Insurance is not considered to be an extremely innovative or exciting industry, and with reason. No one wants to be confronted with unexpected surprises when it comes to our protection. Being conservative in the insurance world is not bad, because less risk is a good thing.
Nevertheless, the world is not standing still. Some interesting social network technologies are finding their way into the insurance industry. Here’s a detailed look at two of them.
Innovative IT Service for Insurance #1: Tapping into Social Circles
Different companies are already exploring the possibility of consumers using their friends and social circle to reduce insurance payments. The technology to do this already exists; now it’s about defining a viable business model.
How does it work? The idea is very simple. Once a registered user, consumers can build groups consisting of the people they trust: friends, family members, colleagues, etc. When a group member needs to be reimbursed for a small claim, members of the group cover the associated costs together — typically under $50 per person — instead of submitting to the insurer. This solves several issues for insurance companies:
• Insurers are able to provide group members with better insurance deals, since the claims history of the people in the group remains clean (group members pay for the small claims themselves, distributing the risk — i.e. micro-insurance).
• Insurers increase their cross-sell, since group members are trying to increase the size of the group by recruiting other members. Those who recruit new members get acquisition commission from insurers.
• Claims fraud rate goes down because people are much less likely to try to cheat on friends than on the insurance company.
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A similar lending concept has already demonstrated the power of the social circle for finance management services. The CommunityLend.com platform, also available in Canada, has already enabled peer-to-peer lending and enjoys solid growth.
Will a similar approach work for insurance? The key will be readiness of insurers to participate in such a service. In order for the model to work, insurers must be prepared to offer lower rates to the members of social groups. Otherwise, consumers won’t see a tangible benefit to joining a social circle insurance community.
Innovative IT Service for Insurance #2: Leveraging Websites and Social Media
Social media have changed many things in our life. But how exactly can they influence insurance? Insurance is probably not a product that you would prefer to buy from a Facebook contact claiming to be an insurance broker or from a company you saw on LinkedIn. Many of us make the buying decision based on the experiences of people we trust and respect — often our family, friends or people we know.[home_insurance_square_widget]
A key development would be a more intelligent use of data and insights by insurance companies in order to create better, consumer-focused products and improved service. The focus should shift from attempting to contact consumers over social media to listening to what consumers are saying. Some companies are trying to do this through a social media presence. For example, State Farm on Facebook and TD on Facebook are using social media to ask for consumers’ opinions. Ideally insurers will listen to consumers whenever and wherever consumers are ready to share their experiences, by means of article comments, blogs, review sites and even advice exchanges with friends.
The technology is already there. Some companies, such as Research Now, offer solutions to track a particular brand’s feedback and opinions through all social media and websites, extracting meaningful insights. Intelligent algorithms, data mining algorithms and meaningful data visualization can fully transform the face of modern marketing for insurance companies. Take, for example, a recent CBCNews article about a retired B.C. couple “Retired couple billed $50,000 despite travel insurance”. The couple reportedly received a $50,000 bill for a U.S. hospital stay despite the fact that they had purchased a travel insurance policy. This resulted in over 1,000 comments from readers. Just imagine this untapped goldmine of direct consumer insights for travel insurance providers.