E&O Issues Emerging Around Technology, Social Media

NU Online News Service, Jan. 25, 9:07 a.m. EST

NEW YORK—As agents seek to leverage technology and social media, they should familiarize themselves with professional practices and potential exposures to protect themselves from errors and omissions claims, according to an industry consultant.

Mishell Magnusson, a consultant with KJM Consulting and Training, Inc., in Munnsville, N.Y., said it is only a matter of time before use of new Internet technologies begin to emerge as an E&O issue.

During an educational session at the Professional Insurance Agents of New York Metropolitan Regional Awareness Program last week in New York, Ms. Magnusson reviewed a number of E&O issues that could arise and what could and should be done to avoid claims.

When it comes to Internet exposures, there are a number of potential liabilities agents can face, some of which might not be their fault, she noted.

Producers, she said, should be mindful of inflated expectations. What appears on the web defines the firm in the minds of consumers, Ms. Magnusson pointed out. It can also have legal ramifications if an agent or broker embellishes in web advertising or on the agency’s website.

She said producers also need to be aware of how others portray their agency on the web, noting, for instance, that a Chamber of Commerce striving to improve the interest of prospects in doing business in an area might enhance an agency’s expertise.

E-mails are increasingly being used by businesses as the primary mode of communication between parties, making up as much as 80 percent of all communication, she said. In a litigation setting, e-mail communication is subject to discovery, she said, which means care must be used.

As a practice, she recommended that agents should:

• Write e-mails as you would a letter, and include a letterhead to formalize the communication with clients.

• Don’t reply to all in an e-mail unless the response actually applies to all.

• If you’re angry, walk away.

• Go over what you want to say. Type it out, spell check it, and make sure the message says what you want it to say.

• Unless a message is encrypted it is not secure, and agency management systems do not ensure encryption. Ms. Magnusson said that this is especially important to remember for life and health producers who deal with sensitive, personal information.

• A sender cannot retrieve a sent e-mail, so be certain of your communication.

Turning to the rising use of social media sites, such as Facebook, Twitter, and LinkedIn, to name a few, Ms. Magnusson said a potential E&O exposure could arise if an agent who is on Facebook has become a friend of a client. The agent may see the client’s personal page and learn that the client has had an incident or is engaged in a practice that could affect his or her insurance. The question then becomes, what is the agent’s obligation?

“There is nothing that says you are obligated to report it, but you may be,” she said.

She cautioned that agents and brokers may want to think twice about friending clients before actually doing so.

The main point, she said, is to “keep up with the generation that is part of this.”

She added, “If you want to be a part of it, be careful with it.”

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