Social media networks provide a rich source of data insurers can use to improve a variety of operational processes, but will take time for insurers to fully utilize, experts say.

Karlyn Carnahan, principal at New York-based insurance advisory firm Novarica, a unit of Novantas L.L.C., said social media data already is paying dividends for insurers in areas such as underwriting, claims and subrogation.

“Social media is being used extensively in claims, especially in fraud,” Ms. Carnahan said.

Mike Fitzgerald, senior analyst at Boston-based information technology consultant Celent L.L.C., said some interesting uses for social data involved underwriters at commercial lines insurers. Mr. Fitzgerald said he knows of an underwriter who spotted a Facebook posting by a client, a general contractor, detailing the contractor's new foray into the roofing business. The client was unaware roofing was excluded in his existing policy and was able to adjust his policy at his subsequent renewal to reflect the proper coverages needed thanks to the eagle-eyed underwriter.

It is the immediacy of social data that enables insurers to alter underwriting from a static process reliant upon backward-facing data into a dynamic process reliant upon real-time data, Mr. Fitzgerald said.

“Social data can help insurers go beyond underwriting and pricing to where you are really managing a risk,” he said. “It turns insurance into much more of a real-time continuous product.”

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David Brisco, a San Diego-based subrogation and recovery attorney for law firm Cozen O'Connor L.L.P., said companies can utilize social media to help with subrogation. In the event of the wake of a tragic event such as a fire, claims and subrogation can glean important information from social media networks such as Twitter and YouTube.

“Bystanders are often taking video of a loss as it occurs,” he said. “So social media can help us gather information on the cause of a loss even before investigators arrive.”

Mr. Brisco said he is familiar with a case in which insurance investigators scoured social media looking for a photograph of a utility pole thought to have started a wildfire near Malibu, Calif., that burned several homes. The investigators found a photo taken mere days before the fire of the suspected pole in a precarious position on the Flickr account of a nearby resident and photography buff.

“Photos from social media sites can be great for helping figure out causation,” he said, adding that social media-derived evidence also may help convince jurors usually indifferent to the plight of insurance companies, if a case goes to trial. “It really helps tell a story to the jurors in regards to the totality of the loss.”

One obstacle to greater usage of social data in subrogation underwriting is that currently being used in an ad hoc-manner according to the whims of individual employees. “The challenge with social media usage on the underwriting side is that it is just not scalable,” Ms. Carnahan said.

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Mr. Fitzgerald agreed that insurers will need to find a way to automate the collection and analysis of social media data to derive its full value. “It's not being used widely enough, so it is not yet cost effective,” he said.

He also said that the use of social media-derived data has thus far stood up to another perceived hurdle, the legal and regulatory environment.

“I am not aware of any regulatory body that had addressed the use of social data in underwriting,” Mr. Fitzgerald said. “Moreover, it appears the courts have said that if you are using social data to fight fraud, you are on solid ground.”

In addition to consuming outside social media data, Ms. Carnahan also sees potential for insurers to use social media to ease internal communications and foster collaboration in complex areas such as claims. In the case of a commercial vehicle claim, social media could help ease information flow between all interested parties from customer service representative to claims adjusters, estimation software provider and the risk manager at the firm filing the claim.