Hersh predicts there will be a quick evolution from the fluff to the functional. “Although we've seen an explosion in apps, we will see a pull back on apps that don't do much. Carriers realize quickly that mobile apps need to be meaningful, useful things, otherwise people will delete them,” he explains.

Determining the Need

“Customers expect real-time everything, and as devices evolve we have to meet as many of their expectations as possible,” says John Elcock, CIO, Unitrin Direct. The challenge is that those expectations change constantly due to the evolution of device functionality and the influence of other industries, including financial services.

“Since I can now instantly set an application to tell me the five-day weather forecast in any area of the country where my extended family may be located, or allow me to check my stock value at any given moment, I will want the same status inquiry regarding an automobile insurance claim,” says Ed Higgins, member of the Independent Insurance Agents and Brokers of New York.

“As we've rolled out our mobile site, we've found the fact that other financial services are further ahead than health insurance has elevated the expectations they have from us,” says Adriana Murillo, director of strategic development at Blue Cross Blue Shield of Florida (BCBSFL), which launched its mobile Web site in July 2010.

To determine the functionality to target on its mobile site, BCBSFL surveyed 700 members and 700 nonmembers about how they use mobile devices. That led to a decision to offer a mobile Web site with features and functionality for both constituencies, native mobile applications, and an opt-in text messaging program for alerts and cost-saving tips. “We found that 66 percent of people text and at least 30 percent use Web data services, and that was across multiple demographics,” Murillo says.

Humana, which offers a mobile Web site and apps for the iPhone and Android platforms, conducted focus groups and in-person interviews of members and prospects. The company also evaluated the types of calls that came into its customer service center and the most-used self-service components of its existing Web site to prioritize the functionality built into its mobile device support. However, insurers need to balance the desire to meet the broadest range of customers' expectations with privacy concerns that don't apply to apps designed to check the weekend weather.

“We have to look at the platforms and determine what we can and cannot share given HIPAA,” says Julie Kling, Humana's mobile executive business lead. “We have to look at privacy, personalization, and we have to make sure that we can change our mobile delivery as platforms change and device market share changes.”

Meeting the Need

The common mobile deployment paradigm is to launch a mobile Web site first, then iPhone and Android apps, followed by apps for other platforms. Apps offer insurers and customers the potential for greater integration with, and use of, device level capabilities, such as cameras and GPS-based location sensing.

In P&C, the focus of mobile has been in personal lines. “Personal lines is transactional, and the mobile device owner is also the policyholder. You get billed every month or six months. And if you have a claim, you have day-to-day interaction with your insurer,” says Hersh.

State Farm rolled out its Pocket Agent app in part because “the writing was on the wall,” according to Matt Edwards of State Farm's public affairs. “That's where the business needs to be–it's another way that customers want to engage with us.”

State Farm utilized its existing strategic resources department to conduct the customer research that led to the launch of Pocket Agent in June 2009 for iPhone, later expanding to the Android platform. “When Pocket Agent was launched, it was 1.0,” says Eli Winn, manager in enterprise Internet solutions. “The goal was to use existing backend systems, port them to a mobile platform, get feedback from customers, and enhance from there.”

Initial Pocket Agent functionality included reporting claims, locating repair facilities, and contacting State Farm agents. In August 2010, the company rolled out a widget for Android phones called On the Move, which consumers can configure to respond to incoming text messages automatically while they are driving or occupied. State Farm also offers its Steer Clear application via mobile, which policyholders can use to qualify for discounts on auto policies, and a FastEstimate mobile Web function for auto policies.

Knowing that customers wanted additional transactional capability and with the experience of its banking operations to draw from, State Farm has continued to expand the Pocket Agent app. By press time, the company plans to have expanded On the Spot Deposit, a remote deposit capture feature, to both iPhone and Android, allowing State Farm Bank customers to take a photograph of checks and upload them for either premium payment or bank deposits.

State Farm does most of the mobile app development work in-house, relying on a few vendor partners for customer experience and user interface design. “Most of the
functionality that we're trying to enable on mobile involves exposing existing services. We are writing new services for the remote deposit capture and other bank transactions,” explains Matt Glan, systems manager.

As of October 2010, State Farm had processed over 16,000 “fast estimates” via mobile, but there is no mechanism to track whether those estimates turn into issued policies. Also as of October, about 3,000 automatic text responses had been sent using the On the Move widget.

Unitrin Direct's decision to invest in solutions aimed to the mobile-equipped customer is based on its business model. “We are a direct writer, and our customers are Web-savvy,” says Elcock. “Mobile is an imperative for us–it's the price of doing business.”

The company also believed it was important to have a device-side application. “With an app, there are location services on the phone that we can take advantage of, as well as the ability to take pictures of an accident scene and upload it more easily,” says Elcock.

Unitrin Direct considered building its apps from scratch, but ultimately chose the DecisionMaker Mobile smartphone platform from Decision Research Corporation (DRC). “After we had started our own internal [mobile app] development, we found that DRC was doing its own development and taking a similar approach. For cost effectiveness, time-to-market, and speed of deployment it made a lot of sense to choose DRC's smartphone platform,” says Elcock.

DRC's SDK allows Unitrin Direct to take a common set of functions and customize the app's look and feel. The insurer plans to have the mobile app available in the fourth quarter of this year.

Whereas the focus in personal lines P&C has been on transactions, the emphasis in health insurance has been to put actionable information in the hands of members at the point of service to make decisions.

“Consumers can benefit from information on their plan details, how close they are to meeting deductibles, what their copays are, or even comparative pricing of services,” Hersh says.

“We know that the mobile channel presents a big opportunity to reach consumers in a timely manner,” says Murillo of BCBSFL. “When you're on the go in the health space, there is a 'moment of truth.' You're in the doctor's office and you have health information needs we can help you with. If we engage with you at that moment, we have a better chance to retain you and make you a satisfied customer.”

“When we asked consumers what their challenges in heathcare were, they were anxious about the cost. And where they get anxious is often at the provider's office or the pharmacy. People want a mobile solution that provides answers, they want it to be simple to use, and they want it to be personal,” says Humana's Kling.

“There are many point-of-care questions,” Kling adds. “Members want to look at their health savings account to determine if they can pay for that care. Or they may need to know the closest urgent care facility. Or they may be with a provider and the general practitioner is about to send them to a specialist and they may want to find one in their network.”

Humana's customer research led to the development of a suite of mobile resources utilizing SMS and mobile Web as well as iPhone, Android, and Blackberry applications to help members access critical information on the go, including doctor and hospital information and guidance to the location using the phone's existing GPS and location awareness. Members can also instantly access their claims history and review current claims status, generate virtual ID cards, or generate a fax of ID cards to the provider via the phone.

Text-messaging services allow members to track health savings account balances, transactions and qualifying expenses. Members can also opt in to receive text-message health and wellness alerts, such as flu-shot reminders. “The percent of members using text messaging is much higher than those using mobile Web functionality,” Kling says.

Humana has been able to leverage internal knowledge and internal resources for the bulk of mobile Web and mobile app development, bringing in new vendors for a few key functions such as SMS aggregation. Kling says that Humana has “learned a lot” in addressing challenges in the development process.

“Our mobile functionality utilizes our current back-end systems,” she says. “In some cases, we had low-hanging fruit that just needed a lightweight, service-level connectivity added. But we've also come across functions that we wanted to mobilize that needed some back-end modernization to address, and we've provided funding to those internal areas to update their services in order to deliver it.”

BCBSFL also believed that a member's greatest need for mobile functionality happens in the doctor's office. “When you're at the point of care, you need to understand your benefits and deductibles. So we wanted to provide a simple, visual snapshot of those benefits. With the same login and password users have at their desktops, they can get a mobile optimized version,” Murillo says.

The insurer also included health savings account inquiries in the initial launch of the mobile site, and provided functions that capitalize on the capabilities of most mobile Web devices.

“If you walk out of your doctor's office with a prescription, there is a tool based on the phone's GPS technology that integrates your current location information with a pharmacy directory and also includes the latest price on medications in our database,” Murillo says. “We also provide options to save money, such as generic alternatives, that you can use to talk with your doctor.”

The BCBSFL site also provides click-to-call functionality for network providers and offers opt-in SMS reminders. By press time, the company had planned to build in a healthcare reform section to help users navigate changes that impact their coverage.

“At the core of our features and decisions on features is a focus on simple, easy access to relevant health info when you're on the go,” Murillo says. “Our goal is to be a trusted advisor.”

BCBSFL did the mobile Web development using its internal Web team, retaining some third-party expertise on user experience design. “We spent a lot of time on the user experience to ensure that we didn't simply replicate the Web, but that we optimized it for each device,” Murillo says.

The company's next step is to launch apps for iPhone and Android devices, scheduled for the first quarter of 2011, that will incorporate the functionality of the mobile Web site and leverage additional device-level functionality.

Assessing the Results

Even though supporting the mobile-equipped customer is increasingly important, making the necessary investments in technology is not without its obstacles–even for a direct writer. “Internally, the challenge is funding [of mobile Web functionality], and keeping the internal focus on it,” says Unitrin Direct's Elcock. “In today's economy, everyone is trying to do more with less, and projects like this compete with other revenue-generating priorities.”

“If you look at mobile as a revenue-enhancing opportunity, you miss the point. You should view it as an opportunity to better serve agents and customers at a lower cost. That's the real value,” argues Hersh.

“By and large if you try and do an ROI on a mobile app it's going to be tough,” Hersh adds. “You have no idea what the adoption will be or how it will compare to another e-channel like the Web. Also, you can't factor in a lot of the costs of the mobile channel because those are costs you should already be incurring or using, such as having a mobile app call the policy or claims admin system as a service.”

“Our approach is keep our investment in mobile small and relevant, and to stay current as much as possible to what's going on with mobile so we can evolve gradually, rather than invest so much that you become concerned with generating a ROI. The decisions you make today may not be relevant a year from now, or even six months from now, so you need to target quick deliverables,” Murillo says.

BCBSFL reports that its online quote tool has generated sales leads from its mobile site, but these leads are a secondary goal to the objective of member engagement. “We have good traffic and it's picking up each month,” Murillo says, stating only that the number of visitors to the site has been “large.”

“We haven't been asked to have targets for the metrics around mobile Web and app results,” says Kling. “We've had thousands of iPhone and Android app downloads, thousands signed up for text messaging around spending account balances and health wellness reminders, and tens of thousands of people accessing the mobile Web.”

“We think value and convenience does translate into customer loyalty and profitability, but we don't have any set expectations around how people will embrace these tools,” says Elcock. “In time, we will hopefully tease out the value, and if there is any way we can demonstrate the value after it is launched, it will help us in our funding and focus on mobile.”

“The beauty of pushing more functionality to the consumer side, such as claims reporting, is that consumers can do a lot of the work for carriers, such as taking photos at the scene,” Hersh observes. “When customers are reducing work on your end and feel they're getting better service at the same time, that's a win-win.”

Keeping Pace

At the same time mobile access is increasing, the number and type of mobile devices is multiplying. “iPads, Blackberry and Android tablets, and other Internet-enabled mobile devices are blazing a new trail,” Hersh says. “Customers and agents are both going to be more comfortable sharing illustrations and entering application data on those devices than they are on smaller smart phones.”

The challenge of keeping pace with the mobile-equipped customer is simply the pace of change. “For the first time, insurers will no longer dictate the speed to market with which applications are developed. Instead, the end user will dictate acceptable speed-to-market and demonstrate that point by migrating to insurance companies or agents who can provide these mobile device services,” predicts Higgins.

“The demand from business partners for the foreseeable future will far outweigh the capacity to develop it,” says State Farm's Matt Glan. “We're trying to keep up, but it feels like there is always going to be more work than people to do [the work].”

Devices are going to keep evolving, and customers' expectations are going to keep changing as a result. Mobile may well become table stakes, particularly for serving a new generation of customers. But the good news for insurers is that, at least for now, it is sufficient to be a fast follower.

“Carriers should closely watch the consumer market to see what they should be focused on, particularly where the device market shifts dramatically,” Hersh maintains. “Compared to banking and travel, the demand for mobile apps isn't yet as robust in insurance, so we can afford to be a little behind the curve, but not much. If they leave the door open too far, someone else will step through it.” TD