Insurance Apps

Insurance companies have used software for the better part of 50 years, if not longer. And for the first many years, its access and use was strictly internal. Legions of clerks would take data from various sources, including brokers, and enter it into the company systems allowing for the rapid processing (when compared to manual processing) of policies, claims, accounting entries, reinsurance and a host of other transactions.

In the mid-to late-1980s, as brokers started to get systems of their own, which to some extent duplicated the processing on the company systems, people started to think about the overall efficiency of the industry and the reduction of entering the same data into different but similar systems. And so the concept of single-entry, mul- tiple-company interface (SEMCI) emerged, which, after many years of effort, is now starting to show value.

However, much of the system-related work is still confined to within the industry. Generally speaking, the end consumer still does not interact with their broker’s systems or the company’s systems.

All this is changing. A new type of system is starting to make inroads into the insurance industry, and it is unlike anything the industry has done before.

Insurance companies are starting to develop and publish consumer-facing mobile applications (apps) for Smartphones; iPhone, Black- Berry and Android devices. To date, most of the activity in this area has taken place in the United States (with StateFarm Canada being one exception), but the trend is unmistakable.

Thus far, most of the apps have focused on auto claims first notice of loss (FNOL), with one or two companies also providing habitational FNOL capability. The apps typically make good use of the technology on which they are deployed, using features like the built-in Global Positioning Systems (GPS), cameras, video capa- bility, the ability to turn the Smartphone into a flashlight and so on.

A typical insurance company app will consist of three or four layers of functionality, ranging from ‘core insurance’ –focused entirely on a standard insurance process such as FNOL — to ‘tools,’ which can be a mix of functionality that may be of value to the insured but are not related specifically to insurance.

(Please See Figure 1.)

A FNOL app will typically offer two or three basic menu choices. At a minimum, they will include claim notification and tools.

Take, for example, the screenshot from Farmers Insurance Group. (Please See Figure 2 on Page 22.) The claim notification choice (termed ‘Proceed to Application’ in the screenshot) will allow you to gather data pertaining to an accident. This data, when collected, will be either downloaded into the company claims system or automatically bundled into an email that will be sent to the insurance company.

This data typically includes details about the accident location and personal information about the other party or parties (name, address, drivers license number and so on). Most of the apps developed so far also allow you to take photographs of the accident scene, the damaged vehicles, the intersection or road and other items that might be of importance. Some will even allow you to draw a sketch of the scene.

The tools choice (termed ‘HelpPoint’ in our example) will allow you to call the broker, company, police, ambulance,

a tow truck, list preferred body shops, find hotels and a myriad of other helpful information, all at the insured’s fingertips.

Several of the apps provide a ‘checklist’ that helps the insured deal with the accident situation. The time immediately after an accident is typically very stressful for an insured, particularly if there are injuries. A checklist is a great way to guide someone through challenging moments. State Farm’s Pocket Agent has one such checklist. (Please see Figure 3 on Page 22.) StateFarm has done a great job in designing this checklist. It features three clean, simple steps:

• Stay safe.

• Call it in.

• Write it down. If you have ever been unfortunate enough to have been in an accident, you will recognize that simple, clear instructions to follow is exactly the thing you need at that moment: the stress of the incident will vastly reduce your ‘clear-thinking’ capabilities.

The sky is really the limit as to what can be included in an app. You can, for example, add links to sites like Zoom-Safer http://www.zoomsafer.com/or DriveSafe.ly http://www.drivesafe. ly, both of which provide tools to reduce risk from texting or emailing while driving. Or you could add a speedometer app, which includes a warning sound if you go over the speed limit. And so on. A few minutes spent browsing all the available apps is an education.

There are several types of Smartphones, but the iPhone, BlackBerry and Android devices seem to be leading the pack at the moment. Windows Phone 7 is due out later this year and may add to the market mix. Among the eight or so insurance companies that have delivered a Smartphone app thus far, all of the companies have focused on the iPhone and for good reason. Arguably the iPhone can deliver the best user interface/ user experience (UI/UX) of any of the phones, although the market penetration of the BlackBerry also makes it an attractive choice. Of the eight insurance companies mentioned above, two have developed apps for BlackBerry. None (of which we are aware) have developed an app for an Android device.

As stated before, mobile technology is like nothing the industry has seen before. There are two basic reasons for this.

First, the app is focused at the end consumer. With the exception of a very small number of companies that have self-service portals, this is a large and innovative step for insurance companies. The design, functionality and look and feel have to be completely different than the software that is used internally or even with brokers.

This raises the question of what entity ‘owns’ the customer. Many brokers feel very strongly that the customer is theirs, and only they should be communicating with the consumer. This article makes no attempt to debate that issue. In fact, several techniques can be used to help defuse this issue. For example, a FNOL app could easily display both the broker’s and the insurance company’s identity.

Second, designing apps for Smartphones requires an entirely different skill set than most insurance companies or even consulting companies have available to them. The design has to consider:

Mobility

A mobile app is not simply a small version of an in-house system. To be successful, it has to take advantage of the inherent mobility features of the device — location-based services, built in accelerometer, Bluetooth and so on.

Usability

Mobile users are just that: mobile. They don’t have or won’t take much more than a couple of minutes to use an app. If the app is complicated or difficult to navigate, a user will quickly abandon it, causing the app to fall rapidly fall from grace.

Dynamic Content

You have to develop reasons for people to use your app on an ongoing basis. If you just include FNOL capability, when it comes time to use it, people will have forgotten it’s there or will have erased it from their Smartphone. You have to give people a reason to use the app on a regular basis.

Personalization

Mobile phones, in many respects, become part of a user’s personality. They add different skins, accessories, ring tones and so on. A good app will continue this concept and allow people to personalize it in some way.

So why would an insurance company go to the trouble of developing a FNOL app?

The first reason is client service. Any company providing an app would be providing a valuable tool to their insureds. Policyholders might use an app not only for reporting a claim, but also to contact the company or their broker. An app mig ht also provide other tools to make a consumer’s life a little easier. Progressive Insurance, for example, provides a car-shopping tool. (Please see Figure 4.). This might not be life-altering in and of itself, but in today’s busy world, every little bit helps.

The second reason is that numerous studies have shown the earlier a claim is reported, the less the claim costs to settle. This is particularly true when personal injuries are involved.

Hartford Insurance commissioned a study showing that a personal injury claim reported in the second week after the incident cost, on average, 18% more to settle than one reported in the first week. This percentage went up to 45% if the claim went unreported for a month. These statistics relate specifically to personal injury claims in the United States, but the trend is unmistakable.

Two primary skill sets provide the key to developing an excellent mobile application for an insurance company. First, you have to understand insurance. Second, you have to understand mobile apps.