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http://www.insurancetech.com/management-strategies/232200670
http://www.insurancetech.com/management-strategies/232200670

11 Burning Insurance Industry Questions That Will Be Answered in 2012
Insurers enter the new year facing many questions about regulation, technology trends and more. Not all the answers will emerge this year, but I&T provides clarity on some of the most pressing unknowns.

Insurers enter the new year at a crossroads in many ways. Technologies such as mobile that once were considered "emerging" or "curiosities" now are bleeding from the marketing department into the enterprise and have become table stakes in many cases. Further, legacy systems -- no longer seen as mere annoyances, but rather as inhibitors that prevent much-needed growth -- are spurring major investments in core systems replacement projects. And the environment in which all of this is taking place is itself in flux as new regulation and vendor and insurer consolidation reshape the status quo.
These developments raise many critical questions for insurance companies. While we may not get answers in 2012 to all of the questions facing the industry, we surely will see some clarity on many of them. I&T offers insights into 11 unknowns that are likely to shape the insurance industry in the coming year.

4. How Will Social Media Be Used Beyond Marketing?
Several industry consultants and analysts have pointed out that social media often contains public, unstructured data that insurers can use. While privacy and resource issues have prevented many carriers from looking too closely at the information, the industry enters 2012 with several software vendors offering products to help analyze unstructured social media data -- perhaps signaling an uptake in this kind of use.
"The industry will move slowly on it, but I think there's a lot of hype and education and awareness," says Strategy Meets Action founder Deb Smallwood. "It's amazing how many software companies are out there working on this."
Recent SMA research indicates that 24 percent of insurance companies are evaluating using social data in claims and 26 percent are evaluating it for underwriting. Celent (Boston) has been examining the phenomenon as well, and Celent insurance analyst Craig Beattie says it's important for insurers to tread carefully at first. "There's a risk here that if underwriters start using social to penalize people, they'll lock down all the data in social networking sites," he says.
Beattie recommends a reward-based approach to using social to establish a risk profile -- at least in the short term. "There's a generation of people coming up now who share everything with their friends," he notes. "The interesting challenge will be what service offering or what incentive will insurers have to offer to let them see what they're doing." --N.G.

5. Will Usage-Based Insurance Finally Take Hold?
Social media isn't the only way insurers have tried to get a more holistic view of their policyholders. For a decade or so, auto carriers (led most notably by Progressive) have tried to get telematics-powered, usage-based insurance to catch on. This year, while Progressive rolled out its Snapshot program in all 50 states, other major carriers -- including Allstate and State Farm -- launched their own versions of usage-based offerings, indicating that the industry sees this market poised for growth.
Robin Harbage, director for Towers Watson, says the time is right for usage-based insurance to gain traction. "It's just a question of enough choices out there for consumers that it starts to become ubiquitous," he says. "There are 18 states that have four or more usage-based insurance products available."
The most popular way for telematics data to be collected is still the insurer-provided proprietary device that plugs into a car's onboard computer. While there have been some rumblings that alternate means of collection might be employed -- either by using OEM services such as GM's OnStar or the always-on, location-aware smartphone -- those solutions are still a while off at best, Harbage says. "The reason it's developing with the proprietary device is largely because of the need for control of the data. If you're going with OnStar, you can only use what data they're willing to provide you in the way they're willing to provide it," he explains.
"Smartphone technology is clearly something people are interested in leveraging in order to do this," Harbage continues. "But it's just not always clear at this point how the vehicle is associated with the smartphone." --N.G.