Social Networks Growing As Channel For Insurers

NU Online News Service, April 15, 3:04 a.m. EDT

As social networks continue to grow in usage, insurers should take advantage of the services to advertise and communicate with customers in ways not available through other channels, a consulting firm advised.

Celent in its report "Leveraging Social Networks: An In-Depth View for Insurers," defined a social network as "a group of individuals and organizations that are linked to each other in some meaningful way," with examples being Twitter, LinkedIn, MySpace and Facebook.

Speaking to the rising popularity of such networks, Celent, noted that in March 2010, Facebook was the most visited Web site in the U.S., having more visits than Google for the first time.

For insurers, Celent said, a better understanding of social networks will help companies understand their target market.

For now, insurers have three reasons to participate in social networking, Celent said: a cheap method of advertising, a communication channel to customers, and tapping into a channel that is growing in influence.

"It is Celent's view that not only are social networks here to stay," the report notes, "but they will grow to define most people's experience of the Internet in the future."

Going forward, Celent said, consumers will be accustomed to seeing friends' comments in search results for financial services products, and will expect to be able to engage with their chosen insurer through the channel of their choice.

As social networkers become more comfortable with the concept of sharing information about their behavior and location, Celent said insurers could respond with innovative insurance products, new payment methods, and meeting consumer requirements on-demand. The shared information could help inform pricing decisions and aid in fraud detection, Celent noted.

"Rather than the current model of searching for content and pulling it, relevant content will be pushed to Internet users through recommendations from their friends and targeted advertising," Celent said.

Social networks come with risks, the report states, including free signups which mean no vetting to tell if the account is legitimate--a problem for both organizations wanting to communicate with a customer and a customer trying to identify real organization accounts.

Additionally, Celent said, interacting through social networks is a written form of communication and is subject to legislation and regulation.

In the U.S., Celent said many insurers are testing the social networking waters. Nine of the top 10 nonlife U.S. insurers have at least one Twitter account, and eight have at least one Facebook page, according to the report.

In the United Kingdom, however, only seven of the top 20 life and nonlife insurers have a presence on Twitter, with fewer on Facebook.