A large majority of U.S. insurers (86%) plan to increase their use of social media next year, according to a new report from Moody’s Investors Service, which surveyed 42 life insurers and 24 property & casualty insurers about their plans.
Currently 80% of life insurers surveyed are already using Facebook, while three-quarters are using Twitter. The most common reason insurers use social media is to promote their brands, while many also use it for business-to-business communications, for example between wholesalers and financial advisers. Meanwhile roughly eight out ten insurers use LinkedIn for recruitment and screening purposes.
Insurers are much more cautious about using social media data as part of underwriting or as an input to pricing (for example, assessing someone’s risk based on statements or photos on their personal profile), as well as fraud detection, in large part due to legal and regulatory concerns. Insurers are also lagging behind in using social media for customer service, usually limiting themselves to posting “factual information about disasters and how to file claims.”
According to Moody’s, while insurers are still experimenting with social media, the impact could be substantial enough to affect their financial performance (and therefore credit rating).
Moody’s senior vice-president Scott Robinson stated: “For US insurance companies, social media programs are in their early stages but based on our recent survey, many companies expect to make increasing use of social media in the future even if there isn't a direct link to sales. However, we do see social media use as a potential future credit positive for early adopters, since over time their experience will likely give them an edge in branding and marketing relative to latecomer competitors.”
Previously a survey by LIMRA, a research, consulting, and professional development organization serving the insurance industry, revealed that 93% of life insurance companies were using social media in 2013. Furthermore 77% of the companies surveyed said they had social media programs targeting the public.