NU Online News Service, Nov. 30, 2:05 p.m.EST

Despite its reputation for risk aversion, insuranceorganizations are engaging in more technology innovation than theindustry is given credit for, a report from the consulting firmCelent said.

In a new report, "A Snapshot of Innovation: An Insurance MarketScan," the Boston-based financial research and consulting firm tooka closer look at examples of innovative application of technologyin insurance. The report provides several examples of technologiesthat are being used to create innovation in product andprocess.

"It may seem like a peculiar time to talk of investing ininnovation, given the backdrop of the global financial crisis,"noted Catherine Stagg-Macey, senior insurance analyst and coauthorof the report, in a statement. "But there is remarkable interest inusing innovative technology to achieve business objectives."

The report discusses in some detail applications for thesmartphone, digital pens and other developing technology.

Celent said while the business case behind many of theseinitiatives is unclear, innovation requires a leap of faith, morein some areas than others.

There remain several unknowns in all the initiatives, such asconsumer behavior in social networking or adoption rates ofsmartphones and their applications. Few of the initiatives in thisreport are able to create a high impact on the business processtoday, the firm asserted.

"There will be leaders and followers in innovating businessprocesses," noted Nicolas Michellod, senior insurance analyst andcoauthor of the report. "[Chief executive officers] and [chiefinformation officers] need to be clear on which category they wantto be in. Leaders could reap benefits for early investment in aninnovation that gains broad acceptance, but could also bear thecosts with minimal benefit if it does not work."

Celent said that despite flat budgets going into 2010, itsresearch shows a remarkable number of insurers that have or areconsidering launching products or channels during thisrecession.

Among some of the innovations:

o Leveraging Smartphones: The last few years have seen theadoption of smartphones increase dramatically, as well as a shiftfrom business use to personal use.

Adoption rates by country vary considerably with the UnitedStates holding a 17 percent penetration level.

Two U.S. insurers' utilization of iPhone technology is aimed atpolicyholders.

The Nationwide Claims application is aimed at clients andprospects alike. Farmers iClaim application offers similarfunctionality for the motorist and for the homeowner.

American Family, another U.S. P&C insurer, goes a stepfurther and offers the claims applications for both iPhone andBlackBerry devices.

o Digital Pens: These devices offer an alternative to empoweringthe remote workforce and address issues of connectivity and cost.Through a combination of a digital pen and a smart form, efficiencyof the new business process can be improved. Business benefits aremultifold, including capturing the data once, validating the dataat source, speeding up data submission and the overall process.

The report also looks at marketing with social media and theadvent of virtual worlds and digital assistants and how insurerswill incorporate these technologies in the future.