Wireless Adoption Outlook Bleak ForInsurance

Technology is nice to have, but is it really a need tohave option?

Many of today's newest and coolest technology developmentsinvolve wireless computing and communication but the insuranceindustry, it seems, remains unimpressed.

While use of wirelessly-connected personal digital assistants,laptops and other devices has seen some growth in other areas ofthe financial services industry, “adoption is very light” when itcomes to insurance, said Chad Hersh, senior analyst with theinsurance practice of Celent Communications, based in Houston.

According to Mr. Hersh, use of wireless technologies in the lifeinsurance sector stands at a miniscule “1 percent or less” at thismoment, while property-casualty use is in the 2 percent range.“It's kind of a bleak outlook,” he noted.

Mr. Hersh said that one major use of wireless “just barelystarting to gain traction” is in worksite marketing, where an agentgoes to job sites and enrolls insureds in real time. In that case,wireless provides “completely accurate quotes right through thebinding process,” he noted.

Mr. Hersh said such use is “limited, but some large carriershave started doing it.” Connecting via a wireless modem or wirelesslocal area network, agents at a worksite such as an office buildingcan have all covered employees sign up for benefits on the sameday, he explained. The same technique could be used at the facilityof a retailer to market insurance to customers at a store.

Such a use, however, is “very rare once in a blue moon,” headded.

“There's an opportunity to leverage wireless technology to dothese things, but not much has been done yet,” said Mr. Hersh. The“good news,” he noted, is that the technology has gained some“traction” in claims for p-c insurers and agents.

“The real driver will be agents' personal use of wireless,” saidMr. Hersh. In addition, development of the next generation of Wi-Fitechnology and “hot spots,” which will cover up to 30 miles, willexpand broadband access, making Web-based applications fromcarriers “suddenly available anywhere,” he noted.

Why hasn't wireless done better in insurance up until now? Mr.Hersh pointed out that Web-based applications from insurers “areonly now just starting to mature.” He reasoned that insurers mightview creating such applications, in addition to putting in awireless infrastructure, as biting off more than they can chew.

“Some carriers have an independent field force and they won'tspend for it,” added Mr. Hersh. “A captive field force is easier,because you supply the hardware, but how much business do you haveto do to make it worthwhile? And if you're an agent, at what pointare you willing to do business anywhere? If you're out at the park,are you going to whip out the laptop?”

He noted that “the primary benefit is really accessibility ofdata.” Some software vendors are trying to market customerrelationship management wireless applications. “There's a place forthat, but it's really a nice-to-have,? rather than a need-to-have.?Early adopter agents will like it if a carrier has it, but theywill not pick their carrier based on it,” he said.

Wireless offers some obvious benefits, he concluded. “Where costsavings and revenue generation are to be had, it will be used,” hesaid.

When it comes to the use of wireless technology in insurance,James Bisker, senior analyst of insurance for TowerGroup inNeedham, Mass., agrees that the key question is: “What is the need,and what is the nice-to-have' versus the want-to-have'?”

“The basic thing is that the technology is improving, and itbasically works,” he said. “There has always been this enormousidea that the insurance industry is one of the best places to usewireless, but it has not materialized as much as we wanted.”

Mr. Bisker pointed to some use of wireless technology for p-cclaims, but noted “there's no real need for immediacy” in lifeinsurance. “Now you can get a life policy in days instead of weeks,but there's still not an immediate need,” he added.

Mr. Bisker concluded that “the nature of insurance just isn'talways real-time.” He suggested, however, that as agents get intoselling financial products beyond insurance, wireless would be morerelevant.

“Wireless is a ?nice-to-have,' but I don't know that it's a?need-to-have,'” said Mr. Bisker. “But just because it's notessential doesn't mean it's not good.”

Reproduced from National Underwriter Edition, June 4, 2004.Copyright 2004 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.