Direct writers likely to be first to use social platform for selling insurance: Celent

The first U.S. property and casualty insurer to use a social networking site as a platform for its business will likely be a direct writer that offers personal auto, motorcycle or dwelling insurance and not necessarily one of the biggest insurers in the market, Mike Fitzgerald, a senior analyst at Celent, wrote on his Feb. 3 blog.
In his blog post, Which U.S. P&C insurance company will be the first to use a social network as a platform to transact insurance?, Fitzgerald listed key characteristics he believed the first P&C insurer to use a social network site for selling insurance would possess.
Facebook’s initial public offering on Feb. 1 prompted the blog post. The vision of Mark Zuckerberg, the founder of Facebook, is reportedly to establish the site as a platform on which people can actually complete their commercial transactions.
According to Fitzgerald, key characteristics would include:
•A commoditized product like personal auto, motorcycle or home insurance, where price and service separate the offerings.
•Companies that are targeting consumers currently most comfortable using social networking platforms. Such consumers are typically irritated by traditional insurance distribution and not as concerned about personal privacy.
•Insurers with intermediated distribution will pass on using the platform. “Upsetting their existing agents with a direct social network approach will be too much to bear,” Fitzgerald wrote.
•Insurers that have a reputation for being innovative will be more likely to reach acceptable terms with the platform provider.
•Although the first insurer to use a social network may not be the largest, it will still need to meet the network provider’s “steep rent.”
•”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,” Fitzgerald wrote. “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.