A natural fit for financial services, but still finding its way
OLDWICK, N.J., May 4, 2015—A.M. Best has released results of a survey that asked U.S. insurance companies about their internal and external use of social media.
The Best’s Special Report, titled, “Social Media: A Work in Process,” states that social media is a natural fit for the insurance industry, given the “relationship” bond inherent in social media. According to the A.M. Best survey, approximately 55% of respondents use social media in their business model as a strategic business initiative and approximately 75% of these insurance companies use social media for marketing, advertising, and brand awareness for products and distribution.
However, the strategy remains a work in process as evidenced by survey responses, as approximately two-thirds indicated that their social media strategy is not as effective as they would like. The use of social media has become ubiquitous, especially with the increasing use of smartphones and other mobile technologies.
Millennials lead the charge
The Millennial generation is especially dependent on technology and as the largest living generation, now surpassing the Baby Boomers in size; corporations—including the insurance industry—are investing to find innovative ways to effectively reach them.
Within its own workforce, the insurance industry has allowed its employees access to social media on the job, with only 21% of respondents indicating that they allow no access to social media. The survey also found that the top three social media platforms used by the insurance industry are: Facebook, LinkedIn and Twitter, respectively. For the most part, social media is used to reach out to current policyholders and agents.
For many years, companies have been trying to find cost-effective ways to reach the so-called underserved mass middle market. Going forward, A.M. Best expects social media to expand to the mass audience in efforts to generate greater industry and company brand awareness. Larger companies are already employing this strategy of a broader outreach.
A.M. Best believes that for the near term, the monetization benefits of social media will be limited for the industry; however, the future opportunities presented by social media are clearly evident, and the potential for negative online feedback from consumers or agents posting inaccurate information is an area of emerging risk for insurance companies.
Regulators also have been monitoring the expansion of social media, and A.M. Best believes that overall management of social media programs will be a growing part of operational risk management for the industry.
For a full copy of this special report, please visit here. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.