Many companies in the insurance industry struggle with the role of social media. While it is clearly here to stay, business value remains cloudy? Providing customers the ability to talk freely and publicly about products and services goes against the culture of the industry and seems to offer little benefit but substantial risk.

There is no question that social media has many downsides and for these reasons alone it is vital to participate. This defensive posture however does nothing to take advantage of social media. Do not expect miracles,  most companies have seen little or no return from social media to date and I doubt whether we will see more than a handful of marginal success stories this year. Social media does however have the potential to change the relationship between insurer and consumer as affects trust, something that is fragile in many cases. We should take with a ‘pinch of salt’ the view business practice will change dramatically but adjustments will happen.

One of the biggest potential ‘game changers’ comes with the Facebook “LIKE” button. This little button will become ubiquitous on the web as it expands from Facebook to a range of sites allowing consumers to express their preferences for others to see. Take a look on the Levi website to see it in action; even though many of your friends might not have expressed their jeans preferences, this might be more about the demographics of this blog. How does this play out for insurance? The ‘Like’ button represents one of the most sought after goals in the insurance business  - the “customer recommendation”.

We pour over statistics about web behavior, knowing that consumers still prefer to buy from the offline agent but one thing we know more anything is referral and recommendations are still king. So if a consumer visiting your Facebook page sees that 4 of their trusted friends “likes” you or your products, how important is that? Over the next year the “like” button will evolve but will become central to the personalization of the web.  Insurance companies will recruit fans with increasing sophistication and user recommendations will help bridge the trust gap. We can see the beginning with USAA and Nationwide trusting their customers to rate them and their products online and as we move to the next phase of retail insurance, do not wait too long to adopt the ‘like’ generation.