Although websites such as Pinterest, Facebook and LinkedIn can help make a business more successful, insurers, producers and other insurance entities need to protect themselves from the many risks social media can pose by creating and enforcing an effective social-media policy.
PRIVACY AND INTELLECTUAL PROPERTY CONCERNS
The consumer's right to privacy is a paramount issue for insurance companies subject to the Gramm-Leach-Bliley Act and the Health Insurance Portability and Accountability Act, among other federal and state laws. Insurers and producers need to carefully consider how personally identifiable information may be intentionally, or even unintentionally, collected about insureds and consumers through the use of social-media platforms; how this information will be managed; and what controls are in place to assure that this information is not publicly disclosed.
While it often may be overlooked, the opposite also holds true. Insurance organizations should ensure that their employees and representatives are not disclosing too much information about their company or compromising their company's intellectual property rights on social-media sites. Companies may lose their proprietary trade secret or confidentiality rights depending upon the information they make publicly available.
ADVERTISING AND MARKETING
Social-media governance needs to be carefully tailored and managed based on diverse advertising and marketing implications. There are numerous issues to consider including: 1) what social-media activities are considered advertising; 2) licensure of designated personnel; and 3) testimonials.
What activities are advertising? Social-media advertisements are subject to the same legal and compliance standards as traditional insurance advertising. While social media is a fluid and interactive platform, good policy would provide for prior internal review of all social-media advertisements and prior regulatory approval, if required by state law. Those within an insurance organization engaging in business-related, interactive social-media activities should be properly trained and supervised, and postings should be monitored under a well-constructed risk-based protocol.
Of course, many nuances apply. States often require that all advertisements include the insurer's name. This can apply to social-media content. Also, if social-media advertisements direct consumers to a particular Web page, both the advertisement and the Web page may need to properly identify the carrier. Additionally, an insurer or producer may be liable for misstatements on a linked-to third-party page.
Licensure of designated personnel: The laws of most states prohibit people from "selling, soliciting or negotiating insurance" unless the person in question is licensed for the lines of business involved. This can have subtle nuances for many who have access to and actively use social media and want to encourage business-related contact with prospects.
This becomes especially problematic for unlicensed agency staffers, who may be given incentives to attract business prospects to an agency. Careful attention must be drawn to assuring that unlicensed personnel are properly restricted from discussing insurance products or engaging in what may be considered licensed activities on social media.
Testimonials: The Federal Trade Commission previously adopted a set of guidelines relating to testimonials in advertising which require disclosure of material connections between advertisers and endorsers. Under the guidelines, an employer may be liable in an FTC enforcement action for its employee postings that comment on the employer's products or services without properly disclosing the employment relationship. The employer could also be the target of a class-action lawsuit under state consumer-fraud laws for this type of conduct.
EMPLOYMENT-RELATED CONCERNS
Social media has blurred the lines between professional and personal communication, causing a recent onset of employment-related legal disputes under the National Labor Relations Act. In the right situations, employee activity on social media may be protected under federal law.
The National Labor Relations Board's Division of Advice issued two memoranda this year discussing social-media-related claims. Essentially, the division appears to draw a line between scenarios in which employees try to engage their colleagues in discussions on social-media sites about working conditions, which is protected activity; and electronic communications that are not related to an employee's wages, hours or other terms or conditions of employment. The latter is generally not protected. Careful attention must be paid to crafting a social-media policy that provides for legitimate limitations on business-related communications, while not improperly interfering with an employee's protected labor-related activities.
Establishing a social-media policy and training all employees is an important step to take to mitigate against the risks associated with social media. Many companies simply block employee access to the Internet or certain sites. However, with the growing popularity of smartphones and other handheld devices, insurance organizations need to take additional precautions against the risks posed by social media.
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