Recent reports from two leading analysts suggest strongly that tools and techniques for using Social Media are maturing, and becoming increasingly important and valuable for insurance professionals.
A new report by the research and advisory firm, Celent, provides an overview of the uses of Social Media within the insurance industry. The report, ‘Using Social Data in Claims and Underwriting’ points to the gathering of risk data as a particularly fertile activity.
According to Mike Fitzgerald, the report’s author, “The information that is posted by individuals on multiple sites reflects their preferences, lifestyles and habits. Postings from companies include descriptions of product offerings, services, and operations. In both cases, this social data can be used to build a real-time risk profile. When integrated into an insurer’s existing process and automation environment, this profile can improve underwriting and claims results.”
While many insurers see Social Media as a sales and marketing vehicle, a report from SMA – Strategy Meets Action – suggests that the greatest value may be found in taking a broader look, and leveraging its use – and data – across the enterprise. According to the report, ‘The Business Value of Social Media’, sponsored by SAS, “The most remarkable news from the recent SMA survey is the story about what is happening in this category – especially in the core areas of underwriting, policy, and claims, where 25% of insurers say that they are planning activities around social media.”
Insurers are also finding that the use of Social Media is coming with its own challenges, and practitioners hare having to mature in their responses. According to Celent’s Fitzgerald, “Key techniques that must be developed or enhanced include authentication methods, improved data extraction tools, and more advanced analysis tools.” Fitzgerald adds, “Additionally, regulation concerning the use of social data is evolving more slowly than the technology and potentially will significantly impact the use of information collected from these public forums.”
The SMA report notes that effective access to the rich set of data that is becoming available requires new techniques and tools: “There are a wide variety of tools available that can assist companies in monitoring and measuring social media traffic and events, and even some that manage information. However, the greater value comes when sophisticated tools are infused with a deep understanding of customer behaviors and industry-specific activities and terminology.”
The reports agree that while there are challenges and costs associated with the maturation, the potential for rewards make investment worthwhile. Celent’s Fitzgerald concludes: “social data has the potential to join existing third party data sources such as CLUE, MVR, and MIB to enable more accurate underwriting evaluation/pricing and lower claims costs.”