E-Business

Although this is fast becoming a hackneyed phrase it is also very true. There are in excess of six billion chips in our world today, the vast majority of which aren't employed within desktop computers. These chips are gainfully employed in dealing pretty much with binary information. Is something on or off, is something open or closed, is something full or empty, with applications ranging from monitoring the engine performance of a high-end saloon car to telling the Western Australian farmer whether his water tank, fifteen miles away, is full or empty.

What becomes interesting for insurers is how this binary data can be turned into information and ultimately into knowledge about a specific risk.

Not only can these monitor engine performance, they can also communicate this information to a call center via telemetry, (something that was originally developed in formula one racing). If the management system detects a problem it alerts the call centre which in turn alerts the driver. Current levels of sophistication also allow the cars geographic location to be captured.

This becomes very powerful when thinking about customer service. The driver can be informed of the fault, sent a digital map showing the position of the nearest dealership, and ultimately the dealer itself can be informed so that it's ready to receive the car and offer its driver corrective action or assistance for onward travel.

Now imagine the same type of communication potential but with a chip embedded in something of very high value such as a piece of furniture or a painting. The ability to uniquely identify what the object is and where it is should be of considerable value to an insurer, especially if it is found to be traveling due west at forty miles per hour! Interestingly, the Government has now asked the Police force to investigate the use of chips in this manner.

We see the role of eCommerce changing from one of connecting the supply chain in a way that removes time and cost from transactions to one of being the aggregator of risk information. It is the ability of the Internet to convey risk information across private and public telephone networks that makes it so powerful.

This is not to say that its original focus will diminish over time; like EDI it will become the accepted way of transacting business. Moreover, it will be a fundamental technology in servicing and maintaining partner relationship management (PRM) and providing customer intimacy and knowledge (CRM).

Capture of risk information is due to expand almost exponentially. Unfortunately, much in the same way as European Monetary Union is constrained by the lack of consistent tax regulations, obtaining risk information may perhaps be limited by localized privacy legislation.

A chip manufacturer in California has already developed a chip that when embedded subcutaneously could provide telemetry based monitoring of vital signs for post heart bypass patients. The ethical acceptability of monitoring a person's well-being remotely is a question that National Governments will have to grapple with, and it has a direct correlation with the current debate concerning genetic predilection to disease, but the value of this and similar information to insurers is immense. eCommerce was necessary and is necessary, if only because it provides the fertile learning ground necessary for organizations to move towards eBusiness.

It's as much about organizational structure, empowerment, and core competencies as eCommerce is about browsers and Internet connectivity, but the technology is subservient to the business needs.

Where eCommerce is about transactions, eBusiness is about relationships, communities, and customer and partner intimacy.

eBusiness is a step change in how we conduct business, its characteristics are already emerging in the way in which business alliances are being forged between companies with differing core competencies and market focus. The move to web-enabled CRM products and their ability to gain life-style information at the individual customer level will change the way in which insurance is sold.

Some might be transient, such as those that form to exercise collective buying power on web-sites such as ‘letsbuyit.com’, and some are becoming more permanent as web-enabled workflow is embedded into the supply chain. In the next article we will look at their current and potential importance and what organizations have to do to embrace eBusiness.

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