The insurance industry hasn't been known for innovation.
But imagine if you could file a claim after an auto accident simply by snapping a photo of the damage with your smartphone. Or buy coverage for your boat or motorcycle by the mile or for just a weekend.
Earlier this year, Allstate Corp.'s headquarters officially opened what's known as its Insight, Design & Innovation Center, which has been studying those and other new ways to serve policyholders.
Efforts by the Northbrook, Ill.-based insurer and some rivals to modernize how they sell and deliver coverage and other products have been unleashed in large part by advances in the smartphone industry, which has made it possible to knock off an increasing number of everyday tasks with a hand-held device. Some banks, for example, have enabled consumers to deposit a check by snapping a picture of it with their smartphones.
"Why can't I use the phone to take pictures of my damaged car and generate an automated claim?" said Pablo Azar, Allstate senior vice president of insight, design and innovation. "As you start looking at how these phones work, as they get better, they're turning the world into a self-service environment."
Social media also present opportunities for insurers. Trawling for information on Facebook, Twitter and other sites can enable underwriters and claims professionals to track individuals' lifestyles, experiences and habits, letting them see, for example, if a policyholder claiming to have a serious injury has just posted a photo of himself break-dancing.
Celent, a Boston-based consulting firm to the financial services industry, likens the promise of social media monitoring to how the insurance industry recognized a link between consumers' payment histories and risky driving behavior, turning credit reports into an underwriting staple.
"Our industry is evolving rapidly due to trends associated with advanced technology in vehicles and homes; the power and ubiquity of mobile devices, tablet computing and social media; and customer expectations for a remarkable experience," said Mike Lamb, a State Farm strategic resources director. In 2009, the Bloomington, Ill.-based company began what it calls a collaborative foresight and innovation program.
The Allstate innovation center has become a testing ground for more than 30 projects at any given time, though only 10 to 20 percent are likely to come to fruition.
The first product Allstate's Insight, Design & Innovation Center is credited with launching is Drive Wise, an auto insurance product that includes a device embedded in a vehicle that tracks certain motoring habits and makes consumers eligible for discounts if they engage in low-risk behaviors. Progressive and State Farm are among the insurers with a similar product.
The concept that Allstate is working on most actively now is an automated claims process. It's testing multiple systems that use a combination of cameras, lasers and scanners to assess a vehicle's damage and enable the vehicle owner to submit a claim without help from a claims center representative or agent.
One method has a drive-through setup, which could be established at an existingAllstate location or auto dealership.
"We have lasers and photo equipment taking pictures of damaged vehicles to understand, 'How can we automate the process, so you can do it on your terms, drive up and have it all done without needing a person to inspect the damaged car?' " Azar said.
The Insight, Design & Innovation Center recently sent a team to Fabtech, a metal-forming, fabricating and welding event held in Chicago in mid-November.
"The reason we're attending is, how do we stage the cameras and lasers to do all this, to take pictures or do measurements?" Azar said. "Could we move to a world where you take a picture of your damaged vehicle?"
Using smartphone technology to settle physical damage claims was bound to happen, said Jim Fish, executive director of the National Association of Professional Allstate Agents Inc.
"While it will likely speed up the claims process, the downside is that customers will forfeit the usual one-on-one meetings with their local adjusters, which can be useful when there are questions or disputes," Fish said.
But he said smartphone claim settlements could be handy in remote rural markets, where it's not cost-effective to deploy field adjusters.