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Sabrena Sally 2010 Fowler Seminar
1. Social Media - Risk Management for Insurance Agencies S. Sally, Baltimore CPCU Roundtable, October 2010
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5. Social Media –The evolutionary path Websites Interactive Websites Forums/Chat Rooms Blogs IM Professional Networking 4
6. How might agencies be affected? Business models Use social media? Costs Risks Internal Processes Technology requirements Procedural changes E&O Exposures Identify Quantify Manage the risk 5
7. Potential Errors from Social Media Transactions outside usual agency procedures Misrepresentation/Incorrect Advice Negligent Referral Defamation/Trade Libel Advertising Liability Personally Identifiable Information 6
8. Potential Errors Transactions outside established agency procedures Examples: -General discussion becomes account specific -Customer uses social media to report claim -Social media used to answer application information Issue: Information does not become part of agency file No documentation of discussion to support defense against potential E&O claim Specific request not completed, ie. claim not reported, coverage not bound Application information not forwarded to complete application transaction 7
9. Potential Errors Transactions outside established agency procedures Risk Management Tips: Post clear guidelines outlining what can be communicated on social media site using disclaimer "The ABC Agency cannot bind or alter coverages or accept reported claims via social networking. Please contact a licensed agent directly" Agency procedures manual addresses social media exposures specifically – detailing when and how to bring discussions 'off-line' 8
10. Potential Errors Incorrect Advice/Misrepresentation Examples: -While blogging, agent offers incorrect advice regarding business interruption -A white paper with inaccurate data is posted on the agency website Issue: Customer or potential customer acts on the incorrect advice or inaccurate data, resulting in damages, leading to E&O allegations If on a blog, how to find a record of the exchange for defense purposes? Ensuring accuracy/appropriate disclaimer of information shared publicly 9
11. Potential Errors Risk Management Tips: Venue (ie, virtual world) does not matter – best practice is the same 10 Incorrect Advice/Misrepresentation Email Chat Room Blog Twitter Phone Call Same Best Practice Same Best Practice
12. Potential Errors Incorrect Advice/Misrepresentation Risk Management Tips: Establish clear agency direction on when to take “off-line” Document in Agency’s social media policy, and be certain communicated to all agency personnel Post appropriate Disclaimers where possible 11
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14. that interferes with the company's business relations through damaging or derogatory remarks that cause its customers to look elsewhere12
17. Slang.Predictions for increase in defamation claims arising out of an insurance agent’s and broker’s use of social media Social networking more casual discussion – “Water Cooler Discussions Posting news articles or white papers authored by third parties is common 13
18. Potential Errors Defamation/Trade Libel Examples: While participating in a quick moving discussion on the agency blog, an employee makes a comment that "ABC Insurance Company" has a reputation for not paying claims" On personal Facebook page, an employee comments negatively about their prior work experience at "Wholesale Insurance Brokerage" Agency posts on their website an article authored by a third-party, and article is later subject of an allegation of defamation 14
19. Potential Errors Risk Management Tips Truth provides a complete defense to defamation claims. A cautionary note; by the time a defendant has proven the truth of an alleged defamatory statement, time and resources have been waste 15 Defamation/Trade Libel
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21. Clearly state that goal is to keep discussions positive and truthful (keep it clean and keep it real)
22. Be specific on when discussions should go offline and into established agency workflow
23. Advise employees that personal sites should make it clear that any statements are their own opinion and not reflective of the agency
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25. Only allow reputable third party information to be posted to your blog or website
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27. Potential Errors Personally Identifiable Information Examples: -Instead of posting a white paper on flood insurance, agency mistakenly posts a file containing a list of customers and their personal information -Agency website has an area for online quoting, collecting PII, but no encryption Issue: Customer alleges damages from identify theft or mental anguish resulting from personal information becoming public Third Party Liability – may or may not be insured - $???? Exposure to fines/penalties – not generally insurable 19
28. Potential Errors Personally Identifiable Information 2009 Poneman Institute study: -More than 40% breaches come from 3rd party vendors -More than 35% come from lost or stolen laptops or PDAs Point: Social networking creates one more avenue for breach, main exposure is traditional agency operations! 20
29. Potential Errors from Social Media Personally Identifiable Information Risk Management Tips: Agency’s written Social Media policy should include standards on what information is to be transmitted via social networking Anywhere PII is collected: Comply with state and federal regulations If no applicable regulations, then encryption and firewalls (ACT is an excellent resource) Written social media policy should make it clear that all private information of customers and employees be kept off of the web entirely 21
30. Potential Errors Advertising Liability Examples: Agency website contains links to other businesses Agency owner or employee makes agency logo part of their personal website or social network page Issue: Agents must comply with advertising regulations governing the State in which they are licensed and do business At least one state, NY, is specific to advertising on the internet Can an agency be held liable for advertising on employee website or social network pages? 22
31. Potential Errors Advertising Liability Risk Management Tips: Follow the same legal vetting process as used for traditional advertising Agency social media policy should also addresses to what extent employees have permission to link to the agency’s sites, or use the agency name, logo, or other advertising material on their personal sites Comply with all statutory and regulatory guidelines in all states where licensed to do business 23
32. Summary – Risk Management Tips Establish a written Social Media Policy, example, authored by the Agents Council for Technology on website at www.iiaba.net/act Maintain positive environment Use Common Sense Permanent record- worldwide Escalation procedure should be clearly stated When and how to take 'offline 24
33. Summary – Risk Management Tips Engage qualified legal counsel to review – specialized area of practice Review and update the social media policy to keep abreast of rapidly changing environment All employees should be trained regarding the social media policy Agency employees should be instructed to report any potential defamation claims to agency management who should report them promptly to the GL and E&O insurer 25
34. Resources: http://www.acttech.org/ your one-stop shop for technical issues for insurance agencies! 2010 ACT webinar series: Intro to Social Networking Creating a Social Networking Policy & Strategy E&O Considerations Techniques to Build, Manage Facebook, Twitter, YouTube etc. Much, much more….. 26
Number of Twitter users has increased 62 percent since April 2009 ...Number Of Bloggers In The US — Tech Crunchieshttp://content.usatoday.com/communities/technologylive/post/2010/10/three-stats-that-reveal-much-about-our-digital-culture/1LinkedIn Now 60 Million Strong
You might be thinking, all this stuff is for my kids and grandkids, I don't and won't blog, facebook, or even more so, will not Tweet!As agencies plan for growth and perpetuation, they will look not only at their current customer base, but – where will their future customers come from? That's right – those kids and young adults that now communicate soley through social media. My grandaughter had never even seen a land – line phone until I pulled one out of a box in the basement. To her, you 'talk' to people by texting, facebook, skype, etc. Even email is seen as non-essential. Like any other business decision – risks/reward, costs, timing, etc. must all be considered. There are plentiful resources and consultants specializing in helping businesses analyze if/when/how to integrate social media into their business models, so that will not be our focus today.Internal processes – however, as having a major impact on how an agency manages their E&O risk – we will talk about processes. Not so much on the technology requirements, as again, many resources available, but more so on how agency procedures might change.The heart of our discussion today will be on E&O exposures – What new E&O exposures?How does the use of social media change existing exposures?Risk/rewardManaging the risk
1. A discussion going beyond generalities and into details of a specific situation – this now needs documentation – when is right time to move into agency standard procedures?2. Blogs, chat rooms – see above. Posting of informative articles3. Links to other vendors or services. 4. Discussions blogs chat rooms, even employees making comments on their own Face book or Linked In sites – about competitors or othersGrowing and rapidly changing concern is that of protecting personally identifiable information. Examine each of these separately
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