The Great Wireless Way.

The emergence of mobile commerce can boost the insurers' market valuation.

Mobile commerce is emerging as a force with the potential to not only impact insurers' distribution channels but also to play a significant role in helping increase the overall market valuation of insurance companies.

It has the potential to expedite business transactions, because it makes it possible to access information at anytime from anywhere. Mobile commerce is accomplished through the convergence of three technologies: the Internet, enterprise application integration and wireless.

The fusion of the Internet with enterprise application integration has spawned a new term, B2Bi (business-to-business integration), coined by high-tech consultancy The Hurwitz Group. While both enterprise application integration and Internet technology provided business benefits on their own, their network effect in B2Bi will be enormous. Digital Capital, a recent book written by executives of the Alliance for Converging Technologies (now Digital 4Sight,), describes B2Bi's impact as comparable in magnitude to the changes brought upon us by the Industrial Revolution.

Mobile commerce is enabled by the rapid proliferation of portable, intelligent devices. It's irrelevant whether the mobile device of choice is a digital telephone; a personal digital assistant such as Visor's Handspring and Palm Computing's PalmPilot; a laptop PC; or a Pocket PC (Windows CE devices such as those made by Hewlett-Packard and Compaq). It's even somewhat less relevant whether the device is mobile, with a specific example being a network computer (such as Wyse or Sun's Sun Ray) acting as part of a kiosk-type solution.

What is most important is that mobile commerce supports the "forward progress" of the business transaction from outside the office. That is particularly important as the number of employees who work off-site grows. Technology consultant Gartner Group estimates that 108 million people worldwide will work outside the traditional office setting by 2020. While mobile commerce will help that happen, insurers also will be able to increase their value to their customers by applying horizontal mobile commerce "best practices." Fundamental top- and bottom-line improvements can result from the efficiency and effectiveness gains offered by mobile commerce.

Applying the Technology

In its simplest application, mobile commerce enables business processes to continue at clients' sites. But with its B2Bi backbone, mobile commerce can become much more than a business-continuation strategy for insurers.

For example, a claims adjuster can visit a claimant's home or the auto body shop where the damaged vehicle is being held. The adjuster can capture the relevant data necessary to develop the estimates on site on a personal digital assistant. Before the adjuster leaves the body shop, the accepted estimate letter is being composed back at the office. With new federal electronic-signatures legislation, why even waste time and money composing a hard-copy mailing? With mobile commerce, the adjuster can capture the policyholder's signature on site and complete the claims-settlement process through electronic funds transfer on the spot.

The same on-site policyholder-data capture can occur for a life insurance policy. During the requisite physical prior to accepting a new policyholder, the visiting medical practitioner can immediately enter all the findings into the corporate database, decreasing the time before a new policyholder is accepted--and billed for the premium.

The biggest benefit to mobile commerce may be new opportunities that are created. The benefits to cross-selling consumers have long been recognized by insurers, but mobile commerce is the first tool that allows for superior cross-selling by supporting remote custom product development.

For example, a new homeowners policy already warrants a visit to the residence to validate replacement value; mobile commerce lets an insurance agent work with the homeowner to determine what riders might make sense. Having an insurance professional make an annual visit to update the homeowners policy and associated riders may cost money, but the return from new riders or larger riders, and the ability to retain customers in today's world of online quote simplicity, should override the expense associated with making homeowners feel more like they're being served than sold.

Even complex custom product development requiring underwriting can be facilitated by mobile commerce. To begin with, the type of data and information needed to support underwriters--and even prior to that, actuarial professionals--will become more readily available through the B2Bi work already under way across multiple industries. Start-ups such as SafetyDirector (www.safetydirector.com/personal/defaultpage.htm) are focused on items, which while not directly considered insurance, can be viewed as providing the type of information needed by both business owners and their insurers to better understand, manage and minimize risk. As this data and information continue to proliferate and be accessible to multiple interested parties, the applicability of this data and information becomes more available for custom product development. Today, an underwriter can review and rate the risk associated with almost anything that needs a custom insurance product while being physically present at the location. In the not too distant future, insurance agents may be able to do the same for an increasingly complex set of products by being remotely connected to their underwriting departments or to separate underwriting organizations.

Spawning New Risks

Another emerging business is insuring the mobile commerce infrastructure. The most basic example of this is the insurance currently being offered on cell phones for $2.95 a month, with additional products available for mobile accessories. This simple offering alone is potentially a brand-new billion-dollar insurance market worldwide resulting from mobile commerce.

Mobile commerce also introduces new risks to corporate data--the most valuable commodity of all. What about new data-integrity insurance products that leverage this risk with recommended safeguarding approaches?

While it may be hard to comprehend how to define data-replacement value, there could be opportunities to craft new insurance products by creating well-defined guidelines to mobile commerce-related data protection. If not the data itself, maybe associated processes of backing up the data are insurable. In this same vein, the opportunity to provide credit insurance for online transactions, especially in the business-to-business space, has huge potential. The nature of business to business will allow nonfamiliar buyers and sellers to meet and transact business on the Internet, resulting in what should be a drastic increase in trade-related insurance. As Internet business is conducted worldwide, 24 hours a day, 7 days a week, the opportunity to provide mobile business-to-business commerce-related credit insurance products and services is just beginning.

Insurers interested in covering these emerging risks may want to invest in pilot projects to explore and understand what wireless technology is and what it can mean to the industry. Understanding wireless, its associated buzzwords such as WAP (wireless application protocol), WML (wireless markup language), mobile Java, compression, synchronization, speech recognition (see "Speech Recognition Will Drive Wireless Adoption," page 138) or wireless companies such as LiveSky Solutions (www.liveskysolutions.com), Netmorf (www.netmorf.com) and Mobilize (www.mobilize.com) is important given the magnitude of mobile commerce. Ultimately, understanding what mobile commerce can do for the insurance business could help someone create entirely new technology-enabled insurance businesses or increase the revenues, profits and valuation of existing insurance companies.

Gates Ouimette is a partner with Launch Technology, a technology start-up consultancy, of Concord, Mass.

Speech Recognition Will Drive Wireless Adoption

While the convergence of Internet, enterprise application integration and wireless technologies are the drivers of mobile commerce, associated technologies such as speech recognition, language translation and semantic processing will help drive the adoption and usefulness of wireless technology. There is little debate over the need and associated business benefits of a mobile work force, especially in today's business environment, where customer service and employee retention are key business challenges.

Speech recognition has been used with call-center interactive voice-response systems for years. The business system design associated with typical interactive voice-response system implementations minimized the limited functionality problems of existing speech-recognition software and hardware. Speech-recognition technology has continued to advance to the point that in June 1998, Gartner Group, a technology consultant, announced that "speech-recognition technology finally works and is viable for customer-service organizations." At that point, "speech-recognition technology had matured to the point that interactive voice-response systems could reliably and accurately recognize spoken responses more than 90% of the time, making speech recognition accurate enough for all but the most risk-averse environments," according to Gartner.

The advent of wireless has added new fuel to the speech-recognition industry due in part to the increasing dual use of portable phones as both a voice and a data tool. Demand for new methods of both data input and data retrieval has been spurred by the limited functionality and difficulty of use of cellular phones in the data space. That is because only a limited number of characters can be displayed on a cellular phone's Web browser and it is awkward to input data using a cellular phone.

In specific insurance applications, speech recognition will increasingly be used to initially capture, "index" and retrieve client information, such as an insured's health-care information--assuming privacy concerns are addressed by a combination of laws or opt-in technology solutions. Already, health provider organizations as diverse as DanaFarber Cancer Institute in Boston and Wyoming Valley Health Care Systems in Wilkes-Barre, Pa., are using speech-recognition tools from Lernout & Hauspie, a leading provider of speech-recognition software, for health-care information management. Start-ups such as RedWell Technology Group will leverage wireless devices in the area of diabetic self-care, providing more and better information to patients, doctors and hospitals, potentially decreasing the risks--and costs--of insuring diabetics. Initially, these devices will be data input only, but manufacturers are focused on the combination of dual-function voice-/datacapture products, so it's only a matter of time before a diabetic, using RedWell's technology, will be able to capture and transmit personal daily monitoring information verbally. More and better data will be available to the actuarial and underwriting professions not only in the health field but in the life, property and casualty areas as well.

As standards such as VoiceXML (voice extensible markup language) are defined and adopted, the concept of B2Bi (business-to-business integration) will be applicable not just to traditional data but also to speech-generated data. VoiceXML, which is intended to support access to the Internet from public telephones, is being invested in significantly by high-tech industry leaders such as IBM well-known as a leading provider of insurance applications. Similar investments are being made in language-translation technology for global Internet systems and in semantic processing, the application of context and meaning to text. Although semantic processing is a new term to many, Tim Berners-Lee, the inventor of the World Wide Web, has stated that "the semantic Web will be the next revolution" (Internet World, January 2000).

There is much opportunity for insurers in understanding speech recognition and its associated application technologies, language translation and semantic processing. Wireless is providing the underlying technology driver, and new technologies--such as Bluetooth--used for short-distance wireless data transmission, promise to keep the fire burning into the new millennium.