Insurers across both property and casualty and life/health are evaluating 2011 mobile technology plans, and many are following a model used by banks, airlines, hotels and other service providers that are focused on improving transaction and service levels, reports Novarica in two new reports on the subject.
In spite of assumptions that the life/health providers may desire mobility to beef up presentation capabilities (such as with use of an iPad or other tablets) among its distribution network, there is stronger interest in mobile tech among P&C carriers that are being driven to invest in consumer applications that support the front office.
Novarica shed some light this week with state-of-the-market research reports that provide insight into the platforms, usage patterns, expectations of business value and investment strategies in play for both sectors.
The New York-based research and advisory firm tapped its Insurance Technology Research Council to capture data from a cross-section of 14 life/health carriers and 61 property/casualty insurers (all sizes were represented, with 62% representing mid-size carriers).
Interest and investments in the technologies that support mobility, reports Novarica, are a bit higher for P&C versus life/health. In 2010, the average investment in mobile technologies was 1.98% of life/health carriers’ IT budget. This is expected to increase to 2.43% in 2011. Only 21% of those surveyed spent less than 0.1% of their IT budgets on mobile technologies. No participant in the life/health study currently spends or plans to spend more than 5% of their IT budgets on mobile technology, reports Novarica.
Novarica points to an important qualifying factor with regards to investment by life/health carriers in mobile technologies: If core systems have been replaced or modernized, mobile is not a particularly expensive proposition.
“As a result, although [life/health] budgets are small, support for mobile laptops and smart phones is fairly high,” notes Novarica’s director of insurance Matthew Josefowicz, who authored the report “Mobile Technology at U.S. Life and Health Insurers: Platforms, Use and Impact,” with analyst Kimberly Markel.
“It would be easy to look at the budgets for mobile and discount them as underfunded, but while mobile in the past required significant infrastructure investment for devices, API development, and sometimes even infrastructure, mobile today relies primarily on devices already owned by agents, employees, and consumers, and leverages existing investments in SOA and Web services,” says Josefowicz.
Senior executives are well supported when it comes to mobile technologies, with an overwhelming majority of insurers in the sample supporting both mobile laptops and Blackberries for their executives. Support for the iPad was the greatest among all groups at 29%, with an expected increase to 36% in 2011.
Analysis of Novarica’s second report, “Mobile Technology at U.S. P&C Insurers: Platforms, Use and Impact,” reveals that use of mobile technologies among P&C carriers is higher than among life insurers. Hersh, who authored the report with analyst Kimberly Markel, tells Insurance Networking News that “far more P/C carriers have already updated their back end with modern core systems that can more easily support a mobile app than life carriers.”
To Hersh’s point, 77% of the P&C carriers in the sample group reported spending between 0.1% and 5% of their IT budget on mobile technology. In 2010, these carriers spent an average of 1.28% of their IT budget on mobile. At the same time, 21% of these carriers reported spending less than 0.1% of their IT budget on mobile, and 2% of carriers reported spending more than 5%, notes the report.
Novarica says that in the coming year, although overall spending is not projected to change dramatically, the percentage of respondents spending less than 0.1% of IT on mobile drops by 3 points, while those spending more than 5% on mobile rises by 3 points, reflecting the growing importance of mobile technology among P&C insurers.
Novarica reports that the majority of life/health respondents (57%) supported standard laptops for application submissions by producers, which is expected to increase to 64% in 2011. Of the same sample, 71% of participants reported supporting standard laptops and Blackberries for sales and marketing reps. While this is expected to decrease to 64%, use of other technologies, such as smartphones, tablets, and the iPad, are all expected to increase in 2011. But few firms are anticipating additional positive impact from the use of mobile in 2011.
And despite optimism about tablet-based point-of-sale solutions, few insurers in the life/health sample anticipate supporting these in the near future.
“Life carriers would need to rely on their illustration software to support this functionality,” notes Chad Hersh, principal, Insurance at Novarica. “Whether packaged or homegrown, few illustrations systems¬, if any, do so today. So, without the consumer impetus (it's a nice to have for life at the moment), life carriers will focus first on distributors, but that's generally more difficult, more expensive, and more time consuming, and will therefore take longer to occur,” notes Hersh.
P&C carriers have their eye on more than consumer apps, however, as mobile-equipped laptops and smartphones are already widely deployed amongst claims adjusters. However, while 52% of all carriers support Blackberries for their claims adjusters, only 27% of small carriers do.
Tablet adoption—and significant impact from it—is expected in 2011 for this sector as well. Tablet adoption may erode laptop use significantly given the cost differential (iPads start at under $500), battery life (non-Windows tablets average more than twice the battery life of a typical Windows laptop), and ease of use (touch screens and simplified apps, easy-to-handle form factor, small size, etc.).
“Expect an explosion of tablets in late 2010 and into 2011, including a slew of Android tablets and even a Blackberry offering (tentatively named the PlayBook),” notes Hersh in his report.
P& C insurers continue to rely on the traditional laptop (along with Blackberries) for transactional activities. In addition, Novarica predicts that other smartphones will catch up in 2011, with tablets (including the iPad) looking to grow to nearly 20% versus 21% Blackberry or 11% for other smartphones, rapidly catching up to laptops.
On the life side, notes Josefowicz, adoption of tablet devices is very rapid for a new technology in insurance, but the projected impacts may seem minimal other than allowing senior executives to be more effective, especially with limited support for producers. “However, with 21% of respondents reporting positive impact from tablet use among sales and marketing reps, we expect this platform to continue to grow in importance.”
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Corrected December 3, 2010 at 11:46AM: yes