With the explosion of social media outlets such as
Facebook,
Linked In and others over the past few years, it's time that insurers, agencies and producers consider the liability exposures presented through the use of these marketing and advertising outlets. According to an article published by
Business Insurance, businesses face a "host of liability risks when they or their employees use social media, yet only the largest companies have been using insurance to protect against such exposures," experts say.
Facebook launched in 2004 and
Twitter in 2006, and brokers and analysts in recent years have pegged social media as one of the next frontiers in potential liability for companies of all sizes. Risk managers, consultants and attorneys have "advised against participating in social media sites without adequate protections in place, including insurance that typically is designed for traditional media outlets."
According to
Silicon.com, there are now more social-networking accounts than there are people in the world, according to figures from
In-Stat. The market analyst reports that there were 10 billion social-networking and online-world accounts in 2010 and that 4.5 billion of these are active. There are approximately 6.92 billion people on the planet.
There are a number of different exposures that can arise from use of social media: defamation, slander, copyright infringement and others that have traditionally been protected through commercial general liability (CGL) and associated liability contracts. Whether this trend continues is going to be up to the insurance companies themselves. Joanne Richardson, the N.Y. based Managing Director of U.S. media at
Hiscox Ltd. says, "We're going to have to wait and see how the general liability market reacts to having claims come up, and whether or not carriers are going to start getting more restrictive." In terms of insurers actually getting tighter on the CGL covered exposures, "That's definitely the direction that the market is moving in," says Richardson, "but there haven't been enough cases against those policies yet."
CGL policies often include advertising injury within the scope of coverage, but can exclude copyright and trademark infringment, according to the Business Insurance article, and insurers have also expanded Employment Practices Liability (EPL) policies in recent years to include communications via social media, but that might cover only communications between employees and not to the outside world.
The sensible direction of all employers utilizing social media is to make sure that the insurance coverage in place does cover these exposures, and if not, make sure to endorse the policy correctly or purchase the right type of policy to make sure that your company is properly insured against these risks. When looking at how employers manage social media risk, these numbers prove telling: In an April, 2010 survey of 1,000 consumers conducted for Warren, N.J.-based
Chubb Group of Companies, 64% of the respondents said their employer had no policy for talking about the company on social networking sites. More recently, Chubb's survey found that 51% of employers do not prohibit respondents from posting information about their company or their job on social media sites without authorization.
That can cause problems, especially when a company is publicly confronted and commented upon by a disgruntled employee. Your company must have a social media policy in place. Peter Foster, a Senior V.P. at
Willis North America's Boston office, says "If you don't have a policy in place, and there's nothing to refer to when there is a litigation or someone alleges that you violated a regulation, you have no way of showing that you had preventive measures in place before some employee went out and did whatever they did."
Are you taking the proper precautions?