Discussions of mobile and wireless technology in the insuranceindustry usually come down to two points: Yes, the technology iscool, but do we really need it? There's little to argue about thefirst point. Being connected anywhere, any time gives agents andclaims adjusters freedom they never imagined a decade ago. Thesecond point, though, has been the defining issue regardingmobile/wireless strategies: Companies may be able to survivewithout such technology today, but without a mobile/wirelessstrategy, are they limiting the effectiveness of their operationsin the future? Industry observers say yes.

Companies are waking up to the fact what they've been doing inthe past has been too random, believes Karen Pauli, a seniorinsurance analyst for TowerGroup. The call to action for wireless,she maintains, translates into exploring the kinds of applicationsagents and claims people should have on their mobile device toallow them to gather data–information that then can be uploadeddirectly to the home office.

Celent senior analyst Chad Hersh thinks wireless is still on thecusp. "The technology actually has been a little slow in gettingwhere it needs to be," he says. "The promise of ubiquitousconnectivity has not panned out. It's here, but it took a long timeto get here, and it's still pretty darn expensive."

From a consumer perspective, wireless connectivity has takenoff, but Hersh asserts that's a far cry from what he expected tosee on the business side. In 2004, he wrote a report for Celentasking whether wireless was ready for prime time. It turns out theadoption rates he predicted for 2007 (60 percent of P&Ccarriers with projects in production) are more in line with thenumbers he estimated for 2005 (30 percent). "If you think about thecapabilities since even last year of wireless modem cards and thelack of WiMAX, there was no compelling reason to switch tosignificant wireless projects," he says. "I would say from a claimsperspective, I think you will see about a two-year delay [from hisearlier predictions]. I think the 2007 numbers will be pushed backuntil at least 2009 because of the delays in mobile WiMAX."

There have been improvements in the design of wireless devices,according to Rod Travers, senior vice president, Robert E. NolanCo., but he credits this to evolution more than innovation. He'snot ready to call wireless/mobile use mainstream in the insurancearena, but he feels it is headed in that direction. "That's goingto help with costs because the more people adopt the technology,the easier it is going to be to afford, since it's reaching abroader base of adopters," says Travers.

The adoption of wireless strategies is beginning to filter downto midtier insurers, suggests Shane Hughes, CEO of Pyxis Mobile,because there are more people carrying hand-held devices. "Thatbegins to drive interest in what else they can get on these devicesbesides e-mail or local contacts," he says. The other driver ishome offices want to increase the adoption of the systems they'vealready purchased, such as CRM or reporting systems, adds Hughes,noting, at the same time, companies are putting in a singlerepository they want to use to support their sales professionals inthe field.

The most obvious application for wireless in theproperty/casualty field continues to be claims and damageappraisal, indicates Travers. "Beyond those well-knownapplications, where you have some innovation going on is in thecorrelation of information related to location intelligence, so youare doing more pinpointing about CAT information and using locationintelligence to put your people in the right place faster than whatmight have been before," he says.

Cincinnati Insurance contracted with Symbility Solutions in 2006to arm the carrier's field claims representatives with the vendor'sestimating software for property claims. The solution is used withCincinnati's tablet PCs. David Rice, assistant secretary,headquarters, field claims, for the insurer, reports the companyselected the tablets first before searching for the estimatingsoftware, but it found a good match. "Symbility was specificallydesigned for tablet technology," he says.

Prior to purchasing the new solution, Rice continues, thecarrier used a different estimating solution on a license basis."Quite a few in the field had [access to the earlier solution], butit was designed more for desktops," he says. "One of the biggestadvantages with Symbility is it is available to everybody on aper-use basis."

In Rice's view, the advantage for insurers with mobiletechnology is it allows claims reps to be face to face with thecustomer. "More than half of anyone's ability to communicateeffectively rests with those interactions," he says. "Mobiletechnology has made good service even better."

He uses an analogy to explain the difference between good andbetter: At 211 degrees, water is really hot, but at 212 degrees,water is boiling. "That one degree makes a big difference," hesays. "The needs of our customers may or may not require lightningspeed, but allowing for quicker resolution certainly can benefitthe customer. We have found that to be very welcomed [bycustomers]."

Using another analogy, Rice compares the difference betweentraditional inspections and using any kind of estimating softwareto moving from a hand saw to a power saw. "The end result always isa cleaner cut," he says. "It's faster, and it's better looking." Heremarks one customer commented that before his neighbors even hadheard from their carrier about damage from a storm that occurred,the Cincinnati claims rep had contacted the customer and quicklysettled the claim. "[The claims rep] was at the house the very nextday to inspect the damage," he says. "The check was in thecustomer's hand, and repairs were being made. So, as far asmeasuring [the value of the wireless service], I'd say ourcustomers are more than satisfied with what we are able to bring tothem."

The most noticeable back-office benefit Cincinnati Insurance hasexperienced with the wireless solution, Rice indicates, is asubstantial reduction in the administrative and record-keeping workby the carrier's storm-team managers during storm situations."We've been able to examine data faster," he says. "That's stillsecondary to providing great service to customers, but it's allowedme to take another look at what we've been able to accomplish.Staffing needs always are an issue. This helps identify thoseneeds."

AXA Distributor, part of the AXA Group, developed a wirelessstrategy for the wholesale division of the carrier's annuitybusiness–third-party distribution to AXA's retail agents.

Back in 2001, AXA launched a wireless sales application peoplecould use on hand-held devices, according to Nick Volpe, vicepresident of IT strategy with AXA Distributor. He reports theadoption rate was unsuccessful because the comfort level for theusers was not there. "There was no killer app," he says. "Theydidn't have to use it as part of their business process. There alsowas an industry factor: The wireless atmosphere wasn't what it istoday."

Flash forward to 2004, when AXA tried a new wireless strategythat focused on user adoption. It began simply enough, giving userse-mail and calendar capabilities, and has grown to a territorymanagement system provided by Pyxis Software.

"In wholesale distribution, there are some key drivers that makea successful distribution channel," says Volpe. "The most importantis keeping wholesalers in the field and giving them the flexibilityto travel quickly and fluidly and keeping them in the face of thebrokers."

AXA decided the most critical goal for the strategy was enhancedcommunication, both on the corporate level and with internalwholesalers. "That was the driver for the e-mail launch onto thewireless devices," says Volpe. "We launched that first because it'sthe most common and most important application."

E-mail and calendars got the users comfortable with the device,continues Volpe, and usage grew to 90 percent. Riding on thecoattails of that adoption rate, AXA launched the territorymanagement system, which among other things, gave the users theability to look at sale information at multiple levels, activityhistory with the broker, the history of the broker's contact withthe wholesalers, whether the broker had made a quote online, anysales activity online, and all levels of activity.

The tool gave the wholesalers valuable information as theywalked into a broker's office while also making them efficient asthey walked out of the broker's office. "The ability to logactivity is something they've been driven to use to save themtime," explains Volpe. "[The wholesalers] can log activities, andthat promotes two things: immediate recognition of the activityinternally as well as a fresh memory of what happened in theoffice. It becomes a much more valuable piece of information tohave internally. Our strategy has been driven by the effectivenessof our wholesaling staff, giving the staff as much time in thefield [as possible] and fluid movement because it is the backboneof distribution."

Volpe reports the adoption rate for the territory managementsoftware is above 80 percent. "I can tell it has become anessential part of our business," he says. "If it is ever down ornot uploaded by 7 a.m., I begin to receive phone calls fromwholesalers in the field."

The most essential application for any wireless user is e-mail,Volpe believes. "It's your lifeblood to your company," he says. "Ifyou can give people who are not in the office every day the abilityto travel with their main line of communication in their hand, youbasically force them into adopting that device and the function ofthat device. They embrace that device because it gives them theability to get contact and keep in communication with thecompany."

That's why the AXA strategy took off, he contends. "Let's getthem using the devices and feeling really comfortable with them,"he says. "Once the users become comfortable and it becomes part oftheir business process to use these devices, let's give them stuffthat goes above and beyond what they were expecting, which for uswas the territory management tool. Now, the next thing is to trysomething new, whether it be GPS tracking or something else. Thatkiller app was essential."

Incorporating a mobile or wireless strategy is becoming acompetitive necessity for insurance carriers, asserts Travers. "Ifthere is a killer app, it might be competitive parity–keeping upwith the Joneses," he says. "In the event of a major incident suchas a CAT, when you have the RV pulling up from the major carriersand their competitors don't have the technology to support theadjusters right then and there, it's a competitive disparity realplayers can't afford. I don't know if that's a killer app, butthat's a strong motivation to begin the investment and startlearning and building competency because it is going to be tough tocatch up as time goes on."

The incorporation of GPS information is finding its way into themobile automation suites, observes Travers. It is helping carriersrespond to catastrophes and anticipate where the damage might be,dispatch claims personnel to that area ahead of time, and allowcarriers to react a little faster.

Many other industries have recognized and utilized the value ofGPS and remote technology, notes Craig Bedell, director, globalinsurance services, MapInfo. "What we've seen in the insuranceindustry of late is in the loss control process," he says. "Whencarriers are going out to inspect assets, they can understand that,say, a refinery is not just where the mailing address is. Insurersare able to track particular assets and identify where theyare."

A loss control representative for a carrier can use remotetechnology not only to get information; the devices are being builtwith site inspection reports and are GPS enabled. "Wireless isallowing insurers to do their jobs more effectively and with moreaccuracy, providing more accurate information to the carrier tomake better individual decisions and corporate decisions onreserving, reinsurance, and fraud detection," says Bedell.

Volpe is excited about the possibility of GPS mapping for hiswholesalers to use in the future. If a wholesaler is headed to ameeting that gets cancelled, he explains, it's difficult to findthe next broker to talk to in that territory. "Wouldn't it be greatif a wholesaler could say, 'Give me a list of all my reps producingmore than $100,000 within five miles of where I'm standing rightnow,' and then start making calls–real customer-service-typestuff," he says.

Straight-through processing could be achieved one day, hepredicts, as more devices become Bluetooth enabled. The ability toput forms online in a BlackBerry format and put a paper in front ofthe customers to sign with a Bluetooth pen would allow the policiesto be issued directly from the field. "I'm sure there arelimitations, but those are the kinds of things I'd like to seecoming in the wireless industry for the annuity world," saysVolpe.

All of AXA's wholesalers have been issued hand-held devices andlaptops, but Volpe points out most of the wholesalers no longertravel with their laptops. "They have become comfortable enough totravel with only their BlackBerry," he says. "They have the abilityto do all the work they need to do on a daily basis in the fieldwith the hand-held. They have their e-mail, their calendars, andall their sales and broker information."

Security always is an issue for wireless and mobile usage, butVolpe comments there is a minimal amount of resident data on thedevice. "If a device gets left in a plane or an office, there isthe concern it's a direct pipe into our network," he says."However, the application we use does not have any resident data.It's all live data and is stored here in our home office servers.That's one way we circumvent the loss of a device."

The BlackBerry devices can be terminated from the home office,as well. "If the device is lost, the next time someone tries to hita tower and come into our network, the device will be killed. Itwon't be able to be used," says Volpe.

Security is a concern for carriers, Travers agrees, but it ismanageable. "It certainly could be an excuse [for not adopting awireless strategy], but it's not a good reason not to be investingin this technology," he says. There has been increased availabilityof device protection capabilities, whether for encryption ofwireless communications, encryption of hard drives, or encryptionof data on hand-held equipment. Companies also have become aware ofindividual behavior that creates security risks and have gottenmuch better about training employees and instituting policies. "Thetechnology is not the weakest link [in security]; it's the peopleand behavior," says Travers.

Security issues never will be solved fully, but Travers feelsjust because a carrier is using mobile technology, it doesn'tintroduce higher risk. "The security element is going awayrapidly," he maintains. "It's not a good reason not to do it."

For now, Hersh believes wireless projects make more sense forcarriers prone to dealing with catastrophes and carriers that haveissues around location. He points out State Farm has a lot ofdrive-through claims offices. "If you have a drive-through claimscenter, why do you need a wireless claims solution?" he asks.

The direct writers are likelier to drive wireless, Hershsuggests, because they tend to focus more on service. "Serviceissues are driving [wireless claims projects]," he says. "When youare talking to your customers face to face about a claim, that'swhen they will decide whether they are going to renew their policywith you over the next few years. Unless you screw something up,they are likely to renew. [Handling the claim is] your chance toshine in their eyes. That's what they have been paying you for overthe years."

Hurricane Katrina was a great proving ground for wirelessstrategies, Hersh adds, but it also highlighted some shortcomings."The cell towers after a few days stopped working once the backupbatteries died," he says. "Everybody learned a lot, and part ofwhat they learned is we're almost there."

That is why he anticipates WiMAX will bring a drastic change towireless strategies. "WiMAX has such a broad coveragerange–somewhere between 10 miles and 30 miles," says Hersh. "Youcan cover a wide area without gaps–a huge difference over Wi-Fi,which has such a short range. It will allow claims to be processedin an inconceivable environment–no electricity, no phones, noInternet coverage–and yet adjusters still will be writing checksand filing claims. From a customer service perspective, youcertainly can't ask for more."

Hersh expects 2008 will be a critical year for the rollout of 3Gservices and WiMAX, which, he believes, will be the real driversfor wireless claims. "Once those business-friendly technologies arein place–security wrinkles ironed out, a clear understanding ofwireless connectivity–then and only then will carriers finally getto where they should have been this year," he says.

He also blames lower adoption levels on the massiveinfrastructure projects required for wireless carriers and the factthe carriers haven't got the cost model down to somethingreasonable for a business user. "I think if you begin to seewireless modem cards start to be reasonably priced, the data plansbecome reasonably priced, and ubiquitous coverage, in the nextcouple of years you'll start to see a surge," he predicts.

Pauli has observed a great deal of progress in terms ofpartnership between the software and hardware vendors. "Thesepeople have a level of expertise in terms of what their productscan perform," she says.

It can't stop there, though, she asserts. "What [vendors] needto do is facilitate thinking with the carriers that know what theirbusiness is," she says. "Facilitate and collaborate with the VP ofclaims administration who knows what his mobile claims peopleneed."

At that point, all sides can go forward and create appropriateapplications. "The message I'm preaching is: Vendor community–youhave to collaborate seriously with carriers, and carriers have tohave a vision for their workers and let the vendors help with thatvision," concludes Pauli. "There will be leaders in the industrywho will do this, and others who will say, 'Oh, darn!'" TD