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Rivalry Flares In Emerging Social Network Management Market

Trash talking vendors vie for early dominance in a market with enormous growth potential in insurance and financial services.

Social networking has always been a key feature of insurance sales, so insurers are especially well positioned to benefit from web-based electronic social media networking platforms. However, given how strictly regulated the industry is, it also faces significant compliance challenges, not to mention increased liability exposure in the event of its agents using social media sites such as Facebook and Twitter for business purposes. As I discuss in a newly published story at Insurance & Technology, two automated social networking management platform vendors -- Socialware and Hearsay -- have emerged with capabilities that can help insurers exploit their natural social media opportunity. Neither has been shy about arguing the other's limitations.

These vendors have aggressively attacked the problem not only by providing functionality to automate tracking and filtering of agent activity but also in connecting with regulators and industry associations and forming industry councils. For example, platform vendor Socialware interacted with security firms regulator FINRA during the drafting of the regulator's important regulatory notice 10-06, according to CEO Chad Chad Bockius. "We have conversations every month with FINRA, and LIMRA has chosen us as their strategic partner for social media compliance," he says.

Bockius claims that Socialware currently has over 90 FINRA-regulated firms among its clients, including five insurance companies, three of which are in the top ten and one of which we've reported on at I&T. Socialware also has 15 of the top 75 independent brokers as clients, along with some of the largest wealth management firms, according to Bockius.

While there is plenty of business to go around for social network management platform vendors, there is fierce competition among these leaders. Hearsay, which publicly announced its launch today, Feb. 3, 2011, has already scored major insurance contracts, including State Farm and Farmers. "Insurance is where we got our start," claims Clara Shih, a alumna whose fame until now has been associated with her having authored a book titled "The Facebook Era." Says Shih, "We spent the last two years building an enterprise platform to manage all the content, workflow, compliance and analytics for a company's agent base."

Hearsay's sales pitch emphasizes its ability to provide not only effective compliance capabilities but also marketing outreach to support agents and analytical capabilities to enable the home office to monitor the effects of its social networking efforts. This morning the vendor published a cute and very effective video (embedded below) to advertise this range of capabilities.

Socialware CEO Bockius appears underwhelmed. "Hearsay is coming at the problem from a marketing angle," he says. "It doesn't look like they can really address the compliance issue and meet the letter of the law from a FINRA standpoint."

Hearsay's Shih won't name names but she draws distinctions between the proxy-based approach to regulating agent social networking -- which Socialware happens to use -- and the API-based approach Hearsay uses. "There are two approaches on the market; one is proxy-based, which we considered early on because it's easier to build," she says. "But it doesn't work."

Facebook and LinkedIn have sophisticated spam blockers fighting spam from places like China and Eastern Europe which experience downtime, during which social networking messages are archived, Shih explains. "The other shortcoming is that agents don't typically access [social media] from behind the firewall," she adds. "Most access is from home computer or portable device, which don't go through proxies."

Hearsay's API approach involves officially supported integration between Hearsay and each of the social networking sites, according to Shih. "We just inked a deal where we are allowed to access and archive messages for a FINRA kind of fix, and whether agents are using their Blackberrys or at work, we're able to archive all the messaging," She relates. "We were talking to corporate headquarters and the CTOs and security officers who realize it's a nightmare to configure a proxy."

Shih says that proxy approaches require special permission to be approved to go behind a firewall and require custom configuration for every agent office.

Socialware stakes its ground on what it calls a "hybrid approach" that combines proxy and API.

According to Mike Williams, VP, Socialware, "Hybrid archiving is the only approach that guarantees you get all of the data, all of the time. For example, if you are operating off the corporate network on devices such as a smartphone or iPad you will still be able to participate on social networks knowing that content will be retained and supervised to ensure compliance," he says. "This approach is required to automatically link enterprise accounts to social networking identities. In this fashion enterprises won't need to rely on reps sharing each of their social profiles, they will be automatically identified and linked."

The approach also ensures that you can moderate data before it hits the social networks, William adds. "For example, if someone uses the phrase 'guaranteed results' this would trigger the system to capture the content, route for approval and hold, pending a review from a registered principal.

Williams declined to score the point, Socialware also gives carriers the ability to disable certain Facebook features, such as the "Like" button, which Hearsay cannot do. Whether suppression of such features is or will be necessary in the long run, from the regulators' point of view, is open to debate. What is undeniable is that cautious insurance companies still want such capabilities. Despite that fact, Shih claims to be converting insurers to her platform.

"We can't talk about names, but insurance companies that have tried the proxy approach -- because those were available sooner -- are now piloting with us," says Shih. "We hear from them almost invariably six months later. It's been a long road building what we have, but it's the right solution and worth the extra time and expertise."

Socialware's Williams is skeptical of Shih's claim. "Our solution is quickly evolving and we will continue to deliver innovative capabilities for optimizing social media," he comments. "The many months of deploying at top tier firms and learning what it takes to manage social media an optimal way is helping us to create a very compelling roadmap for ongoing development."

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

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