Like many other relationships, the relationship between business and consumer is growing increasingly automated. Digital and social media marketing are essential for lead generation, and a social media presence alone is vital for any company wishing to nurture and maintain relationships with its consumer base.
Why, then, are insurance companies dragging their feet to embrace change?
A new study from Timetric analyzed the presence of insurance companies on various social media platforms globally, as well as social media strategies adopted by leading companies across all markets, and came up with three key findings.
1. Too much negative customer feedback
One reason insurers gave for not adopting strong social media campaigns is the potential for reputational risk due to negative consumer feedback.
Complaints posted by other users on social networks can damage a brand quickly, and as consumers increasingly look to online thought leadership in their purchasing decisions, this can be very damaging for an insurance company.
“To better serve customers and reduce reputational risk, companies are now setting up dedicated social teams or departments to handle customer queries or complaints,” Timetric said. “However, this creates an additional financial burden. As a result, a number of insurers have been reluctant to embrace social media.”
2. Technological complexity and high costs
According to Timetric, to get the most from social media, insurers must integrate their social media strategy with customer relationship management (CRM), to automate processes and systems, enabling insurers to monitor social media data. Moreover, insurers must improve their IT systems and rethink how their business integrates into their technology platforms to deliver effective customer support, improve CRM capability, and use high-end analytical tools to better understand consumer behaviour.
Insurers also need to invest in advanced analytical tools such as predictive analytics to mine the vast pool of data available on social media platforms. This will help insurers in underwriting and fraud detection.
However, all this involves complexity and significant costs, making insurers reluctant to implement social media.
3. Possibilities of cyber threats from social media
Social media sites are mostly open platforms, and carry a risk of malicious attacks in cases where insurers’ platforms are integrated to social media platforms, which increase risks to intellectual property and trade-secrets.
Fraudulent users can create fake pages to trick customers into revealing sensitive information. Other malicious activities include the creation of fake profiles and accounts, hacking, spamming, using malicious links containing malware, spyware and Trojan horses.
Spam and infected links are other key security issues faced by both users and organizations, creating challenges for insurance companies which place a strong emphasis on privacy of user data.
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