Insurance industry sets its sights on social networking

News reports put Facebook as the most visited website in the US in March this year, having more visits than Google for the first time ever.

Locally, we see a similar trend with social networking fast-becoming a central part of our internet experience. It’s no surprise then that these platforms have become targets for companies as a way of reaching people.

Rhys Collins of SSP, a leading global provider of insurance technology, reckons social networks are becoming an increasing target for the insurance industry in particular. He says that while the phenomenon continues to explode, there are opportunities for forward-thinking insurers to get in on the action.

There are a few reasons why a company would want to be part of a social network: It’s a cheap method of advertising, it’s growing as a communication channel to customers, it’s increasing in influence, and, most importantly, it may allow a company to harness a user’s social graph, directly or indirectly.

Users will increasingly use social networks in pricing decisions and to engage with organisations for services. And nothing is more powerful than the recommendation of a product or service based on personal experience. Quite simply, people trust people more than they trust companies. An insurer that fails to engage in social networking is missing an opportunity to engage with customers through these emerging channels.

A study by Anderson Analytics on the demographics of social network users and non-users in July 2009 found that 110 million Americans had used a social networking website within the last month — 60% of the online population. The study found the average user logs on five days a week, four times a day, for a total of about an hour a day.

Which social networks should you target?

In South Africa there are three social networks with significant influence: Facebook (over 3-million South African users), Twitter (over 55 000 active “tweeters”) and MXit (over 22-million registered).

MXit, the South African mobile social network, has been taking the world by storm. It is extremely easy and cost effective to use, providing advertisers with an opportunity for highly-targeted advertising.

Most social networking sites offer their services for free, with the business model centering on allowing third parties to pay for targeted advertising or premium services.

“What is an important and as yet still unanswered question is why insurers should take social networks seriously… what is the business case, and if there is one, what might the execution of such a strategy look like?” says Collins.

“For starters, understanding of the types of social networkers will help insurers to better understand their target market and 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.”

We’re covered on Twitter

Collins says a number of global insurers are already testing the waters in the world of social networks, and best practices are only beginning to emerge. In the United States for example, nine of the top 10 non-life insurers have at least one Twitter account, and eight of those have at least one Facebook page.

By contrast, only seven of the top 20 life and non-life insurers in the UK have a presence on Twitter, with fewer on Facebook. In the UK, the interaction is rare and adoption is just starting.

In South Africa this percentage is much lower. Only three insurers, namely 1st for Women, OUTsurance and HollardSA, have a presence on Facebook and Twitter, and all three are relatively new to the platforms.

“Surprisingly, we found more SA insurers on MXit: 1 Life Direct, 1st for Women, Auto & General, Budget Insurance Brokers, Dial Direct, Insurance Driven by AA, Hippo Insurance, OUTsurance and Virgin Insurance,” says Angus Robinson, executive creative director at Native, a newly created digital agency.

“Most of the major banks, particularly Standard Bank, FNB and ABSA, have had a presence in social media since as early as 2007. These platforms are used to address customer queries and concerns, as well as to inform users of new products, including insurance products,” says Robinson.

“We believe in the future we will see a growing population of social networkers who are used to seeing friends’ comments in search results for financial services products and who expect to be able to engage with their chosen insurer through the channel of their choice.

“In addition social networkers will be comfortable with the concept of sharing information about their behaviour and their location and also paying small amounts for key premium services,” he says.