Mobile Apps for Insurance

By Somnath Guha - September 19, 2012 | Tickers: AEG, AET, HUM | 0 Comments

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What role does the mobile phone play in the insurance industry?

Waves from the mobile app revolution have reached the insurance industry. The insurance industry uses just 20 percent of the potential of mobile apps to better serve clients and increase market appeal.

The challenge for insurance companies will be to offer, across multiple access channels, a platform that allows clients and others to make claims, get quotes, receive critical information plus advice and be entertained, wherever and whenever they wish - but the single greatest area for investment in mobile apps during 2012 will be distribution.

Whatever their challenges, companies of all sizes and lines of business will need to provide distributors with at least baseline mobile capabilities, including basic horizontal apps that provide functionality such as voice communications, calendar and scheduling. Insurers in the mobile app vanguard are providing their producers with capabilities such as product information, needs analysis and quoting. People nowadays want everything to be at their fingertips, and if companies are not finding ways to provide these tools [they] will soon see drop-off from their customers

The majority of mobile app innovation is being undertaken by tier one companies, which are less resource-constrained. Many smaller insurers are struggling in how to invest in mobile and social media. It's not that they see these things as unimportant, but they have higher priorities, such as core system investment.

A survey was done on the user-friendliness, quality of the content, functionality and integration of other media of the mobile applications of the 30 large insurance companies worldwide. More than 70 insurance apps were analyzed according to 35 criteria and across the business segments of auto, health and life/pensions insurance. AXA, State Farm, Humana and Aegon top global mobile app ranking.

The overall winner of the app ranking is the French AXA insurance group, who offers a consistently good app portfolio across all insurance sectors. AXA is followed by US-based Aegon group on second rank and the British Aviva on rank three.

The best offering for auto apps comes from State Farm followed by Allstate. The number one ranked insurance company for health insurance apps is Humana with Aetna as runner-up. In the life and pension insurance sector the first rank is taken by AEGON followed by Swiss Life.

The top-ranked insurers, based on a 100-point scale, are:

Ninety percent of all apps analyzed are only available in one country. And, the majority of apps don't offer user-friendly features such as a renew policy function, or ones that would improve the claim process. Only about 50 percent of auto insurance companies provide an “ask for quote” or similar feature. For health and life insurers, the rate is even lower, at about 20 percent. 62 percent of the insurance apps are only available for iPhone despite the fact that Android devices have a higher market share than the iPhone worldwide.

The challenge for insurance companies will be to offer, across multiple access channels, a platform that allows clients and others to make claims, get quotes, receive critical information together with advice and be entertained, wherever and whenever they wish. Therefore, personal interaction, telephone, online channels for insurers and mobile media will increasingly merge into a unified service platform.

The biggest shortcomings in the app strategy of most insurance companies are:

• Most insurance companies offer only an incomplete and inconsistent patchwork of apps.

•  Most insurance apps are only available for iPhone (Apple iOS).

•  In most cases insurance apps lack important features for existing customers.

•  Insurance apps do even less to attract users who are non-clients.

•  Insurance apps miss opportunities to bring content and information to the user.

•  Integration of apps with the mobile web is a weak spot.

The overall winner of benchmarking, AXA, and the winners in the specific insurance sectors (State Farm, Humana, AEGON) show that it is possible to provide a portfolio of apps that covers various markets and targets different segments of app users. However, overall the verdict of this report is that a large majority of insurance companies are not yet harnessing the potential of apps to engage clients, market their products, provide more corporate information and strengthen their brands.

It is now clear that few insurance companies have seen a spurt in sales and market growth with the application of mobile apps. Among the companies listed in NASDAQ and NYSE, many of them are strengthening their position in the market through investments in apps and online business. Apps have doubled as marketing tools in terms of boosting productivity, efficiency, competitive edge and user experience, thereby increasing sales figures. Companies like AEGON and Humana have already rewarded their investors with interim dividends while Aetna is looking forward to increasing its customer base.

AEGON N.V. (NYSE: AEG) experienced growth in deposits by 45% to EUR 9.8 billion driven by sales of US pensions and new asset management mandates. While accident and health sales increase 29% to EUR 187 million. The company announced the interim dividend in August amounting to EUR0.10 per common share. The interim dividend will be paid in cash or stock at the election of the shareholder. The value of the stock dividend will be approximately equal to the cash dividend. AEGON shares will be quoted ex-dividend on August 16, 2012. The record date was August 20, 2012.

Humana Inc’s (NYSE: HUM) strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, good cash flow from operations and notable return on equity. Net operating cash flow has significantly increased by 337.92% to $706.00 million when compared to the same quarter last year. In addition, HUMANA INC has also vastly surpassed the industry average cash flow growth rate of 35.30%. The company announced in August that its Board of Directors has declared a cash dividend to stockholders of $0.26 per share payable on October 26, 2012 to stockholders of record as of the close of business on September 28, 2012. 

While Aetna Inc’s (NYSE: AET) recent acquisition of Coventry Health Care will provide the company with access to the expanding U.S. healthcare program. Once the integration is successful, it is expected that Aetna will emerge as a leading player in the industry, with a large customer base (expected to add five million customers. The stock has tremendous upside potential.

Success through mobile apps for distribution also brings challenges. As the company progresses with its mobile strategy, security remains paramount by including complex passwords, encryption of information and a apps that can even wipe out all information on a lost or stolen tablet or smartphone.

What we are seeing is only the very beginning of the mobile app revolution. Soon users of online media will spend more time with apps on their smartphones or pads than on the fixed or PC-based Internet..

Providing an app offers a tremendous marketing opportunity for the insurance companies. Securing a placeholder in customers' smartphones can help keep a company constantly in the mind, which is especially important in this rocky economy. Growths of online business and applications have directly pushed the sales figures upward. Insurance companies that miss out on apps will be losing out commercially.

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