Using private consumer data in insurance: Mind the gap!

Insurance is no different to other industries when it comes to capturing valuable data to improve business decisions. At Celent we have already discussed how and where in their operations insurance companies can leverage private consumer data they can find on social networks, blogs and so on. For more information you can read a report I have published this year explaining Social Media Intelligence in insurance.

Actually there are various factors influencing insurers' decision to actively use private consumer data out there including among others regulation, resources adequacy, data access and storage. I think that an ethical dimension will play a more important role going forward. More precisely I wonder whether consumers and insurers' perceptions about the use of private consumer data are divergent or similar:

  • What do consumers really think about insurance companies using their private data on social networks and other internet platforms?
  • What about insurers; does it pose an issue for them?

In order to assess this ethical dimension, we have asked both insurers worldwide and also consumers (in the US, UK, France, Germany and Italy) what where their view on this topic. To insurers, we simply asked them what best described their opinion about using consumer data available on social networks (Facebook, Twitter, LinkedIn, etc.) and other data sources on the internet (blogs, forums, etc.). To consumers, we asked what were their opinions about insurers using these open data sources for tracking people potentially engaged in fraud or criminal activity.

The following chart shows the result and indicates that there is a big gap between the two sides:

UseConsumerData

Overall what is good for consumers is not necessarily good for insurers. In the same way, what insurers want is not always in line with what consumers expect from their insurers. Going forward the question for insurance companies will be the find the right balance between the perceived value of private consumer data and customers' satisfaction. In addition, it will be tough for them to figure out the impact (pros and cons) of all factors at play in the decision to invest in technologies allowing for the efficient use of private consumer data accessible on the Internet.

At Celent, we are trying to define a framework that can help them structure their reasoning and make an optimal decision. So more to come in the coming weeks on this topic…

Social media intelligence and insurance – don’t listen to everything if you want to hear something

In a 2011 report titled Using Social Data in Claims and Underwriting: Creating a Social Risk Profile, Celent looked at how insurers could leverage social networks to do a better job in claims and underwriting. Since then, we have been looking at vendors who can complement insurers internal data with external data sources including social media data and this in the frame of different applications that go beyond underwriting and claims. We notably have profiled and will continue to profile vendors active in the predictive analytics space and for which data sources are as important if not more important than pure features and functions they offer as part of their system. Using social media data in insurance has become more important over the past few years and what can be called now social media intelligence goes beyond a simple technology that taps in all sorts of social network data sources. Indeed for many people social media intelligence or what people also call social media listening purely consists in screening social networks to get data that can complement internal data to make a better business decision. Actually this definition is too succinct and does not include all key phases a proper social media intelligence strategy should include: ScreenHunter_496 Feb. 29 10.29 So we define social media intelligence as the strategy consisting in:
  1. Defining strategic objectives that are dependent not only on internal but external data,
  2. Defining a referential or a group of topics, relevant social media platforms as well as a geographic and language scope to be considered for the analysis,
  3. Filtering and analyzing social media data regularly (real time, daily, monthly but it is generally a continuous process)
  4. Implementing an action plan leveraging findings derived from the data analysis to achieve the strategic objectives initially defined.
We think insurers can learn from project and use cases other industries have gone for in the Social Media Intelligence space and we are interested to better understand how these examples can generate fruitful ideas for insurers. Stay tuned as Celent will be covering this topic in more detail in the near future.

Bending the Supply Chain Into a Supply Network

The image of a supply chain is linear, stretching from one point to another, link-by-link, in an orderly procession. If each part does its part, success is realized. But, we all know that business does not really work like that.  Rather, activities are more random, concurrent and fluid. The case studies at the Celent innovation event, What’s Next: The Search for Disruptive Innovation, https://www.regonline.com/builder/site/Default.aspx?EventID=1237201 will explore how companies are making the transition from the step-by-step chain to the dynamic network that we increasingly experience. Over the next few weeks we will give you a preview of the program. This week we will preview cases of financial services firms that are using social networks to create new collaboration patterns with their customers, distributors, and employees. We have some fantastic examples of companies that are extending social technology in order to bend their supply chains into supply networks. The companies presenting on October 3 in San Francisco have applied social collaboration well beyond the Marketing function to use them to change traditional relationships between customers, distributors and employees. I’m not going to steal their thunder and give away all the valuable details in their cases but here’s a thumbnail sketch of what you’ll learn in the sessions:
  • How does an insurer reduce fraud, manage risk, decrease losses, minimize customer acquisition expense, and lower processing costs all at the same time? Join Sebastian Herfurth, founder and co-CEO of Friendsurance as he explains how his company is using social collaboration to turn the traditional insurance model on its ear and accomplish all these goals simultaneously.  His presentation details the mechanisms that allow their customers use social networks to agree to “cover” each other if there is a loss.
  • Don Montanaro, CEO of TradeKing Group, will describe how their focus on social networking immediately differentiated their firm from the 600-pound gorillas in the online brokerage industry by providing a safe, collaborative environment for investors to interact with peers and with the company itself. He will share examples of how TradeKing operationalizes social. Working closely with securities industry regulators to leverage social’s power beyond marketing, they have built industry leadership in key business functions like customer service.
  • With the increasing need to innovate and change the way business is being done, companies continue to struggle with tapping the skill and knowledge of their employees to identify ways to transform the business. Everyone recognizes what a valuable resource associates can be, but it is very difficult to collect and refine the “next great thing”. Chubb & Son uses social technology to build innovation as a part of the day-to-day, natural activity stream of all of their employees. Jon Bidwell, SVP and Chief Innovation Officer, will describe the social platform that reaches directly to front line support staff and interacts directly with agents and customers to engage them in the product development and feedback process. Their lessons learned are surprising and insightful.
The conference is a unique offering that will allow you to take a deep dive into what innovative leaders in financial services are doing to exceed market expectations.  If you haven’t already, join us in San Francisco on October 3 by registering today https://www.regonline.com/Register/Checkin.aspx?EventId=1237201 and stay tuned for more updates!

Social Media at ACORD LOMA was Really a Social Discussion

For the first time at ACORD LOMA one of the sessions was a discussion, a workshop on a topic that required the audience to participate.  The session, “Social Media in Business: Friend, Foe, or Who Cares” was moderated by Mike Fitzgerald of Celent and in the end was well attended and well received. When I first walked into the room, I noticed the room set up was different than most sessions.   So did the others who followed.  Instead of rows of chairs and tables, the tables were a U.  There were only 30 chairs so the audience was limited to ensure the discussion flowed.  Most people came in, sat down and made him or herself comfortable, but it was evident that a few did not expect the layout.   A few people stepped into the room, looked for a seat, and opted to leave when they saw the layout and format of the session.  This was different than other sessions. And yes, it was different.  The session began with introductions of each attendee. Slides were limited.  Questions were asked of the moderator at first, but it quickly turned to the attendees asking the other attendees how things were being done where they worked.  It was exactly how a Social Media discussion should be! Mike presented a few slides on the different levels of social media involvement.  Most insurers are still at the infantile stages of social media, meaning that the insurer is in the marketing or media stage of social media.  They are promoting brand, using mascots, and getting their presence known in the space.  However, a few in insurers in the room had moved into the next two stages in Social Media use, meaning they were further along in their use Social Media.  Some insurers had developed networks both internally and externally using social media.  This is often done through agents or agencies with customers or even within the enterprise itself.   Others had gone as far as setting up methods for listening to Social Media chatter to understand and react to customer postings and feedback.  The level of use of social tools for both internal and external engagement was a surprise. Use of social for customer service was also covered.  Results from the Celent report Realizing the ROI of Social Media in Insurance: Listen to the Mirror were reviewed. This research scanned over 350,000 posts that consumers left about their insurance companies – what topics were posted, what sentiments were expressed, etc.  Real-life examples were offered by two of the participants in the room who exchanged their personal experiences using Twitter to engage with insurers about complaints.  In both each case, the negative Tweet was answered, however, it was noted that neither person posted a subsequent positive, follow up Tweet! Overall, the consensus of the group was that is medium is an effective and rapid way to get attention. The final topic dealt with using social data for core insurance processes such as claims and underwriting.  Multiple participants reported that their Claims areas were accessing social sites as part of their investigations process.  The group agreed that there is potential for use (and misuse) of social information in Underwriting, but that this area is still very much emerging. Based on this experience at LOMA/ACORD, I encourage you to look for the discussion group sessions at next year’s event.  It was a valuable source of information and enjoyable, too.

If only we could trust data available on social networks…

Some insurers are starting to launch e-reputation insurance products for individuals. Indeed, in France Swiss Life started to launch last year an insurance product targeting students about to start a professional career or any persons worrying about all data and information about them on the web. Very recently Axa France also launched a similar insurance product. While it’s been a while that we have been speaking about how insurers can leverage social network data in claims or in underwriting, it seems some of them just apply the simple rule that consists in recognizing these types of data just represent a new business opportunity. With the importance taken by the notion of self-image and reputation in the public (not only the young one), I tend to think this is an interesting field to investigate. In the case of Swiss Life, the insurer uses a dedicated e-reputation agency called Reputation Squad and, for a bit less than €10 a month, the insured can action the insurer’s e-reputation agency, who will try to put pressure on website or social network owners and ask them to erase data using the threat of a battery of juridical means. Of course, it’s almost impossible to erase all kinds of data related to a person from sites and social networks on the net and it is here that the real issue appears. Actually if there are still data left after all the juridical measures have been triggered, the insurance service proposes to flood existing data with a massive positive information and data content about the insured. While I think there is certainly a need to fulfill when insurers propose specific juridical assistance to erase data about their insured from social networks and specific Internet websites, I think flooding the web with exclusively positive information about a person demonstrates how harmful open data on the web can be. It raises two simple but important questions for insurers: Can we trust information publicly available on social networks? If external sources – in our case here insurers in the frame of their obligation towards insured with regard to e-reputation insurance products but we can assume insurers are not and will not be the only external sources playing a role in here – start flooding the web with biased data about individuals, is it really a case to leverage social network data for claims and underwriting in the long run? Addressing these questions should be according to me the starting point of an evaluation to invest in technologies whose objectives are to leverage social network data.

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 mfitzgerald@celent.com, or contact me on LinkedIn or Twitter and let’s knock this around a bit.

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.

Meerkats and insurance brands

The Economist this week made an interesting point about brands. The public downfall of Tiger Woods is attributed to wiping of $12 billion in value of his then sponsors, Gatorade and Nike. From someone who is not offay with the world of marketing, this seems like a devastating consquence that was out of the hands of the brands. Since insurance isn’t a consumer brand, it’s hard to imagine such a negative impact of the brand association. When Swiftcover launched their Iggy Pop ad campaign, and the press released the fact that the insurer didn’t cover musicians, it was hardly a black day for the insurer. So whilst there isn’t much negative impact on the brand, there are some examples of a posititve impact. In the United Kingdom, there is a delightful campaign around Aleksandr Orlav, the meerkat—a fictional meerkat character used by BISL Limited in the comparethemarket.com advertising campaign. Comparethemarket.com has an advertising campaign based around a mock similar website. Originally the name was selected to highlight the “market” element of the website, since “compare” is a common term now in UK aggregator websites. The meerkat character has appeared in television, print, and online media adverts. It’s a bit like marmite – it’s a love or hate relationship, but no-one I know has been put off using CompareTheMarket’s website. And what’s really interesting is the effect of brand association with the meerkat. As the figure below shows, the meerkat campaign has helped increase traffic to the “sponsor” website”. The meerkat also has the highest number of followers for UK insurers in social networks (Twitter and Facebook). This is one of the few examples of a succesful social network strategy, even if we measure the success only on page hits. What’s clear from our conversations is that insurers are puzzled about how to leverage this new technology, and worry about chasing rabbits (or meerkats) down dark holes. We’ve pondered this topic too and will publish a report next week – here’s to navigating rabbit holes and meerkats together.

Social Search Engine Optimisation? Google's Buzz is part of a bigger strategy

Just before the Google Buzz announcement (and associated bad press) Google announced a change to its core search product. This is a potentially huge change and a pointer to Google’s broader strategy. Given the annual budgets aligned to SEO (Search Engine Optimisation) for Insurers, IT Vendors and brokers alike, this change deserves a closer look. Social search was originally announced last year as an experiment and then released as part of the core search product this year. In brief, social search uses a persons connections to personalise the search results. So for instance, if you search for Car Insurance and your friend Bob has something to say about Car Insurance on a blog or Twitter – then you will see a link to that in your search results along with a summary. For example in my Twitter feed I follow Aleksandr Orlov – the meerkat character used in comparethemarket.com’s advertising campaign. In my search results for Car Insurance I see an update from Aleksandr suggesting I go to comparethemarket.com. In effect free advertising for that brand. Of course if one of my friends has had a bad experience with a particular insurer the details of that will be visible to me in the search results too, and I would likely get in touch with them as a result to understand the issue. It becomes clear where Buzz fits in with Google’s strategy – Buzz is less about creating a new Twitter or Facebook, but more about getting users of Google’s products and particularly the search product to provide more, rich information about their own content and their network of friends. Why is Google introducing this change? The Guardian newspaper in the UK recently reported that more twice the number of people were coming to news organisations web sites from sites like Facebook and Twitter than from Google News. This demonstrates a huge shift in the way people are interacting with the Internet. In the last decade people went to a portal or plain search engine web site and keyed in what they’re look for. In this decade people are being fed relevant links from their network of contacts. This again places Buzz as a core part of Googles strategy to remain relevant on the Internet. What does this mean for insurance? Simply, the automation of word of mouth. It means that the various social network sites will become increasingly important. Many Insurers are already investing time in a Twitter and Facebook presence and must continue to do so. Not only will Twitter updates and Facebook updates appear in front of people when they use those websites but increasingly these updates will appear in search results. Positive comments about the company should be repeated and lauded. Negative updates from customers will appear in their friends search results, responding directly to criticism where possible and stating your brands position will become increasingly important. Of course, you could take this approach and ask your customers to ask their friends about your product. Look out for Celent’s upcoming report on Digital Marketing. Feel free to add your comments below too.