Social networks could become an insurance distribution channel in two years: Gartner research

What if social networks such as Facebook, Myspace or Google+ were to become an insurance channel unto themselves in the next two years?
Juergen Weiss, a research director at Gartner, a technology research firm, said this kind of development could be a very real possibility — perhaps as early as by the end of 2014.
Weiss hosted the Gartner Webinar, 2012 Industry Predicts: Disruptive Technologies for Insurers, on Jan. 11. The Webinar outlined four planning assumptions Garter made in predicting some of the key disruptive technologies for insurers in 2012.
“Our [fourth] planning assumption from our 2012 predicts is a pretty aggressive one,” Weiss acknowledged. “By year-end 2014, within the next two years, we are going to see that at least one social network provider will maybe become an insurance channel. If that happens…it would be a major disruption force for the entire insurance industry.”
Weiss did not name any specific social network providers that are prepared to offer insurance services. He also noted that regulators would have an impact on the possibility of this occurring. But he did see three reasons for believing that social networks could easily make the jump into the insurance services space.
“First of all, we can see that social network providers are already investing in beefing up their capabilities around financial services,” he said. “For example, in the banking space, in the mobile payments space.”
Since insurance services are already in the virtual space, social networks could use their networks to extend their reach by offering insurance services to different generations of users. Most likely this could be done through some kind of ‘white label’ arrangement, in which the insurance product is sold under the brand of one company (a distributor) while a separate company (an insurer) actually provides the product.
The failure of the insurance industry to fully engage the virtual space may be opening up an opportunity for social networks to fill the void left in their absence, he added.
“We…believe a lot of life and P&C insurers are currently failing to explain and convince their services to a lot of young people in the new market, so there will be strong competition in that [social media] space,” Weiss said. “And we can also see that…a lot of insurance products have turned into commodities and consumers are very much looking at the price.
“They [consumers] are looking at a much more personalized and individual service. In that aspect, we do believe that social media providers may have an opportunity to attack the market from an insurance provider perspective.”
In addition, Weiss added, insurers have “failed so far” to develop mature e-services for their clients.
“They have also failed on many occasions to develop less complex products,” he said. “It’s not very convenient and it’s too complicated to apply for new insurance, and we do believe that this is going to be an opportunity for a disruptive provider to transform the industry.”