Sabrena Sally 2010 Fowler Seminar

Social Media - Risk Management for Insurance AgenciesS. Sally, Baltimore CPCU Roundtable, October 2010

S. Sally | Baltimore CPCU Roundtable | October 2010 2

Table of Contents / Agenda

Social Media - Risk Management for Insurance Agencies

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What is Social Media? 4

Social Media – The evolutionary path 5

How might agencies be affected? 6

Potential Errors from Social Media 7

Summary – Risk Management Tips 25

Resources: 27

S. Sally | Baltimore CPCU Roundtable | October 2010

What is Social Media? Blogs —

Social Networking Sites — Facebook, MySpace, Friendster

Social News — Examples: Digg, PopURLs

Social Measuring — Examples: Technorati, BlogPulse

Microblogging – : Twitter

Social Bookmarking — Examples: Del.ici.ous, Diigo

Social Q&A – Examples: Answers.com, Yahoo! Answers

Video Sharing —: YouTube, Vimeo

Professional Networks — : LinkedIn, Plaxo

List goes on (see onbloggingwell.com)

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http://www.facebook.com/

http://www.myspace.com/

http://www.friendster.com/

http://digg.com/

http://popurls.com/

http://technorati.com/

http://www.blogpulse.com/

http://twitter.com/

http://delicious.com/

http://www.diigo.com/

http://www.answers.com/

http://answers.yahoo.com/

http://youtube.com/

http://www.vimeo.com/

http://www.linkedin.com/

http://www.plaxo.com/


Social Media –The evolutionary path

Websites

Interactive Websites

Forums/Chat Rooms

Blogs

IM

Professional Networking

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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


Potential Errors from Social Media

Transactions outside usual agency procedures

Misrepresentation/Incorrect Advice

Negligent Referral

Defamation/Trade Libel

Advertising Liability

Personally Identifiable Information

6


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

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Potential Errors

Transactions outside established agency procedures

Risk Management Tips:

1. 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"

2. Agency procedures manual addresses social media exposures specifically – detailing when and how to bring discussions 'off-line'

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Potential Errors

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

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Incorrect Advice/Misrepresentation


Potential Errors


1. Venue (ie, virtual world) does not matter – best practice is the same

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EmailChat RoomBlogTwitterPhone Call

Same Best PracticeSame Best Practice



Potential Errors


– 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

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Potential Errors

What is this?

• business defamation is a false statement about a business, its products or services,

• that interferes with the company's business relations through damaging or derogatory remarks that cause its customers to look elsewhere

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Potential Errors

Social networking conversations move very quickly using:

Abbreviations;

Nicknames; and

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

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Potential Errors

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

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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

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Potential Errors

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Risk Management Tips

Establish a written Agency Social Media Policy

Specify who within agency authorized to blog, post, etc

Clearly state that goal is to keep discussions positive and truthful (keep it clean and keep it real)

Be specific on when discussions should go offline and into established agency workflow

Advise employees that personal sites should make it clear that any statements are their own opinion and not reflective of the agency

Outline consequences of non-compliance


Potential Errors

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Establish a written Agency Social Media Policy (continued)

•Addresses when and how to issue retractions or corrections to insurance articles and news articles posted on its blogs

•Only allow reputable third party information to be posted to your blog or website

•Post appropriate disclaimers


Potential Errors

Breach of Personally Identifiable Information

The term personally identifiable information refers to information which can be used to distinguish or trace an individual's identity, such as their name, social security number, biometric records, etc. alone, or when combined with other personal or identifying information which is linked or linkable to a specific individual, such as date and place of birth, mother’s maiden name, etc.

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Potential Errors

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

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Potential Errors

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!

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Potential Errors from Social Media


1. Agency’s written Social Media policy should include standards on what information is to be transmitted via social networking

2. Anywhere PII is collected:

– Comply with state and federal regulations

– If no applicable regulations, then encryption and firewalls (ACT is an excellent resource)

3. Written social media policy should make it clear that all private information of customers and employees be kept off of the web entirely

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Potential Errors


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?

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Potential Errors



1. Follow the same legal vetting process as used for traditional advertising

2. 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

3. Comply with all statutory and regulatory guidelines in all states where licensed to do business

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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

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http://www.iiaba.net/act


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

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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…..

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http://www.acttech.org/

Thank you


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Sabrena Sally 2010 Fowler Seminar

Economy & Finance