have carved out internal IT staffs and a focused path, whether it be the iPad and agent apps, an eye for innovation or breadth of offerings. Insurers that have only decided to enter the mobile fray recently have some catching up to do.


Getting Started

In recent months, small- to mid-tier insurers (less than $100 million to between $100 million and $1 billion in premium) are enacting mobile budgets independent of IT funds and scrambling to jump into the game. While cultivating a specialty IT unit to manage mobile in-house application development may be necessary for maintenance and integration in the long-run, many companies are looking to outsource early development to vendors or developers already familiar with their legacy systems and who will have an easier time tying front-end development to back-end systems.

Babu Mauze, VP Financial Services, head of Channels Practice, Capgemini, explains two typical models insurers are choosing to get started: "We're seeing two flavors: One is where you employ a digital agency and you have an in-house IT customer shop that manages the relationship. For the other, an internal program management team serves as a liaison between the business and IT and the additional vendor and the supply, etc. That's the typical model."

To keep up with the sudden spikes in outsourcing demand, developers and vendors are now offering pre-built applications; they are quick and cheap to deploy, but a generic product does little to ensure your customers of a dynamic, fluid interaction. Avoiding disparate services is where a company's internal mobile staff needs to come in.

"You need to be able to integrate it," Mauze says. "If you have a customer creating a quote on his mobile phone, but finds he's uncomfortable or has a question or wants to look at a more complex scenario, he is going to want to connect with the call center and continue that dialogue without having to give that information all over again."

When outsourcing for the sake of initial speed-to-market, according to Mauze, insurers face greater hurdles on both the front and back ends: How do you improve on the basic formula developers provide to offer a dynamic experience, and how will this new, increasingly complex business platform route back to the legacy system? These long-term questions and the rapidly advancing capabilities of mobile apps means, even when outsourcing to get your mobile feet wet, integration and ongoing innovation must come from an internal mobile staff.

"A lot of insurers are going to take stabs at low-hanging fruit, and hosting an app is not a difficult task to achieve," says Sam Ganga, EVP, Enterprise Solutions, DMI, a technology consultancy and solutions company. The excitement comes when you consider the granular approach apps provide, according to Ganga, adding that insurer's can stack mobile capabilities with apps, thus, new technologies can be adapted and trends established faster than ever before.

Progressive and Mitek bringing mobile image capture technology to consumers is an example of how rapidly new technologies and developers can shape an industry's operations, if the insurer has a team with an eye for innovation and the agility to deploy.


Innovation

This opportunistic approach to mobile-spotting fresh mobile usage and leveraging its development into your sector through outsourcing-is what insurers are forced to cultivate within their companies.

When discussing the newfound zeal of insurers willing to gamble on outside technologies and mobile developers, Mitek's Nelson points to the Web as an inimitable warm-up. Because of the lessons learned during Web adoption, most insurers entering the mobile space are prepared to handle the more technical issues, such as security and integration, and be more aggressive in pursuing competitive advantages. And when it comes to mobile, competitive advantages can come from anywhere, providing potential for the most volatile insurance industry to date.

"That's one of the most exciting things about the market now, is that apps really do level the playing field," Hudson says. "If you're a medium- or even small-sized player and you have a great idea, you can prove it out with just 500K."

Yet, there are a couple decisions insurers must make before getting to a point where innovation is possible. Most importantly, and a decision that will effect what technologies you have to innovate with, is that of platform.


Platform

USAA's Hudson remembers the arcane technology used to build their very first app for the Blackberry more than five years ago. Fast-forward to today, and there are myriad approaches to choose from-starting with the options of Apple's iOS and Android, which is complicated by the pros and cons of platform aggregators such as Kony, and ending with the rise of the tablet, particularly for internal-facing apps.

According to Peter Anderson, AVP, Life Products, John Hancock, his company eyed the iPad over a year ago as their platform of choice: "We decided the iPad was the platform we wanted to use based on the volume of sales and our experience going out in the field; all we see is iPads. So we took the time to have a couple developers to learn how to program on them, and we now have two apps from the life division out that are pretty successful."

Their experience in bringing that capability to life displays the agility with which insurers can operate in the mobile space if they have an internal team thoroughly familiar with the company's Web products and integration hurdles. Yet the internal resources needed to foster this agility are evident: Anderson's independent mobile unit of 42 IT staffers is dedicated to tackling the iPad, and USAA is fortunate enough to have the resources to embrace Android, iOS and the iPad. Hudson admits it took years to develop that breadth and the company still encounters problems in trying to source them all equally.

Platforms are "a fairly deliberative process," he says. "We look a lot at what platforms our members are using, and we struggle at times to ensure an equal level of capability across all platforms." But having staggered implementations may be a small price to pay for more nuanced user experiences.

Hudson acknowledges quicker deployments when outsourcing, which may be attractive for diving into the app game, but he persists that purchasing a cross-platform approach often ignores the subtleties of each platform and the requirements of their respective outlets (the Android Market and iTunes Store). The apps become watered down into a generic, one-size-fits-all product, which, according to Hudson, dulls what could be a dynamic customer interaction.

"We think about consumers all the time, but they have about 15 to 20 seconds to interact with us and if that's not done well, then we're really not meeting the mission," says Hudson. He went on to lament insurers' mobile mission to continuously impress customers: "That's really one of the toughest questions for anybody who's trying to run a mobile team: What do you invest in that gives you a differentiated quality of either experience or efficiency? Where do you get your differentiation?"

Insurers steeped in mobile app development, such as USAA, are beginning to find that the question of quality or quickness does not disappear. There is no answer. Rather, according to Hudson, the only option is to condition your approach with an internal unit while looking for innovative solutions and developers that can keep you ahead of the curve.

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