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Mobile: The Road Ahead for Insurers

The insurance industry has begun to provide relevant mobile capabilities to customers and distributors, but carriers must develop strategies of engagement beyond mobile that embrace the data processing implications of 'the Internet of things.'

New applications of mobile image technology include check imaging for recurring payments, which Mike Nelson, VP, mobile imaging platform, Mitek, says is one of financial services companies' primary retention vehicles. "You can download an app, take a photo of a prospect's statement, process it through an algorithm and spit out a competing version," he explains. "That can be done direct to the consumer or by empowering an agent to do that in real time with a prospect."

Perhaps the most dramatic mobility-related development recently in P&C insurance has been the emergence of machine-to-machine capabilities of telematics, rather than business-to-consumer mobile communications. While obstacles relating to privacy considerations and the cost of "black box" telemetry transmitters hindered the adoption of telematics when Progressive debuted it more than a decade ago, many insurers are now developing capabilities to enable pay-per-use types of automobile insurance enabled by telematics. For example, Progressive's Snapshot device uses a phone chip and existing cellular networks to transmit data back to customers. Allstate's (Northbrook, Ill.; $32.7 billion in 2011 revenue) Drive Wise device similarly uses a mobile phone component, a SIM card. State Farm (Bloomington, Ill.) does not offer a pay-as-you-drive insurance product, but it has produced an app for iOS devices that measures acceleration, braking and cornering for purposes of enabling policyholders to privately score their driving safety.

Insurers' movement on telematics is a good thing, but it shows that they remain somewhat myopic in their preparation for a more mobile and interconnected world, asserts Craig Beattie, a U.K.-based analyst with Celent. In addition to telematics, insurers are using mobility within fairly narrow concepts, such as collecting quote data from aggregators and social media for real-time pricing based on consumers' demonstrated preferences.

[What Defines a 'Mobile' Insurance Capability?]

Those endeavors are all very well, Beattie acknowledges, but the insurance industry is missing opportunities that are developing rapidly in the world of wireless communications and telemetry. "The key issue goes beyond mobile devices to the connectedness of things -- not only people talking to people, but people to machines and machines to machines," he says.

Society is moving rapidly to what has been dubbed "the Internet of things," which involves the collection of vast amounts of data potentially useful for purposes of underwriting and risk mitigation, according to Beattie. For example, individuals are interacting through sites such as Fitocracy.com to motivate themselves to get in better shape, and using telemetry devices to record physiological metrics, such as heart rate, while engaging in individual or competitive activities. In the transportation world, while insurers are focused on telematics, other industries and government organizations are developing vehicle-to-vehicle and vehicle-to-infrastructure communications for safety and other purposes. Beattie also adduces the example of a "smart carpet" that can detect people walking -- or lying inert -- on it, or whether a toxic substance has touched it, or whether it's on fire. It's an example among potentially thousands that could generate data useful for understanding risks and preventing losses.

"Insurers are being cut out of the loop when it comes to access to this emerging mass collection of data," Beattie says. "Insurers have an opportunity to connect with sites such as Fitocracy and Fitbit, or with security system companies and a host of others to negotiate discounts to companies, individuals or groups willing to share their information."

He adds, "The key thing is that insurers begin to develop a culture of ingesting and interpreting data. Some are investing in infrastructure such as Hadoop, and I think they'll have a leg up in this emerging world."

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio

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