Insurers Can Learn from Facebook’s Digital Awareness

This is the second blog post aimed at discussing the opportunities for digital technologyin insurance within the framework of a higher design principle, one that is not technology-led, but speaks to delivering value for consumers of insurance (both individuals and businesses). The tenth anniversary of Facebook is an appropriate date to pass along this next installment.

Why? Because Facebook illustrates the difference between a narrow, technology-focused and a broad, solution-based design principle.  If Facebook had been trying to only deliver digital content on the web (a tech-focused approach), it would still be only a posting site.  However, with its introduction of the News Feed feature, it moved into the Awareness realm.  It went from “look what I have been doing and I’ll look at your posts too” to a proposition “I want to be aware of what my network is looking at because I’ll probably be interested too”.

This shift reflects the key design principles of the Awareness approach:

  • Passivity of user  – minimal or no user action to initiate Awareness (FB: don’t make the user look for news, deliver it to them when they sign on)
  • Pattern recognition determines activity and records preferences (FB: monitor what are friends doing and match that to the user’s interests)
  • Always on capability (FB: continually monitor activity and make it available when the user accesses the site)
  • Allows user to choose to “manage and/or turn off monitoring” when desired (FB: I wouldn’t identify this a strength to the platform so far)

Applying Awareness to insurance, I would add two additional key design principles:

  • Signal when a deviation from normal activity occurs using data analytics
  • Provide a user’s current and past location(s)
The objective of Awareness design in insurance is to prevent the unintentional retention of risk by continually allowing the insurer to be aware of the changing risk profile of an insured. It uses predictive capability to match data collected (at a very specific level of detail) with the external environment, and identifies changed and/or new risks faced by a person or business. It then delivers this analysis to the insured in a preferred format (text, post, email, phone call, etc.)

In my last posting on Awareness, I described a commercial insurance example ( .

Another example in health insurance involves continuous monitoring of an insured using their smartphone.  If any one of several key biofeedback measures begins to register out of a normal range, the insured receives a text to schedule a doctor visit.  The insurer is constantly aware of the health of the insured and takes proactive steps to intervene appropriately when needed.

Does this sound like Star Trek? Something we should be able to do in the future?  A company called Tokio Marine Nichido launched such a product in Japan last summer (June 2012). The insurance policy provides a reimbursement ranging from $50 to $300 for the visit based on the final diagnosis.

 As I mentioned in my earlier post, I am confident that we are ready to design digital solutions which change insurance from a backward-facing, financial indemnity product to a continuous, predictive, risk management service. I’d appreciate your views, either in reply on this blog, or you can reach me at

How to Solve the Digital Challenge – Successful Companies Report Out

Over the past five years digital technology has evolved significantly. Many financial services firms have moved past the exploration stage and are now more committed to the mobile channel. There is increased demand for expanded capabilities and functions and users expect “always on” access through an app on their smart devices.  Celent has seen a rise in the focus on mobility solutions across the enterprise and this trend is expected to be a sustained area of investment for the short to medium term. In short, there is a broad consensus that digital channels and mobile platforms represent a critical path forward. In a series of presentations at Celent’s next conference, What’s Next: The Search for Disruptive Innovation, several companies will detail how they are addressing the digital challenge, including:
  • Continuum will review the work they did with BBVA and explain how they used a strong understanding of the consumer to influence decisions about touchpoints. Their experience demonstrates how to build an omnichannel strategy and how businesses need to integrate digital and physical touchpoints into a seamless experience. This presentation will describe BBVA’s result — an experience spread across multiple channels that always considers the user’s needs first.
  • Kroodle, a separately branded business unit of the Netherland insurance giant Aegon, sells personal lines insurance directly to the public exclusively through Facebook. Their co-founder and COO will discuss how they design first for digital engagement. He will also describe how they are making this transition by building a completely new company inside a large, established parent.
  • One of the distinguishing capabilities of many mobile devices is location awareness – the ability to provide information about where the user is, physically, and even what activities they may be engaged in. Tokio Marine, a Japanese insurer, has pioneered the use of location and context-aware computing technology to provide insurance product recommendations based on the current location and activities of the mobile phone user. The presentation will highlight how the company continues to create unique product propositions for their customers and prospects that leverage digital capabilities.
  • What happens when you combine the gaming industry with financial services? 7Imagine, from Seven Investment Management in the UK, is an application designed for intermediaries and their clients designed by a firm whose founders are better known for developing console games such as GoldenEye and Donkey Kong Country. To the best of our knowledge, this is the first financial services app with a musical score and sound effects.
Whether your organization is actively pursuing digitization, or if you are still looking to design an approach, these leaders will give you practical dos and don’ts from their experiences. But, you have to be present on the day to gain this perspective.  Visit the program website and register today!

Which U. S. P&C insurance company will be the first to use a social network as a platform to transact insurance?

Part of the hype involved with the Facebook IPO this week is the vision of its founder to establish it as a platform for people to use when interacting on the internet. To me, this means not simply linking from the S.N. to another site, but to actually complete commercial transactions on the social network itself. For insurance, this would have a minimum benefit of avoiding tedious data entry of demographic information that the network already knows about you, age, sex, address, etc.

If you don’t think transacting insurance on a site other than that of the writing company will happen, you can stop reading now — you won’t be interested in the rest of this post. If, however, you are game to consider that a company will try this, read on and get ready to post a comment and make your pov known.

What would be the characteristics of the first U.S. P&C insurance company to use a social site as a platform for its business? Here are some considerations:

Product – Will be one of the commoditized, less differentiated products such as personal automobile, motorcycle, or dwelling: In these lines of business, price and service separate the offerings. Being able to ease the process of obtaining and maintaining insurance will be a driver.

Segment – Likely youthful: The companies first attracted to a S.N. platform will be those with prospects who are most comfortable with the environment, aggravated by traditional insurance distribution and less concerned about personal privacy.

Channel – Direct: As this new way of doing business will involve first-mover risks, it is likely that companies with intermediated distribution will pass on using the platform in the beginning. Upsetting their existing agents with a direct social network approach will be too much to bear.

Culture – Innovative: There will need to be some match between the value system of the insurer and that of the social network company. Stepping into this unknown territory will require that both parties are comfortable with their partner. Thus, insurers which have a reputation for being more innovative will be more likely to reach acceptable terms with the platform provider. Since this will probably be either Google or Facebook, the insurer with the vibe closest to “do no harm” or “hacking” will likely prevail.

Size — Not necessarily the largest: I do not think that the first S.N. insurer will need to be a billion+ organization, but I am sure that the network provider will demand some fairly steep rent and this will restrict the number of insurers able to pay the freight.

Technology – Probably not a barrier: The investment of many insurers in core system renewal should position most of them to take advantage of the open standards that a S.N. is built on.

Regulator view – The wildcard: The most likely insurer, in my view, is one that has a good reputation with the regulators and a decent reputation at addressing their concerns in past market conduct reviews and inquiries. As the response of regulation to this new way of doing business is such an unknown, the company willing to take this step will be confident in its ability to respond to its overseers.

Given these parameters, does anyone come to your mind? In days past, I would have identified the company with the pink-haired lady mascot as a leading possibility, but its recent purchase takes them off the table. It also could be one of the specialty auto insurers targeting the youthful driver market as well.

Post a reply, or email me at, or contact me on LinkedIn or Twitter and let’s knock this around a bit.

The big unanswered social media question – where’s the money?

With the Facebook IPO looming thoughts are returning to how social websites will actually generate money. Sure, Facebook is used globally, has an extraordinary number of users and is the top social network in a growing number of countries – but how is it likely to make revenue? Advertising revenue has always been the principle answer here, whether it’s Twitter, MySpace or any other social network. It worked for Google and it could work here too – couldn’t it? I think it’s interesting that the revenue model for LinkedIn is quite different. There is advertising there but the main focus is around recruiting people and getting recruited. Those people who want to find the best talent pay a little extra to access features that make it easier to do just that – find the best talent. For Facebook however, people use the site for lots of different purposes so it’s harder to hold back such targeted functionality. Actually I think Facebook could learn from Apple and Blizzard – the games company behind World of Warcraft. Blizzard made $1 million in 1 hour by selling a flying horse in their game. The horse was actually no better than ones you could find in the game, and you already had to be able to ride one (so probably had something similar already) in order to buy. It was kind of pretty and just a few dollars so, despite offering no value or advantage in the game millions of players bought it for real world dollars. Zynga and a number of other social game developers have taken this further with the possibility of playing games for free, but paying a little cash to be able to play the game faster or have that one extra thing that looks quite pretty. Virtual goods available at a low price are now a huge market. What does this mean for Facebook? There’s a scam going around on Facebook at the moment promising to be able to turn your Facebook page pink rather than the usual blue. People are clicking on it because they want it – I have little doubt that if Facebook charged $0.10 to change the colour of Facebook profiles we would see them make $1m in less than an hour. Actually though, that’s not even the sweet spot here. If Facebook were able to control the payment method as Apple does in the App store then they could take a little revenue from everyone using their platform, from all the virtual purchases (again, as Apple does on all those little purchases through apps and in the app store). Facebook is starting to do this already – this is what Facebook credits are about. In my view it’s not in Facebook’s interest to offer Facebook branded products (save except for caps or t-shirts possibly), but rather to corner social commerce, to create a platform where it’s easier and more convenient to purchase items in Facebook credits – all the while seamlessly sharing the purchases and implicitly recommending products to their friends. What does this mean for insurers? One is do the virtual goods need insurance? Personally I’m not sure about digital equine & aviation insurance in World of Warcraft or virtual farm insurance in Farmville, but Eve Online did have space ship insurance built in. Does anyone remember Second Life and the virtual businesses operating in it? The second and more important one is that Facebook will become a platform for doing business. The infrastructure is already in place, the opportunity is too great and the current client base too large for this to be ignored. Today Facebook credits are just for games, tomorrow why wouldn’t young drivers top-up their pay-as-you-go car insurance on Facebook? All the while sharing the product and provider with their friends as they do it. Facebook isn’t going to be the next virtual shop on the high street, it will be a new high street on which established brands and new brands build their shops.

Hey Facebook and Google, why I'm Liking it and looking forward to +1ing it

Perhaps it’s because I like technology, because I was born into an age of unprecedented technological advancement, because I’m curious or simply because I’m too lazy to keep in touch with folk but I have to say I love social networks. For me they’re a tool that allow me to keep folks up to date and to keep track of what friends and acquaintances are up to. The whole thing was brought home to me recently when I was tinkering with and talking to my family about my extended family. On a whim I had a quick look in Facebook for my Mum’s cousin and found her, alive and well in Australia. A few messages on Facebook later and I discovered she’d had a few children and there were grandkids dotted around Australia and the US. The real value of Facebook came home to me when I was able to sit down with my 3 year old boy and show him the pictures distant family members had shared and show him where they lived. All this and I can keep them up to date without doing more than i do today – got to love Facebook for that fire and forget, status update to everyone feature. So why use the Facebook Like button? I think about the Facebook Like button in a similar way to Amazon’s suggest feature. Every now and again I go on Amazon and tell it things I would like to get, things I’ve purchased and even rate some of the things. This investment pays dividends in relevant suggestions from Amazon on books and other items genuinely of interest to me. Facebook Like allows me to share likes with my friends and allows Facebook to suggest things I might like, so recently it suggested a bunch of my friends like Terry Pratchett’s Facebook page (I’m a fan of the UK’s most prolific author) and I happily discovered a new book is due out shortly and some of the other activities Terry is up to. For me Tweeting, Updating, Liking, Following, Friending – it’s all about filtering the wealth of information out there to find the bits I’m interested in quicker. I make investments by creating content and sharing it – like this blog post, and for my very small effort I am typically rewarded ten fold. This appeals to the lazy efficient part of me. This is how many (though not all) of my friends are using social networks today. There are issues with all this though. Different groups of people are interested in different things – I know colleagues, ex-colleagues, friends, family, folks who live in my village, people from university, school – people interested in games, technology, mobile phones, insurance technology and wierdoes as Craig Weber described them. Oddly enough I don’t know anyone who is all of these things yet these networks treat them all the same. To some degree using Facebook for some things, Linkedin for others, twitter, skype, etc. kind of works but this presentation on a version 2 of a social network really spoke to me. Google have just announced Google+ – something I’m looking forward to trying out because of a few key features:
  • circles – group friends in different ways so you can share content but only send it to those who’ll be interested. I’m looking forward to creating the wierdoes circle
  • sparks – a feature that claims to go and find content for your interests and pull them together – awesome – why search when the relevant web content can come to me?
  • hangouts – 10-way video chat! Need I say more.
Google+ is in it’s infancy and the literature lacks some of the business focus but I’m sure Google+ will find it’s way into Google Apps for Enterprise in due course. What should an insurer take away from this? The hidden subtlety here, and the reason Google has been forced to respond to Facebook with Google+ lies in sparks, or Facebook like suggestions or Amazon suggest. Internet users are moving away from searching. Brands focussing solely on search engine optimisation will lose out, as will company’s focussed on search. In the future systems will suggest content, reviews, products, brands and insurers to customers based on their behaviour and social circles. Whilst today’s drive to get Likes and reviews seems shallow and immature, it points to a fundamental shift in the role of the Internet in driving the acquisition of new business. It’s hard to say where all this will fall but a few things are clear:
  1. Whether we like them or not facebook and social networks in various guises are here to stay
  2. Google has re-entered the social network space, even if it’s not successful (like orkut?) the new features will change other social networks
  3. Social networks and they’re features are changing the way we interact with the world, each other and with insurers. Like Google, the insurance industry will be forced to respond
For more look at our coverage of social, read why Craig Weber isn’t using Facebook and look out for more on the value of Facebook pages and the social internet for the insurance industry in future posts and research. I’m off to tweet, like, post and +1 this blog post.

Hey Facebook: I’m Not Liking It

I shouldn’t admit this, but Facebook makes me queasy. I recently killed my personal Facebook account that the Class of ’83 Reunion Committee begged me to create.

Maybe it’s my unwillingness to finally be found by all those weirdoes I spent most of my high school years trying to avoid. And unlike LinkedIn, which focuses on my professional resume, on Facebook I’m supposed to put personal pictures and photos up on my wall, for all to see? I don’t think so.

Or maybe it’s the Like buttons, which have transformed “Like” into an action verb.

They remind me of second grade, where clandestine notes were used to figure out if someone “liked” someone else. As a lovelorn youth, I once tried to innovate this process by folding my note into an airplane and flying it to my target in the middle of class. Only it landed instead at the feet of my teacher, Mrs. O’Brien. She unfolded my plane, read my amorous profession silently, and handed it back to me. The answer to my question—if I ever got one—is lost to history, while the shame of my failed special ops communication persists.

But now my aversion to Facebook is extending into my professional consciousness. As if sharing of personal information and capturing the cheesy Likes of millions of users weren’t bad enough, new negatives are emerging. Businesses, not just individuals, are getting into the act. Some are creating special 2-stage fan pages, where new visitors have to Like the page to see all of the content. Even worse: Some businesses are providing hard incentives to visitors who Like their content, in a cynical bid to punch up their Like count and get their messages in front of the ever-expanding networks that are forming.

Anyone who has tried to resolve the wildly conflicting opinions found on Zagat or TripAdvisor or Ebay knows that feedback from strangers is of questionable value in determining the truth about goods or services. People’s experiences are hard to compare, even simple ones. And I have found that not many people view the world exactly the way I do, valuing the things I value and discounting the things I discount. I’m also certain that competitive misinformation, spread by competitors posing as dissatisfied customers, is rampant.

Even retreating to the comfort of your hand-crafted “social network” (ugh!) does not guarantee that you’ll turn up useful, honest, actionable data. Without talking to my friends directly, I have no way of knowing why they clicked on the Like button. Was it to congratulate a vendor on a job well done? To beef up their own level of activity to make themselves more relevant? Or perhaps to get 15 percent off their next online purchase? An analytical tool of questionable value has been further devalued. I think we should all unfriend Facebook, right before Social Studies.

Claims Investigations Using Social Media

I had a very interesting discussion with a claims investigator last Thursday at Celent’s industry networking event in London (New Rules of Engagement: How Digital and Social Innovation Challenge the Insurer Business Model – see Nicolas’ summary of the event on the Celent Blog). He went into some detail about how they were using social media in their claims work.

As background, this gentleman is the Managing Director of an independent investigation company based in London which serves the UK market. His company has expertise in both personal and commercial claims and is hired by insurance companies to detect and research suspected claim fraud.

He confirmed what I have heard from other claims investigators – their first step in an investigation is to check the social networking sites for information. What he added was a richly descriptive context in which this information is used.

The interview sounds as if it is out of a television script. Paraphrasing his comments, they went something like this:

“After obtaining some interesting information from social sites, we bring a claimant in to the office for a chat. I often say “May I make you a cup of tea?” I then lay a folder on the desk and say “Have a look at this whilst I get your drink”. I then leave the room and they invariably open the folder. In it, we have screen prints of Facebook postings, pictures, Twitter feeds, etc, all of which refute basic facts in their claim statement. Many times it is not the pictures that are most incriminating, it is the text that they have posted themselves. For example, we have discovered postings that read: “I had a great time in Ibiza. I danced all night!” (This can cast some suspicion on the status of a back injury that is paying disability!) I return with their tea and say “Have you had a look? Great. Super. Now, there are only a couple of ways this can go…one, you can sign a paper that relinquishes your claims payments and agrees to pay my fee or two, don’t sign it and we will hand this information over to the police who will begin a criminal investigation.” Obviously, almost all sign.

I felt as though I was in a television show, but a couple of specifics really intrigued me about his comments. First, when I have seen the “have a look at the folder” technique on TV, it almost always contains pictures that someone has taken without their knowledge, or transcripts of wiretaps – both collected by a third party. What is very different about this “evidence” is that the claimant posted it him/herself and offered it freely for the world to see. Something to be said for the efficiency of self incrimination.

Second, I agree that there is an uncomfortable, “big brother”, “Orwellian” aspect to this type of monitoring. I have seen some opinions that criticize insurance companies for using such tactics. My stand on this issue is that insurance fraud costs all of us money and if someone who is adding to my insurance costs can be found out through their own hand, I am all for it. Invading privacy is not acceptable, but using what is voluntarily placed in the public domain should be employed to its full use in order to match insurance rates and coverages with actual exposure.

Location, location, location….. be-ware!

A recent conversation with a concerned aunt reminded me how location-aware and enabled our world has become. My aunt was worried that her teenage children were being a little too forthcoming about family movements on the social network sites. She knew her daughter had posted about an impending family holiday. She’s right to be worried.

Legal & General’s latest digital criminal report highlights once more the dangerous of the proliferation of location-aware services like Gowalla, Foursquare and Facebook places. The report notes that the younger you are, the more likely you are to give information away concerning your whereabouts, with nearly six out of ten 16-24 year old sharing their holiday plans – which could be a cause for concern for parents, and certainly my aunt.

For those with malevolent intentions, the process is surprisingly simple. Few people are aware that anyone can purchase private address information, which is based on the electoral role. Armed with this data, notifications of when people are away, photos of housewarming parties showing contents of house, and pictures of animals indicating the likelihood of cat flaps or open windows, the burglar has a pretty easy job. This poses an increasing claims threat for insurers and an opportunity in educating consumers.

Another side of location-aware technology is more benign. Advertisers can target consumers by location using services such as Ji-Wire , which launched in the UK last month. Its deal with BT Openzone means it is has access to users of Wi-Fi networks in more than 4,000 ‘hotspots’ – and can target them with localised ads when they log on. One of the first advertisers is insurance firm Hiscox, who signed up this month and will integrate its digital media campaign with local poster activity. Using location aware services can open a whole new world of advertising for insurers in a digital media world (See Celent’s digital media report)

Whether on the defensive or the offensive, the time has arrived to understand the opportunities and threats of location aware services in new media.

Our event in London– New Rules of Engagement: How Digital and Social Innovation Challenge the Insurer Business Model — will cover this topic in more details. We hope to see you there.

Social Media so hot, Ben & Jerry's email marketing melts

The story that Ben & Jerry’s are dropping email marketing in favour of social media hit something of a sweet spot with me. Not only do I not like trawling the ever increasing mass of emails each day but I also have a keen interest in how the Internet is evolving and a highly developed sweet tooth. The story is quite interesting as it tracks some of the trends Celent observed in our Digital Marketing in Insurance report. For many insurers email marketing and communication is the primary digital method of reaching consumers, however most insurers saw social networks and social media as becoming an increasingly important channel to market. Perhaps Ben & Jerry’s move is both a little early and a sign of things to come. This also comes at a time when rumours abound regarding yet another social network set to come from Google, possibly to be called Google Me. Indeed there are stories that disenfranchised companies working with Facebook may already be signed up to work with Google Me. A slide show published by a user experience researcher at Google offers some insights into the key issues with current social networks, how the new social network will look and the features it will offer businesses. For insurers looking at social networks as a medium to customers or looking at how they can expand their use of social networks Celent’s report on the subject may well be of interest. Addendum: Also making waves in social media is the old spice campaign on YouTube. Effective use of this style of campaign is discussed in our report but it is particularly well executed here.

Facebook, meet the Regulators…

By whatever measure you choose, Facebook is growing up fast. The company reports 400 million active users spending 500 billion minutes per month. Over 70% of users are outside the United States. And all this in an unbelievable 6 years since the site was launched in a student dorm room.

Such sudden growth does not come without attracting considerable attention from regulators. In the US, several consumer protection agencies filed a complaint with the Federal Trade Commission and sent a letter to Congress that charges Facebook with engaging in unfair and deceptive trade practices in violation of consumer protection law. EU data protection officials have written to Facebook saying that the plans to share user’s information with outside websites is unacceptable. And here is lies the core of the problem in Facebook’s next phase of growth.

To become a viable business operation, Facebook needs to find a way of monetizing it’s core asset – which is all that data about Facebookers. There is a revenue stream from the application developers, but this will not be enough to satisfy the group of private equity backers. The company reported that it was cash-flow neutral in September 2009 but the major growth will only come from a new revenue stream. Targeted marketing is where the company will gain huge revenues, but will the regulators in the UK, EU and US ever allow them to do that? The answer to that question remains unclear but there is going to be a ugly and dirty fight.

As a backdrop to the regulator-company discussions, comes a marked anti-facebook rhetoric. The query on Google of “how do I delete my Facebook account?” (the answer is with considerable difficulty) has become a very popular query showing concern amongst consumer themselves. Riding on the wave of anti-facebook sentiment come Diaspora , a project that looks to develop an open-source social network that eliminates the midddleman, the “anti-Facebook. They raised their required capital, admittedly not much, in under a month. Another example of the backlash is a site called somewhat tongue in cheek, Websuicide which helps users delete their presence on social network sites. Facebook blocked the site in January this year and there is current threat of legal action.

For corporations such as insurers looking to leverage sites such as Facebook, these developments are worth taking on board. Celent has been encouraging insurers to look at where social networking might play a role in an overall digital marketing strategy. This is still the case – the current debate with the regulators underlines just how much of an emerging area this is. And with all emerging technologies, the sage advice is always to proceed with caution. The coming months will bring some clarity in the rules of engagement between social network sites and regulators, but it’s hard to imagine a world without Facebook. Facebook is probably here to stay – the question will be just how big their sandpit will be.