The Use of Social Media in Insurance
NAIC White Paper, December 2011
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Director, Market Regulation
Issue: The use of social media in the business of insurance is becoming widespread. Insurance companies and producers use social media for a variety of purposes, including increasing visibility, developing relationships, and building trust. While most insurance companies are not using social media to overtly sell their products and services, they are using it to provide customer service by building and maintaining relationships with consumers. The goal of developing these relationships is the creation of market presence and product branding, which, in turn should generate new customers. Most state insurance regulators have observed the increasing use of social media within the insurance marketplace and are actively addressing social media use and issues via market conduct examinations; others have addressed complaints regarding the misuse of social media through the consumer complaint process.
Overview: The use of social media has evolved rapidly over the last decade from an emerging form of communication to mainstream. The vast majority of adults who use the Internet also use social media platforms such as Facebook, Twitter, YouTube, LinkedIn and Wikipedia. Accordingly, a growing number of companies are now using social media sites to complement their marketing, customer service and communication strategies. According to the LIMRA study, Where Are We Now? Leveraging Social Media With the Public (2014), insurers predominately use Facebook and LinkedIn. Experts predict companies will expand their use of other social media platforms in the next few years.
Insurance Companies' Use of Social Media
Insurance companies use social media not just to market insurance products; they are also using social media to discover insurance fraud. According to a 2013 study by Trimetric, an online data provider, social media is also used by non-life insurers to detect auto, fire and burglary fraudulent claims. Some companies also monitor social media sites for posts that indicate a fraudulent worker’s compensation claim, such as a claimant is participating in activities that are beyond the restrictions placed by the treating physician. Similarly, a 2013 Foresight Report found that life insurers were most likely to use social media to gauge the risk of a potential policyholder. In addition, an increasing number of insurance companies have utilized social media in post-catastrophe events as an effective way to contact, inform and communicate with insured's regarding the claims process and other relevant and timely information.
Insurance Producers' Use of Social Media
Producers are also avid users of social media. Historically, producers have networked within a defined geographic territory. However, social media provides producers with an opportunity to change dramatically how they build relationships and market their products. As people grow more accustomed to trusting relationships developed online, producers who excel at developing such relationships will likely pursue licenses and sales opportunities outside traditional geographic areas.
Current Developments: While the use of social media in the insurance industry remains an important issue, no additional work has been completed by the Market Regulation and Consumer Affairs (D) Committee since December 2011, when its Social Media Working Group released a Social Media White Paper to guide state regulators as they consider social media use. The White Paper focused on the following key points: (1) insurance company and producer uses of social media; (2) regulatory and compliance issues associated with the use of social media; and (3) guidance for addressing identified regulatory and compliance issues. While some of the statistics in the paper are no longer valid, the issues remain the same. The important thing to remember is that since social media is simply considered another medium of communication, its use by insurance companies and producers generally does not change the applicability of state insurance laws.