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June 16, 2011updated 13 Apr 2017 8:48am

An ineluctable reality for life insurers

Social networks have exploded onto the world as a revolutionary way of communicating, but one most life insurers have yet to come to terms with

By Charles Davis

Social networks have exploded onto the world as a revolutionary way of communicating, but one most life insurers have yet to come to terms with. The CEO of social networking consultancy Socialware provides Charles Davis with insight into how a major US life insurer is tackling the challenge head-on.


Life insurers, like other regulated industries, find themselves in a bit of a bind when it comes to getting on the social network bandwagon. They know they needed to join LinkedIn, Facebook, and Twitter a long time ago, but there are so many compliance nightmares associated with turning an entire sales force loose on social networks that many insurers have yet to take the plunge.

Chad Bockius, CEO of Socialware, an Austin, Texas-based social middleware company, told LII that a negative approach ignores one simple fact.

“Odds are good that some of the insurer’s agents are already on social networks anyway, in direct contravention of corporate policy. They are living their lives on these networks, so surely they are going to want to conduct business on them as well.”

Socialware’s own research shows nearly 40% of insurance agents use social media, whether their company allows it or not.


Do what they must

“They [agents] do what they have to do to grow their business, and for many of the agents, LinkedIn is so organic, so much a part of their day, that they never gave much thought to whether or not there was a policy to violate,” Bockius stressed.

That is how Socialware started, Bockius explained: getting financial services comfortable with the power of social media. Socialware does all the heavy lifting, specialising in providing the required monitoring, filtering, and archiving for compliance control.

“We understand that it’s a bit of new frontier [for insurers], and so we created a set of tools to get them started in a product-safe way,” he said. “We want to make it easy to use social media to find new prospects and grow the book of business.”

One of Socialware’s newest clients is the Guardian Life Insurance Company of America, one of the largest mutual life insurance companies in the US. Guardian Life plans to phase in access to social media, starting with the largest and most technically-savvy producers and then broadening access to others.

Bockius said part of the process for Socialware will be training those staff who are granted access on acceptable communications and behaviour for online media. That training will be repeated as Guardian Life gains experience and revises its policies.

Commenting on Guardian Life’s decision to formalise social networks, the insurer’s chief marketing officer Steve Holstein said: “My vantage point is this is a medium that is here, and it’s only going to grow in proportion and prominence. It is slowly but surely hitting every industry.”


Gaining momentum

Social movement is gaining momentum: US investment bank Morgan Stanley recently announced it will allow its advisors to use LinkedIn and Twitter from June 2011, making it the first large financial management group to do so.

Like most insurers, Guardian Life’s agents have been limited to having relatively static profiles on services such as LinkedIn, with the text pre-approved by the company’s compliance department, and could not participate in online discussions.

But things are changing, as Socialware works to train insurers on how to use social networks to prospect and generate leads. The clarity of the Financial Industry Regulatory Authority’s (FINRA) guidance for social media, issued in January, certainly helps, Bockius said, by green lighting the industry and enunciating clear standards.

FINRA’s rules treat common activities like creating a profile or receiving an endorsement as advertising, subject to tight regulatory compliance reviews. Even the most routine comments and status updates need to be archived as correspondence, like email, Bockius said.

“It’s complicated, but now with the FINRA guidance as best practices, we can move forward,” he said. “A lot of agents are independent business people who also sell FINRA-regulated products, so for life insurance, FINRA serves as the standard.”

Socialware employs three separate solutions to get insurers on to social media. Everything starts with Socialware Insight, an intelligence service that allows them to get started with a policy template, resources to make decisions on what to block and what to allow, and training for end users.

Compliance and moderation is handled by the company’s Compass product, which allows the insurer to dial up the appropriate level of compliance. For sales and marketing, there is Socialware Voices, driving leads for the sales channel to the sales force, by pushing content from industry thought leaders and tracking the results. Insurers can provide pre-approved content to users who select what content is most relevant to their contacts.

Socialware manages social media participation using a combination of techniques, including proxying user connections to social media sites and using application programming interfaces to gain the access it requires to monitor and manage message and comment streams on sites like LinkedIn and Facebook.

That way, the insurer will have the security of knowing it can subject posts to pre-approval as necessary, monitor a user’s overall participation on social sites, and archive messages it might have to produce for regulatory review.


State Farm also joins in

Another social middleware provider, Hearsay Corporation, is working with the insurer State Farm. Last year, State Farm noticed a growing number of their nearly 18,000 independent agents were beginning to interact with customers and prospects on social networking sites such as Facebook, LinkedIn and Twitter. Recognising the need to both address compliance risk and tap into the tremendous marketing opportunity on social media, State Farm has deployed Hearsay Social to thousands of agents, requiring that any agent who wishes to be on social networking sites use Hearsay Social to access these sites.

Social networks are the future for lead generation and service contact, Bockius said. An agent with a carefully crafted presence can monitor clients for life events like marriage, new jobs and babies more easily than ever, as Facebook amply demonstrates.

“Smiling and dialling is a thing of the past,” Bockius said. “The goal now is what we call ‘scalable intimacy’ – using social networks to get more people than ever, more intensely than ever before.”

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