WEB 2.0

As Canadian insurers continue to look for better ways to work with their own brokers within the limited technological sphere of data management, their policyholders are already turning to Web 2.0 — advanced, interactive Web technology that’s overtaking traditional ways of doing commerce.

Technology has an unerring knack of making many people feel perpetually two steps behind the pace. Nowhere is this perception more accurate than with Web 2.0 — the “next generation” of Internet technology that emphasizes openness, collaboration and participation from users. Entrenched in many familiar Web sites such as Google, Facebook and Craigslist, Web 2.0 represents a sea change in how the Internet has been transformed from a static, one-way, read-only medium to a dynamic, open and user-based experience.

“This ain’t your big sister’s Internet,” notes Dan Tapscott, chief executive of technology and business think tank New Paradigm, and the author of Growing up Digital, in an article for Backbone magazine. “The old Web was about sites, clicks and ‘eyeballs.’ In some ways, it resembled the old broadcast media more than today’s new collaborative Web. As users and computing power multiply and easy-to-use tools proliferate, the Internet is evolving into a global, living networked computer that everyone can program.”

Not aware of it? Although popular with high-tech junkies and software programmers, Web 2.0 is not exactly making massive splashes in the insurance industry. There are some examples of insurance companies using bits and pieces of the technology, particularly in the United States, among companies such as Progressive, Nationwide and The Hartford. But it is definitely in the early stages in the Canadian property and casualty industry.

Progressive Insurance launched the insurance industry’s first official Web 2.0 site in November 2007, which the company said features “easier navigation, more personalization and customization, easier-to-use video content and more visuals throughout.”Progressive has also signed deals with Ziff Davis Enterprise, an IT media company based in New York, and Lonely Planet Publications to provide increased content.

“This is about watching and reacting to trends to keep our site relevant to all users,” says Toby Alfred, general manager of customer acquisition at Progressive. “It moves progressive.com content from static to interactive. The redesign lets users get more from their visits, share their experiences and have their progressive. com experience delivered to them in blogs, RSS readers and personal home pages.”

In another example of a Web 2.0 insurance approach, Nationwide introduced a viral marketing campaign in October, 2007. It launched the “Have the Talk” Web site encouraging consumers to engage in difficult conversations regarding personal finance and insurance issues. The site features humorous video shorts starring comedian Frank Caliendo, which also have been posted on YouTube. Nationwide has also reached out to bloggers on gather.com, a social networking and media Web site.

“I think we’re seeing a shift from a transaction-based economy to a dialogue-based economy,” Joe Case, public relations officer at Nationwide told Insurance & Technology magazine. “If you ignore the opportunities that social media and Web 2.0 offer, you ignore an opportunity for real dialogue with the customer base.”

John Anthony, director of the property and casualty innovation lab for The Hartford Financial Services Group, told a forum conducted by Insurance & Technology magazine that “insurers are starting to realize the value of social software to enhance open communications. For example, we recently experimented with podcasting to distribute best practices and industry information within our sales organization, and are exploring the use of wikis as platforms to document IT standards and reference architectures.”

For all this activity, there are still ruptures and disagreements within the IT world about the exact definition of Web 2.0. Does it represent a distinct set of new technologies, or is it more of a marketing buzzword? Some argue it is, at best, an interpretive model referencing a second generation of Internet-based services that use the Web as a platform, employer-rich user interfaces, involve some level of collaboration and rely heavily on user-contributed data.

“You have to be wary of the hype,” says George Semeczko, chief technology officer for Royal & SunAlliance Canada. “People often want to say they are Web 2.0 just to look cutting-edge. You may have flavours of Web 2.0 and you bolt it onto something you have existing. So you have a service that you currently offer on the Internet and you enhance it through Web 2.0.”

“There is some fire when it comes to insurance and Web 2.0,” says Donald Light, a senior analyst with research firm Celent, “but there is a lot more smoke.”

“Web 2.0 is not a flash in the pan, but it is somewhat of a marketing term,” says David West, research area director, insurance for the consulting firm Tower Group. “Some people will view it based on the nature of the sites that are currently dominating the Web. I think it is more the underlying technology and the architecture that is used that makes the key difference.”

The roots of Web 2.0 can be traced back to 2003, when computer guru Tim O’Reilly’s company O’Reilly Media first coined the term. This was followed by the first O’Reilly Media Web 2.0 conference in 2004.According to Wikipedia (itself a Web 2.0 success story), O’Reilly defines it as “the business revolution in the computer industry caused by the move to the Internet as platform, and an attempt to understand the rules for success on that new platform.”

Wikipedia also notes the phrase “Web 2.0” hints at an improved form of the World Wide Web. Technologies such as Weblogs (blogs), social bookmarking, wikis, podcasts, RSS feeds (and other forms of many-to-many publishing), social software, and Web application programming interfaces (APIs) provide enhancements over read-only Web sites. Stephen Fry, who writes a column about technology in the British Guardian newspaper, describes Web 2.0 as “‘an idea in people’s heads rather than a reality. It’s actually an idea that the reciprocity between the user and the provider is what’s emphasized. In other words, genuine interactivity, if you like, simply because people can upload as well as download.'”

This emphasis on collaboration and user-generated content may work well for Web sites like Amazon, which seeks customer reviews of books, or YouTube, which relies exclusively on user postings for its content, but what about insurance companies? Where do the real opportunities exist for insurer-based Web sites?

In a report on IT in the insurance industry released in January 2008, Celent asked for the first time about insurer strategies related to Web 2.0. It surveyed insurers on key elements of Web 2.0, including Ajax, wikis, blogging, SaaS, podcasts, RSS, tagging, social networking and mashups.

“Overall, insurers are in an assessment and limited deployment mode for Web 2.0 technologies,” Celent concluded. “The most frequent deployments were aimed at better Web site usability (Ajax) and facilitating communication within teams and with external partners (wikis). Large insurers are generally earlier adopters than midsize.”

Celent’s Light says the initial opportunities for insurers in Web 2.0 are in improving Web site efficiency through Ajax; not just for external users, but also for employees and third parties that access a company’s intranet.

“That is a real problem and a real solution, and we are seeing a fair amount of pickup on it,” Light says. “On the vendor side, they are selling applications to insurance companies with better usability for anyone using a browser. It may just be a claims processing system or policy admin system that in technical terms uses the intranet within the company. However, it is about impr
oving the user interface that many insurance company employees use day in and day out to do their job.”

Semeczko calls the use of Ajax “a brilliant way of reconfiguring Web sites” and a little more efficient than the use of traditional technologies. “There are bits and pieces of the technology that are being developed and being pushed further because of Web 2.0. That can be leveraged to extend a Web 1.0 Web site, if you will.”

Insurers are also likely to embrace wikis, another element of Web 2.0, in the coming months, according to Light. “We are seeing a certain amount of uptake on the use of wikis,” he says. Wikis allow documents to be written collaboratively, in a simple markup language using a Web browser. “It is basically a way of getting a communication, status and/or project management vehicle in place pretty quickly and easily,” Light says. “The nature of work within insurance companies is that there is a lot of need for ad hoc tools for short-lived teams or single projects.”

Internally, insurers will have a greater opportunity to share knowledge and information because of Web 2.0, Semeczko notes. “Web 2.0 is going to be so much quicker than the traditional meet, greet and publish,” he notes.

Mashups, referring to applications that combine data from more than one source into a single integrated tool, are another potential benefit of the Web 2.0 environment, according to Semeczko. “Take a simple case,” he says. “Let’s say you want to find preferred body shops; you do a mashup and throw someone to a Google map. I think mashups are just an extension of offering Web services on a Web site.”

“You can become a stronger player by building mashups that access data, but also provide some additional functionality to the user,” notes West. “It is in the way you build it, so your mashup is better than the next guy’s.You provide more of what the end user wants.”

SaaS, in which, for example, an operator or vendor ‘hosts’ a customer Web site, has some relevance for smaller insurance companies and certain lines of business. “We are also seeing some pickup on SaaS in terms of smaller and mid-sized companies,” notes Light. “They can see business value in terms of lowering their data centre overhead by acquiring SaaS, or because they are at early stages of getting a new policy admin system, but it is only one or two lines in a certain region. Instead of spending millions of dollars or 18 months, they go to an outsourced provider or software provider and use it that way. That is a compelling argument for this scope of project.”

The emphasis on SaaS for smaller to mid-sized companies and its role as a temporary solution will likely preclude larger insurers from making widespread use of it, according to Semeczko. “I have to ask myself: ‘Do I want to get some free software off the Internet

and start drawing up servers and creating new user IDs?'” he says. “Not really. Instead, I want to leverage what I’ve got and bolt something on to that so, from a management perspective, I don’t have administration costs going through the roof. I am more interested in things like Lotus Notes 8.0, which is targeted to social software, wikis and blogs as part of the Lotus Notes environment. I can leverage that and use it.”

One interesting potential application for Web 2.0 is boosting transactional capability and functionality for portals. Most insurers now have portal technology for broker transactions, but the host of Web 2.0 technologies might provide more collaborative models for accessing data, sharing data and making transactions. “For brokers, it is up to the carriers and vendors to make their jobs easier,” notes West. “If you are using Web 2.0 applications, you are creating interfaces that enable the agent to dump their data straight off their computers right into your systems. That will draw more business to that carrier and represent a much greater ease of doing business. Those carriers will gain more business from brokers.”

For a broker-driven insurance company, portals are “the price of doing business,” says Light. “But Web 2.0 technology can be used within the portal, in terms of range of functionality, query and transactional capabilities. That is likely where the battle will be in the future.”

Semeczko says more can be done with brokers along these lines in the future. “The thing with brokers is, you find their literacy in the IT environment varies enormously. You have some that are frighteningly canny, and are really up on it, and you have the other group that would rather fax a piece of paper. I have not seen a clamouring demand for it [Web 2.0 capability] as yet, but as the people who use the Internet become more comfortable with the approach, you may see more of it appearing.”

Of course there are also potential pitfalls associated with any move towards a Web 2.0 environment. Liability for slander on user-generated Web sites, privacy, confidentiality and data-access issues generally top the list of concerns related to the new collaborative approach to communicating via the Internet.

“There are two aspects to insurance companies embracing this stuff — external or internal,” says Semeczko. “You could use many of these features internally, because you are not overly concerned about misuse and you have an acceptable use policy for employees. However, if you were to use an aggregator to provide access to insurance companies for quotes and comments, you have to be careful in how much you are on the hook for potentially slanderous comments about a company or product. That is where traditional companies are going to be a little more cautious in going down this route, because you are giving up control to some extent over the content on the sites.”

Insurers might implement bits and pieces of Web 2.0, but some fear the whole philosophical approach of the new platform towards collaboration and openness may be watered down by a traditional industry structure.

“The insurance industry has been particularly slow to leverage collaborative technologies such as blogs, wikis and podcasts in the public domain,” notes The Hartford’s Anthony. “While these communication tools offer an opportunity to engage our customers, partners and shareholders in a direct and often more personalized conversation, they can be perceived as a challenge to existing corporate communication controls and processes.”

Semeczko says the biggest challenge with Web 2.0 comes down to business value. “I think the biggest challenge is finding the benefit for it. Where can you do this that benefits the end customer, but also has a financial benefit for the company?” he notes. “There has to be a business case. Don’t just do this for the sake of trying out some technology.”

That business case will likely arrive in the next few years, as younger generations come to dominate the workforce and the consumer marketplace, according to West.

“If you start looking at the changes in Web technology and the changes in the population, it’s exciting to think: ‘What’s next?'” West says. “You have ‘millennials’ coming of age, you have ‘Gen Y’ in the workforce. These are the people who grew up with computers. The way they interact with companies, the way they buy products is very different from the way Boomers grew up. Insurance companies are challenged by creating products and services that meet the needs of the younger generation coming up, but that are also sold in a manner they want.”

WEB 2.0 PRIMER

A glossary of terms

• Ajax(Asynchronous JavaScript and XML) is a group of interrelated Web development techniques used for creating interactive Web applications. A primary characteristic is the increased responsiveness and interactiveness of Web pages achieved by exchanging small amounts of data with the server “behind the scenes” so that the entire Web page does not have to be reloaded each time the user performs an action.

• A blog is a Web site on which entries are commonly displayed in revers
e chronological order. “Blog” can also be used as a verb, meaning to maintain or add content to a blog. Many blogs provide commentary or news on a particular subject; others function as more personal online diaries. A typical blog combines text, images, and links to other blogs, Web pages, and other media related to its topic.

• A mashup is a Web application that combines data from more than one source into a single integrated tool. An example is the use of cartographic data from Google Maps to add location information to real-estate data from Craigslist, thereby creating a new and distinct Web service that was not originally provided by either source.

• A podcast is a collection of digital media files distributed over the Internet using syndication feeds for playback on portable media players and personal computers. The term, like “radio,” can refer either to the content itself or to the method by which it is syndicated; the latter is also termed podcasting.

• RSS (“Really Simple Syndication”) is a family of Web feed formats used to publish frequently updated content such as blog entries, news headlines or podcasts. An RSS document — called a “feed,” “Web feed,” or “channel” — contains either a summary of content from an associated Web site or the full text. RSS makes it possible for people to keep up with their favorite Web sites in an automated manner.

• A social network service (or social networking) focuses on the building and verifying of online social networks for communities of people who share interests and activities, or who are interested in exploring the interests and activities of others, and which necessitates the use of software. Most services are primarily Web-based and provide a collection of various ways for users to interact.

• Social software is normally defined as a range of Web-based software programs. The programs allow users to interact and share data with other users. This computer-mediated communication has become very popular with social sites like MySpace and Facebook, media sites like Flickr and YouTube and commercial sites like Amazon and E-bay.

• Software as a service (SaaS) is a software application delivery model in which a software vendor develops a Web-native software application and hosts and operates (either independently or through a thirdparty) the application for use by its customers over the Internet. Customers do not pay for owning the software itself but rather for using it.

• A tag (or tagging) is a (relevant) keyword or term associated with or assigned to a piece of information (a picture, a geographic map, a blog entry, a video clip, etc.), thus describing the item and enabling keyword-based classification and search of information.

• Viral marketing and viral advertising refer to marketing techniques that use pre-existing social networks to produce increases in brand awareness, through self-replicating viral processes. It can be word-of-mouth delivered or enhanced by the network effects of the Internet. Viral promotions may take the form of video clips, interactive Flash games, advergames, images, or even text messages.

• A wiki enables documents to be written collaboratively, in a simple markup language using a Web browser. A single page in a wiki is referred to as a “wiki page,” while the entire collection of pages, which are usually well interconnected by hyperlinks, is “the wiki.” A wiki is essentially a database for creating, browsing, and searching through information.

Source: Wikipedia