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Social networks can’t be ignored: Finity

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Tech giants such as Facebook and Google pose challenges for personal lines insurers and it is “commercially questionable” to disregard social media as a key distribution channel, according to Finity Consulting and Deutsche Bank’s Pendulum report.

The industry has passed the tipping point for believing in the value of Big Data and advanced analytics, but companies must apply their insights to the delivery of services and products, an article within the report says.

Titled The Future of Analytics in the World of Insurance, the article says social media “is, perhaps, the elephant in the room”.

“Companies may have the desire, but many resist interacting with the social online world, which is growing exponentially.

“There are now 15 million Australians active on Facebook each month who, every day, spend on average 1.7 hours checking their feeds. It would appear social media is simply too big to ignore.”

A separate article titled The Digital Revolution: How it is Changing Personal Lines Insurance, says technology has shifted the way in which insurers must engage with customers.

“The rise of the ‘digital platform economy’, through companies such as Facebook, Amazon and Google, signals a shift away from big brand advertising and marketing to individual and social media interactions,” the report says.

“This has the potential to erode the value of traditional insurance brands, particularly when it comes to the younger generation of customers.”

The report says personal lines insurers must either develop their own relationships with customers by having a presence on these platforms, or look to form partnerships with distributors and rely on them for access to customers.

Finity says the risk for insurers is companies such as the tech giants, or even car manufacturers, may reach a point where they “own” the customer. “If this eventuates, it could threaten the stability of the renewal business that traditionally underpins profitability for personal lines insurers.”