Almost all companies can derive some benefits from social media. And insurance companies may be near the front of the pack, though many are still making little headway, even in 2010. Ultimately, insurance is a business of trust and interpersonal relationships. The policy language matters, of course, but building loyalty can be just as important when it comes to selling policies. 

Along those lines, here are five tips for insurers looking to hop on the social media bandwagon.

1. Open the Dialogue 

Successful social media campaigns involve identifying core constituents and engaging them. Insurance companies can leverage social networks like Facebook and Twitter to connect with -- rather than communicate at -- users. Making customer interactions feel more personal can significantly enhance loyalty and boost retention rates. Social media makes it easy to let others do your promotion for you.  

2. Build Communities, Not Databases

It's not only about collecting information about customers. It's about creating communities of influencers and brand ambassadors who can help spread brand messaging to their online friends and followers.  

3. Use Social Media to Gain Customer Insight

Social media tools allow insurance companies to tap into customer sentiment like never before, revealing important customer concerns related to the industry, competition or the company itself. This can ultimately help insurance companies improve service quality or spot market opportunities.  

4. Promote Testimonies

Peer influence is 10 times greater than advertising. It's called social media for a reason -- don't be afraid to promote word-of-mouth from happy insurance customers. When the message comes from an objective third party, it can be much more effective.

5. Spread Knowledge to Decrease Risk

People tend to ignore the fine print these days. Social media allows them to gather information in digestible "bytes," creating more informed consumers. Insurance companies can use social media to disseminate important knowledge like coverage updates, policy changes and company alerts faster. As an added bonus, you also will not have to reprint brochures and pamphlets.

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Written by Vijay Pullur:

Vijay Pullur is CEO and founder of SocialTwist, a company that develops solutions to help turn social media into social marketing.