Agency E&O Considerations when Social Networking

ACT Webinar Presented By:

David Hulcher, Assistant Vice President, Agency E&O Risk Management, Big I Advantage

Rick Morgan, Chair, ACT Social Web WGColleen M. Murphy, Esq., Partner, Goldberg Segalla

LLPSabrena Sally, Senior Vice President, Swiss

Reinsurance CorporationJeff Yates, ACT Executive Director

The webinar will start shortly!

Agency E&O Considerations when Social Networking

ACT Webinar Presented By:

David Hulcher, Assistant Vice President, Agency E&O Risk Management, Big I Advantage

Rick Morgan, Chair, ACT Social Web WGColleen M. Murphy, Esq., Partner, Goldberg Segalla

LLPSabrena Sally, Senior Vice President, Swiss

Reinsurance CorporationJeff Yates, ACT Executive Director

David Hulcher

David Hulcher is AVP of Agency Professional Liability Risk Management for the Big “I” Professional Liability Program. In November of 1997, he joined the Independent Insurance Agents and Brokers of America’s for-profit subsidiary, Big “I” Advantage Inc. with primary responsibility for the management and marketing of the Big “I” Professional Liability Program. He is now focused on enhancing the risk management activities for the Program including the development of risk management information and tools to assist agents not only avoid E&O claims but improve their business practices and procedures in general.  

Email Address: David.Hulcher@iiaba.net

Rick Morgan

Linkedin.rickmorganconsultingFacebook/rickmorganconsultingTwitter.com/rickjmivrick@rickmorganconsulting.com

Colleen M. Murphy

Colleen M. Murphy, Esq. is a partner with the firm Goldberg Segalla LLP, which has 10 offices throughout New York, New Jersey, Pennsylvania and Connecticut. Ms. Murphy chairs the firm’s Insurance Agents and Brokers Errors and Omissions Practice Sub-Group within the firm’s Professional Liability Practice Group. Since 1992, she has nearly exclusively confined her practice to the defense of insurance agencies and brokerages in errors and omissions claims and lawsuits as well as in consumer complaints and hearings before the New York State Insurance Department.

http://www.linkedin.com/in/colleenmmurphy1

Sabrena Sally

Sabrena_Sally@swissre.com

Sabrena Sally is a Senior Vice President of Swiss Reinsurance Corporation. As the leader of Swiss Re’s Insurance Agents and Brokers Professional Liability program in the United States, Sabrena is responsible for the insurance agency errors and omissions program endorsed by the Independent Insurance Agents and Brokers of America. The IIABA program has been in place with Swiss Re for over twenty years.

Jeff Yates

Executive DirectorAgents Council for Technology, IIABA

Jeff.yates@iiaba.netlinkedin.com/jeffyatesACT

E&O & Social Media Social media networking is expanding the

ways that insurance agents and brokers do business

This merits an examination of the likely E&O risks flowing from use of social media

E&O loss control techniques to neutralize the exposures

Predictive – E&O claims and/or regulatory claims have not yet been made to our knowledge

Major E&O Risks from Use of Social Media

General E&O risk management tips from use of social media; Risks that result from taking advice/transactions out of normal agency processes

Incorrect advice; misrepresentation of policy terms

Negligent referrals Business defamation; trade libel Posting private consumer information on

the social web Advertising liability

General E&O Risk Management Tips

Step one is have a social media policy guide that all employees understand and adhere to.

Employees should know when to move from social web and into the agency’s normal business workflows and how to communicate this to customers. Social contact to prospect General insurance topics to specific topics of

individual or business

General E&O Risk Management Tips Use standard disclaimers where possible such as:

“The ABC Agency cannot bind or alter coverages or accept reported claims via social networking. Further, the information provided is intended for general situations and questions relating to specific coverage should be discussed using the agency’s regular workflows. Please contact a licensed agent directly.”

Establish with the customer upfront how your agency does business including who and how the customer should contact you for their specific needs.

If customer activity does occur through a social media platform it should be documented in the agency management system.

Potential Errors Without a Good Social Media Policy:

Example: Social networking account used to communicate answers on customer applications.

Example: Customer notifies agency of a claim via a social networking account.

Example: Customer requests via social networking account - a change in coverage or limit; an additional insured be added; a certificate of insurance be issued.

Misrepresentation/ Incorrect Advice

Example: Agent offers advice on co-insurance during blog exchange – someone sues alleging incorrect advice 

Venue doesn’t matter – Best Practice remains the same

EmailChat RoomBlogTwitterPhone Call

Same Best Practice

Misrepresentation/ Incorrect Advice

Risk Management Key:

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 wherever technology permits

Negligent Referral

Example: Agency blog lists or links to a vendor name for a wellness service provider, tax preparation service, or other services

Exposure: Allegation of damages resulting from inadequate services and that agency was negligent in making the referral

Negligent Referral

Risk Management Key:

Best Practice: Don’t recommend or link If you must, then at minimum provide

two vendor names/choices Obtain prior written permission from

vendor

Business Defamation and Trade Libel

Simply stated – 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

Business Defamation and Trade Libel

Hypothetical: In an effort to be competitive , an

insurance agent blogs that “ABC insurance company doesn’t pay claims”, or

Gets lured into this type of discussion by seemingly agreeing with another blogger that public adjusters inflate claims

Business Defamation and Trade Libel - Continued

We predict an increase in defamation claims arising out of an agent’s or broker’s use of social media

Why? Information is transmitted instantly and can be redistributed

Can remain on the “Social Web” forever Social networking encourages more casual discussion

Business Defamation and Trade Libel - Continued

These casual conversations move very quickly on social networking sites using:

Abbreviations; Nicknames; and Slang.

Results in misinterpretations and miscommunications

Business Defamation and Trade Libel E&O Loss Control Techniques - Continued

Have a written social media policy that mandates agency employees to refrain from making statements on the social web that competitors might find unflattering

Employees should keep comments positive Employee sites should make clear they reflect

their own views and not those of the agency

State the consequences of non-compliance.

Exposure for Defamatory Third Party Information you Post to your Blog or your Website

Posting insurance industry articles and/or providing a topical news feed to your targeted customers.

Potential exposure for posting an article which contains defamatory information.

Section 230 of the Communications Decency Act provides some protection from liability for “information providers” but not “content providers”

Adding your own commentary to a third party post can move your website or blog from being an “information provider” to a “content provider” under Section 230

Exposure for Defamatory Third Party Information you Post to your Blog or your Website

Only allow reputable third party information to be posted

Agency should have a written social media policy for issuing retractions or corrections

Exposure for Defamatory Third Party Information you Post to your Blog or your Website

Release of Personally Identifiable Information

Personally identifiable information is defined as:“Information which has been provided for a specific

purpose by an individual and which the individual can reasonably expect will not be made public”

Telephone number, address, date of birth, insurance score, drivers license number and social security number are examples of private information

Release of Personally Identifiable Information

Example: During blog exchange, someone posts to agent a file containing PII. Blog is not encrypted, information is intercepted and identity theft ensues.

Exposure is high: Third Party Liability (may or may not be insured) First Party Liability fines/penalties (not insured)

Release of Personally Identifiable Information

Risk Management Key Best Practice: Agency’s written Social Media policy

& security plan should clearly state that no PII is to be posted or transmitted via social networking

Post appropriate disclaimer and Privacy statements where the technology permits

Anywhere PII is collected:

Comply with state and federal laws & regs If no applicable regulations, then encryption

and firewalls & security plan (ACT is an excellent resource)

Advertising Liability/Use of Social Media

One reason insurance agents and brokers use social media is to promote “branding”

What if an agency is asked by a trade association to put the agency’s banner and hyperlink on the trade association’s website?

Is that considered advertising? Is it permissible?

Depends on the laws of the state the agency does business in

Advertising Liability/Use of Social Media

Agents must comply with advertising regulations governing the State in which they are licensed and do business

For example, The New York State Insurance Department Circular Letter No. 5 2001, provides guidance for New York licensees who advertise on the web.

Advertising Liability/Use of Social Media

Based upon this circular letter, it appears that, if a N. Y. agency places its banner and/or a hypertext link on a non-licensee’s website, it must be labeled as an “advertisement”

And it cannot contain any endorsements from the non-licensee

Advertising Liability/Use of Social Media

When an individual agency owner or employee uses the agency name, logo, or other advertising identifier as part of their personal social networking site does that then constitute advertising for which the agency must follow state advertising laws & regs?

That question has yet to be settled.

Advertising Liability/Use of Social Media

Loss Control Tips:  Be sure your agency advertising on

the site complies with all statutory and regulatory guidelines.

Use a written social media policy addressing employee linking to agency sites or use of agency name, logo, or other advertising on their personal social networking sites.

Summary of E&O Risk Management Tips

Establish an appropriate social web policy customized for you needs which incorporates other agency policies and workflows; train employees; audit for compliance

Employees should know when to move from the social web to the agency’s normal workflow.

Where possible, use disclaimers on agency’s posts, blogs, and tweets similar to those used in voicemails, emails, faxes, and websites.

Focus comments on issues and not individuals and organizations; keep comments accurate, truthful, positive and professional.

Summary of E&O Risk Management Tips

Employees’ sites should make clear they reflect their own views and not those of the agency.

Personally identifiable information should not be put on the social web.

The same vetting process for review of advertising materials should be used when dealing with social media sites.

Creating a Social Media Policy See ACT’s “Creating a Social Web Policy for Your

independent Agency” at www.iiaba.net/act at the “Websites & Social Media” quick link

Sample agency policies & recorded webinar

See also “Agency E&O Considerations When Using Social Media” by Sabrena Sally on the same page

ACT’s Policy guide provides key steps to take to formulate an agency policy; a check list of provisions to consider for your policy; & a social web code of conduct

Reiterating a Few of Key Points in Policy Guide Employees need to stay positive; use common

sense What employees do on their personal social

media can reflect on the agency Do not recommend individuals or businesses Do not refer to customers or employees without

permission; do not include any personally identifiable information

Employees need to know escalation procedure if they become aware of potential problems

Make clear the agency’s communications policy with prospects & clients for agency business

Conclusion

Social Media may be a wonderful tool for your agency or brokerage

Implement, with the help of qualified legal counsel and other professionals a written Social Media Policy, so that you may use Social Media wisely

Conclusion/ Disclaimer

Follow up email; ACT contact—jeff.yates@iiaba.net

This webinar is intended only for educational or illustrative purposes and should not be construed to communicate legal or professional advice.

You should consult legal or other professionals with respect to any specific questions you may have.

Further, the statements and/or opinions contained are those only of the webinar presenters/ authors and do not constitute and should not be construed to constitute any statement, legal advice, opinion or position of Goldberg Segalla, LLP, ACT, IIABA, and/or Swiss Re.