InsurePal is a great example of how a mix of advances in both technology and social norms can address fundamental challenges faced by the insurance industry to add value to all the stakeholders across the value-chain; insurer to the insured.
In a world where social media is a real currency and more often than not is kept more up-to-date and representative of reality in contrast to more traditional data sets - it is a source of information that can no longer be ignored by financial services organisations as it can not only allow them to revolutionise their product and service offerings, but actually achieve the long standing goal of "Know Your Customer" (KYC).
Couple the increasing volume and richness of social data with its breadth of use this is becoming an increasingly trusted source of information and customer insights. The fact that globally 91% of 16-64 year olds have at least 1 social media account, reinforces that social media and social networks are a critical resource for all businesses for engaging with and knowing your customer.
Looking to utilise social media channels and data is not necessarily a new concept for the financial services sector. That said, for financial services organisations, social networks have typically been used more as a means to improve customer engagement, personalise and promote traditional products, or to reduce friction in the process for customers to do business with the bank, insurer or broker (but in most cases this is a front on top of the traditional business models).
InsurePal's approach is a sensible first step for leveraging social media data in the insurance market, as for the insurer it doesn't require changing their back office and operating model (as it is the same product/ service being offered). However, it has the potential to reduce the cost of acquisition and risk exposure of the insurer, whilst allowing them to be more commercially competitive on both premiums (by seeking out better risk and reducing fraud) and offering customers different ways to spread their risk and excess exposure across a network of friends/ family.
So where next with social media and insurance...? Clearly the answers are seemingly endless and there will be many good ideas that don't get off the ground for a number of reasons.
But with InsurTech's like InsurePal getting air-time it is clear that social media and social data has great potential for transforming insurance products, services and engagement models for both personal and commercial lines. I am excited to see how this particular area of the market evolves getting behind initiatives in this space with Charles Taylor InsureTech and working with InsurTech's in this space like InsurePal, DigitalFineprint and more...
Although it is so hard to predict what the big things will be for insurance technology over the coming 12-24 months, I anticipate a significant factor being social data and how Insurance companies (or disruptive new market-entrants) apply the latest data & analytics technologies around this data to transform underwriting, claims handling and fraud prevention. This compliments the ongoing - and appropriate - buzz relating to the Internet of Things (IoT) and Artificial Intelligence and when coupled with social and historic insurance data this can be used to establish preventative, personalised and adaptive insurance services.
There has been a significant focus in recent years to use technology to reduce friction and cost across the insurance value chain. I expect that this will continue to top the Data and Analytics agenda, but I anticipate there there will be an increased use of social networks, social data and publicly available (big data) in risk rating and premium calculations, sanctions checking and risk aggregation/ exposure management between now and 2020. This also continues to pose the question as to whether any of the tech giants with vast pools of personal and social data - like Facebook, Microsoft, Google, Amazon - decide to offer insurance products or services...
Insurers are trying to overcome poor risk management with the use “of expensive, privacy-invading technological solutions and tracking methods,” commented Peterman in a blog he authored on the InsurePal site, titled “The dusk of incumbents is the dawn of InsurePal.” Despite all the industry’s investment and innovation, Volk said, it has had limited success combatting fraud—and premiums will likely keep rising unless a more effective business model can be found. A better model will be based on social proofing, which provides a more effective, less expensive and non-intrusive solution to risk assessment—and ultimately reduces premiums for good drivers, said Peterman and Volk in an interview with Carrier Management, the sister publication of Insurance Journal.