Insurance is a collaborative industry. The bulk of insurance sold in the United States is through intermediaries, often an independent agent. Accordingly, carriers and producers have spent a great deal of time, energy and money on tools aimed at facilitating their relationships.
One new class starting to bear wider consideration is social networking tools. Perhaps more than any other technology, social networking exemplifies the trend of the "consumerization" of IT, where, inverting tradition, technologies developed in the consumer market end up being used within the enterprise.
Insurers have, for the past few years, leveraged consumer-oriented networking platforms such as Facebook for external purposes. In fact, a quick perusal of Facebook confirms that GEICO's cavemen and gecko do not want for online friends and followers.
However, it is precisely this consumer market pedigree that may give some in the enterprise pause about incorporating social networking tools into their technology infrastructures. For valid reasons, such as perceived loss of message control, there are companies that are terrified of using Facebook and Twitter.
The argument advanced is that these technologies are best suited for the periphery to help in customer-facing endeavors such as marketing and brand-building. Accordingly, many proponents of using these tools within the enterprise bristle at the term "social networking," favoring instead the moniker "business networking."
Irrespective of what you call them, these networking tools designed specifically for the business are beginning to emerge, and promise to drive deeper into the enterprise. "The big question is: How do we - or do we - integrate social networking into our platforms?" says Craig Lowenthal, EVP and CIO at New York Marine and General Insurance Co. (NYMAGIC).
Indeed, the challenges around adopting social networking tools in the enterprise center largely on integration. This need for networking tools to complement existing solutions has not been ignored by vendors, says Jeff Goldberg, senior analyst at Boston-based Celent, noting that many vendors offer comprehensive suites of collaboration tools as part of their core system offerings.
"You'll see many vendors that sell agent portals and policy administration systems build this functionality into that," he says. "There already are vendors that have mini-social networks built into their underwriting systems."
While these baked-in solutions may be an enticing option for carriers already undergoing a modernization push, there are many point or hosted solutions of which carriers can avail themselves to achieve social networking functionality without replacing existing systems or infrastructures. Companies such as Washington, D.C.-based Present.ly and San Francisco-based Yammer Inc. offer micro-blogging tools expressly designed for enterprise use.
Karlyn Carnahan, a principal in the insurance practice at New York-based Novarica, notes that many of these tools are inexpensive, and readily adapt to a carrier's server-centric architecture. "These are open platforms," she says. "It doesn't matter if you use .NET or Java, and it doesn't matter if you use Oracle or DB2."
Where and How
With viable business networking tools readily available, the question then becomes where best to deploy them. "Carriers are using the tools in two ways: for carriers to communicate with agents and for agents to communicate among themselves," Carnahan says.
Thus far, the most prominent examples exist of the latter. Using Web-based technology from Palo Alto, Calif.-based Ning Networks, carriers such as Columbus Ohio-based Nationwide Mutual Insurance Co. and Los Angeles-based Farmers Insurance Group have created networking sites expressly for agents. The agent-only networks afford users a forum to form groups, interact with other agents, browse profiles and form friendships over common interests. It is the self-organization engendered by these tools that make them so effective, proponents say.
Goldberg says underwriters also could benefit from this type of networking. "For example, an underwriter could add requirements to certain types of policies and have them show up immediately on others' desktops," he says.
However, using business technology tools to catalyze the much more complex relationship between agent and underwriter brings both cultural and operational challenges.
"It's not as straight forward as adopting a technology," NYMAGIC's Lowenthal admits.
With both carriers and producers heavily invested in systems to facilitate their relationship, push-back against new technologies can come from both the business and IT sides. While social networking tools may provide an ideal avenue to elicit input from producers, they lack the functionality found in modern agency management systems such as endorsements, renewals and real-time rating.
Stressing this distinction may go a long way to allaying concerns among both producers and carriers, says Jeff Yates, executive director of the Agents Council for Technology (ACT) of the Alexandria, Va.-based Independent Insurance Agents & Brokers of America. "These [social networking] technologies will augment more than supplant existing technologies," he says. At press time, ACT released a report to help its members develop and implement a social networking policy.
Goldberg says that any technology that can get these groups talking to each other in a more immediate way bears consideration. "It seems like an ideal scenario to enable underwriters and agents to put information up in a user-generated content style," he says. "Specifically with independent agents, the better the interaction, the more business those agents will submit. Also, it's not just that it will direct more business to the carrier, it will direct the right kind of business to that carrier."
Although business leaders may prod IT leaders to jump on the social networking bandwagon, carriers won't seek out networking for its own sake. Thus, proponents of business networking tools have to make the business case that the tools can provide improved productivity at little additional cost to their existing agency management environment.
As such, like all technology initiatives, social networking tools need a business sponsor that can help convince others - both executives and end users - that the value of the new technology outweighs the risk.
"The cultural challenge is not just whether the leadership will embrace it, but also whether the employees will use it," says Carnahan. "If carriers rush into this, you are going to end up with something that is not used or incorrect."
The Producer Review
With ease-of-doing-business ranking among the top reasons a certain carrier is a producer's top choice, insurers amenable to using a social networking style interface may have a leg up when a broker or agent decides to place business.
What's more, producers themselves are turning to social networking tools to help manage collaborative business relationships. Assurex Global, a Columbus, Ohio-based network of independent insurance brokers, uses a Web-based platform from Austin, Texas-based ProspX to identify risk experts around the globe, and carriers with the proper risk appetite.
Jim Hackbarth, president and CTO of Assurex, says the real-time nature of the platform is an improvement over the previous method it employed, when brokers would send e-mail blasts and wait for responses to trickle in.
In addition to gains in timeliness, Hackbarth says the tools have helped shape the way the company's brokers align themselves. "You can look at what we're doing as a private social network for like-minded brokers around the globe," he says, noting the tools also help the company grade carrier responsiveness. "It takes it from a reactive to a more proactive alignment of your resources."
Puru Agrawal, CTO of ProspX, says although the tools can help brokers work more closely with underwriters, use of business networking in insurance is not just about finding the right person.
"Insurance is the oldest networking industry in the world," he says. "The way social networking needs to work in insurance is significantly more complex than in the consumer world. If you are actually going to collaborate on an opportunity, you have to be able to report, track and measure the outcome of what happens. It's critical that you tie back the scorecards that you are keeping and associate the deals that are won and revenues that are generated as a result of the collaboration."
Moreover, Agrawal says segmentation of information, which is not well addressed in normal social networking tools, is vital in insurance. "This segmentation is especially important to brokers, who may be working with underwriters from several carriers on the same opportunity. They want more granular control over who has access to information. It's also really important for management to know what type of information is being communicated."
Fears and Concerns
Privacy concerns also may color the view of many on social networking technologies. "There is some concern from people based on their history with more traditional social networking technologies," Agrawal says. "Will my privacy be protected?"
Indeed, given the regulation the industry, data governance in insurance is hard to overstate. "The issues around social networking are around compliance," Carnahan agrees.
For example, an agent can post customer info from a carrier on a site. "We're going to have build tools to account for that," Goldberg says. "This is beyond somebody posting something embarrassing on Facebook."
Security concerns are also justified, as attacks on social media platforms are beginning to proliferate as virus and malware writers have began turning their attention to these technologies. To get a handle on these issues, carriers and producers may wish to set up specialized governance teams that include representation from a wide array of departments, including legal, IT, human resources and corporate communications.
Vendors of business-specific tools say they have worked to address these privacy and security concerns. Hackbarth adds his fears over such issues has been assuaged. "We're not using Facebook or Twitter. We're using a very secure tool."
One other nagging concern about networking tools is the fear they will sap worker productivity as employees spend time socializing. Lowenthal says the specter of employees idling away hours on social networks can be addressed with proper management.
"Are people going to be on social networks during work hours?" he asks. "Absolutely, they are. But, they also are also going to be doing work at all hours of the day and night. If people are spending too much time on [social networking], you a have a deeper underlying problem - they either don't have enough work to do or they are not the right person for the job. In either case, it is the responsibility of management to assess the work product and timeliness, and if it isn't up to par, it should be handled appropriately."
Such concerns not withstanding, Lowenthal says adoption of these technologies is vital given the general shift underway, with many members of the millennial generation even regarding e-mail as passé.
"How do you attract people into what, for them, is an arcane environment?" he asks. "They're expecting certain technologies. The reality is you have to look at your workforce and make sure you don't date yourself as a company."
Indeed, it is worthy to note that many of the technologies critical to business operations - from agency management systems to e-mails - were once derided as fads. Agrawal says he sees a critical mass starting to develop. "Three years ago there were a lot more questions of how is this going to be different," he says. "Those questions are quickly going away."
Goldberg says he, too, sees many of the perceived barriers to the use of business networking tools starting to vanish. "In the end, these are small hurdles," he says. "The people who are going to do well with this and take advantage of these technologies will not be the ones throwing out a Facebook clone," Goldberg says. "The carriers and vendors that embed the valuable parts of this technology into their existing processes and workflows will benefit. Technology is less well adopted when it's an entirely new thing - it's all about building into a process somebody is already using on a day-to-day basis."
This article can also be found at InsuranceNetworking.com.
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