Part of the hype involved with the Facebook IPO this week is the vision of its founder to establish it as a platform for folks to use when interacting on the web. To me, this implies not just linking from the S.N. to another site, but to actually complete commercial transactions on the social network itself. For insurance, this would have a minimal benefit of avoiding tedious data entry of demographic details that the network already knows about you, age, sex, address, etc.
If you don’t assume transacting insurance on a website other than that of the writing organization will take place, you can quit reading now — you will not be interested in the rest of this post. If, nonetheless, you are game to take into account that a business will attempt this, read on and get ready to post a comment and make your pov known.
What would be the characteristics of the initial U.S. P&C insurance firm to use a social internet site as a platform for its business? Here are some considerations:
Item – Will be a single of the commoditized, less differentiated merchandise such as private automobile, motorcycle, or dwelling: In these lines of company, value and service separate the offerings. Being in a position to ease the procedure of acquiring and sustaining insurance coverage will be a driver.
Segment – Most likely youthful: The businesses first attracted to a S.N. platform will be those with prospects who are most comfortable with the environment, aggravated by traditional insurance coverage distribution and less concerned about private privacy.
Channel – Direct: As this new way of performing business will involve very first-mover risks, it is most likely that firms with intermediated distribution will pass on making use of the platform in the starting. Upsetting their current agents with a direct social network method will be too significantly to bear.
Culture – Innovative: There will need to be some match between the worth method of the insurer and that of the social network firm. Stepping into this unknown territory will need that each parties are comfy with their partner. Thus, insurers which have a reputation for being more innovative will be much more likely to reach acceptable terms with the platform provider. Considering that this will most likely be either Google or Facebook, the insurer with the vibe closest to “do no harm” or “hacking” will most likely prevail.
Size — Not necessarily the biggest: I do not think that the initial S.N. insurer will require to be a billion+ organization, but I am certain that the network provider will demand some pretty steep rent and this will restrict the number of insurers able to pay the freight.
Technology – Probably not a barrier: The investment of numerous insurers in core method renewal need to position most of them to take advantage of the open standards that a S.N. is built on.
Regulator view – The wildcard: The most likely insurer, in my view, is one particular that has a excellent reputation with the regulators and a decent reputation at addressing their concerns in past marketplace conduct evaluations and inquiries. As the response of regulation to this new way of undertaking business is such an unknown, the firm willing to take this step will be confident in its capacity to respond to its overseers.
Given these parameters, does anyone come to your mind? In days past, I would have identified the business with the pink-haired lady mascot as a leading possibility, but its recent buy takes them off the table. It also could be a single of the specialty auto insurers targeting the youthful driver industry as nicely.
