Think Beyond Technology

By Howard Mills | July 18, 2011

Here’s a bedtime story I tell my little ones. Back in the dark ages when I went to college, there was no Internet. Cell phones, for the few who had them, were called car phones since they were installed in cars. Facebook was a real book with photos of incoming freshmen, and LinkedIn meant meeting at the campus center. There was no way to stay in touch with each other all the time and — even scarier — we saw no need.

To them, this is a fanciful fairy tale. They can’t conceive of life without instantaneous communication through smartphones, Google or social media.

But like many leaders in our industry today, I can. And there’s the rub. For those of us of a certain age, the ubiquitous social media and other communication tools fall somewhere between minor annoyance and useful avenue. By comparison, for a new generation of insurance clients, social media and its ilk are the necessary background music to everyday life. For an agent, broker or insurer to ignore that reality is to risk a slow fade into irrelevancy or worse.

A new Deloitte Consulting report, “Tech Trends 2011: Insights for Insurers on the Natural Convergence of Business and IT,” sums up the bottom line succinctly:

For many agents and brokers, use and acceptance of social media has lagged.

“Social computing is not a fad. And it’s not something to be dismissed as a youthful or consumer-oriented hobby — many of the major insurance demographics are now well represented in the world of social computing, and their ranks are only expected to grow…

“And connecting with stakeholders is normally a priority. Because the fact is, people critical to the success of your business will continue to interact — whether or not you are aware and with or without your consent. Fostering those relationships can yield tangible business benefits, while also providing insight on consumer sentiment, employee skills and market perceptions. Welcome to the hyper-social organization of the future.”

Most insurers recognize the value and are attempting to use social media to increase links with clients and maintain their brands. But many among agents and brokers — who face ever-thinning margins and stricter regulatory and compliance — use and acceptance of social media has lagged. That’s unfortunate.

The report’s authors — Deloitte Consulting’s Joe Guastella, Linda Pawczuk and Mark E. White — offer an intriguing take on the rise of social computing. To them, it really isn’t part of some high-tech future. Instead, they say, it “is in some ways a return to the business landscape of Frank Capra’s and Norman Rockwell’s time — where business was local, corporations lived within a single office and market value could be pegged by the sentiments on Main Street or the water cooler.”

Of course the business landscape then was not as simple as Capra and Rockwell conveyed it, but it is true that in a local market, reputation trumps almost everything else. Now, with social media, all markets are local, and reputational risk is higher than ever.

Today, when one of a million claims is mishandled, the impact can be magnified by postings to Facebook, Twitter and a hundred other places. The insurer, the agent, the guy walking his dog — just about everyone around can be blamed. And on the Internet, the stain is permanent.

But the answer is not to lament the lack of civility or accuracy in the online world; it is for agents and brokers to use the tools themselves. The great news for most agents and brokers is that even online, this is not so much an IT matter as a matter of setting goals and figuring out how to use social computing to help meet them.

The airline industry, for example, quickly seized the opportunity to use Twitter to push communications — such as short-term airfare sales — to increase customer loyalty, but soon found that it was just as useful, if not more so, for customer service. As news spread, more people joined, airlines’ social networks broadened and their potential customer base increased. Not unhappily for the airlines, information about less expensive fares and quick customer service responses can also serve to dampen anger when a flight is delayed or a bag lost.

The takeaway here is not that airlines used the technology available to them. What they actually did, what agents and brokers need to do with the resources available to them, is think beyond the technology. Ask, as the authors of Tech Trends did, “How will we make our business relevant to consumers in this new era?” Then do it.

About Howard Mills

Mills is chief adviser for the Insurance Industry Group at Deloitte LLP and former insurance superintendent for New York. A copy of "Tech Trends 2011: Insights for Insurers on the Natural Convergence of Business and IT" may be downloaded at:

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