It is amazing how much society has changed over the last few years. The advent of social media has influenced where we get information, how we work, the tools we use, and most important, how we communicate with one another.
The way in which we exchange thoughts and information has changed so drastically that companies are struggling to keep up with the new reality. In a world of services such as Facebook, Twitter and YouTube, how should we conduct ourselves? How do we remain relevant? And how do we protect both ourselves and our businesses?
CHANGING SOCIAL INTERACTION
Until recently, social interaction was governed by the rites and rituals inherent to physically meeting in person or by phone. Outside of broadcast media, communication was limited to those with whom you shared a personal relationship (friends, family and colleagues). Social media - or perhaps more appropriately termed "unsocial media" - provides ample opportunity to communicate with the masses, but does so in a way that is without relationship or intimacy.
Face-to-face meetings are being replaced by Google+; rather than sharing interests over a glass a wine or cup of coffee, people look to websites such as Pintrest; chatting on the phone has been usurped by texting; and Twitter and Facebook allow individuals to monitor the actions/events of others without actual interaction.
These new tools are fundamentally different from the social interaction behaviour innate to the evolution of our species. Rightly or wrongly, our society's approach to interaction is changing and there does not seem to be any signs of it slowing down.
LOSING HUMAN INTERACTION
So how does this affect the insurance business? Although insurance is known to be a conservative industry, where the pace of change and adoption of new technology has been slow and methodical, it too is seeing a dramatic change.
As a technophile, you would think I would be embracing and supporting this transition; in reality, I struggle with the lack of human interaction these tools provide. Lost is the interpretation of someone's tone and intent when speaking on the phone; gone too is the ability to read body language and adapt the conversation appropriately when meeting face-to-face. While sharing a meal in person, one can gain better insight into a person's likes and dislikes through the conversation as it relates to the environment, the meal and the atmosphere. In sales, these are all physical cues that can provide insight into the customer. Reading emotions and reacting accordingly is a key factor in building a long-term relationship that ultimately leads to more sales.
STRETCHING THE TRUTH
Beyond the unsocial aspects of social media, there are fundamental differences in the way we act online compared to in person. My brother, who runs a mortgage brokerage, has found that people who submit applications online are much more likely to omit, distort or blatantly lie on an application compared to those who submit in person. One applicant had gone so far as to lie about filing for bankruptcy only two months prior.
People take liberties when hidden behind the veil of their iPad screen. Even in light of the growing number of inaccurate applications, my brother reports there are far more submissions coming in via the internet than the phone; it is a risk he has to take.
BEWARE OF SHARING
It is amazing how much information - true or false - people offer up to the online world without ever thinking about the potential consequences to their privacy. One man's trash is another man's treasure in this case.
Employers frequent online sources to gather information on potential hires. There have been cases involving people submitting injury claims and being denied settlement because of information discovered on their Facebook profiles. It is even possible that information retrieved via social media channels could be used by insurance companies at the time of underwriting.
The reality is that the vast majority of people who share information so openly online would never do the same in person. And, unfortunately, once the information is posted it will always be out there.
The cloud-based storage services that have become so popular of late are not immune to having their data compromised (or in some cases legally accessed by third parties).
Social media has encouraged this blind trust; society's ignorance towards the business model behind the software being used. Current online behaviour allows companies to collect and analyze personal data that is then sold to the highest (and lowest) bidders. In the era of targeted marketing, this is big business.
CREDIT SCORING TO INCREASE
Credit scoring has become an integral part of the underwriting process, especially for direct insurers. Credit scoring offers a roundabout way to infer a person's character as a driver or homeowner by extrapolating that against their ability to maintain a good credit rating. Although the two items do not directly correlate, it does assist the underwriter as they have little opportunity otherwise to assess character. This is an area where brokers clearly have a distinct advantage.
If the direct business came in by phone it would at least provide some gauge of trustworthiness by allowing the underwriter to interpret the tone and tendencies of the individual's voice.
As a result of the directs employing credit scoring, other insurers have followed suit and have embraced the practice as an added sanity check over and above the broker's frontline underwriting skills.
Brokers need to be extremely careful with how they utilize the credit information they obtain. It is only a matter of time before a major insurer announces a breach of its security and the loss of consumer data.
KNOWING YOUR COMPANY'S ONLINE REPUTATION
Much like an individual, a business' reputation can also be seriously harmed within the virtual landscape of Face-book, Twitter and blog discussions. Opting not to be online may hinder growth and it may surprise many brokerages that they are being discussed on the web.
Insurance is highly competitive and it only takes one disappointed customer to create a negative perception.
Unfortunately, online negativity is very difficult to address.At a minimum, companies should perform frequent searches to stay in tune to their "online image" and, ideally, address any problems as they arise. There are successful firms, such as Radian6, whose sole purpose is to track brands online through the social channels on a company's behalf. A company can then address any discontent in a timely manner to protect its respective brand.
ADAPTING TO UNSOCIAL MEDIA
The challenge going forward, for brokers and carriers alike, is to be able to adapt your business so that it remains truly connected with customers, while still leveraging social media as a sales tool. Successful companies will need to embrace this new opportunity and use it to their advantage.
Monitor your online brand and understand how customers want to interact. Unsocial media is here to stay and companies must, at a minimum, be able to co-exist in both the real and virtual worlds.