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

1. Technology
Mobile Commerce
1BEST’S REVIEW • NOVEMBER 2000 • REPRINT
The emergence of mobile commerce can boost the insurers’ market valuation.
by Gates Ouimette
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 insur-
ance companies.
It has the potential to expedite
business transactions, because it
makes it possible to access informa-
tion at anytime from anywhere.Mobile
commerce is accomplished through
the convergence of three technolo-
gies: the Internet, enterprise applica-
tion 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 applica-
tion integration and Internet technolo-
gy 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, intelli-
gent 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 some-
what 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 “for-
ward progress” of the business trans-
action from outside the office.That is
particularly important as the number
of employees who work off-site
grows. Technology consultant Gart-
ner 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
The Great Wireless Way
IllustrationbyWilliamWaggoner
Gates Ouimette is a partner with
LaunchTechnology, a technology
start-up consultancy, of Concord,
Mass.
Copyright © 2003 by A.M.Best Company,Inc. All Rights Reserved. Reprinted with Permission.
November 2000

2. 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 let-
ter 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 com-
merce, 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 vis-
iting 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-sell-
ing 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 war-
rants a visit to the residence to validate replacement value;
mobile commerce lets an insurance agent work with the
Technology
2 BEST’S REVIEW • NOVEMBER 2000 • REPRINT
Mobile Commerce
W
hile the convergence of Internet, enterprise
application integration and wireless technolo-
gies are the drivers of mobile commerce, asso-
ciated 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 bene-
fits 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 busi-
ness system design associated with typical interactive
voice-response system implementations minimized the
limited functionality problems of existing speech-recog-
nition software and hardware. Speech-recognition tech-
nology 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 sys-
tems 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 Dana-
Farber 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 Tech-
nology 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-/data-
capture products,so it’s only a matter of time before a dia-
betic, using RedWell’s technology, will be able to capture
and transmit personal daily monitoring information verbal-
ly. 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 applica-
ble not just to traditional data but also to speech-generat-
ed 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 applica-
tions. 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 understand-
ing speech recognition and its associated application tech-
nologies, 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.
Speech Recognition Will Drive Wireless Adoption
Copyright © 2003 by A.M.Best Company,Inc. All Rights Reserved. Reprinted with Permission.

3. 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 associ-
ated with making homeowners feel more like they’re being
served than sold.
Even complex custom product development requir-
ing underwriting can be facilitated by mobile com-
merce.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 SafetyDirec-
tor (www.safetydirector.com/personal/defaultPage.htm)
are focused on items, which while not directly consid-
ered 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 applica-
bility of this data and information becomes more avail-
able for custom product development. Today, an under-
writer 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 depart-
ments 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 potential-
ly a brand-new billion-dollar insurance market worldwide
resulting from mobile commerce.
Mobile commerce also introduces new risks to corpo-
rate 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 opportu-
nity 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 busi-
ness 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 com-
merce-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, synchroniza-
tion,speech recognition (see“Speech RecognitionWill Drive
WirelessAdoption,”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. Ulti-
mately, 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.
Technology
3 BEST’S REVIEW • NOVEMBER 2000 • REPRINT
Mobile Commerce
BR
Copyright © 2003 by A.M.Best Company,Inc. All Rights Reserved. Reprinted with Permission.