Between Cool and Practical

Technology and social applications do offer a bridge between the cool and practical, with many insurers developing methods to utilize Web 2.0 in their business applications.

Barely a week goes by that we don’t learn of the “next big thing” in the world of Web 2.0. But what does the emergence and maturation of Web 2.0 mean for the insurance industry? How can insurers harness its capabilities to drive collaboration, more personalized service and ultimately, improved financial performance?

Web 2.0 refers to the second generation of web development and design that allows a more dynamic user interface, greater information sharing and interoperability online. Web 2.0 tools consist mainly of user-generated content, rather than content generated by the companies hosting the sites. The evolution of these technologies has spurred the development and evolution of web-based communities, hosted services and web applications, including social applications that allow individuals to communicate and collaborate online.

Web 2.0 tools and social applications include:
1) Blogs;
2) Video-sharing sites, like YouTube;
3) Social networking sites, like Facebook and LinkedIn;
4) Mashups, which combine data or functionality from two or more external sources to create a new service, such as mapping, search and news mashups;
5) Wikis, which allow the easy creation and editing of any number of interlinked web pages using a simplified markup language or a text editor within the browser; and
6) Micro blogging, made popular by Twitter.

As social applications gain momentum, businesses are working to capitalize on the potential of Web 2.0 to cost-effectively support and extend internal and external initiatives. These range from sales and marketing efforts to corporate learning and employee recruitment and retention.

Why Web 2.0 Matters
Regardless of where a company stands in the adoption curve, there are compelling reasons to enter and stay on the Web 2.0 highway.

First, online adoption continues to grow in the insurance sector. Consumers are increasingly choosing the Internet to make transactions, and we see this trend playing out in the insurance industry. For example: online auto insurance research generates more applications than those that come in person, by mail or phone in the United States. More than 17 million U.S. consumers completed transactions on an insurance website in 2008, and 21% of all new personal insurance sales were conducted via the web. In 2006, more than a million quotes were provided through Kanetix, a Canadian online insurance aggregator with affiliations to over 30 insurers.

Successful insurance professionals are embracing this trend through extended web functionality and online transactional capabilities. In today’s economic reality–in which controlling costs while improving performance is more important than ever–online collaboration and transactional tools offer carriers and brokers a new, cost-effective way to interact with customers.

Even socially focused web tools are the new norm. The numbers of social media “fans” are hard to ignore. Facebook, for example, has more than 250 million active users worldwide with approximately 12 million users in Canada. Additionally, Canada ranks in the top four countries for Twitter users, following the U.S. and U.K.

Although some view these trends toward social structures as being for “entertainment” only, the concepts of sharing and instant access to information are having a significant impact on the way that companies operate, both internally and externally.

The “Generation Y” (Gen Y) workforce grew up on the Internet and is used to sharing and receiving information almost instantaneously.

Insurers that do not attempt to understand and map a strategy for participating are likely to find themselves at a disadvantage and working to play catch-up.

Brokers can also benefit from the use of social media and Web 2.0.

Advance Business Goals
These technologies offer valuable opportunities for insurance companies to cost-effectively extend their marketing, training, recruiting and research activities to a new plane. Many of those leading implementation of Web 2.0 are carriers, but brokers can also benefit from the use of social media and Web 2.0. For example:

  •  Creating and supporting brand awareness. Web 2.0 and social media tools enable insurers to bring their message and brand to a tailored audience in a highly personalized and extremely cost-effective manner, and via the preferred communication channel for many modern consumers.

Allstate Insurance Company, for example, created a micro site for motorcycle enthusiasts,, containing information on insurance, motorcycle education, sweepstakes, tips and places to ride. The site is intended to build brand attitude, reliability and trust. Esurance Auto Insurance has taken a different approach with its creation of Erin Esurance, a virtual character and star of the company’s advertising campaigns, who also has an official Facebook page and more than a dozen fan-created Facebook pages and YouTube videos.

  •  Supporting sales and improving service. Insurers are taking steps to integrate social networking into sales and customer service initiatives to deliver faster and more personalized service and products. New York Life, as an example, is adding functionality to its website to enable multi-tasking. Each Web page now includes a “Read This Page” button, which allows visitors to stream audio of the text on the page, freeing them to surf other pages while “reading” information about available New York Life products.

Other insurers are using Web 2.0 applications to keep their finger on the pulse of customer concerns. Esurance uses Twitter to “monitor” discussion about the company. If someone mentions they are disgruntled on Twitter, Esurance reads the post and reaches out to address the customer’s issues.

  • Fostering collaboration and consistency across the company. The influx of Gen Y to the workforce requires all employers to evaluate how they communicate with younger employees who grew up on the Internet and how to nurture this communication. Web 2.0 must play an important role in communicating and collaborating with employees of this generation. To enhance its productivity and drive employee engagement, Northwestern Mutual Financial Network launched internal blogs to increase dialogue between employees and the field force, and encourage idea sharing. Others are using wikis to achieve similar objectives.
  •  Supporting employee recruitment and training. Brokers can improve the effectiveness of recruiting and training initiatives by reaching candidates through the channels they are most comfortable using. American Family Insurance, for example, leverages Facebook to support agent recruitment with This interactive site shows the path to becoming an agent, and allows prospective agents to ask questions as they read information. By leveraging the site through Facebook, the company attracts more new-to-the-job-market recruits that they can train and mold to become career agents.

Capitalize on collective customer information to improve predictions on prospects and products to sell.

Coming Up: Enterprise 2.0
Various entities within the industry have experienced initial success with preliminary Web 2.0 initiatives; these entities are now looking to realize the potential of Enterprise 2.0– the application of Web 2.0 and social applications in solving business problems.

The first wave of adoption–which is where we are today–represents the adoption of non-business tools for business problems, such as establishing Wikis, blogs and Facebook pages for your company.The next wave of social tools, however, will be designed specifically for business use. These new tools will help brokers and insurance businesses maximize the value derived from collaborative tools, while ensuring the scalability and security. By utilizing enterprise-specific social networks, brokers will be able to effectively:
– Interact with customers and prospects, and gain increased insight into their preferences;
– Capitalize on collective customer information to improve predictions on prospects and products to sell;
– Leverage the collective knowledge of the enterprise social network to optimize sales campaigns, and improve campaign efficiency and effectiveness through sharing and re-use of campaign components;
– Improve company productivity and efficiency by categorizing, rating and tagging content for improved organization, leveraging insight from the collective social network to identify and reuse the most useful content.

Web 2.0 technologies, and the evolution to Enterprise 2.0 capabilities, offer the insurance industry a great opportunity to capitalize on the behaviour and preferences of the next generation. The flexible and social nature of these tools will enable insurers to extend their ability to effectively and efficiently market to and service a new generation of customers, build and reinforce a shared corporate culture, and recruit, train and retain the next generation of industry employees.

Srini Venkatasantham, vice president, Product Strategy, Oracle Insurance.

© Copyright 2010 Rogers Publishing Ltd. This article first appeared in the February 2010 edition of Canadian Insurance magazine.

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