Social Media
This article appeared in the first 2011 issue of Underwriter e-ALERT. This superb bimonthly e-newsletter is written by the three gifted consultants who are Select X in the United Kingdom, and then published by John Krinik. In this article, the authors explore social media trends within the insurance industry.
This article is so outstanding that we asked permission to reprint it for InsureIntell members. That permission was granted by Underwriter e-ALERT. We invite you to visit their website for more information about this outstanding publication: www.underwriteralert.com
SOCIAL MEDIA
It feels as though not a day goes past without hearing seeing or hearing the term 'social media' – so what is all the fuss about?
What are social media? In short, the term represents web-based applications designed to share and discuss information between individuals and organizations. This is often also known as 'web 2.0' technology. Examples include Facebook, YouTube, Twitter and, of course, Wikipedia.
A few facts and figures about social networking:
- Global usage of social networking has boomed in recent years and as of early 2010 accounted for 12% of global on-line usage time – in second place to instant messaging (accounting for 12.3%).
- Global unique visitors to Facebook reached in excess of 517 million in July 2010, making it the largest social networking site – reaching just under 44% of all Internet users worldwide.
- Usage of Twitter increased by 111% over the 12 month period to December 2009, reaching 65 million visitors – increasing to 145 million by July 2010.
- LinkedIn has over 90 million members in over 200 countries.
So why are we telling you this? Well, maybe social media have enormous potential in the insurance industry and within underwriting and claims – it's just 'how' that needs to be determined.
On Facebook many of the major life insurance companies in the US have an official presence. While those that don't may appear in the search results, the resulting pages are often 'community pages', drawing information from Wikipedia. These pages are not endorsed by the organizations, but are still open to users 'liking' them and creating wall posts about the company. Users who 'like' these organizations will then have access to other users' wall posts containing their own views. However, it appears that many people use these pages as a mechanism to post negative comments – with the insurer having no means of officially responding to and handling such comments. Complementary providers (such as occupational therapists, etc.) also use these community pages as a method of free advertising to promote their services.
At the other end of the spectrum, companies like Allstate, John Hancock, New York Life and State Farm provide examples of how Facebook can be used to market products, create general awareness and promote discussion, whilst being able to manage any less-than-positive postings about their products or services. These same companies have a Twitter presence too, allowing the Twitterati follow news, see jobs available, etc.
Use of the new media is catching on in the UK too, with names like LV=, Friends Provident and Legal and General featuring on Facebook and Twitter.
Could Facebook have a role in the underwriting and claims processes?
We often see news items naming and shaming insurance claimants and state disability benefit cheats caught out by postings on social networking sites – like a 61-year-old who claimed to be so crippled by arthritis that he needed a wheelchair, spotted on YouTube jiving with amazing agility in a competition.
Anecdotal evidence from insurance claims assessors suggests that it is not unusual to view individuals' social networking profiles in order to corroborate – or otherwise – information provided on claim forms. Conceivably, the same approach could also be used in underwriting to support lifestyle, health and other disclosures or to indicate they may be false.
Of course, much depends on privacy settings on the respective sites. As user numbers increase, so does knowledge among the user community, with the more savvy users being aware of how to ensure their information is only available only to known contacts. There is also a responsibility to ensure that the profile in question is indeed that of the applicant or insured. Quite often the only way to verify this is by searching by the user's e-mail address – assuming this information is collected as a matter of routine on application/claims documentation.
But this problem applies in the other direction too. The public can play the system by posting favorable information that isn't true. So how verifiable does such information need to be before risk managers are prepared to use it for risk pricing or claim management? And thinking a little more broadly, how to turn something that's accidentally useful (as in the case of the jiving arthritic mentioned) into a genuinely valuable tool that can be used as a matter of routine?
Of course, there is an ethical debate to be had about the use of any information posted to an individual's profile. One school of thought is that it is in the public domain and as such it is perfectly acceptable to use during the assessment process, in the same way that the results of a Google search could be used. Others may take the view that using this information represents an invasion of privacy.
Taking things a step further, the potential for using an individual's on-line information as part of risk assessment goes much deeper than just looking up an applicant's profile on social networking sites. The results of trials in America looking at individuals' online social profiles and activities together with their spending habits suggest that these can be as accurate as some medical tests in indicating life expectancy. There are reports that this concept will be adopted by some carriers over the next year or so.
Social networking in the workplace
A possible barrier to using information posted to social networks as part of the assessment process is corporate IT policy on employee access to such sites. If marketing teams have no access to sites, they have no way to create and manage the pages. Undoubtedly a key reason for not allowing access by employees is one of trust – remember the days when access to e-mail and Internet were reserved for the chosen few? However, given the usage of personal mobile devices among company employees, it is highly likely that employees are accessing social networking sites for their own personal use during working hours regardless.
LinkedIn has become the social networking site of choice for much of the business community – it's a 'professional Facebook'. While it supports many of the same features as Facebook, it seems to be much more widely acceptable for employees to be able to access it from the workplace, and it enables its members to have a business persona online that is separate from their social profiles – very much as it is in the real world.
Some organizations have recognized the potential for social networking in the workplace and have created their own sites for employees. This is certainly the case in at least one global reinsurer, which runs its own Facebook-style application to promote better collaboration among employees. Social networks are also being created to support particular communities within industries – for example agents and brokers, providing access to knowledge and services as well as promoting lively online discussion between members.
Remember lifeunderwriting.com?
Actually the life underwriting community once had its own networking site – lifeunderwriting.com, started in around 2004 to provide a forum, create a professional community and help elevate the status of underwriters in the life and disability industry. But it never really caught on – despite strong support from Hank George – although there was plenty of activity by underwriters in developing countries posing questions that their more experienced counterparts in other parts of the world largely declined to answer. Lifeunderwriting.com withered away and died after a few years, largely as a result of apathy.
Maybe it was ahead of its time. Or maybe underwriters are an insular bunch, not natural networkers and unwilling to help and share. In fairness, sharing knowledge and information can only go so far. Knowledge and experience in departments and in individuals constitutes competitive strength, so why give that away? And aside from the restraints imposed by antitrust laws, how much time can employers spare their staff to devote to an online community, even if many of the contacts are in other countries and not (yet) direct competitors? The good of the broad community versus the good of the individual insurer and its employee ... What is the duty? What are the motivations?
What next?
While the debate rumbles on as to whether and to what extent online profiles and activities can be applied in risk assessment and management, social networking is here to stay and will only increase in its use and reach. But it is apparent that the life and health claims and underwriting communities appear reluctant to adopt and harness the opportunities and benefits that social media can provide. If the value of the traditional big international conferences is in decline because information is so widely available, then networking opportunities are being lost – and for most people networking is a key benefit of attending. Groups have been set up on LinkedIn but appear to feature a few regular participants posting questions but not always getting answers – ah, shades of lifeunderwriting.com.
With social media on the list of 'six hot technologies that will transform the insurance industry in 2011' as published in the 2011 Insurance & Technology outlook (www.insurancetech.com), maybe the underwriting and claims fraternities have some catching up to do with their counterparts elsewhere in the industry. Could organizations like AHOU and AAIM in North America, and AMUS (Assurance Medical and Underwriting Society) in the UK, use the 'Net more effectively, drawing together online their members to debate current issues? (They could also disseminate more information to a wider audience via video (YouTube?) and webinars. Maybe the big annual conventions will truly become a thing of the past…)
What do you think?
So what do you think about the role of social media within underwriting and claims? Will you be using them as part of your daily working routine? And how? Maybe you use them already … What about the practicalities? What about the ethical issues? Some discussion topics have been started within the Underwriting & Claims Forum on LinkedIn. Joining the group – or even putting your profile on if you're not already there – is simple to do.
The authors raise some provocative questions. We would like to hear from you on this subject!
Please send your comments to hankgeorge@aol.com.
