We explore how the insurance industry can embrace social media and networking. Far beyond a mere marketing channel, social business in insurance can be used to recruit employees, design products, collaborate, analyze, and much more.
Demystifying Social Business Trends for the Insurance Industry
• Cognizant 20-20 InsightsDemystifying Social Business Trendsfor the Insurance IndustryMaking the leap into social business promises increased demand,customer loyalty and returns for insurers. Executive Summary Insurers Go Social Within a relatively short time, social networking Businesses usually benefit to the extent that they has evolved as the preferred networking hub for stay close to customers. While industries such as millennials. As a result, maintaining a presence retail and hospitality were quick to understand on the social Web and staying connected with the the implications of social media, insurers joined tech-savvy community has become imperative the social bandwagon comparatively late. Insur- for business brands. ance carriers have marked their presence on the social Web by creating Facebook fan pages. Business enterprises are witnessing the emer- A similar presence on Twitter, LinkedIn, YouTube, gence of social business, which encompasses blogs and other social media channels supple- collaborating and engaging in conversations in ment their traditional marketing campaigns to B2B, B2C and B2E touchpoints. Social business improve their brand equity. largely comprises social media (external facing) and social enterprise (internal facing), shifting Customer conversations on social media the paradigm from a transactional model to an generate a wealth of information that can supple- engagement model. ment traditional sources of information. These conversations range from negative feedback Traditionally, the insurance industry has relied on about a recently launched product to opinions strong networking and trusted relationships. By that can drive new product innovation. Some transforming into social businesses, insurers can insurers have engaged in these conversations tap significant opportunities that enable them to and analyzed them to derive deeper insights. This generate more demand, win customer loyalty and has helped improve service offerings, influenced maximize returns. buying behavior and enabled prudent decisions in underwriting and claims settlement. As they This white paper examines the implications of continue to engage with customers externally, social business in the insurance industry, high- some insurers have also begun to invest in devel- lights the popular social avenues and innovative oping an internal culture of collaboration in their trends that are revolutionizing the industry and business units, and among their employees and presents our point of view on future trends. partners. cognizant 20-20 insights | january 2013
The social business avenues that insurers should Insurance carriers are keen to promote sales leverage include but are not limited to: through the social graphs of customer communi- ties. New York Life8 believes that 60% of Facebook • Social media marketing. fans are prospects. American Family9 believes its • Social media listening/monitoring. social media outreach strategy is spurring sales. It claims to have anecdotal evidence of agents • Social media analytics. who have sold hundreds of policies through their • Social enterprise. Facebook usage. Farmers10 has taken innovative steps to equip its agents to generate leads through • Social design. social media platforms. Foremost Insurance,11 Social Media Marketing which is part of Farmers Insurance Group, has set Facebook1 has more than one billion active users, up a dedicated Web site — Foremost Social Media closely followed by Twitter with more than 500 Suitcase — where it hosts educational material to million users. Over 300,000 businesses have familiarize its agents with the use of social media. Facebook pages. Around 50% of social users are Moving one step ahead, Farmers12 also supplies connected to brands, 36% content for agents’ Facebook pages. Facebook templates with a full content library were success- Word-of-mouth post content about brands, fully piloted, attracting more than 25,000 fans to advertising of the 40% of products in co-cre- ation take part and, more the 300 participating agents’ pages. past has given way important, 78% are influ- Digital marketing trends are set to drastically to testimonies and enced by other social users’ change the way insurance products are marketed feedback on social recommendationsdecisions. making purchase when and sold. The onus is on carriers to equip their agents with adequate technology and training channels. In a recent survey conduct- so that they can meet the expectations of social- ed by Kasina,2 about 85% savvy customers. of respondents said they have seen increased brand awareness on social media platforms, 67% Real-time relationships nurtured in social media have seen increased engagement with clients and will soon become the de facto networking prospects and 58% said social media has led to standard to promote brands, retain clients and increased Web site traffic. The top 10 insurers gain prospects through client referrals. With the have already managed to attract 11 million rich sharing options available on social channels, Facebook fans. they present numerous opportunities for carriers and agents to turn their customers into brand Insurers no longer have the choice of staying off ambassadors. social media. Word-of-mouth advertising of the past has given way to testimonies and feedback Social Media Listening/Monitoring on social channels. Customer sentiments voiced Most insurers view social media predominantly as on these networks essen- a marketing vehicle. Effective digital marketingWith the rich sharing tially decide the fate of the can no doubt help capture customers’ attention. brand in the market. GEICO3 options available on and Progressive4 have led However, social media can do much more. At anysocial channels, they the way in digital market- given time, there are several conversations hap- pening across social channels. Monitoring these present numerous ing through their YouTube conversations can bring enormous benefits to the commercials where their opportunities mascots promote their various links in the insurance value chain. Getting for carriers and brand. Players such as alerted about negative sentiments and taking suitable remedial action is extremely important. agents to turn their All State,57 State Farm6 and AVIVA have taken itcustomers into brand further by endorsing edu- While carriers could monitor whether the customer reflects positive or negative sentiments ambassadors. cational videos and spread- about their brands, insurance agents could use ing awareness about safe the profiles of customers publicly visible on social driving, disaster preparedness, etc. This serves networking sites to understand lifestyle or monitor the dual purpose of promoting their brand inter- their life events and utilize that data for lead ests and also reducing loss exposure that would generation. Insurance carriers can understand otherwise result in claims payments. market perceptions and customer expectations. cognizant 20-20 insights 2
They can acquire immediate feedback about their from social platforms qualifies as one of theproducts and services, improve the quality by prominent data sources to be fed into a fraudaddressing the gaps in coverage or service provid- detection engine. The structured and unstruc-ed and stay ahead of the competition. Listening tured data must be unified to generate collec-and engaging in conversations also allows the tive insights. Predictive models must be built notcarrier to provide enhanced customer service. only to scrutinize the after-PEMCO13 uses a platform from Radian6 to monitor effects during claims, but Insurers should employsentiment in social postings. Twitter acts as an effec- to proactively analyze thetive listening mechanism to facilitate a quick feed- risk exposure while accept- the right strategiesback loop. Progressive14 has employed dedicated ing, modifying or rejecting to decide on theirprofessionals who monitor Twitter and respond to coverage for a prospect. objectives and thencustomer queries around the clock. Also, by gathering and ana- choose appropriateCelent analyst Michael Fitzgerald15 observes, lyzing the data from social monitoring platforms.“Leading organizations are beginning to leverage feeds, insurers can createsocial media monitoring as an operational tool. customized products forThese companies will know more about their specific target audiences. USAA17 has taken acustomers at a very specific, actionable level by significant step by engaging Bazaarvoice totracking social media posts.” read and categorize the reviews/ratings that are provided by its custom-Insurers should employ the right strategies to ers on the official customer In a classic case,decide on their objectives and then choose appro- Web site. USAA processespriate monitoring platforms. A sentiment analysis and publishes these aggre- a customer whotool needs to include context in evaluations. gated ratings and authen- faked illness to claimSelection of an appropriate domain and customer tic reviews against its workers’ compensationbusiness-specific taxonomy plays a key role in products, which attractsinterpreting sentiments for valuable feedback new prospects. benefits was exposedabout market trends, recently launched products via Facebook profileand competitor brands. Engaging in the right Given that there is signifi-conversation can bring greater credibility to the cant noise that needs to pictures thatbrand and help build customer loyalty and trust. be filtered, correlating the suggested otherwise. data available from differentSocial Media Analytics sources becomes crucial. Also, there are someSocial media analytics involves mining unstruc- individuals who could play an important role intured data to generate business intelligence shaping conversations. It is extremely importantinsights for the brand. It can help insurers make to find these influential sites/persons and priori-prudent decisions by measuring the performance tize focus accordingly. With more cutting-edgeof their brands and associated social media cam- platforms and tools being developed in this space,paigns. Two areas within the insurance value we expect correlation engines in addition tochain where analytics can play a significant role sentimental analysis and integration of socialare risk segmentation and claims fraud detec- data into CRM systems and warehouse marts.tion. Insurance carriers could leverage social datato identify new rating factors or modify existing Social Enterprisefactors based upon the lifestyle changes evident Social collaboration within the enterprise enablesin prospective clients’ social networks. This could the stakeholders to collaborate through virtualpotentially expand or minimize the risk exposure communities, build trusting relationships andrelated to prospects or customers. An actuary discover/disseminate knowledge. For example,could use this data in addition to other data collaboration between underwriters and agentssources to make sound pricing model decisions. could ease the underwriting of new business. Access to the latest underwriting guidelines, sup-Similarly, the customer’s social profile data could plementary data and expert guidance could behelp detect fraudulent claims. In a classic case, added advantages. Similarly, the ability to share,a customer who faked illness to claim workers’ upload and comment on digitized claims data,compensation benefits was exposed via Facebook improved information sharing between a claimsprofile pictures that suggested otherwise.16 Data adjuster and the claims field location representa- cognizant 20-20 insights 3
tive, and the ability to collaborate with the legal Social Design department could result in shorter claims cycles. Social design is a new way of visualizing applica- Departments such as finance, legal and HR within tion design that puts social experience at the core. an insurance organization would be equipped to Facebook is a classic example, incorporating core make informed decisions after discussion with elements of social design such as identity, con- other units that need not versation and community. Facebook establishes social design as a strategy that builds upon users’Enterprise collaboration necessarily be co-locat- trusted communities, encourages conversations could promote ed. The regulatory and compliance department between them and ultimately creates a stronger innovation through the could actively dissemi- sense of identity for everyone. This strategy revolves around utilizing community to person- participation of various nate information on the alize user experience, building conversations to departments such as latest toregulatory proce- dures varied stakehold- effectively listen and share data and curate an marketing, sales and ers through blogs/activity identity for themselves. These principles can be applied while designing core insurance systems. distribution, business streams that can aid the By modeling the system to adopt a social mindset units, operations, underwriting in or claims department evaluating and driving social business by design, the benefits research team, legal, the customer application. could be enormous for the various players in the insurance value chain. finance, customer Enterprise collaboration services and IT in the could promote innovation through the participation For example, based on past loss history the designing of a new of various departments system could recommend that an underwriter reject a prospect’s application. The underwriter product. such as marketing, sales could be referred to an actuary who has worked and distribution, business on a similar actuarial assignment. A claims units, operations, research team, legal, finance, adjuster could gain access to court judgments customer services and IT in the designing involving similar coverage disputes. The system of a new product. Better alignment between can bring up references to policies where similar IT and business can be achieved through loss exposures were assessed. Potential cross- better collaboration. selling opportunities can be notified. Products BUPA’s18 enterprise collaboration platform, BUPA and coverage suitable for a customer can be high- lighted. Recommendations and product reviews Live, has reported an estimated cost savings of by the customer’s friends can be pulled up. The $305,746 for 700 users, overall improvement system could provide FAQ responses to custom- of sales by 10% (of which 2% is attributed to ers to enable self-service. Recommendations for internal collaboration) and a 2% increase in con- suitable pricing models or for projecting near- nectedness leading to a 10% rise in its satisfac- accurate claims loss reserves can be provided. tion index. Nationwide19 has been successful in fostering a culture of transparency, better inno- This design is not just restricted to internal vation, and knowledge flow within the organiza- facing core systems but can extend to customer tion. Swiss Re’s20 collaboration site, Ourspace, service applications hosted on a platform such facilitated cross-functional collaboration and idea as Facebook, thereby leveraging the inherent generation on varied business themes with both features of social design. When the prospect global and regional focus. logs into Facebook and accesses the Get Quote App for an auto product, the app provides him Enterprise collaboration brings with it a host of valuable insights such as “2,000 visitors viewed benefits such as increased productivity, a greater this app, 250 liked it, 75 of them have opted for sense of belonging, rapid access to knowledge this additional coverage, 50 of them have saved and faster time to market at reduced operation- $20 by combining their auto and home policy, five al costs. We believe that insurance companies of your friends recommended it.” The app could should focus as much on strengthening internal list the agents who reside nearby based on the collaboration initiatives as on external initiatives. zip code entered or suggest agents who have It is important to crowdsource the collective intel- serviced the policies of friends in the prospect’s ligence of employees and partners in order to social graph. The app can effortlessly function as understand and serve customer needs better. an effective social media marketing tool that gen- erates leads. cognizant 20-20 insights 4
Social design is challenging the design of tradi- the process value chain. The potential of socialtional systems and should dramatically accelerate business is vast and could generate immense pro-operational efficiencies. Early adopters are sure ductivity gains if “right use cases” are identifiedto benefit greatly, in our view. across the insurance value chain.Social Business: Innovative Trends For example, with the Insurers such as right mix of social designInsurers such as USAA, Travelers, New York 21 22 and collaboration, the USAA, Travelers, NewLife23 and MetLife24 have started using theirLinkedIn sites to recruit employees. State Farm25 commercial underwriting York Life and MetLifegot started in social media when it set up a blog process, which involves have started using their extensive manual inter-to find New Orleans-area employees and agents vention and complex LinkedIn sites to recruitwho could not be located after hurricane Katrina.Within 24 hours, the blog enabled them to locate rules processing, can be employees.every agent and employee. AXA UK26 launched streamlined to eliminatea snakes and ladders-style game on LinkedIn duplication of data, efficiently manage task workto encourage small businesses to consider the flow, leverage community expertise and carry outrisks they faced and the kind of insurance they predictive analysis. The system could be equippedneeded in order to thrive. Farmers27 approached with tools to virtually connect from anywhere,social gaming as an opportunity and partnered anytime — thus providing an integrated view ofwith Zynga to promote brand awareness through the submission documents associated with aZynga’s Farmville, which is reported to have more prospect/policy. This, in turn, will help improvethan 80 million users. Humana,28 a leading health operational efficiencies at a lower cost. Socialinsurer, has set up the Humana Innovation Center means of doing business within an enterpriseto reach out to consumers in a novel way through brings all the stakeholders on the same page togames, tools and blogs aimed at staying healthy. achieve more successfulCNA‘s29 special investigation unit is aiming to innovations in introducing Social and mobile gomine social network data to identify relationships new products/services in hand in hand, as most an agile fashion, thereby reducing time to market. social networkingbetween parties to a claim that might not be oth-erwise apparent. It also allows rapid access applications areInsurEye30 is a Canada-based independent online to customer feedback to accessible throughservice company that collects, validates and derive deeper insightsanalyzes insurance experiences of real people. and gain competitive mobile devices.InsurEye is a great example of social benchmark- advantage.ing because all the data is generated from theconsumer side and across various insurance pro- Social commerce and F-commerce (Facebookviders. An opportunity to create a marketplace commerce) rely on social interactions and rec-that would connect car owners with other people ommendations to assist in online purchase ofin need of a car is catching up. People in need of products/services. Facebook applications coulda lawn mower or chain saw might find a friendly serve as a prime channel for offering quotes andneighbor to borrow or rent from on social net- selling insurance products in the near future. Theworking sites such as HeyNeighbor.com.31 confluence of social analytics and big data will aid in the generation of vital business intelligenceTwitter “bots”32 that automatically respond to insights for insurers, opening up new opportuni-certain triggers can be useful. Imagine the pos- ties and expanding social business.sibilities if every new home buyer within 50 milesof an agency location receives helpful home- Social and mobile go hand in hand, as most socialinsuring tips within minutes of their purchase. networking applications are accessible through mobile devices. The other layers such as analyt-The Future of Social Business ics, content management and business processfor Insurers management have also started including social aspects into their design. Though there are notSocial business is here to stay. The horizons of many mature models available in the marketsocial business are yet to be explored or exploited to measure social ROI, Google Analytics33 hasby insurers to their full potential. Insurers have recently announced that it will help identify thestarted to move past the linear process-driven full value of traffic coming from social sites andmindset to exploit collaborative intelligence in cognizant 20-20 insights 5
measure how they lead to direct conversions. Insurance firms show resistance in adopting socialProducts such as Hearsay Social34 have taken business models, fearing regulatory, compliancea giant leap in integrating social networking and legal implications. By publishing social mediachannels with back-end systems, allowing organi- policy guidelines and selecting products thatzations to manage customer relationships, gather enable compliant use of social media, insurersand disseminate content, measure and garner can mitigate these risks to a great extent. Insurersinsights through in-depth analytics and minimize must identify the appropriate business cases andstate insurance/FINRA-compliance risks. ensure that their social strategy is closely aligned with their organizational business objectives.Conclusion Once the strategy is in place, with the right choiceAs is evident, social business is more holistic than of partners and products, insurers can redesignsocial media. Rather than existing in silos, the their communication ecosystem, build strongersocial mindset should be adopted by every layer relationships and realize tangible gains.within an enterprise. We believe the future ofwork for insurers revolves around social business.Footnotes1 http://en.wikipedia.org/wiki/List_of_virtual_communities_with_more_than_100_million_users2 www.propertycasualty360.com/2012/05/04/toops-scoops-insurers-find-social-media-lacks-roi3 http://www.youtube.com/user/GEICO4 http://www.youtube.com/user/progressive5 http://community.allstate.com/community/allstate_blog?view=blog6 http://www.statefarmyab.com/7 http://www.aviva.com/investor-relations/news/item/uk-aviva-launches-magic-money-social-media-cam- paign-14475/8 http://gillin.com/blog/2011/08/social-marketing-wisdom-from-the-insurance-industry-%E2%80%93- really/9 http://www.propertycasualty360.com/2012/05/01/reach-out-and-touch-someone10 http://www.dmnews.com/qa-ryon-harms-director-of-social-media-farmers-insurance/article/220750/11 http://www.farmers.com/2_10_11_SocialMedia.html12 http://www.zurich.com/internet/main/SiteCollectionDocuments/insight/personallinesfinal.pdf13 http://www.webassurance.org/insurers-leveraging-social-media-to-improve-customer-acquisition-and- retention14 http://twitter.com/#!/Progressive/15 http://www.celent.com/reports/mining-chatter-optimizing-social-media-monitoring16 http://articles.latimes.com/2011/jan/25/business/la-fi-facebook-evidence-2011012517 http://www.bazaarvoice.com/blog/2010/05/13/forrester-features-usaa-as-social-media-innovator/18 http://www.jivesoftware.com/customers/case-studies/bupa19 https://www.yammer.com/customers/casestudies/nationwide/20 http://www.jivesoftware.com/customers/case-studies/swiss-re21 http://www.linkedin.com/company/usaa/careers?trk=tabs_biz_career22 http://www.linkedin.com/company/travelers/careers?trk=tabs_biz_career23 http://www.linkedin.com/company/new-york-life-insurance-company/careers?trk=tabs_biz_career24 http://www.linkedin.com/company/metlife/careers?trk=tabs_biz_career cognizant 20-20 insights 6