Using Social Media Responsibly

Social media are changing the way insurance professionals do business. How can these forms of media, such as Pinterest, Twitter, Facebook and LinkedIn, help make your business more successful? And how can you protect yourself from the risks these media can create? Using some best practices for ensuring compliance with existing law, the right tools, and proper planning, social media can make your company more productive, more consumer-friendly and more successful.

Current Trends

The National Association of Insurance Commissioners has defined the term “social media” as Internet-based applications that allow for the use and exchange of user-generated content. They provide a company the platform to tell its story and speak directly to the consumer’s needs and concerns by breaking down communication barriers and improving accessibility.

For example, companies can educate consumers and spread information about their products and services through interactive Facebook pages. At the same time, consumers can read about products and services and find local agents on Facebook. Twitter can be used to engage in direct conversations with customers and stay informed on the latest insurance trends. LinkedIn, a more business-oriented social networking site, allows users to network with other professionals. Pinterest is a good outlet for photos and other visual content. New smartphone applications allow customers to make payments, report and track claims and buy a policy through their phones.

How can social media work for you?

While the popularity of most social media outlets ebb and flow, there are certain principles that apply regardless of the medium used. Social media raise a diverse set of business risks, including privacy and intellectual property issues; advertising and marketing risks; and employment-related concerns.

The consumer’s right to privacy in Internet activity is a serious issue for insurance companies and other professionals who are subject to the Gramm-Leach-Bliley Act, the Fair Credit Reporting Act and other privacy laws.

It is important that protocols and policies be implemented to ensure that all non-public personally identifiable consumer information will be properly safeguarded and protected. In a web-based, dynamic environment involving the free flow of information, this presents unique challenges that must be addressed. It is important that these issues are addressed in advance, that companies adopt procedures that can be easily followed and implemented and that the companies establish appropriate internal controls and maintain risk-based oversight of their social media presence.

It is also critical to recognize that social media have blurred the lines between professional and personal communication, leading to an increase in employment-related legal disputes. For instance, if a supervisor “friends” an employee, the information that is available on the employee’s social media site may be used as evidence of the supervisor’s knowledge of harassment or other impermissible practices in the workplace. Also, under certain circumstances an employee’s use of social media may be a protected activity under applicable labor law.

Best Practices

Establishing a defined, yet somewhat flexible, policy will help mitigate against myriad risks associated with the use of social media. Issues to consider in the development of a social media policy include:

• Companies should designate the employees who are authorized to represent them on social media. These employees may need to be licensed insurance agents if they will be soliciting or transacting insurance business under applicable state law.
• All other employees should be informed that they are not authorized to speak on behalf of the company on social media.
• The employees designated to speak on behalf of the company should be trained to avoid social media pitfalls, including issues related to defamation, libel, unattributed testimonials and impermissible or unapproved advertisements. They should also be advised that anything they post may be used against the company later in a regulatory proceeding or court of law.
• The policy should prohibit the designated employees from engaging in official business communications on social media where these communications are not subject to the company’s oversight.
• Designated employees should have separate business and personal social media pages and/or accounts.
• Employees should be informed that if they decide to engage in social media on their personal time, they should make it clear that the opinions they express are their own and do not represent the views of their employer.
• Employees should be instructed not to endorse company products until the message has been reviewed and approved.
• They should be reminded that all posts are public and permanent.
• The policy needs to be crafted to carefully balance employees’ free speech rights against the company’s right to manage its operations and corporate communications.
• Identify the types of information that require prior legal review, including press releases; comparisons to competitors or their products; and information about the company’s own products, personnel, ownership and finances.
• The policy should include prohibitions against revealing private consumer information and confidential or propriety company information. It should also provide guidance on the use of company photos, logos, trademarks and other intellectual property.
• Adequate safeguards need to be implemented for the proprietary or trade secret information that belongs to third parties to whom the company owes confidentiality protection.
• Insurers and producers should ensure that all social media content adheres to state insurance and advertising laws and submit material for prior regulatory approval when required.
• A carrier’s social media policy should be distributed, and be accessible, to all employees, producers and third party vendors, as needed or appropriate.
• A protocol should be implemented to ensure retention of any necessary information.
• A robust data security policy needs to address the protection of personal consumer information at all sources of vulnerability, including employee and producer personal electronic devices.

Emerging Issues

NAIC recently adopted a white paper that provides guidance on several key regulatory issues related to the use of social media in the insurance industry. This white paper is not regulation or state law. It is intended to provide guidance on particular social media issues, such as the potential exposure to an insurance licensee that adopts third party content and protocols related to the use and regulation of interactive social media content. It is expected that standards related to social media usage in insurance will further evolve over time based on state action taken in market conduct and targeted examinations, as well as investigations resulting from consumer complaints.

There are a number of open questions on the proper use of social media, particularly in a highly regulated industry like insurance. Insurance companies and producers developing their policies on social media should consider some of the nuances that could arise, such as the following:

• Are consumer complaints that are Tweeted subject to insurance complaint handling regulations?
• Will regulators expect insurers and agencies to maintain a copy of every Tweet under record retention rules?
• If a “fan” on a carrier’s web page posts a false or derogatory comment about another insurance company, will regulators attribute that comment to the carrier hosting the web page?
• Will the use of social media increase errors and omissions and/or directors’ and officers’ liability exposure?
• What are the consumer privacy nuances that will develop in a public, dynamic and evolving social media environment?
• What are the best practices for monitoring employee and agent postings and ensuring the security of PDAs?

Social media continue to change the insurance industry’s marketing environment. The industry’s use of social media to interact with the public can be a good first step in broadly shaping public opinion and brand loyalty. However it is critical that companies proceed under a thoroughly vetted and well defined plan to ensure social media activities are not only effective and efficient, but compliant with the laws applicable to this highly regulated industry.

Topics Carriers Legislation