061211_unisg_FPV1_ww11_oracle

Forschungs-, Praxis- & Venture-Projekt 1Institut für Wirtschaftsinformatik, Fr. Prof. A. BackRaphael Schilling & Nguyen Tran

FPV 1 - Social Media in the Insurance Industry 1

in the Insurance Industry

This is a joint project with ORACLE and the HSG IWI

Harry Stehrenberger Prof. Dr. Andrea Back Nguyen Tran Raphael Schilling

VP, Global Business Unit Financial Services Oracle EMEA

Professor of Management with special IT, University of St. Gallen

Master Student of Information, Media and Technology Management, University of St. Gallen

Master Student of Information, Media and Technology Management, University of St. Gallen

[email protected] [email protected] [email protected] [email protected]


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IntroductionIntroduction

Insurance Social Media Maturity ModelInsurance Social Media Maturity Model

Market AnalysisMarket Analysis

Innovative Business ApplicationsInnovative Business Applications

Market PotentialMarket Potential

Strategic Options & ConclusionStrategic Options & Conclusion

IntroductionThree research areas helped to identify the potential value from social media in the insurance industry


Identify the potential value from social media* for insurance companies in the costumer

relation**

Market overview Switzerland

International Best Practices

Strategic options and potential benefit for insurance companies

• The social media activities of the 10 largest Swiss personal and property insurance companies have been analyzed.

• Interviews with two Social Media

Managers of the insurance industry have been hold.

• Database research helped identifying international best practice examples.

• 45 mainly students have been questioned upon their opinion about social media activities of insurance companies.

• With regard to already existing models, industry specific maturity model has been developed.

*Social Media (SOM):„A group of Internet-based applications that build on the ideological and technological foundations of Web 2.0, which allows the creation and exchange of user-generated content.”(Andreas Kaplan and Michael Haenlein)

* * Customer RelationThe potential value of internal use of SOM has not been analyzed.

IntroductionInsurance companies should consider Social Media


Changing customer behaviorWhen purchasing insurance services,

younger people are influenced by 64 % by online platforms

The Brand Science Institute 2009, N=1‘100

Other industries are actively using Social Media

Industries such as telecom and retail have embraced the capabilities of social media and

customer expectations are quickly growing into all sectors of financial services

National Underwriter, 2010

Getting known to the customerInsurers can use social media to gather information

about their customers and effectively conducttargeted marketing campaigns.

National Underwriter, 2010

Insurance companies can be innovative“Innovation doesn’t

come first in insurance, but itdoesn’t mean it doesn’t come.”

Julian Pelenur, Founder, ChiefTechnology Officer, FirstBest Systems

“The potential business value [of social media] for the insurance industry is moving beyond just sales and branding

to a stage where servicing benefits areequally important.”

Karen Furtado, SMA (strategic advisory)

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Maturity ModelThe insurance specific SOM Maturity Model gives insurance companies orientation and an outlook


Why a new SOM Maturity Model?

Why a new SOM Maturity Model?

Adaption to insurance industry Benchmarking Development path

Adaption to insurance industry Benchmarking Development path

MethodologyMethodology

Normative derivation Comparison to other Social Media Maturity Models Challenged by Social Media insurance managers

Normative derivation Comparison to other Social Media Maturity Models Challenged by Social Media insurance managers

• http://www.rd2inc.com/blog/2008/10/social-media-maturity-model/** http://pr.typepad.com/pr_communications/2009/03/social-media-maturity-index-finding-social-media-engagement-leaders.html*** http://www.collectiveintellect.com/blog/wp-content/uploads/2011/03/CollectiveIntellect-GuidanceforEnterpriseSocialMaturity.pdf

Maturity ModelOur specific Insurance Social Media Maturity Model takes the customer perspective


Listening

Informing

Interacting

Networking

Integrating

Not observable

Presence in various SOM channels Relevance of information Regular posts of information

Interaction platforms available (e.g. Facebook)

Response on customer comments Relevant content of interactions

Formal relationships with customers (fans or friends)

Company proactively approaches customers

Implementation of customer ideas Integration of SOM into offerings SOM is company wide integrated

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2

3

4

5

Our model

Listening

Not applicable

Participating Actively Engaging

Not applicable

Letting Go Propagating

Social Monitoring

Social Presence

Interacting

Not applicable

Integrating

Listening

Informing

Receive Feedback Problem &

Innovation Response

Networking

Acknowledgement & Demons. Action

Knowledge Management

RD 2 SOM Maturity Model*

Colletive Intellect SOM

Maturity Model***

SOM Maturity Index**

ExtractExtractReverse OrderReverse Order

Maturity ModelA cross section of EU insurance companies shows that even the leaders are interacting only at interaction level


Listening

Informing

Interacting

Networking

Integrating

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5

9

9

12

0

0

Reverse OrderReverse Order

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Market AnalysisWe used diffrent methods for analysing the Swiss and international market


Market Method Key findings

Switzerland

10 largest Swiss personal and property insurances were analyzed by externally observing their activities in SOM by using parts of the POST method.

• Axa Winterthur, Mobiliar and Zurich are most progressive

• SOM mainly used for marketing activities

• No disruptive business model identified

International

Data-Base research •Data-Base: EBSCO, Google•Only English results•Keywords: Insurance AND Social Media OR Facebook OR Twitter OR Web 2.0•Published after Jan 2010

• Geico, Progressive, Allstate and Farmers as best practice

• Fast growing importance• Missing regulation implies risks• Changes in the ways of commication

with agents

Market AnalysisNo disruptive business model for social media could be identified in the Swiss insurance market


FacebookFacebook TwitterTwitter YoutubeYoutube BlogBlog Mobile AppMobile App

Mainly used for marketing activities and rarely for costumer interaction

Axa Winterthur has most fans

Swiss Life has a personalized page

Mainly used for recruitment

Mostly no regular tweets

Mainly publication of commercials

Really some further product information, hints and information for perspective employees.

None of the observed companies has an own Blog.

Mobile Applications offer emergency support, claim handling and marketing activities

N/A

YesNo N= 10

YesNo N= 10

YesNo N= 10

YesNo N= 10

YesNo N= 10

International Best PracticesContests and online applications help to gain fans


Description

Millions of Facebook users play FarmVille. Farmers Insurance Group took advantage of this trend offering free protection against the devastation of virtual crop loss.

Axa Winterthur could impressively increase the amount of fans by offering tickets for a popular concert.

Millions of Facebook users play FarmVille. Farmers Insurance Group took advantage of this trend offering free protection against the devastation of virtual crop loss.

Axa Winterthur could impressively increase the amount of fans by offering tickets for a popular concert.

Customer Value

Gaining information about company in a informal way

Gaining information about company in a informal way

International Best PracticesSocial Media can be used for dynamic user help


Description

A mobile app, allowing instant connection of individuals with similar user profiles and access to health info, recipes and wellness challenges

CaféWell allows users to control the degree to which their identity is shared

CaféWell rewards active users with profile badges, and prizes

A mobile app, allowing instant connection of individuals with similar user profiles and access to health info, recipes and wellness challenges

CaféWell allows users to control the degree to which their identity is shared

CaféWell rewards active users with profile badges, and prizes

Customer Value

Fast response on personal questions by professionals

Sharing feelings No doctor expenses

Fast response on personal questions by professionals

Sharing feelings No doctor expenses

International Best PracticesPeer to Peer networks lower costs for both sides


Description

Customers build ind. Insurance collectives For every friend added to someone’s personal

network, the customer gets a slight price reduction (bonus)

If one of the added friends has a claim, this bonus reduction is reduced accordingly

Customers build ind. Insurance collectives For every friend added to someone’s personal

network, the customer gets a slight price reduction (bonus)

If one of the added friends has a claim, this bonus reduction is reduced accordingly

Customer Value

Lower insurance fees Better control of the risks the own insurance has to

cover

Lower insurance fees Better control of the risks the own insurance has to

cover

International Best PracticesPolicyowner servicing improves customer experience


Description

21st Century Insurance was the first auto insurer to offer consumers the ability to get an auto insurance quote via Facebook

“GEICO Shortcuts” offers GEICO policyholders access to their insurance information using the functionality of Facebook

21st Century Insurance was the first auto insurer to offer consumers the ability to get an auto insurance quote via Facebook

“GEICO Shortcuts” offers GEICO policyholders access to their insurance information using the functionality of Facebook

Customer Value

Improved customer experience as the services are fast, easy to use and reachable from everywhere

Improved customer experience as the services are fast, easy to use and reachable from everywhere

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Innovative Business ApplicationsThere are interesting innovative business applications for the Social Media industry


Medium term(3-5 years)

Medium term(3-5 years)

Long term(5+ years)Long term(5+ years)

Short term(1-2 years)Short term(1-2 years)

Integration of Social Media into corporate CRM

Integration of Social Media into corporate CRM

New products integrating Social Media

New products integrating Social Media

Friendsurance Pricing Schemes

integrating Social Media

Connections between agent/ broker and clients

Friendsurance Pricing Schemes

integrating Social Media

Connections between agent/ broker and clients

Innovative Business Applications – Short termIntegration of SoMe in corporate CRM


Customer benefitCustomer benefit

Targeted advertising Targeted advertising

Benefit for insurance company


Additional client and non-client data can be used for data mining

Enhanced customer segmentation

Additional client and non-client data can be used for data mining

Enhanced customer segmentation

RequirementsRequirements

Interface between social media platforms and corporate CRM

Interface between social media platforms and corporate CRM

RisksRisks

Security issues Privacy issues Security issues Privacy issues

Innovative Business Applications – Medium termConnections between insurance agent and their clients enhance the customer relationship



Service: Easy way for communication and support

Familiar platform

Service: Easy way for communication and support

Familiar platform



Easy way to manage customer relationship

Increase visibility Customer advocacy

Easy way to manage customer relationship

Increase visibility Customer advocacy


Guidelines Relevant material Customers need to

adapt

Guidelines Relevant material Customers need to

adapt

RisksRisks

Selling must not be the primary driver

Vulnerability to spread of negative news

Selling must not be the primary driver

Vulnerability to spread of negative news

Innovative Business Applicatins – Medium termThe idea of Friendsurance can also be adopted on insurance level



Savings Community Savings Community



Reduction of adverse client behavior

Increased customer knowledge

Customer advocacy

Reduction of adverse client behavior

Increased customer knowledge

Customer advocacy


Platform Critical size Marketing

Platform Critical size Marketing

RisksRisks

Conflict with agencies Regulatory

environment

Conflict with agencies Regulatory

environment

Innovative Business Applications – Medium termConnection between clients and insurance companies offer potential for new pricing schemes



Savings Savings



Increased customer data for risk management

Marketing

Increased customer data for risk management

Marketing


Autom. of data analysis and integration into risk system

Autom. of data analysis and integration into risk system

RisksRisks

Available data may not be true

Ethical issues e.g. about discrimination

Available data may not be true

Ethical issues e.g. about discrimination

Innovative Business Applications – Long termSocial Media brings opportunities for new insurance products serving new needs: e.g Insurance of Facebook account



New needs arise with societal and behavioral changes

New needs arise with societal and behavioral changes



New business development

New business development

IT security will increasingly become an issue also for private users!

ExampleExample RequirementsRequirements

Product development in insurance industry very time consuming

Market sizing challenging

Product development in insurance industry very time consuming

Market sizing challenging

RisksRisks

New product risk Fast changing

environment

New product risk Fast changing

environment

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Market PotentialMost respondents were between 22 and 28 years old

Market Potential93 % of the respondents do not have any experience with insurance offers on social media


UsageUsage FollowingFollowing InsuranceInsurance

Have you ever used any social media offer from a company?

Have you ever used any social media offer from a company?

Are you following any company on Facebook?Are you following any company on Facebook?

Have you ever used any social media offer of an insurance company?

Have you ever used any social media offer of an insurance company?

YesNo N= 45

YesNo N= 45

YesNo N= 46

Market PotentialThe majority of respondents is willing to connect to an insurance company in exchange for a 10% discount


A 10% premium reduction would motivate 50% of the people to connect their profile with the one of an insurance company

20 % of the people are not willing to connect their profile with one of a insurance company

An insurance company offers you premium reductions, if you connect your Facebook profile with the corporate profile. From which premium reduction on would you be willing to do so?

Legend% of People willing to connect with corporate fanpage

N = 45

Could you imagine to be connected with your personal insurance agent on Facebook?

Could you imagine to be connected with your personal insurance agent on Facebook?

Your insurance company offers you fast and easy access to your costumer via Facebook. Do you see any advantage in this?

Your insurance company offers you fast and easy access to your costumer via Facebook. Do you see any advantage in this?

Could you imagine to use Friendsurance?

Could you imagine to use Friendsurance?

Could you imagine to recommend your insurance company in social media?

Could you imagine to recommend your insurance company in social media?

It becomes possible to purchase insurances on the fanpage of the insurance company or via application. Do you see any advantage in this?

It becomes possible to purchase insurances on the fanpage of the insurance company or via application. Do you see any advantage in this?

Market PotentialAlready today a quarter of the respondents can imagine to be Facebook friends with their insurance agent


Agent Relation E-Policy Friendsurance Recomandation Micro Insurance

YesNo N= 46

YesNo N= 46

YesNo N= 46

YesNo N= 46

YesNo N= 46

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Option 3Pioneering

Development of unique products and services

Social Media as unique selling proposition

exceed customer need

Development of unique products and services

Social Media as unique selling proposition

exceed customer need

Option 1Skip Social Media

Focus on the traditional services and channels

No Social Media activities at all

Focus on the traditional services and channels

No Social Media activities at all

Option 2Active Participation

Social Media fully integrated in the organizational structure (resources and responsabilities)

Continuous improvement by fully adopting to the market development

Social Media fully integrated in the organizational structure (resources and responsabilities)

Continuous improvement by fully adopting to the market development

Strategic Options & ConclusionWe recommend to active participation


There are potential business applications enhancing customer value Customers have positive attitude towards new Social Media offerings

from insurance companies

There are potential business applications enhancing customer value Customers have positive attitude towards new Social Media offerings

from insurance companies

Relationships between agents/ insurance companies and their clients can already be implemented

Top Management attention because changes are essential Interaction level should be pursued

Relationships between agents/ insurance companies and their clients can already be implemented

Top Management attention because changes are essential Interaction level should be pursued

Uncertainty about regulatory environment Uncertainty about development of Social Media platforms Uncertainty about regulatory environment Uncertainty about development of Social Media platforms

Potential is given

Uncertainties exist

Insurance companies should position themselves

Strategic Options & ConclusionSocial Media is a strategic topic for insurance companies

Backup


Market Analysis (1/5)


Company Allianz Suisse AXA Winterthur

People Spectators, Joiners / Conversationalists (Wiki) Critics

Objective Talk: push / Support (Wiki) Talk: networking

Strategy

Targeted stakeholders costumers Customers, prospective employees

Technology

Corporate Website Website Website

Facebook Fanpage existing but inactive Fanpage 1‘479 Fans, job offers, discussions, participation

Twitter @allianzsuisse existing but inactive @AXA_Schweiz general customer information, interaction

Youtube Channel advertisements only Channel, product spots, recruitment information, prevention material

Blog N/A N/A

Mobile Application N/A Axa App

Other Wiki N/A

Remarks Allianz Austria is more active on FacebookAllianz Germany has a mobile app



Company Basler Versicherungen Generali

People spectators, joiners spectators, joiners

Objective Talk: push Talk: push

Strategy

Targeted stakeholders customers customers

Technology

Corporate Website Website Website

Facebook Fanpage inactive Fanpage active since summer 2011

Twitter @baloise_ch inactive, future activity announced @GeneraliCH active since september 2011

Youtube Channel TV-adds only Channel

Blog N/A N/A

Mobile Application security app Infos, e-banking, e-insurance N/A

Other N/A N/A

Remarks



Company Helvetia Die Mobiliar

People spectators, joiners spectators, joiners

Objective Talk: networking Talk: networking

Strategy

Targeted stakeholders Customers, prospective employees Customers, prospective employees

Technology

Corporate Website Website Website, RSS news feed

Facebook Fanpage info about social activities, jobs, locations, events Fanpage ; events, viedeos, discussions, contests

Twitter @helvetia mainly recruitment @diemobiliar_ recruitment

Youtube Channel advertisements only Channel advertisements only

Blog N/A N/A

Mobile Application Helvetia Notfall Application Mobiliar Notruf

Other N/A N/A

Remarks



Company Nationale Suisse Swiss Life

People inactives spectators, joiners

Objective listen Talk, energize

Strategy

Targeted stakeholders n/a Customers, prospective employees

Technology

Corporate Website Website

Facebook n/a Fanpage : personalized, contests, interaction

Twitter n/a n/a (in Switzerland)

Youtube n/a Channel advertisements only

Blog n/a n/a

Mobile Application n/a Swiss Life Rechner calculation tool

Other

Remarks



Company Vaudoise Zurich Connect

People inactives spectators, joiners

Objective - Talk: networking

Strategy

Targeted stakeholders - Customers

Technology

Corporate Website Website, Rss Feed Website

Facebook N/A Fanpage games, product selling

Twitter N/A @Zurich_ch

Youtube N/A Channel

Blog N/A N/A

Mobile Application Vaudoise Zurich ConnectZurich Helppoint

Other N/A

Remarks

Economy & Finance

061211_unisg_FPV1_ww11_oracle