The Effect of Social Media on Insurance

I received a post from someone this week asking my opinion about price comparison sites for auto and homeowners insurance in the UK.  He wanted to know my opinion as to whether these sites would have an effect on the UK insurance market.  When initially aswering his question, I missed the point that the site was a comparison model, as opposed to a social media site.  But after reconsidering my initial opinion, my thought process remained unchanged. 

Social media has turned the internet into a living, breathing thing that shifts, expands, and displays physiological traits like a biological organism.  It is nourished by the “macrological” input of the masses and displays its nutrition in the way of statistical expressions that are generally accepted as truthful.  It is the ultimate expression of We The People.  It is this very premise that draws more and more people to the internet every minute, drawn to the internet for honest and credible answers to their specific questions.  And this is why I believe that price comparison websites will have an effect on the insurance industry.  Insurance carriers are no stranger to competition, and they have created countless strategies to compete on other criteria such as claims service and other value adds.  But when the lowest bidder continues to scoop up market share, the only recourse for other insurers will be to lower their premiums.  That’s exactly what they are doing now, as we are several years into a soft U.S. insurance market.  Of course this all changes with the same issues that harden insurance markets, like catastrophic events and economic changes.

I believe that social media is going to change everything(it already has, really).  It’s like all of a sudden the little dog pulls the curtain aside to reveal the so-called wizard behind the curtain, and everyone sees him.  Companies are going to have to get damn good at what they do or they will be exposed.  And they will have to be more competitive when it comes to pricing, or they will lose to those that are.