How mobile is transforming insurance

A report from The Economist Intelligence Unit

How mobile is transforming insuranceFrom protector to partner: Can mobile expand insurers’ relationships with consumers?

© The Economist Intelligence Unit Limited 20141

How mobile is transforming insurance

Preface 2

Introduction 4

How open to mobile are the insured? 5

Insurer capabilities and success stories 9

The changing insurer-agent relationship 11

Customer loyalty 13

Conclusion 16

Appendix: Executive survey results 17

Appendix: Consumer survey results 24

Contents

1

2

3

4

5



Preface

From protector to partner: Can mobile expand insurers’ relationships with consumers? explores how mobile technologies are transforming the insurance industry. The “anytime, anywhere” interactions that mobile enables are allowing a new level of intimacy in the insurer-policyholder relationship with the potential to change the insurance game. The report explores how insurers can become trusted partners that provide valuable new services that help policyholders identify and assess risks as well as gain protection tailored to their individual needs.

As the basis for this research, The Economist Intelligence Unit conducted two global surveys, sponsored by SAP. The first polled 113 insurance executives in June 2014 and the other polled 1,827 consumers in September 2014. The findings and views expressed in this report do not necessarily reflect the views of the sponsor. The author was Anthony O’Donnell. Riva Richmond edited the report and Mike Kenny was responsible for the layout. We would like to thank all of the executives who participated, whether on record or anonymously, for their valuable insights.

Interviewees

Mark Boxer, executive vice-president and global chief information officer at Cigna

Francisco Duque, marketing manager at Suramericana, a unit of SURA Group

Michael Fitzgerald, senior analyst Celent

Seamus Fitzpatrick, senior vice-president for mobile sales technology integration at Combined Insurance

Eric Herbek, vice-president of product development for Consumer Health Engagement at Cigna

Neff Hudson, emerging channels executive at USAA

Kevin Murray, group chief operating officer and UK chief information officer at AXA

Rick Roy, chief information officer at CUNA Mutual Group



This report is based on two new surveys conducted by The Economist Intelligence Unit (EIU) and sponsored by SAP: one of 113 insurance executives in June 2014 and the other of 1,827 consumers in September 2014.

The executive survey. The survey of executives at life, property/casualty and health insurers went to a senior group. Almost six in 10 (59%) worked in the C-suite, including chief executives, chief financial officers, chief risk officers and CIOs. Another 7% were at the vice-president or director level or ran business units.

The survey attracted executives at large insurers primarily, including many national or global operations. About half (48%) generated annual revenue of more than $5bn, and just over one-quarter (27%) had assets between $1bn and $5bn. Respondents were fairly evenly distributed across North America, EMEA, Latin America and Asia. Three countries accounted for almost half (48%) of respondents: the US, the UK and Brazil. Eight percent came from France and 5% from Japan.

The consumer survey. Respondents to the consumer survey were from five regions and 48 countries. All currently use mobile devices and

have bank accounts. About 13% of respondents were from the US, and 6% each were from Brazil, Mexico, Canada, China, the UK and France; no other country accounted for more than 4%. Emerging markets were well-represented, with 19% of respondents hailing from the BRIC countries and another 48% from a more broadly defined group of emerging economies. About one-fifth (19%) came from North America, 19% from Latin America, 23% from EMEA, 26% from Asia-Pacific and 14% from Middle and Eastern Europe, specifically.

The median survey-taker was in the 41-to-50 age group—the average age was 45. Men outnumbered women by a ratio of 57:43. In terms of income, respondents exhibited a dumbbell pattern: the largest group made more than $125,000 per year (14%), while the second-largest made less than $10,000 (9%) and the third largest earned between $10,000 and $15,000 (7%). The average annual income of respondents was approximately $57,000. Most have smartphones (86%) and almost half have tablets (47%). A significant portion also uses a feature phone (22%)—a basic phone for calls and texts, with simple games and Internet connectivity.

About the surveys



Little more than a decade ago, mobile technology at insurance companies was limited to BlackBerry devices for executives and “rugged” laptops for field claims adjusters. Today the picture is very different. The consumerisation of technology has put an array of mobile technologies and services into the hands of both insurers and their policyholders, changing the way they interact and shining a spotlight on customer service.

While the Internet has enabled a new level of efficiency and convenience, mobile has enabled truly “anytime, anywhere” customer engagement. As a result, a new level of intimacy is developing in insurers’ relationships with their policyholders. In a survey of 113 insurance executives conducted in June 2014 by The Economist Intelligence Unit, sponsored by SAP, 62% of respondents see mobile

as offering unique capabilities with the potential to change the insurance game.

Mobile is enabling insurers to reach current and potential customers in new ways with new offerings. Not only can mobile make communication more convenient and frequent, it now supports a new paradigm: Insurers can become trusted partners that provide policyholders with valuable new services that help them identify and assess risks—and take action to protect themselves based on their individual needs.

As mobile technologies continue to be more and more widely adopted, they are also improving the efficiency and responsiveness of employees at insurance companies and their many partner companies.

Introduction1

Source: Economist Intelligence Unit survey, September 2014.

North America

Latin America

Middle and Eastern Europe

Asia

Executives who agree that mobile provides a new set of capabilities and has a business changing-potential that other channels lack, by region. (% of executives)

79

68

61

55



Insurers have long struggled with many advances in “customer experience” for the simple reason that their touchpoints with policyholders tend to be few and far between. While consumers may interact with their banks several times a week, they may contact their insurer only occasionally—to purchase a policy, to pay their premium and, potentially, to file a claim.

According to a companion survey of 1,827 insurance and banking customers polled in August and September 2014 by the EIU, more than half deal with their insurer once a year or less often. When they do connect, the interaction rarely takes

place on a mobile device. Only 26% of consumers have ever connected with their insurer via mobile. When they do interact with their insurer on mobile, the reason is convenience—just as it is for banking. Mobile lets them communicate with their insurer any time they want (60%) without having to wait (41%) or make a trip to meet with an agent (37%).

Nonetheless, policyholders today are disinclined to use their mobile devices. While 61% of respondents say they would use a mobile device to interact with their insurer if it were easy and safe, a significant minority (39%) say that even then they would not. By contrast, 74% of these respondents

How open to mobile are the insured? 2

North AmericaLatin America

EMEAAsia


EMEAAsia


EMEAAsia

Percentage of insurance customers who have used mobile technologies to connect with their insurers, by region(% of consumer respondents)


Shop for or compare policiesLocate third-party service providers (eg, authorized repair centres, physicians)

Receive alerts (eg, expiration and renewal)

Pay premiums and see payment history Update policy and personal dataResearch or purchase other financial services (eg, banking, mortgage, legal)

Access proof of insurance, check policyReview risk level (eg, health check)

File claims and check claim history and status

21

23

26

28

23

29

27

25

17

30

23

24

21

21

20

24

13

23

16

20

16

23

22

20

17

19

15

19

10

14

8

15

13

16

12

14



say they would use mobile to bank if it were easy and safe, while 26% would not.

Of those consumers who do interact with insurers via mobile, only 23% say that they are more satisfied with the mobile experience than with the desktop experience. The largest group of respondents (45%) say the experience is inferior to that of desktop computers. Similarly, security concerns and preference for PCs were top reasons for avoiding mobile banking, suggesting that many financial-services firms have work to do in the security area and with their mobile experiences.

Consumers are especially wary about sharing private data with their insurer, including data generated by mobile devices and sensors. Seven of 10 policyholders (70%) say they would be strongly or moderately concerned about their insurer collecting and using their personal information to personalise products and services. Almost as many (67%) would feel the same way about insurers collecting personal data to discourage risky behaviour. Interestingly, when the question is stated slightly differently—collecting personal information to encourage healthy behaviour—the level of high-to-moderate concern drops to 62%.

Between 76% and 87% of consumers have strong or moderate concerns about collection of data from a range of sources including mobile devices, location software, social media, wearable devices (eg Fitbit) and sensors (eg fire alarms). Despite consumer concerns, one-third (32%) of insurers are collecting data on policy risk and another third (33%) plan to within three years.

Insurers that move ahead without getting their policyholders on board by explaining the benefits offered and the privacy protections guaranteed may be putting themselves at risk of backlash.

The mobile imperative in an “omnichannel” world Although insurers and consumers are somewhat at odds in their attitudes towards data collection (much of which will be generated by mobile devices), their attitudes may soon converge. Consumers may be reluctant to share their data, but they want to benefit from the aggregate data that insurers collect to get a better understanding of how to manage health, property and lifestyle risks. About one-quarter of respondents say they have viewed their driving history (25%) and fire and surveillance data (24%) and gotten advice about managing risks and premiums, while more than half would like to do so.

Consumers may be more likely to share data as they see the benefits in gaining a new understanding of how to manage their health, property and lifestyle risks. These findings set the stage for a breakthrough in the insurer-customer relationship enabled by the unique capabilities of mobile. More than three-quarters (77%) of policyholders would exchange personal information for lower premiums, according to an October 2014 global study by Accenture, a global advisory firm.

Mobile has become one of many channels that insurers must support. More than half (53%) of insurance executives surveyed by the EIU

Insurers and consumers are somewhat at odds in their attitudes towards data collection.


How concerned are you about your insurer collecting and using data from the following sources? (% of consumers who are very or somewhat concerned)

Mobile phone, tablet

Social media

Location data (eg, GPS)

Connected devices (eg, automobile sensors, smoke detectors, security systems)

Wearables (eg, Fitbit)

Other personal or behavioural data

83

82

81

77

75

86



❛❛ Mobile is unique for its ubiquity and the services that it can enable, but it still must be complemented by other channels.❜❜Francisco Javier Duque, marketing manager of SURA Group

Asia EMEA Latin America MEE North America

Personalise products and servicesStrongly concernedModerately concernedMinimally concernedNot at all concerned

Discourage risky behaviourStrongly concernedModerately concernedMinimally concernedNot at all concerned

Encourage healthy behaviourStrongly concernedModerately concernedMinimally concernedNot at all concerned

How concerned are you about your insurer collecting and using your personal information to—(% of consumer respondents)


31 26 35 26 26 41 46 41 42 36 20 19 15 24 26 8 9 9 7 12

28 24 34 27 24 43 40 40 39 36 21 25 20 24 26 8 10 6 10 14

27 22 27 24 24 39 39 37 37 30 23 27 25 27 30 11 13 12 12 16

acknowledge that customers learn and buy in many ways—from web and mobile to word-of-mouth and traditional advertising—and that every one of these channels must be supported. The 18% who disagreed with the need to support multiple channels tended to come from smaller and more specialised insurers.

Asked directly whether mobile is just another channel, about one-third (32%) of executives disagree, another third agree (36%) and the remaining third are not sure. However, 62% see mobile as having capabilities that other channels do not—capabilities with the potential to change the game.

For example, through sensors, location-based services and telemetry, mobile empowers insurers to collect data that correlates with risk and enables

the delivery of custom offerings. Policyholders can inventory property, document damage and file claims with their devices.

“Mobile is unique for its ubiquity and the services that it can enable, but it still must be complemented by other channels,” says Francisco Javier Duque, marketing manager at Suramericana, the insurance and social security subsidiary of SURA Group. “It presents difficulties in accommodating the variety of devices and operating systems, but it creates opportunities because it facilitates access to information and services and accompanying the client on an anytime-anywhere basis.”

SURA’s business model goes beyond the traditional indemnifying benefit of insurance, or paying claims in the event of a loss, Mr Duque says.


Have you used your mobile device to get any of the following types of information and advice? (% of consumer respondents)

Have done Would like to do

Manage my and my family’s health

Manage my personal assets and related risks

Legal advice and/or services

View driving history and manage driving risks and auto premiums

View home fire and surveillance data and manage related risks and premiums

52 34

36 48

27 50

25 53

24 54



“SURA’s customer experience is designed for our policyholders to enjoy quality, timely service delivered in an integrated manner, so that we can develop a long-term, win/win relationship.”

SURA, a multi-line insurer based in Medellin, Colombia, was the first insurer in Latin America to offer a telematics-powered, usage-based auto-insurance programme, and it provides policyholders with a range of downloadable applications for Apple and Android devices. “These enable us to maintain contact with policyholders, educate in preventive health, schedule medical appointments, manage risks and request roadside services,” Mr Duque says. “We also have a GPS service for private vehicles and commercial fleets through which our customers can access a variety of useful information for safe and reliable driving—

we capture information such as location and driving style to generate added value.”

Since 2001, SURA has offered online services to enable agents and policyholders to interact and execute transactions at the company’s site, while its digital channel has evolved into a multi-channel approach. “Now, with smartphones, we can offer an even higher quality of services, some through the traditional navigator and others from applications downloaded to mobile devices,” Mr Duque says.

“It’s a challenge for companies to simply initiate and complete service within a single channel, let alone begin in one and end in another,” he adds. “But customer experience must be designed in a way that channels complement each other to support better service.”



USAA, a San Antonio, Texas-based insurer and financial-services company that serves military personnel, has become a leader in customer-facing mobile capabilities because of its need to reach its clients when they are deployed. Today, mobile is USAA’s largest contact channel, reporting 590m interactions during 2013. By contrast, its website logged 350m interactions and its voice-response system received 110m calls, according to Neff Hudson, the company’s emerging channels executive.

USAA aims to provide both high-tech and “high-touch” services, giving policyholders the option to talk to a person when desired while also providing digital pathways that make decision-making easy. “That could take the form of text on screen, an avatar or a phone-call offer—the point is to offer help at the decision point and emulate the logical flow of the person making the decision,” Mr Hudson explains.

The mobile aspect is particularly transformative. For instance, it fundamentally changes the relationship of driver to car and driver to insurer, Mr Hudson says. “Instead of the old paper policy that sat in the glove box, we can put the entire policy on your phone,” he says. “With a driver’s permission, USAA can use GPS to send a tow truck [and] coach policyholders on driver safety.”

In the last couple of years, USAA has created apps designed to reduce losses. It has an app that enables fire-hazard self-assessments and recently

launched another that can capture video and deliver a repair estimate within a few hours.

The proliferation of mobile and other remote devices is rapidly reshaping the insurer-customer relationship, making it more personal and enabling insurers to be more useful to people in their day-to-day lives. “When we see the emergence of connected homes, Google rolling out driverless cars and mobile devices hitting scale, it suggests a very different future for insurance,” Mr Hudson says. “In this emerging world, insurance will be about individual protection generally, rather than a policy for your car, house, etc.”

In the meantime, mobile is causing insurers to rethink their distribution and service models, according to Rick Roy, chief information officer (CIO) at CUNA Mutual Group, a North American provider of insurance and financial products to credit unions. “Even insurers who haven’t considered themselves direct-to-consumer in the past should engage the consumer directly, taking advantage of the fact that everybody has three devices,” he says. “In some cases, this is an incremental change, in others a transformation.”

CUNA Mutual has instituted a policy that prioritises mobile functionality for both internal and external users. “This has meant a big change in our application-development approach” to use more agile methodologies that involve rapid prototype development, Mr Roy says. CUNA recently launched a mobile service for customers

Insurer capabilities and success stories 3

Insurers need to provide customers with digital pathways that make decision-making easy. “That could take the form of text on screen, an avatar or a phone-call offer—the point is to offer help at the decision point.”Neff Hudson, emerging channels executive at USAA



and distributors called ZONE, an iPad-optimised app that enables financial advisors and credit-union members to customise a “zone” of risk/reward that aligns with investment goals and is associated with the company’s Members Zone annuity.

CUNA Mutual’s AskAuto mobile service supports the cross-sale of credit insurance and loans when credit-union members visit an auto dealer to purchase a vehicle. “Credit unions have generated over $1bn in loans, and we have been able to offer members credit-insurance options to protect their debt,” Mr Roy says.

The company has also implemented a bring-your-own-device policy for its associates. “We still have corporate devices, but we allow employees choice,” he explains. “We want our employees using the same technology our customers are using, which helps us understand devices better and gives us ideas on opportunities to use mobile.”

Combined Insurance, a Chicago-based global

provider of supplemental insurance, recently undertook a sales-enhancement programme to increase adoption of mobile capabilities by its US agents and eliminate inefficient paper-based processes. “We selected the iPad as the mobile device to enhance agent productivity and provide for electronic submission of applications and other documentation,” says Seamus Fitzpatrick, the company’s senior vice-president for mobile sales technology integration. “Our goal was to boost sales by improving efficiencies of sales agents, field management and back-office operations.”

Now sales agents and marketing field personnel have electronic versions of sales presentation materials, up-to-date underwriting guidelines and other frequently used documents that they can use both online and offline. More than 200 agents are enrolled and active users, and the company has seen significant improvement in speed-of-business and policy-issue rates and more timely payments, according to Mr Fitzpatrick.



To the extent that mobile brings insurers closer to policyholders, it raises the spectre of “disintermediation”—a direct business model that takes intermediaries, such as agents, out of transactions—a model that has already been realised to a significant extent in personal lines property insurance and some types of individual life insurance.

More direct sales are likely as insurers offer convenient transactions and services via mobile. Two-thirds (67%) of insurance executives surveyed by the EIU agree that consumers expect insurers to provide mobile services with the same personalisation and ease-of-use provided by retail giants and trendsetters such as Amazon.com. Only 12% believe that they can get away with services below this standard.

Two-thirds (66%) of executives see mobile as suitable for simple activities, such as ordering ID cards or contacting customer service, but believe mobile is inadequate as a platform for explaining the complexity of insurance products or properly documenting insurance transactions—a belief belied by the experiences of industry leaders USAA and CUNA Mutual. Only 13% agree with the concept that mobile devices can handle the complexity of the insurer-insured relationship.

Whether sales are direct or mediated, mobile will become important for both learning about insurance products and buying them. Consumers currently access many channels for these purposes, including brokers and agents, aggregators, insurer

websites, call centres, mobile devices, social media and word-of-mouth recommendations. None will disappear, but their roles will shift as mobile matures.

Today, eight out of ten executives say that customers primarily reach insurers through brokers and agents. In five years’ time, mobile and social will take on bigger roles. Indeed, mobile will rise to the top, though it will not dominate in an omnichannel distribution model. Customers will likely use many channels, for example, speaking to an agent, browsing a website, seeing a story on social media and using a price-comparison app—perhaps all at the same time.

Yet only one-quarter of insurance executives say their companies currently have an integrated, omnichannel strategy. This will soon change: almost six in 10 (58%) say that five years from now all channels will be managed through an integrated set of processes.

Mobile’s implications for direct selling go beyond a question of distribution to include product innovation and custom markets. For example, Japanese insurer Tokio Marine & Nichido Fire (TMNF) offers “One-Time Insurance” products in partnership with Japanese telecom company NTT Docomo. The products, which can be purchased anytime and anywhere via mobile devices, cover potential risks from sporadic and short-term events.

Policyholders can buy coverage casually whenever they feel the need, says Michael

The changing insurer-agent relationship4

More direct sales are likely as insurers offer convenient transactions and services via mobile.



Fitzgerald, a senior analyst at research firm Celent. “One-Time Insurance aims to cultivate the untapped market for small-amount, short-term insurance and attract a new customer segment that typically does not have an interest in insurance.”

TMNF maintains that One-Time Insurance products do not conflict with current distribution channels because the premium amounts are too small to interest agents. Premiums start at ¥300 (about $2.50).

The One-Time Insurance programme uses Docomo customers’ smartphone GPS functionality to make location-specific insurance recommendations. For example, it recommends travel insurance at airports, golf insurance at golf courses and sports and leisure insurance at ski resorts, according to Mr Fitzgerald. The system can differentiate between a user’s place of work and a location that the user is merely visiting, thus avoiding redundant recommendations.

Since the debut of One-Time Insurance in 2010, TMNF has released new product lines, some which involve data-sharing. For example, an inexpensive medical-insurance product features a health-promotion programme that uses a policyholder’s mobile device to monitor steps walked or miles run. Policyholders can use points won to purchase

Docomo products. An auto-insurance product aimed at those who have a driver’s license but do not own a vehicle provides damage coverage for as little as ¥500 or ¥1,000 a day.

TMNF and Docomo Healthcare also offer a service called “How My Body Feels” designed to promote wellness and the taking of preventive measures among women. Using a smartphone and connected thermometer, Docomo Healthcare monitors users’ daily body temperatures and other health data; if it detects symptoms of disease, it alerts them to strongly consider a visit to their doctor. Women who receive a diagnosis from a doctor receive money to help cover the cost of the visit. The companies say they have found a novel way to boost prevention, thus reducing overall healthcare costs, boosting customer loyalty and attracting new customers.

TMNF’s mobile successes are partly attributable to strong mobile demand among Japanese customers, says Mr Fitzgerald. Indeed, Asia could be a bellwether for mobile insurance developments. “Because of the difference in privacy concerns and the advanced adoption of mobile by consumers in the region, Asian insurers can lead the way for the rest of the world in unlocking digital value for insurers,” he says.

❛❛ Because of the difference in privacy concerns and the advanced adoption of mobile by consumers in the region, Asian insurers can lead the way for the rest of the world in unlocking digital value for insurers.❜❜Michael Fitzgerald, a senior analyst at research firm Celent



Given that mobility increases customer knowledge and convenience, insurers have legitimate concerns about it also increasing customer attrition. A significant proportion of executives (38%) fear that the proliferation of mobile services will increase customer churn. Half of respondents who fear increased attrition (48%) also believe that mobile will exacerbate the trend towards

commoditisation of basic insurance services. One-third (31%) say mobile will remove barriers to entry for potential competitors, especially on the distribution side where aggregators have already increased customer churn.

However, about one-quarter (23%) of respondents believe the opposite: that mobile will reduce attrition. They base their opinion on a

Customer loyalty 5


How will the migration of customers to mobile technologies affect customer attrition (eg, churn, defection to competitors)? (% of executives)

Why will attrition decline?

Insurers will have more ways to differentiate themselves

Greater efficiency will allow insurers to lower costs for customers

Insurers will gain scope for personalisation using customer data

Insurers will gain scope to address niche markets

Many customers will prefer self-service over interacting with personnel

Insurers will get better at predicting which customers are likely to leave and making offers to get them to stay

Insurers will offer advisory services, becoming more than just insurance suppliers

Insurers will be able to build loyalty by providing innovative features

Managing and renewing insurance will become easier and faster

Why will attrition rise?

Human interaction will decrease

Security concerns will increase

Barriers to market entry will fall, leading to more new providers

Basic insurance services will become even more commoditised

Switching to new providers will become easier

31

38

38

38

38

42

46

54

58

24

24

31

48

81



number of factors, especially the idea that mobile makes it easier for customers to manage their insurance (58%). If an update or renewal is required, a customer can act instantly from any location.

Insurers plan to expand the mobile features and services they offer policyholders over the next three to five years, according to the executive survey.

Cigna, of Bloomfield, Connecticut, has incorporated wearable technology into the various services it offers, including Cigna Health Matters, a suite of health-coaching tools that uses mobile, online, social media and gamification technologies that is designed to help employer health-plan customers set and meet health goals.

“Cigna Health Matters integrates the latest insights and practices of the sociology of engagement, motivation and rewarding behaviour change with the latest health tools and technology,” says Eric Herbek, vice-president of product development for Cigna’s Consumer Health Engagement unit.

Cigna’s vision involves the “instrumentation of the individual”, or the use of wearable devices that collect and transmit medically relevant information. For example, a device could help a

diabetic monitor blood glucose levels and share those readings with a health coach who helps co-ordinate dietary adjustments. Transmission of this personal information is anonymised to protect an individual’s privacy, says Mark Boxer , the insurer’s executive vice-president and global CIO.

The insurer has formed an exclusive alliance with Samsung as a co-developer of the S-Health platform for the manufacturer’s smart devices. S-Health enables users to track health statistics, such as blood pressure, glucose levels and weight, as well as environmental conditions and details of an individual’s exercise programme.

Perhaps within five years, consumers will have the option to use implanted devices to transmit accurate readings on important physiological factors like blood glucose levels, heart rate and blood pressure, says Kevin Murray, group chief operating officer and CIO for the UK unit of AXA, a French financial-services firm. However, consumers’ willingness to adopt such devices and share these data will require clear value in return, for example, useful medical advice or discounts on insurance premiums.

AXA is looking for ways to deepen customer bonds through engaging apps like its Gate Who prototype, which enables users to identify people


Which mobile features can your customers currently use, and which do your company expect to support five years from now? Please select all that apply in each column.(% of executives) Now Five years from now

Access and manage accounts, ID cards, policy documents

Purchase and manage policies, pay premiums

Document and provide information about properties and assets, damages; file claims

Locate third-party support partners (authorised service/repair centres, healthcare providers)

Submit and update documents (eg, via device-based cameras)

Access customer-service representatives via email, text message and social media

Access personalised risk-management tools (eg, via mobile-data analytics)

Receive personalised information and/or offers on products, prices, agents, brokers (eg, based on behaviours, preferences, history, location)

Receive personalised recommendations about risky and healthy behaviour (eg, lifestyle, health, driving)

Receive, view and share information with insurance companies via sensors (eg, in cars and wearables)

68 42

51 45

46 44

41 42

34 46

52 45

25 49

45 48

37 44

38 48

❛❛ Devices that can respond to vocal commands will break the threshold of confidence for many consumers.❜❜Kevin Murray, group chief operating officer of AXA



at the same airport gate or flight, access useful travel information and buy travel insurance before boarding the plane.

Mr Murray believes the next breakthrough in mobile will be voice analytics because it addresses two of the most common limitations of devices: the size of the screen and the difficulty of inputting information. “Devices that can respond to vocal commands will break the threshold of confidence for many consumers.”

Voice plays a key role in USAA’s concept of a virtual assistant or agent that accompanies the policyholder through mobile and remote technology, including sensors within a home. “We’ve worked on visual avatars and ideas around active help, where a policyholder can simply ask the app to show an insurance ID card, give

navigational advice or begin the claims process,” Mr Hudson says. “This is a concept of an agent in a broader sense: someone who can act on your behalf.”

USAA is also experimenting with a mobile savings coach who can encourage good spending habits. “We’re starting with savings, but it can extend to any risk factor where behavioural change is the goal, such as aggressive driving,” he says.

The company is also working with IBM to integrate Watson cognitive-computing capabilities into customer service. The idea is to enable “complex virtual advice in response to a life change, such as leaving active military duty,” Mr Hudson says. “We’re trying to introduce advice at scale in digital, and we think that cognitive computing will be a big part of that.”



While policyholders’ current use of mobile technology is modest, it remains a valuable channel for something that both they and their insurers expect to be a rare occurrence: an insurance claim.

Mobile capabilities are also vital for insurers seeking to serve customers in the channel of their choice, whether for research, purchases, supplying policy information changes or handling billing, payment issues and claims.

Similar considerations apply to insurers’ relationships with business partners. Even as the unique power of mobile brings insurers closer to customers, it is also the next frontier in competing for agents and other partners’ attention by making it easier to do business.

For consumers, agents, prospects and even internal associates, mobile is rapidly becoming the

channel of choice. It is emerging as the premier communication and transaction channel as well as an important driver of new efficiencies for customers and insurance operations.

But the most profound implications of mobile reside in the quality of the user experience. In the short term, this means a vastly improved customer and partner experience. In the longer term, the user experience will drive a significant improvement in the insurer-customer relationship, which some bold insurers are already demonstrating.

Mobile and other remote technologies are enabling insurers to be their customers’ constant companion in assessing and mitigating risks and to take on the role of a trusted advisor. Insurers who grasp this potential will be the leaders in a rapidly transforming industry.

Conclusion

Mobile will drive a significant improvement in the insurer-customer relationship.



Appendix: Executive survey results

Percentages may not add to 100% owing to rounding or the ability of respondents to choose multiple responses.

90 52 42 70 63 47 45 53 53 71 49 43 31 66 64 16 67 47 55 33 40

Brokers, agents

PC to access your website

PC to access an aggregator’s website

Call centre

Mobile devices

Social media

Other customers/word-of-mouth

How do customers primarily learn about and make decisions to buy the insurance products your organisation provides? How will they learn about and make decisions to buy your organisation’s insurance products in the future? Please select the top three channels in each column. (% respondents) Now Three years from now Five years from now

Transaction channel: Learn about insurance products

Brokers, agents

PC to access your website

PC to access an aggregator’s website

Call centre

Mobile devices

Social media

Other customers/word-of-mouth

Transaction channel: Purchase insurance products

90 51 44 66 63 34 41 52 46 68 34 38 29 60 62 19 59 67 60 35 43



Are these channels managed separately in your organisation—each in its own silo—or are they integrated? How will they be managed in the future? Please select one in each column. (% respondents) Now Three years from now Five years from now

Each of the channels is managed separately

Some are integrated, but not all

All channels are integrated (ie, we have “omnichannel” capabilities)

38 23 24 38 51 18 24 26 58

At your organisation, which of the following stakeholders use custom mobile technologies today? Which do you believe will use them three years from now? Please select all that apply in each column.(% respondents) Now Three years from now Five years from now

Stakeholder

Policyholders

Prospective customers

Front-office employees (eg, customer support including customer-facing aspects of sales and claims)

Middle office employees (eg, product, policy, middle-office aspects of sales and claims)

Back-office employees (eg, finance, risk, regulation, administration)

Third-party sales partners (eg, agents, brokers)

Third-party support partners (eg, adjusters, claims specialists, authorised service and repair shops, healthcare providers, pharmacists)

70 60 47 52 70 45 51 51 54 45 58 47 41 49 53 44 61 61 46 53 58

Which mobile features can your customers currently use, and which do your company expect to support three years from now? Please select all that apply in each column.(% respondents) Now Three years from now Five years from now

Mobile feature

Access and manage accounts, ID cards, policy documents

Purchase and manage policies, pay premiums

Document and provide information about properties and assets, damages; file claims

Locate third-party support partners (authorised service/repair centres, healthcare providers)

Submit and update documents (eg, via device-based cameras)

Access customer-service representatives via email, text message and social media

Access personalised risk-management tools (eg, via mobile-data analytics)

Receive personalised information and/or offers on products, prices, agents, brokers (eg, based on behaviours, preferences, history, location)

Receive personalised recommendations about risky and healthy behaviour (eg, lifestyle, health, driving)

Receive, view and share information with insurance companies via sensors (eg, in cars and wearables)

68 47 42 51 61 45 46 55 44 41 67 42 34 60 46 52 55 45 25 64 49 45 49 48 37 53 44 38 42 48



What types and sources of personal mobile data from policyholders does your organisation currently collect? What will it collect in the future? Please select all that apply in each column.(% respondents) Now Three years from now Five years from now

Data type


Social media



Wearables


52 47 47 60 59 39 43 51 48 60 53 46 24 49 61 34 48 52

We do this now

We plan to do this within the next three years

We will not do this within the next three years

Do you collect mobile data relevant to the level of risk in the policies you underwrite (eg, health indicators, driving habits, property status)? (% respondents)

32

33

35

Assess risk

Recommend relevant products / services

Change behaviour and reduce risk

Extend discounts

Don’t know

We use or plan to use this data to: (% respondents)

48

25

22

4

1

Personalised service

Discourage risky behaviour

Encourage healthy behaviour

How do consumers’ privacy concerns affect your company’s decisions to collect and use personal data to provide individualised service, influence behaviour and set prices?Please select one in each row. (% respondents)

Curtail significantly Curtail somewhat Curtail slightly Do not curtail at all Don’t know

32 25 20 13 11

15 39 17 13 16

11 25 25 19 20



Mobile is fine for simple tasks, but agents are necessary to facilitate conversations, personally engage customers and explain complex products

Consumers expect mobile services from insurance companies to offer the same personalisation and ease of use as those of popular shopping sites

Mobile provides a new set of capabilities and has a business-changing potential that other channels lack

Mobile is just one channel, no more important than any other

Our customers trust us to insure them more than they would trust an Internet or telecom company, even one with a strong brand name and broad customer base

Our customers generally use multiple channels to research our products and make buying decisions and expect us to support all of them (eg, have “omnichannel” capabilities)

We have invested in games or game-like experiences on mobile devices to engage consumers or educate them about less risky behaviours

Please indicate the extent to which you agree or disagree with the following statements about mobile services. Please select one in each row. (% respondents)

Strongly agree Somewhat agree

Neither agree nor disagree

Somewhat disagree

Strongly disagree

Don’t know

38 28 19 12 1 4

29 38 19 8 4 3

28 34 29 6 1 3

13 23 28 25 7 4

29 29 24 9 6 3

15 38 22 11 7 6

18 14 24 16 19 9

Attrition will rise

Attrition will decline

Not sure

How will the migration of customers to mobile technologies affect customer attrition (eg, churn, defection to competitors)? (% respondents)

38

23

39

Barriers to market entry will fall, leading to more new providers

Switching to new providers will become easier

Basic insurance services will become even more commoditised

Human interaction will decrease

Security concerns will increase

Why do you believe attrition will rise? Please select all that apply. (% respondents)

31

81

48

24

24



Managing and renewing insurance will become easier and faster

Insurers will have more ways to differentiate themselves

Insurers will gain scope for personalisation using customer data

“Insurers will gain scope to address niche markets”

Insurers will be able to build loyalty by providing innovative features

Insurers will offer advisory services, becoming more than just insurance suppliers

Insurers will get better at predicting which customers are likely to leave and making offers to get them to stay

Greater efficiency will allow insurers to lower costs for customers

Many customers will prefer self-service over interacting with personnel

Why do you believe attrition will decline? Please select all that apply. (% respondents)

58

31

38

38

54

46

42

38

38

Your company’s business model

The way employees at your company work (ie, increased emphasis on data analysis and decision-making)

The data your company collects, analyses and uses

How your company’s employees engage customers

How your company engages customers with self-service capabilities

In your opinion, to what extent is the growing adoption of mobile technology changing the following? Please select one in each row. (% respondents)

Strongly Moderately Slightly Not at all Don’t know

35 29 25 4 7

25 36 26 7 6

28 35 26 4 7

28 35 26 4 8

32 33 20 6 9

In your opinion, which cost areas do mobile technologies have the greatest potential to minimise now and in the future? Please select the top two in each column. (% respondents) Now Three years from now

Selling insurance policies

Providing and receiving information (eg, documents, news)

Claims processing

Renewing policies

Providing advice and support

75 44 65 57 54 67 46 63 47 63



$500m or less

$500m to $1bn

$1bn to $5bn

$5bn to $10bn

$10bn or more

What are your organisation’s global annual revenues in US dollars? (% respondents)

8

17

27

19

29

Board member

CEO/President/Managing director

CFO/Treasurer/Comptroller

CIO/Technology director

Chief actuary officer/Head of actuary

Chief underwriting officer

Chief risk officer

Other C-level executive

SVP/VP/Director

Head of Claims

Head of Compliance

Head of Business Unit

Head of Department

Manager

Other

Which of the following best describes your title? (% respondents)

9

7

3

12

3

5

4

16

5

1

1

2

10

23

1

Customer service

General management

Marketing and sales

Strategy and business development

IT

Actuary

Finance

Underwriting

Other

Compliance

Risk

Information and research

Human resources

Portfolio management

Legal

Regulatory

R&D

What are your main functional roles? Select no more than three. (% respondents)

21

20

19

17

13

12

12

12

10

9

8

7

5

5

4

3

2

Middle and Eastern Europe

North America

EMEA

Latin America

Asia

In which region are you based?(Number of respondents)

24

24

23

22

20

Property and casualty insurance (including auto, home)

Life insurance

Health insurance

What is your primary industry? Select all that apply.(% respondents)

70

36

22

Individual life

Group life

Annuities

Other life insurance

Life insurance Select all that apply.(% respondents)

88

61

61

10



Personal lines

Small commercial

Large commercial

Other P&C insurance

Property & casualty insurance Select all that apply.(% respondents)

72

54

48

18

Individual

Group

Health insurance Select all that apply.(% respondents)

88

76

Yes

No

Are you familiar with mobile technology trends in insurance? (% respondents)

100

0

United States

United Kingdom

Brazil

Germany

Mexico

Australia, India, Japan, Singapore, Switzerland (each)

Austria, China, Czech Republic, Italy (each)

Canada, Poland, Russia (each)

Africa, Middle East and North Arica, Spain (each)

In which country/region are you personally based? (% respondents)

19

15

14

8

5

4

3

2

1

Under 5,000

5,000 to 10,000

10,000 to 20,000

20,000 to 40,000

40,000 to 70,000

70,000 to 100,000

Over 100,000

Approximately how many consumer accounts does your company have? (% respondents)

4

12

11

13

4

4

52



Appendix:Consumersurvey results

Percentages may not add to 100% owing to rounding or the ability of respondents to choose multiple responses.

Daily

Weekly

Monthly

Quarterly

Every six months

Yearly

Less than once a year

How often do you estimate you interact with your insurance(s) providers? (% respondents)

3

4

10

12

18

36

17

In person or by phone

On a PC On a mobile device By postal mail I have not performed this task

Shopping for and comparing policies

Purchasing policies and making payments

Managing accounts and updating policies (eg, adding family members, new property)

Filing, managing and tracking claims

Finding third-party service providers (eg, repair centres, rental cars or equipment, healthcare providers)

Getting personalised advice on managing my health and/or property risks

What is your preferred method for performing the following tasks?Please select one in each row. (% respondents)

27 56 6 1 9

33 50 7 3 7

27 49 9 3 12

29 42 9 4 15

20 47 15 1 17

38 29 8 2 23



I have used my mobile device to do this

I have not used my mobile device to do this but would be willing to

I have not used my mobile device to do this and would not be willing to

Don’t know

Shop for or compare policies

Locate third-party service providers (eg, authorized repair centres, physicians)

Research or purchase other financial services (eg, banking, mortgage, legal)

Pay premiums and see payment history

Access proof of insurance, check policy

Receive alerts (eg, expiration and renewal)

Update policy and personal data

File claims and check claim history and status

Review your risk level (eg, health check)

Have you used your mobile device to do any of the following activities? (% respondents)Mobile feature

24 40 28 7

26 44 22 8

20 41 30 9

21 44 28 7

17 51 24 8

23 49 21 7

18 48 28 7

13 49 29 9

11 49 28 12

There is no agent or office where I live

I do not want to visit an agent or office

I can deal with my insurer any time I want

I can deal with my insurer any place I want

I do not have to wait for service (eg, on a line)

Easy access to records of my transactions

Easy access to personalised information in one place

The internet is the only way my insurer does business

Using a mobile device is more secure

All of my insurance information is in one place

Other

What are your top reasons for using a mobile device to interact with your insurance providers?Please select the top three. (% respondents)

15

37

60

35

41

31

19

5

5

13

1

Yes

No

If you could interact with your insurer(s) using your mobile device easily and safely, would you interact with them more often?(% respondents)

61

39



Strongly concerned Moderately concerned Minimally concerned Not at all concerned

Personalisation of products and services

Discourage risky behaviour

Encourage healthy behaviour

How concerned are you about your insurer collecting and using your personal information (ie, data about your location and habits) for the following purposes?Please select one in each row.(% respondents)

29 41 21 9

27 40 23 10

25 37 26 13

Very concerned Somewhat concerned Not at all concerned


Social media



Wearables (eg, Fitbit)


How concerned are you about your insurer collecting and using the following types of data?Please select one in each row.(% respondents)

41 40 19

40 42 17

43 43 14

36 47 17

32 43 25

33 44 24

Get advice on managing my health and that of my family

Get advice on managing my personal assets and related risks (eg, property, auto, estate, will)

Get legal advice and/or services

View driving history and get advice on managing driving risks and auto premium costs

View home fire and surveillance data and get advice on related risks and premium costs

Have you used your mobile device to get any of the following types of information and advice from your insurance company?Activities I have done.Please select all that apply. (% respondents)

52

36

27

25

24

Get advice on managing my health and that of my family

Get advice on managing my personal assets and related risks (eg, property, auto, estate, will)

Get legal advice and/or services

View driving history and get advice on managing driving risks and auto premium costs

View home fire and surveillance data and get advice on related risks and premium costs

Have you used your mobile device to get any of the following types of information and advice from your insurance company?Activities I would like to do.Please select all that apply. (% respondents)

34

48

50

53

54



Much more satisfied with my mobile experience than my desktop experience

Somewhat more satisfied with my mobile experience than my desktop experience

I have about the same level of satisfaction with my mobile experience as my desktop experience

Somewhat less satisfied with my mobile experience than my desktop experience

Much less satisfied with my mobile experience than my desktop experience

Overall when it comes to dealing with insurance, how satisfied are you with your mobile experience relative to your desktop experience?(% respondents)

8

15

33

22

23

US

Brazil, Canada, China, France, Japan, Mexico, UK

Australia, Germany, India

Africa, Argentina, Colombia, Indonesia, Middle East/North Africa,Russia, Singapore, Switzerland

Austria, Czech Republic, Poland, Spain

Italy

In what country do you live? (% respondents)

13

6

4

3

2

1

Feature phone (ie, a basic phone for calls and texts, sometimes with simple games and Internet capabilities)

Smartphone (eg, iPhone, Android, Windows Phone, BlackBerry)

Tablet

I do not use a mobile device

What kind of mobile device do you use?Please select all that apply. (% respondents)

22

86

47

0

Yes

No

Do you use a bank to handle personal financial matters? (Note: A bank would provide you with a savings and/or checking account.)(% respondents)

100

0

Yes

No

Do you have one or more insurance policies (eg, health, life, disability, auto, renters, homeowners)?(% respondents)

100

0

Asia-Pacific

EMEA

Latin America

North America

MEE

Embedded Data Field: Region(% respondents)

26

23

19

19

14



Whilst every effort has been taken to verify the accuracy of this

information, neither The Economist Intelligence Unit Ltd. nor the

sponsor of this report can accept any responsibility or liability

for reliance by any person on this white paper or any of the

information, opinions or conclusions set out in the white paper.

Cove

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About our Sponsor

As the world’s leading provider of enterprise application

software, SAP delivers products and services that help

accelerate business innovation for its more than 183,000

customers in more than 120 countries. See more related to this

report at sap.com/insurance

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