Social media presents new market for insurers

Social media-savvy young people offer a potential new emerging market for online risk insurance cover.

That is according to the latest research from the Chartered Insurance Institute (CII), which revealed that the Generation Y element of the UK population is more conscious of the inherent risks associated with using social media than its Baby Boomer and Generation X counterparts and is consequently more interested in insurance cover to minimise financial loss or reputation damage.

Of most concern to younger internet users is the ability to control the commercial use of their name, image or other aspects of their identity. More than half (56%) expressed an interest in protecting personal image rights through insurance cover.

Conversely, purchasing social media insurance to control publicity rights was an issue for less than a quarter (23%) of those aged 55 and above, rising to exactly a third in the 45 to 55 category, reflecting a clear disparity in the perception of online risk across the age groups.

Damage limitation in the event of a social networking account being hacked or parodied by a third party scored similarly highly among 18 to 24-year-olds, with more than a quarter (26%) stating they would consider social media insurance to safeguard their reputation. Among those in the eldest age bracket, just five per cent of respondents claimed they would be interested in insuring their reputation online.

A generation gap exists also in relation to buying insurance to cover legal fees arising from online incidents. Nineteen percent of 18 to 24-year-olds were interested in this type of cover for divorce hearings following revelations from social media while 18% would consider insuring against job loss versus just 2% and 3% respectively of respondents aged 55-plus.

While age differences are significant in requirements for potential online insurance products, the CII’s research also identified a dearth of knowledge across the board about whether location-based updates on social media sites, which could potentially alert burglars to unoccupied houses, would invalidate contents insurance. Between 80 and 82% of respondents of all ages were unaware if posting such information made their insurance void.

The CII’s chair of the underwriting faculty David Williams said: “There’s a growing awareness of the dangers of posting the wrong kinds of information on social networking sites, which relate not only to potential financial exposure but also to reputational harm, and with it we’re seeing an appetite for social media insurance from savvy young consumers.

“Although this constitutes only a potential new market at present, it’s not unlikely that this type of cover would form an important part of businesses and individuals’ insurance portfolios in the future.”