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Of all the major technology trends impacting the insurance industry, the ramifications of the rise of social media as a cultural force may well be the most immediate.
While the recent Facebook IPO debacle has done much to tarnish the shine of the pioneering social media company, social technologies already are beginning to have a profound impact on the insurance industry, experts say.
Insurance companies have long leveraged social platforms for marketing and brand building, but now they also are finding that social mediums furnish a bounty of data that can be used to improve the underwriting and claims process. For example, social data is especially useful in helping insurance companies ferret out claims fraud, said Stephen Applebaum, a senior analyst at Boston-based independent research and advisory firm Aite Group L.L.C.
“Social data is a new pool of information for fraud research that hasn't really been tapped,” Mr. Applebaum said during a panel discussion held at The Insurance Accounting Systems Assn. Inc.'s annual conference in San Diego on Tuesday. “It's economically productive for insurers to mine that data.”
Fellow panelist Max Drucker, CEO and president of Social Intelligence Corp., a social media screening and investigative services firm based in Santa Barbara, Calif., cited an example where a workers compensation insurer used social media to uncover a fraudulent claim. A warehouse worker who claimed to have injured his arm also played guitar in a bar band. After spotting an advertisement for his show on Myspace, the insurance company sent an investigator to photograph the concert and subsequently denied the claim. “Social media can be the smoking gun, but it is best used in conjunction with other things,” Mr. Drucker said.
Moreover, Mr. Drucker noted that people often have complex online identities involving multiple social platforms and email addresses. “There's a ton of information out there and it's not all on Facebook,” he said.
In addition to insurance companies utilizing social media platforms aimed at consumers, there also are social technologies built expressly for enterprises. Austin, Texas-based ProspX Inc. provides a collaborative software platform built for the insurance industry. ProspX President and CEO Todd L. Young said that social technologies are well suited to help streamline complex collaborative processes and gather and filter information and expertise on a given topic. “We have built a business social system for commercial insurance that helps bring in just the relevant information based on the opportunity the producer or broker is working on,” Mr. Young said.
Historically, technologies gestated in the enterprise before reaching the public. Social media and mobile technologies have inverted that trend. While the consumer market eventually may abandon Facebook in the years ahead, the use of social technologies by insurers is likely here to stay.
SAN DIEGO—Insurance companies need to remake their technology backbone in light of a rapidly evolving technology ecosystem.