It may be hard to recall what life was like before the iPhone, but the first-generation of Apple's now seemingly ubiquitous mobile device was released just five years ago, on June 29, 2007. With sales of that mobile device, as well as handsets running Google's Android operating system, growing exponentially every year, it's safe to say the mobile channel — or perhaps more specifically, the smartphone channel — is here to stay.
The world of smartphones, however, is marked by rapid change that keeps business technologists on their toes. Leading organizations, including insurance companies, have to implement mobile development strategies that are nimble enough to adapt to the latest-breaking application, handset or operating system, while delivering the established functionality that policyholders demand.
"There's been a massive buildup [in mobile], but the world is changing so rapidly," notes Matt Lehman, Mayfield Village, Ohio-based Progressive's ($4.2 billion in Q1 2012 written premium) mobile business leader. "I was thinking about what [Apple CEO] Tim Cook said [recently] -- how they shipped 67 million iPads in three years and it took 24 years to sell that many Macs. The curve of change is so great that, if anything, we've learned that the industry will continue to evolve and adapt and there will be a lot of new devices and capabilities. We want to stay as flexible as possible. Ultimately the goal is to make consumers' lives easier."
For insurers looking for a blueprint to a top-flight mobile organization, Insurance & Technology asked battle-tested industry technologists to weigh in on the veracity of several assumptions about mobile development. It turns out that what might be considered "conventional wisdom" isn't so conventional among industry leaders.
Myth 1: Mobile development absolutely has to pay off with ROI.
While there are times when a return on investment is paramount, the fluid nature of the mobile channel means that insurers' technology departments have to be every bit as innovative and forward-thinking as Silicon Valley, says Suren Gupta, EVP of technology and operations for Northbrook, Ill.-based Allstate ($724 million in Q4 2011 net income). This means staying current with whatever technology is coming down the pipe and understanding how it may change policyholders' expectations for mobile interaction.
"There are times when you need to look at the research of what is happening in the industry," Gupta explains. "Where some of the things you see are more futuristic, it's difficult to prove the ROI. In those cases you have to make a strategic choice — we want to make sure we are front runners in how we differentiate ourselves."
The best source of insight for evolving consumer expectations for many insurers is their employees — and not just those in the IT department, experts suggest. Most carriers interviewed for this article reported mechanisms for employees across the enterprise to suggest new capabilities and applications.
"We do have some innovation groups whose job it is to look out into the landscape and see what is emerging, and at times we have innovation challenges, and that's where some things have come from in the past," says Patty Gaumond, VP of enterprise Internet solutions for Bloomington, Ill.-based State Farm ($32 billion in 2011 premium). She cites the company's Move Tools iPad app, which provides users — not just policyholders, but anyone with access to the Apple App Store — a way to take inventory of their possessions.
"This was when tablets were emerging — we said, 'Let's do something unique in the industry,'" Gaumond relates. "It's an investment in helping consumers think about State Farm differently."
Myth 2: Mobile development should be kept entirely in-house to preserve proprietary innovations.
When a potentially groundbreaking idea comes across a technology executive's desk, it's easy to be tempted to keep it under wraps so no one else in the industry catches wind of what you're doing. But especially if you're looking to launch something across the vast ecosystem of devices and operating systems, finding a partner whose core business is staying on top of changes in that ecosystem frees up internal staff to refine the insurance-centric capabilities of the new application.
"In today's world, it is hard to make the argument for developing mobile apps in-house — there are many skilled developers who have significant experience developing and testing across multiple operating systems, and that experience translates into reduced costs, higher quality and faster time to market," says Jeff Muscarella, EVP of the IT division at Atlanta-based spend management consultancy NPI. "I see mobile product development and the actual building and coding of the final product as somewhat distinct. Insurers will likely need an internal, elite team of mobile experts; but much like Apple, they will ultimately outsource development to partners to build the actual products they design."
Vendors including Kony (Orlando, Fla.) and Interactive Intelligence (Los Angeles) have announced offerings aimed at streamlining mobile development by providing a single platform on which insurers can build their new capabilities, then port them to the various operating systems and platforms. "From a development standpoint, the challenge of writing for multiple platforms is tough," says Chuck Wilson, director of the finance and insurance solutions group for Interactive Intelligence. "We approached our customers and talked about a single platform that they could develop with native look and feel for the several mobile OSes."
Looking for a vendor with an offering close to what you're already going for also helps prevent redundant development efforts. For example, while it was looking for a way to speed the process of providing an insurance quote via a smartphone, Progressive saw how San Diego-based Mitek's solution for mobile document imaging was making waves in banking and mobile check deposit. Rather than try to develop a way to image driver's licenses and insurance cards from scratch, it approached the vendor with its idea and the two worked together to launch the capability earlier this year.
"Our goal has been to try to be first to market with some of these unique offerings, and that means to partner where it's appropriate," says Progressive's Lehman. "In this case, Mitek had a proven image capture technology that was increasingly accepted on the check deposit side, so we looked at that opportunity to bring it into insurance."