Social Media Buzz on Life Insurance versus Equities​​​

Social Media Buzz on Life Insurance versus Equities

Anish Jain and Dr Nupur Pavan Bang

(This analysis was first published in the IIB Bulletin, Volume 1, Issue 1; Reprinted with permission.)

As Thomas H. Davenport and Jeanne G. Harris put it in their book “Competing on Analytics”, Analytics is the new science of winning. Harping on the virtues of Analytics would be a wasteful exercise. People are sold on the idea.

Heavy duty analytics was deployed to locate the MH370. Big data analytics was at play to effectively devise disaster management plan when hurricane Sandy hit America. Application of Analytics to retain and reward customers, design products and market them is widely in use. Banks and financial services firms use fraud analytics, social media analysis and text analytics effectively to reduce costs and improve efficiency.

The advent of Facebook, Twitter and LinkedIn has revolutionized the  the behavior of people in many spheres of lives Barrack Obama won the Presidential elections for the second term in 2012 and social media campaigning was an integral part of his overall campaign strategy. He is even called the “first social media president”! Indian political parties have been deploying social media effectively to campaign for the ongoing elections.

The impact of social media has been more significant in the field of marketing. Before buying a mobile phone, most people do research and read reviews on the internet. Similar behavior extends to other kinds of purchases including a house, car, electronics goods, books and even financial products like stocks and insurance.

Due to changes in behavior of a customer, companies have changed their marketing strategies with increase focus on social media. There is a focus to increase presence on the web, engage directly with end customers through social media and manage any adverse feedback quickly and effectively.  Social media can be used as a powerful tool to marketing, customer servicing and maintaining public relations.

The significance of social media prompted us to carry out a study on the visibility of ‘Life Insurance’ on social media.

Life Insurance forms 16% of the total financial savings of Indian households. Only 3% of the savings are invested in the capital markets.

Compositing of Savings in Financial Assets of Indian Households

Source: Reserve Bank of India, 2012-13

The Life Insurance industry has seen a gradual decline in various key parameters over the last three years.

Key parameters in relation to the Life Insurance Industry in India

Source : IRDA Annual Report 2011-12, 2012-13; Swiss Re, Sigma No. 3/2013

While there are numerous reasons which have contributed the decline, how does life insurance perform in terms of their presence on social media?

For the purpose of this study, social media monitoring tool Opinion Tracker was used. We tracked Web News, Social Networks (excluding Twitter) and Blogs. We compare the presence of life insurance on social media, with the stock market, for a 3-month period (29/12/2013 to 29/03/2014). Is the flow of savings into Life Insurance and stock markets proportional to their presence on the social media?

The key words used for the study were Insurance, Life Insurance, IRDA, Indemnity, Life coverage, Tax savings 80c Life Insurance, and names of various Life Insurance companies in India, to get the count for the ‘Life Insurance’ presence. Words like Nifty, Sensex, Equity, Stock, BSE, NSE and SEBI were used for finding the presence of ‘Stock Market’ on social media.

While the results can be influenced by the period of study, the use of different key words from what we have used, and other industry related reasons, the results that we got were quite astonishing, even accounting for all the different scenarios which could result in different numbers from what we have.

The results shows despite so much of social media buzz for Stock Market, people prefer to invest their savings in Life Insurance. It clearly shows the tendency of Indian people to save and their risk-averse attitude. But, we would like to implore the readers to think for a moment, the kind of funds that can flow into Life Insurance market, if they upped their presence on social media!

Life insurance companies do not make much use of social media. The Life Insurance companies still rely on their agency force to spread awareness about the products. This claim is also supported by a recent survey published by Max Life Insurance-Nielsen, where 58% respondents said that Insurance awareness is generated by agents, while only 8% respondents believed that the awareness is generated by internet. They need to realize that Social Media has rapidly turned into a vital part of the modern marketing mix as well as the lives of at least the urban customers (existing or potential). A few benefits of using social media would be:

  • Incomparable reach. Would help the companies explore untouched markets and reach potential customers directly without middlemen.

  • Interact with numerous people, making them their potential customer and eventually resulting in sales.

  • Opportunity to showcase brand and products.

  • Develop a loyal community of prospects.

  • Enhance company trustworthiness.

  • Cut marketing costs.

  • Directly interact with customers to know their grievances and preferences

A dedicated team to spread awareness about the need for life insurance, the right cover, the products, and to engage consistently with customers would help the Life Insurance Companies to achieve growth in their business.

Information Governance

There are four major trends related to data: More data, more threats, more regulations and more demands for ease-of-use of information. Companies need to balance ease of use of data with security and compliance requirements. We help our customers make informed decisions by providing options based on the context of their operations.

Current Scenario

  • Large volumes of data distributed across systems, countries,  cloud, employees, vendors and suppliers ​
  • Increased threats to data. Hacking is now a bigger business than dealing in illegal drugs
  • Stringent regulations around data privacy
  • Increased importance of intellectual property
  • Increased demands from employees for an open work culture and “bring your own device”

How we can help

  • Develop an information security strategy within the company’s governance framework
  • Comprehensive solution that address multiple risks and requirements (Intellectual property, Information Security, Data privacy regulations and Industry-specific regulations)
  • Independent Assessment of gaps in security
  • Provide available technology options for monitoring access and tracking usage of data
  • Define data security policies and procedures
  • Conduct awareness workshops and communication

 

Enterprise Risk

Enterprise risk management (ERM) is a process of identifying risks, assessing them in terms of likelihood and impact, mitigating them with appropriate response and controls, sharing by insuring or accepting risks considering cost benefit.

The objective can be best accomplished by adhering to enterprise wide approach drawing upon the requirements of various regulations (for e.g. SOX, HIPAA), ISO standards, frameworks, organizational planning and internal control. Enterprise-wide approach is necessary to manage variety of risks in numerous departments, functions and processes considering inter-relationship of risks. Hence, coordination and integration is key for successful ERM and a company take benefit of what is commonly called as ‘Upside of Risk’.

Current Scenario

  • Risk is silo-ed in functional and business vertical. This results in lack of perspective about inter-related risks
  • Lack of real-time information about risks at ground-level within the organisation
  • Large volumes of data distributed across systems, countries,  cloud, employees, vendors and suppliers
  • Stringent regulations around data privacy
  • Lack of information about inter-related risks due to silo approach taken for risk management
  • Compliance with multiple regulations with overlapping requirements

How we can help

  • Identification and priorization of enterprise-wide risks
  • Creation of an ERM framework that will address business risks and regulations using defined standards (COSO, ISO31000, NIST)
  • Development of processes to build a sustainable risk management program
  • Definition of Key Risk Indicators (KRIs) and dashboard
  • Develop an information security strategy within the company’s governance framework
  • Comprehensive solution that address multiple risks and requirements (Intellectual property, Information Security, Data privacy regulations and Industry-specific regulations)
  • Independent Assessment of gaps in security
  • Implementation of tools and technologies to enable enterprise-wide monitoring and reporting

Specific Services

  • Risk analytics and Dashboards

  • Tools Implementation (SAP GRC Risk Management)

  • Information Security Governance

  • Social media

  • Cloud Security

  • BOYD Policy

  • Business Resiliency & Continuity

  • Data Retention Compliance

  • Consumer Privacy

Regulatory Compliance

The cost of non-compliance is up to three times the cost of compliance. Learn how we can help to reduce cost of compliance through automation with Qura.

Compliance officers are fatigued by the ever-rising number of regulations. Companies derive more value when they align the regulatory requirements to its business risks and pro-actively anticipate future regulations. Quadrisk provides solutions with the objective of enhancing the quality of its operations.

Current Scenario

  • Audit issues, penalties and litigation

  • Need to ensure compliance requirements are met for new operations and services launched.

  • Impacted by number of regulations with overlapping requirements

  • Lack of visibility about meeting all compliance requirements across locations, business units and functions

  • Grappling with high cost of compliance due to do redundant, manual effort

How can we help

  • Independent assessment that compliance requirements are met

  • Interpretation and adoption of new regulations

  • Develop a robust framework that will address the regulatory requirements, business risks and business objectives

  • A roadmap to address immediate issues, and sustain compliance in the long-run

  • Recommend the optimum level of controls to meet compliance requirements and meet business objectives

  • Define method for documentation, execution and monitoring of internal controls

  • Recommend technology/tools for implementation

  • Define policies, procedures, standards, guidelines

  • Perform period testing to monitor effectiveness of controls

Specific Services

  • Sarbanes-Oxley (USA)​​

  • Clause 49 (India)

  • Data Privacy Act (UK)

  • Anti-Money Laundering

  • HIPAA Compliance (USA)

  • Dodd-Frank Act

  • Foreign Corrupt Practices Act

  • Know Your Customer

  • Data Retention Compliance

  • Consumer Privacy

  • ​ISAE 3402, SSAE 16

GRC Tool

GRC TOOL IMPLEMENTATION

Companies are overwhelmed with the task of managing compliance across departments, business units, geographies, IT systems and business partners. A manual approach is not effective in monitoring risks at ground-level. We focus on solving business problems through various tools and technologies to provide a solution that is cost-effective and sustainable in the long-run​.
  • Information  is available only after an risk-event or fraud
  • Monitoring operations in remote locations is difficult without any tools​
  • Lack of visibility of risks and challenges at ground-level in real-time
  • Manual and duplicate work with chance of error
  • Provide a technology roadmap with focus on high-priority issues​
  • Develop business case for tools implementation
  • Implement the tool by a team of subject-matter experts and technical consultants​​
  • Provide training and conduct awareness workshops
  • Manage end-to-end program from design to implementation to support. Manage multiple stakeholders and communication ​
  • Provide technical tool support

Specific Services

  • SAP GRC
  • Oracle GRC
  • Approva Bizrights
  • OpenPages
  • Custom Tool Development

Areas for Automation

  • Access Controls (SOD)
  • Continuous Controls Monitoring
  • Risk Analytics and Dashboard
  • Audit Management
  • Policy Management
  • Incident Management