Corporate Adoption of Social Media – Insurance Industry April 2013 BLOG POST
Insurance Industry is a Mature Adopter of Social Media Insurance industry has traditionally built its foundation on relationships, networking and good reputation, and insurance agents have been the most natural social networkers, long before the dawning of the digital age. As developing long-standing relationships remains a key to building a successful business in this social era as well, social media offers a unique value proposition to this industry. Today, social media has become an essential part of conducting business. Companies, either large or small, have presence across social media platforms like Facebook, YouTube, Twitter, along with gamification and blogs, among others. The relevance and potential value of social media usage to the insurance industry are quite high, which is leading insurers to invest time and resources in the social media space. According to a study by the University of Massachusetts, P&C insurers in the Fortune 500 list have a high adoption of social media – Twitter represents almost 80% adoption and Facebook, about 70%. Moreover, the International Data Corp. labeled the insurance industry as an early adopter of social media in one of its reports published in mid-2012.
Insurers Are Using Social Media in Many Ways Social media offers a lot of opportunities to insurers. Some of the ways in which social media adoption is helping insurers include: Fraud Detection – Social media is being used by insurers to discover and validate claims frauds such as workers’ compensation fraud. For example, some insurers monitor social media sites looking for posts made by injured workers who might fake an injury to gain claims benefit or may not follow physician orders during recovery. Facebook, Twitter and Foursquare are some of the major social media sites scanned by insurers to detect such fraudulent activities. Customer Engagement and Marketing – Insurers are communicating with policyholders for claims processing and other relevant and timely communication post catastrophic events. Some vehicle insurance policyholders can instantly upload video/images of their car accident to the online claim filing system for quicker claims settlement. Farmers Insurance Group capitalized on the popularity of a Facebook game FarmVille to engage customers. Gamification is thus aligning the insurer’s brand with a popular social media interaction. Life insurer AXA Equitable Life Insurance Company launched Pass it On! – an online game of chance that distills the concept and value of life insurance into a series of choices. The game educates its players on managing finances and making important decisions on life insurance. With this game, AXA is imparting insurance education to children under 18 with no life insurance and hoping to increase life insurance sales in the US. In another example, Generali in France developed an interesting social concept called Kontsurnous – whereby customers form teams in a group insurance scheme to earn and redeem reward points. Thus, lowering premiums or reducing deductibles in case of a loss by using reward points. Kontsurnous helped Generali to grow its customer base while lowering cost of customer acquisition.
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Challenges of Social Media Use Benefits of social media also bring along some challenges to the insurance industry. Disclosure of confidential information by employees can lead to damaged reputation. Moreover, negative customer feedback on social media sites can seriously damage an insurer’s image. Social media use by insurers would also require a major change in the way products are marketed – insurers need to move away from the dull and boring product brochures to engage customers in an interesting way. Such transformational way of marketing can be challenging for insurers for they need to identify and allocate right resources for making their social media marketing interesting and also for breaking away from their age-old marketing habits.
Outlook Insurers cannot afford to ignore the power of social media, which provides them an opportunity to dramatically change how customer relationships are built and products are marketed. The way an insurer interacts with its customers over social media will define its success, as it competes with other insurers in this space. Insurers need to focus on extending their brand and reputation over social media and use it to build trust. Insurance being a complex subject, they need to communicate over social media, in a fun or interesting manner as people interact on social media in a recreational or leisure setting. Hence, engaging customers would prove to be more valuable than trying to sell products on social media. To that end, insurers need to involve all departments for developing their social media strategy, encompassing internal and external environments. The value of social media can be better realized by extending its use beyond marketing activities and also by including core functions of the insurer’s organization. Differentiation in communication across various social media sites would also be necessary as Facebook would be more suitable for stories, Twitter for breaking news, YouTube for promotional commercials or education and LinkedIn as a recruitment tool. Social media would also help insurers build an Omni-channel sales platform, whereby customers can easily research online and buy insurance policies from a channel of their choice (online / offline), including non-traditional channels of insurance sales.
Corporate Adoption of Social Media – Insurance Industry
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