Social Networking: From Fad to Factor

Insurance Networking News, February 1, 2010

Bill Kenealy

Insurance is a collaborative industry. The bulk of insurance sold in the United States is through intermediaries, often an independent agent. Accordingly, carriers and producers have spent a great deal of time, energy and money on tools aimed at facilitating their relationships.

One new class starting to bear wider consideration is social networking tools. Perhaps more than any other technology, social networking exemplifies the trend of the "consumerization" of IT, where, inverting tradition, technologies developed in the consumer market end up being used within the enterprise.

Insurers have, for the past few years, leveraged consumer-oriented networking platforms such as Facebook for external purposes. In fact, a quick perusal of Facebook confirms that GEICO's cavemen and gecko do not want for online friends and followers.

However, it is precisely this consumer market pedigree that may give some in the enterprise pause about incorporating social networking tools into their technology infrastructures. For valid reasons, such as perceived loss of message control, there are companies that are terrified of using Facebook and Twitter.

The argument advanced is that these technologies are best suited for the periphery to help in customer-facing endeavors such as marketing and brand-building. Accordingly, many proponents of using these tools within the enterprise bristle at the term "social networking," favoring instead the moniker "business networking."

NEW TOOLS

Irrespective of what you call them, these networking tools designed specifically for the business are beginning to emerge, and promise to drive deeper into the enterprise. "The big question is: How do we - or do we - integrate social networking into our platforms?" says Craig Lowenthal, EVP and CIO at New York Marine and General Insurance Co. (NYMAGIC).

Craig Lowenthal

Indeed, the challenges around adopting social networking tools in the enterprise center largely on integration. This need for networking tools to complement existing solutions has not been ignored by vendors, says Jeff Goldberg, senior analyst at Boston-based Celent, noting that many vendors offer comprehensive suites of collaboration tools as part of their core system offerings.

"You'll see many vendors that sell agent portals and policy administration systems build this functionality into that," he says. "There already are vendors that have mini-social networks built into their underwriting systems."

While these baked-in solutions may be an enticing option for carriers already undergoing a modernization push, there are many point or hosted solutions of which carriers can avail themselves to achieve social networking functionality without replacing existing systems or infrastructures. Companies such as Washington, D.C.-based Present.ly and San Francisco-based Yammer Inc. offer micro-blogging tools expressly designed for enterprise use.

Karlyn Carnahan, a principal in the insurance practice at New York-based Novarica, notes that many of these tools are inexpensive, and readily adapt to a carrier's server-centric architecture. "These are open platforms," she says. "It doesn't matter if you use .NET or Java, and it doesn't matter if you use Oracle or DB2."

WHERE AND HOW

With viable business networking tools readily available, the question then becomes where best to deploy them. "Carriers are using the tools in two ways: for carriers to communicate with agents and for agents to communicate among themselves," Carnahan says.

Thus far, the most prominent examples exist of the latter. Using Web-based technology from Palo Alto, Calif.-based Ning Networks, carriers such as Columbus Ohio-based Nationwide Mutual Insurance Co. and Los Angeles-based Farmers Insurance Group have created networking sites expressly for agents. The agent-only networks afford users a forum to form groups, interact with other agents, browse profiles and form friendships over common interests. It is the self-organization engendered by these tools that make them so effective, proponents say.

Goldberg says underwriters also could benefit from this type of networking. "For example, an underwriter could add requirements to certain types of policies and have them show up immediately on others' desktops," he says.

However, using business technology tools to catalyze the much more complex relationship between agent and underwriter brings both cultural and operational challenges.

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