Smartphone users, particularly the zealous followers of Apple's iPhone, are passionate about their devices. After all, how many consumer products can transform into something totally new for a few extra dollars, or better yet, for free? By shopping the 140,000-plus applications at Apple's App Store, you can turn your phone into a flute, a magnifying glass, a carpenter's level, a bar code scanner, a jogger's odometer — even pay your car insurance premium.
The iPhone and rival smartphones are no longer perceived as just expensive toys for posting tweets and uploading YouTube videos. Market demographics have clearly captured the attention of financial services companies. Business users outnumber consumers 2 to 1, according to NielsenWire. While the market is broadening, users are predominantly male between ages 25 and 34 who earn more than $100,000 a year — making them good risks and excellent candidates for selling and servicing financial products.
Leading Carriers Making a Splash
Major retail banks were the first to enter the U.S. apps race nearly two years ago, enabling accountholders to check balances, pay bills, move funds, and model loans on their smartphones. More recently, leading personal auto carriers — Nationwide, USAA, State Farm, Farmers and GEICO — have followed suit with apps mostly focused on the claims process.
Claimants, for example, can use their smartphones to report an auto accident, upload photos from the scene, and pinpoint their location for wrecker services (using the smartphone's GPS capabilities). An innovative new iPhone app from USAA lets policyholders pay their premiums by simply uploading a photo of a check.
Such initiatives are seen as a way to give prized customers a higher level of service and a means to target a younger generation of consumers who grew up with cell phones and text messaging. Over the next year, many more insurance companies are likely to follow suit, but as the market matures, policyholders will not be the only target.
Extending Self-Service to Agents and Policyholders
Insurance agents are prime candidates for mobile apps. In a continuing quest to gain efficiencies, a growing number of agents are already using smartphones to stay connected with the office for e-mail, contact lists, and calendars. The thinking among carriers and apps developers now is: Why not give them access to up-to-date policyholder information to help them answer questions on the spot? Even better, why not notify them when policies are coming up for renewal to help kickoff new sales calls?
In addition to cornering the market on convenience, carriers can use the self-service capabilities of apps to drive down costs. In the workers' compensation market, for example, consider the potential value of a managed care app that gets injured employees back to work sooner. An app with a checklist of steps toward rehabilitation, with locations and contacts of the nearest approved medical providers, could help keep claimants on track — and keep carriers up-to-date on their progress.
Many business owners, particularly those constantly on the move, are already married to smartphones. Why wouldn't agents and carriers engage them on their devices? Mobile services such as real-time quoting, instant messaging, and video conferencing have the potential to enrich relationships and ensure their insurance company is just a screen tap away.
Behind the scenes, the technology making these apps possible is nothing new. It is the result of a convergence of advancements over the past decade: easier-to-use hardware, open systems environments, and uniform standards for exchanging data between systems. Agents and consumers can now directly interact with highly sophisticated processing systems that once were the sole domain of back-office and call center employees. Today, by creating special adapters to these systems, carriers can identify virtually any type of service — paying a bill, adding a vehicle to a policy, or ordering a new insurance card — and extend it to their agents and customers.
Capitalizing on a Brand New Channel
Once insurance companies turn those services into apps, there is no limit to the ways they can be used — and reused. For example, the same app for comparing rates between insurance companies could be downloaded to an individual's smartphone, featured by a blogger writing about ways to lower insurance costs, and picked up on thousands of Facebook pages by people who want to share it with their friends.
The exciting aspect of the smartphone phenomenon is that it combines mobile technology, the Internet, and social networking on one device. Unlike the early days of the World Wide Web in the 1990s, when Web-based services were nice to have but not essential, new smartphone apps have the power to turn viral overnight — and set the standard for all apps that follow.
Research in Motion's BlackBerry, which still owns a lion's share of the U.S. market for business users, offers more than 8,000 apps, and owners of Google's new Android can choose among 18,000 apps — and counting. As noted, Apple reports an astounding 140,000 apps for its product. All three devices are expected to erode Nokia Symbian's massive 50-percent share of the global smartphone market in 2010.
Just looking at the numbers, the smartphone channel is hard to ignore. According to a forecast by Wireless Expertise, mobile phones are expected to outnumber PCs worldwide by 4 to 1 in the next few years. Likewise, the mobile app market is expected to grow from $4.7 billion in 2009 to $16.6 billion in 2013.
The challenge ahead for insurance companies is how to harness this emerging channel to engage the up-and-coming segment of agents, policyholders and prospective customers whose expectations grow with the release of every new app. It is going to take a multi-channel approach, with storefronts outside agents' offices, on company web portals and, of course, in the App Store.
Bob Evans is the director of CSC's mobile insurance solutions. He may be reached at bevans26@csc.com.
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