The insurance industry has been urged to improve its use of social media but should it bow to the pressure? Ian Hughes explains.
Many will consider what I am about to say as heresy, whereas others will find it a source of relief - no general insurance company in the UK today will ever make money from social media.
Now, I'm not just anyone saying this. My credentials mean I know what I'm talking about. At Consumer Intelligence we run a social community called Viewsbank where we interact with nearly 30 000 consumers every week. And when I say interact, I mean we have a two-way exchange, which each party listening to each other.
The use of Facebook, Twitter, Pinterest and hundreds of other social tools has become the latest buzz, just like dot com was at the end of the last century. At that time lots of people, me included, were proclaiming: "You have to have a website." These same voices are saying "You have to be social." But mine isn't among them.
Insurance started on the back of a social need in 1688. Friends got together to insure the activities of each other to spread the risk. This mutuality stills sits at the very heart of some of the largest insurance companies today.
Being social and the concept of sociability is a board level strategy. It is something that needs to sit at the very soul of your being, not just another tool in the armoury of crazy marketing people. You have to actually want to connect with people and you need to have the ability to do so.
Social platforms give you the means of connection, but they don't make you sociable. Being sociable is a state of mind, a way of life. It is the desire to want to reach out to others and connect with them, to communicate with them, not at them. For them to listen to you and you to listen to them.
Social is a strategy that starts at the heart of the boardroom, with people who are driven by sociability, who understand how to use sociability to obtain a competitive advantage. Once they have done that, then Facebook, Twitter and the other sites can be brought into the conversation to aid them with this strategy.
There are substantial differences between 1688 and today. These days we have Compliance and the Financial Services Authority. These days insurance companies are listed on the stock market and need to earn a profit to distribute to their shareholders.
Compliance and the focus on profit forces the sociability out of relationships. The last time I made a suggestion to an insurance company about improving their service all I got was a three page letter from their customer service team, which felt more like a compliance service letter that just ticked all the standard corporate communication boxes.
Customers' expectations are also substantially different - we asked them how fast they would expect a response if they posted a message on your Facebook page at 7pm on a Friday. 74% said Saturday morning at the latest. Do compliance teams work nights and weekends? Do your customer service teams? How about Sundays? I thought not.
Insurers do use social networks, but they aren't being social. Aleksandr Orlov pops up every now and again on Facebook, says a joke and then scurries off again. He doesn't stay around to be sociable. A number of insurers respond to complaints on Twitter, but if someone has gone to Twitter to complain it is already too late. It's closing the door after the meerkat has bolted.
My personal opinion is that there is a Lloyds Coffee House model out there; a new form of risk sharing that reinvents the concept. It might not even be called insurance. I've talked to students. I've talked to techies. I've seen the brave new world. There is a possibility that a new, social, insurance model can be built and when it does, Metcalfe's law will kick in and the company who adopts it will grow exponentially. It will be social at its very core, from the board table down.
In short a new, social insurance model could change and revolutionise the insurance industry, but it can't come from any of the traditional insurance players as it requires a brand new model, a brand new way of operating. And the mentality and mind-set at board level has to change, they have to embrace their customers and their communication in a whole new way.
Ian Hughes, chief executive, Consumer Intelligence
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