Insurers Underestimate the Social Media Opportunity

Fiserv has released a white paper with survey results that the vendor says affirms the proposition that “Consumers Want to Connect with Financial Institutions.” While the study of 3000 consumers representative of the U.S. online population was focused on banking, its findings are relevant for the insurance sector.

The survey showed that 11 percent of online consumers are currently connected with their bank or credit union through a social site, and more than one-third (36 percent) of those not connected are interested in doing so. Interest is highest among Gen Y consumers, at 45 percent.”

Consumers who connect with their financial institutions are seeking information about financial services, are open to special offers and promotions, are interested reading other customers’ opinions or and posting their own reviews or complaints, according to a news release announcing the survey.

Since the insurance industry is generally working hard to take advantage of social media, these findings are more of an affirmation than a wake-up call. However, insurers should take such information as a spur to pursue social media consumer outreach efforts that are both more aggressive and more creative.

About a third of all respondents to the Fiserv survey said they were simply unaware that they could connect with their financial institution, with 45 percent of Gen Y consumers saying they didn’t know they could connect this way. However, consumers also indicated they were concerned about privacy and security.

Clearly financial services companies have the opportunity to increase the intimacy of their customer relationships, provided they are respectful and can reassure customers that their privacy will be carefully guarded. The survey affirms that customers are interested in using social media as a basis of dialogue with their financial services provider — an approach that Thrivent Financial has taken, as recently reported in Insurance & Technology. The company's current social networking site, Lutherans Online, receives more than 750,000 visits per quarter and has spawned 7,500 subsites created by members, according to Stacy Eckes-Borys, Thrivent’s social media relationship manager.

The survey also suggests that insurers may want to reevaluate the notion that social media should not be considered a sales channel. It is probably wise to be cautious in early uses of a new communications medium, but as consumers warm up they are likely to be open to more direct overtures. That would include notifying consumers of other products they might be interested in, as the survey results indicate. However, the greater sales opportunity is with distributor use of social media as opposed to direct company interaction, depending of course on the lines of business in question.

Ernst & Young has observed that life insurers are beginning to leverage social media not merely to increase sales, but to reach a customer demographic with higher life expectancy — thus reducing the mortality risk of business written.

Whether motivated by quality or quantity of sales, we can expect to see the more technology-savvy life insurers moving to provide distributors with the means to engage prospects and customers through social media in a compliant fashion.

The same is true of P&C insurers and not only for personal lines. As important as the internet channel is for direct and agent sales for individual life and personal lines products, social media — along with other collaborative technologies — also has tremendous potential for the complex process of matching the unique needs of commercial insurance customers to the best underwriters.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio