Applications, such as vehicle telematics, enhance workflows and processes, enrich client interactions, and support customized pricing methodologies
SINGAPORE and HONG KONG, October 12, 2006 � A recent publication by global independent research and advisory firm Financial Insights discusses the new wave of wireless innovation to hit Asian insurers. The report, entitled Wireless Insurance Strategies: The Pursuit for Further Innovation, finds that insurers are increasingly honing their delivery systems by tapping into devices such as wireless-enabled notebooks, mobile phones or handheld appliances such as personal digital assistants (PDAs) or BlackBerrys, to enhance services to both agents and customers. Equally interesting is the use of vehicle telematics.
Li-May Chew, CFA, senior research manager for Financial Insights Asia/Pacific Insurance Advisory Service notes, “As wireless communication realizes greater commercial viability, deployment of these technologies will help foster collaboration between work groups, provide mobility solutions for field workers, and seamless interfaces for motor accident claims.� Asian insurers that are already wirelessly enabled and realizing significant business gains include Ping An Insurance, a top-tier insurer in China, and NTUC Income Insurance in Singapore. As part of its Straight-Through Electronic Processing (STEP) implementation in 2005, NTUC armed its field agents with Tablet PCs to enable almost instant approval and coverage for its customers.
Vehicle telematics – the term used to describe services offered to motorists through black-box devices and sensors installed in their vehicles and transmitting information wirelessly to the Web or a service centre – is also attracting interest. Hitherto, telematics in Asia has been focused mainly on safety and security features, navigational aids and infotainment services. However, Financial Insights expects telematics to revolutionize the motor insurance industry through more granular segmentation of motor insurance premiums. This works by transmit precise data on vehicle location and driving behavior via a Global Positioning Device (GPD) in real time, to follow exactly when, where, and how a vehicle is driven. By enabling insurers to extract individual data, telematics applications can offer drivers a usage-based policy and empower them to manage their premiums by being more cautious behind the wheel or limiting unnecessary trips.
Telematics has gathered some traction in the West, with the likes of Progressive, a large auto insurance company in U.S., Norwich Union in the U.K., and Aviva Canada having launched their pay-as-you-drive insurance program within the last 2 years. Progressive’s “TripSense” usage-based auto insurance discount program is illustrated below.
Nonetheless, implementation of wireless strategies presents a unique set of encumbrances. Telematics for monitoring driving patterns may be deemed intrusive. Meanwhile, greater field staff mobility from being equipped with wireless devices may engender increased data theft or manipulation and create additional security concerns. The need to demonstrate adequate return on investments (ROI) on implementation costs is another consideration.
On how insurers can utilize wireless technologies, Li-May suggests that “Insurers determine their business benefit, collaborate with vendors who understand the company’s dynamics, and initiate implementation with field trials to determine effectiveness and user acceptance.”
Meanwhile, auto insurers in Asia keen on vehicle telematics to price their policies need to consider forging alliances with automakers to bundle telematics-based insurance products at the point of sale in exchange for a commission to the automaker. Additionally, they should launch consumer-education campaigns to make drivers aware of how this usage-based pricing model is able to offer them more control over their premiums, and continually reassure consumers that their data privacy will be honored, with the customer – not the insurer – controlling the option of whether to share information from their vehicles’ onboard diagnostics systems.
“Conversely, wireless application vendors will impress insurers by addressing their operational challenges with customized go-to-market strategies. As the technology is still embryonic, they should also consider educating customers of the strengths of their applications with well-documented case studies,” concludes Li-May.
For more information on obtaining this report, Wireless Insurance Strategies: The Pursuit for Further Innovation, (Doc #FIN203745).
About Financial Insights, an IDC Company
Financial Insights provides independent research, custom consulting, and detailed multiclient studies on the technology issues and challenges facing the financial services industry. Our global research covers topics of strategic importance to corporate and retail banks, insurance carriers, asset management firms, securities and brokerage firms. Our local practices in Asia Pacific, Europe, Latin America and Canada add an in-depth regional viewpoint. Financial Insights, an IDC company, is headquartered in Framingham, Massachusetts, USA. IDC is a subsidiary of IDG, the world’s leading IT media, research, and exposition company. You can learn more about IDC by visiting www.idc.com.