Brokers, Carriers Battle New Technology Woes

Social networking links personal and professional worlds--and there are insurance consequences.

Social media networks such as Facebook, MySpace and LinkedIn blur the lines between people’s professional and personal lives, paving the way for personal problems in the workplace. But how do these issues relate to the insurance sector, and how are carriers and brokers responding?

Industry insiders say it’s not yet clear–but concerns are growing, and the insurance sector’s response to social media risks is a work in progress.

“The insurance part probably hasn’t changed very much,” says Kevin McIntyre, president of Guardian Risk Managers, an insurance wholesaler in B.C., speaking about the impact of easy, global communication. “However, the risk has changed dramatically.”

One potential risk stems from a practice known as “cyber slamming,” wherein people create blogs and Facebook accounts specifically designed to smear others, perhaps in order to hurt a business or destroy a person’s reputation.

Social media lends itself to such behaviour. Facebook simplifies the commentary process, making it easy to say nasty things about almost anything–and anyone–in a widely viewed medium.

“That’s where you’ll see a lot of it happening,” says Gil Zvulony, a Toronto lawyer specializing in Internet legal issues. “For somebody to take the time to go and open a Blogger account and create a blog to specifically target an individual or a company, that takes a lot of effort.”

It also gives people time to reconsider their actions, before they go too far. “But when it comes to something like Facebook, they’re going to update their status about how much of an idiot their neighbour is. If the neighbour finds out about it, you could get into a legal dispute.”

And there’s no denying that social media removes many of the distinctions between the personal and the professional, notes Derek Huber, partner and privacy officer and professional practices leader at Jones Brown Inc., an insurance brokerage and consultancy with offices across Canada.

A number of Jones Brown employees use LinkedIn and get involved in social groups, addressing questions about insurance. “The evolution there is to garner a following of like-minded people on a subject, and then attract them to your website,” Huber says.

There are legal issues in play with social media–and they could impact an organization’s insurance coverage.

Experts specializing in insurance for technology-based businesses point out carriers have numerous products designed to protect companies with tech-related exposures. Personal injury policies, media liability, cyber liability, directors and officers’ coverage, and errors and omissions policies all work together to ensure businesses operating online or in the technology sector aren’t flattened by lawsuits stemming from inadvertent libel, software programming missteps and other high-tech accidents.

But the industry has no specific cyber-slamming protection mechanism–and it may never develop one.

Experts we interviewed pointed out that if someone intentionally hits another person with a car, the driver’s insurance wouldn’t protect him from the consequences. In the same vein, if a company’s employee intentionally smears another person or company on Facebook–and the employer knows it’s happening–insurance wouldn’t cover the fallout.

That said, brokers and customer service representatives can help. It all begins with talking to clients and getting a handle on their technology operations.

“As a professional advisor to my clients, my question has always been, number 1, are you using the Internet?” says Huber. “How do you use it? And I inform them of the exposures. Now added to that list is: ‘Do you have a Web page on Facebook or LinkedIn?’ I think for a lot of corporations . . . caution is the word.”

It’s also good to have someone at the brokerage or on the customer-service team who specializes in technology-related insurance issues.

“Our focus is on updating our education in this field and updating our education on the products available within these specialty markets,” says Mike Partnoy, commercial insurance broker at Haber Blain Insurance Brokers Ltd. He’s the Burlington, Ont. brokerage’s technology specialist. “Brokerages should have specialists in-house dealing with all forms of IT insurance. Every year, a new form of coverage is appearing.”

© Copyright 2010 Rogers Publishing Ltd. This article first appeared in the June 2010 edition of Canadian Insurance Top Broker magazine.

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