Technology is progressing at a mind-boggling rate. We all know this, we see it all around us, in every field imaginable technological innovations have caused life to become simpler and yet more complicated (a pretty paradox, I know) than ever before, and this isn’t more apparent in any field as it is in communication technologies. PCs, Laptops, tablets, Smartphones, multi-core processors and RAM chips so tiny and yet so powerful that you can carry a phone around in your pocket which packs a harder punch than your average PC from 6-7 years ago. Don’t even get me started on 3G, 4G, and even veiled references to a 5G! Wi-Fi, Satellite broadband, cable broadband, and Edge, it’s all super-fast, uber-cool and hard to understand if you’re from an older generation.
That age disparity is further compounded at the mention of social media. Facebook (FB), YouTube, and Twitter are pretty much mainstream, and LinkedIn is becoming increasingly popular in professional circles, with the age spectrum of users very wide as well. Move on from the conventional forms of social media and into the more niche ones like Instagram, Tumblr, FourSquare, Yelp, Google+, Flickr, and the even less mainstream world of memes and DeviantArt however, and most people will be lost, unless they grow up with a PC and got their first mobile phone in their early teens. See what I mean when I say simpler yet more complicated?
So what does this have to do with insurance? Quite a lot as you’ll soon see …
Insurance, social media and the consumer
While FB can be used to tell your friends how great your holidays were, it can also be used to tell your friends how bad the customer service at a big financial and insurance MNC was. Social media has taken the concept of word-of-mouth, and blown it completely out of proportion. While this poses great risks for business big and small, it is also being seen as a great opportunity to connect on a deeper and more substantial level with potential and existing consumers, and maximizing customer satisfaction, which in turn maximizes profits.
Talking about insurance specifically, on the flip side, for the customers’ social media have strengthened their hand to no end.
- Access to information. With the advent of the internet and mobile access to it, customers can now reach out and pull up information on various policies, compare prices and even look at a company’s financial capability before they make a decision regarding which company and policy to invest in.
- Collective bargaining. Business owners big and small and pool together through social media and buy insurance as a collective so that they can protect themselves with a multilayered policy that covers more risks and is relatively cheaper as it’s purchased as a group.
- Reviews and opinion. If a customer has enjoyed a really good experience or faced a particularly bad one regarding an insurance policy or filing a claim or anything else related to it, there’s a high probability of it finding its way on the internet. Websites and forums dedicated to product review, blogs, and your average tweet or Facebook status could all be used to praise or criticize a company, so the impact of a firm action is squarer in the public eye than even before, which means there’s lesser room to maneuver in terms of transgressions.
- Accessibility to resources. Consumers are demanding complete transparency and accessibility to information regarding their policies and the finer details that surround them at the tip of their fingers. Data assimilation and access via the internet has become a big thing with apps, web pages and massive servers dedicated to facilitating this increased accessibility to policy related information for all the holders of an insurance policy.
Insurance, social media and the insurer
The insurer has had a lot of adapting to do to keep up with the times and master the social media so as to extract the most potential for revenue generation out of it. This has been further hampered by the stringent rules that the Financial Industry Regulatory Authority (FINRA), which is an organization that has been formed by members of the insurance industry and is self-regulatory in nature, has set up a very complicated rule structure surrounding the use of social media. In fact, the Chief Information Officer (CIO) of The Hartford, John Glooch, has on multiple occasions stated his reticence from using social media such as Facebook and his downright aversion to it because of these very rules to media sources, in this case, the Wall Street Journal.
It’s not all doom and gloom however, if applied astutely, social media has the potential of becoming one of the sharpest tools under the insurer’s belt for outreach and communication.
- Engaging current and potential consumers. For the talk of The Hartford being social media averse, they do have a presence on Facebook, Twitter, LinkedIn and YouTube. They use contests, Q & A’s, videos and a products and services page on LinkedIn to provide the web with a flurry of interaction based information avenues, and they have even tied up with a charitable cause on the Facebook page which is an innovative Corporate Social responsibility (CSR) friendly method of attracting attention.
- Marketing. Obviously, with the popularity of social media, using it for advertising and marketing is the most logical consequence for insurers. Innovation is the watchword in this situation, as Farmers Insurance so clearly demonstrated with their advertising campaign that caused a bit of a stir. A farmers blip was available for free to players of the Facebook based game ‘FarmVille’ and players who put up the blip on their farm received crop ‘protection’ up until a certain date.
- Fraud Prevention. Social media can be used to assess and verify details pertaining to one’s identity and personal information to verify that people aren’t trying to hoodwink the company by providing false information. Insurance fraud is a global problem and the many avenues of social media mean there is an additional layer of identity checks that can be carried out. People who commit fraud on their insurance application forms often unwittingly give themselves away. For instance, a recipient of disability benefits may tweet about successfully running a marathon!
- Market Research. By asking for consumers to review products, participate in surveys, conducting polls and other such methods via social media, companies are successfully gauging customer opinion and altering their products to suit the result of these ministrations.
- Operational cost reduction. A social media driven market means insurers need not actively chase after individual customers so that insurance can be sold to them, customers instead approach insurers online to buy insurance policies. This means the middle man or agent is eliminated, making the whole process more streamlined, efficient and budget friendly.
While social media should tread carefully so as not to invite the ire of the aforementioned FINRA, the potential for increased customer satisfaction, better avenues for communication, and product exposure means social media is worth the hassle of involving legal and technical professionals so as to stay within the lines in terms of FINRA mandates. The possibilities for profit maximization are too wide and bountiful for insurers to ignore this platform for any length of time.