Insurers Missing Out on Social Media Opportunity
Social media has become crucial in all industries and holds immense potential for the insurance industry, but many insurers have been slow out of the gate to fully embrace this medium`s advantages. The social media gap between insurers and their customers is particularly pronounced in regards to millennials, who demand a robust and responsive social media presence from their insurers.
It won`t come as news to anyone that we are living in a connected, digital world. There is probably not a single reader of this article who isn`t on either Facebook or LinkedIn. And yet, because insurers are still experiencing some challenges with social media—such as determining which information posted by users is reliable—the myth that insurers can`t yet make good use of social media stubbornly persists in some quarters.
The application of advanced analytics to social media is already disrupting the traditional underwriting process and a few innovative insurers are building their brands and offering a unique customer experience by providing optimized social media content.
Social Media`s Multi-Faceted Role
Research from UK-based Speedie Consultants shows that consumer buying habits have significantly changed in the past few years. The independent study found that 50 percent of people looking to buy insurance use social media to research an insurance product, but 67 percent said that channel didn`t help them make a decision. This suggests that insurers are not providing the right type of quality information via social media.
Marketing is merely a single, albeit important, facet of social media for insurers. Some experts note that the application of advanced analytics to social media—in conjunction with other new data sources, such as wearables and customer engagement platforms—is already disrupting the traditional underwriting process.
And social media platforms are an excellent way for insurers to collaborate within their ecosystems—between internal divisions of the business, with partners, etc.—to quickly and effectively share information.
But Insurers Aren`t Currently Maximizing the Opportunity…
The majority of insurers are now using social media in some capacity, but more than one-third do not have an established social media strategy, according to LeadSift, a top provider of social intelligence. Making matters worse, according to ITDS` Social Media Insurance Monitor 2016, among those insurers who do have a strategy, only 40 percent of them have actually communicated the strategy effectively within their organization.
Without a well-planned, overarching strategy that is communicated throughout an organization, acted upon consistently and backed by an effective policy administration system and digital suite, some insurers have adopted unfortunate social media tactics and habits, and overlooked crucial approaches.
The ITDS research, which looked at 20 “major players” in the insurance industry spread across 11 countries, found some disturbing trends.
- More than 50 percent of all consumers base their choices on ratings and user reviews, but only 25 percent of surveyed insurers show user reviews on their websites
- A mere 15 percent of the surveyed insurers have a platform with user-generated content
- Only 30 percent of insurers refer to social media channels on their contact page
These oversights are preventing insurers from effectively selling and communicating. This is unfortunate, considering the tremendous potential opportunity.
Millennials Are Key…
Millennials are now the largest living generation in the United States and many other regions throughout the world. This fact should increase insurance carriers` desire to tailor products to this influential demographic and communicate with them via their preferred channels, especially considering their growing economic influence.
CNBC estimated that millennials had a combined global spending power of $2.45 trillion in 2015, but insurers have struggled to win over these young adults, despite their growing incomes.
According to Nielsen, millennials are the most underinsured generation. This can be explained in part by a shaky economy during some of their crucial development years that delayed major milestones, such as buying a home or car. Insurers` failure to maximize the millennial opportunity is also partially due to not speaking Gen Y`s language. Today`s digital natives (people who grew up online with social media) demand a social media presence, and not just a token one. Insurers should offer customers, as well as users and agents, a full digital experience enriched by social media channels and with real-time, accurate data-flow through any channel or device.
A failure to communicate effectively with millennials risks prolonging this important segment`s alienation from insurers.
In its Millennials and Insurance: Understanding Tomorrow`s Mass Affluent Today report, research firm Novarica noted, “Millennials hate traditional channels. They hate getting mail, talking to CSRs, and meeting agents in person. Failure to provide millennials an online resource for both information and interaction precludes an insurer from the opportunity of doing business.”
To counteract this dissatisfaction, insurers would be wise to obtain a quality policy administration system and full digital suite that will enable them to offer a branded portal and personalized communications.
And by posting the right types of content on social media sites, insurers can interest millennials. These sites include traditional favorites, such as Facebook and Twitter, but also more visual sites, such as Instagram and Pinterest. Insurers can act quickly to limit and possibly eliminate damage to their brands (brand advocacy) by using scanning software to find negative comments on social media. This type of approach depends upon a reliable big data and analytics solution, and personnel who are empowered to act quickly.
While insurers, for the most part, are recognizing the potential social media offers—from marketing, to service, to underwriting, and beyond—tapping into this wealth of capability continues to challenge the majority of insurers. Effectively reaching today`s consumer requires so much more than just having a social media presence. It demands a well thought-out social media strategy. More on that in our next article.