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Insurers Proceed on Social Media, With Caution

Web 2.0 and social media offer insurance companies a new and potentially more effective way to interact with agents and distributors, according to I&T's Elite 8 technology executives. Still, their approach is, 'Proceed with caution.'

To some extent the insurance industry appears to be taking its usual "Prove it to me before I commit" approach to Web 2.0 and social media. There is considerable caution about the risks (security, productivity, reputation) of open and user-driven social networks. At the same time, a growing number of companies recognize that the interactivity, spontaneity and democracy of social media could truly transform the interactions among customers, agents and carriers, as well as persuade the next generation of IT employees that insurance companies provide positive work environments.

The executives who comprise Insurance & Technology's 2009 Elite 8 reflect these views. Although they see real potential in Web 2.0 to support agents and distributors, they're still waiting for hard evidence of the true business value of social media. They want to be able to take advantage of the opportunities, but also are well aware of the risks of investing too aggressively in this still-evolving channel.

New York Life Insurance Company considers itself an Internet pioneer within the insurance industry -- it has had a corporate Web site since 1996 and has received a No. 1 ranking from Internet rating firm Dalbar 16 quarters in a row. The carrier continues to invest in infrastructure to support the growth of the online channel, but SVP and CIO Eileen Slevin acknowledges that the company still is trying to figure out the best ways to take advantage of the Internet's fast-changing Web 2.0 and social media capabilities.

"Some of our infrastructure investment is in newer technologies, such as Web 2.0 and RIA [rich Internet application]," Slevin says. "We are looking at Web capabilities, collaboration, social networking. There's been some discussion ... to make sure the company is ready for Gen Y customers, agents and employees. There's a lot of work being done in understanding Gen Y."

Marketing and Lead-Gen

Slevin believes that the Internet and social media will play an increasingly critical role in insurance distribution -- although that channel, she stresses, will not change the truism that "Insurance is sold, not bought." "Customers can begin the process of buying life insurance on our Web site," Slevin relates. "Our site wins awards for its consumer-friendliness, and we generated close to 120,000 leads for our agents in the past year alone. That contact leads to a conversation with a knowledgeable agent to ensure that the client is buying a product that best fits his or her needs."

As far as leveraging the potential of social networks to make agents more effective, Slevin notes, "I'm not sure we have [the] solution in that area yet, but we're working on it. We're well aware that agents are going to need to be able to use these tools in order to make the sale of the future, and that future is very soon, if not now."

That said, "I do believe that, for agents to communicate with their customers, they're going to need to be on the Web; and we need to be there to enable them to do that, because people are using it for information," Slevin adds. "We want them to get the information they need and still get pointed to New York Life as the best place to come. We have to be able to figure out how to use these social networks, for the good of the company and the good of our agents, because that's where policyholders will be."

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio

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