INSURANCE INDUSTRY: Regulatory Issues October 21, Faith M. Williams. Bricker & Eckler LLP

Transcription

1 SOCIAL MEDIA AND THE INSURANCE INDUSTRY: WHAT YOU NEED TO KNOW Regulatory Issues October 21, 2010 Faith M. Williams Bricker & Eckler LLP

2 Regulatory Issues: From a regulatory perspective, p is Social Media really different from other forms of communication? Yes --- and No Bricker & Eckler 2

3 Regulatory Issues: The most important thing continues to be the content of the communication But, the flexibility of the technology, and the potential reach of the communications require us to think broadly about regulatory implications. Bricker & Eckler 3

4 Regulatory Guidance Insurance regulators have said very little about social media IMSA provided a presentation to the NAIC on Social Media and issues for insurers in December Written materials available at: The general expectation appears to be that all existing insurance laws and regulations apply to communications Bricker & Eckler 4

5 Regulatory Guidance Financial Industry Regulatory Authority (FINRA) issued: Regulatory Notice Guidance on Blogs and Social Networking Web Site (Jan. 2010) /P Note: P/C companies are not subject to this, but the FINRA Notice highlights relevant issues. Bricker & Eckler 5

6 General Observations Distinguish between: Static one-way communications like a company or producer website that only provides information; and Social Media, which is interactive Examples: blogs, Facebook, LinkedIn Note: Some sites today perform both of these functions. Recognize that different requirements may apply to different functions on the same site. Bricker & Eckler 6

7 General Observations Generally, static websites are subject to advertising rules, which may include prior approval, document retention, etc. Focus of this presentation ti is on interactive ti social media FINRA states t that t an interactive ti electronic forum is subject to the same requirements as a presentation to investors. Can be applied generally to insurance activity. Bricker & Eckler 7

8 Key Regulatory Requirements that Apply to Social Media Unfair Trade Practices Act Advertising Complaint Handling Document Retention/Recordkeeping ti i Endorsements Pi Privacy Suitability (Life Insurers) Supervision Reputational Risk for the Insurer Bricker & Eckler 8

9 Regulatory Requirements Two important definitions Solicitation : Does the communication constitute solicitation under applicable law? Correspondence : Is the communication correspondence or another type of communication that must be retained... either to satisfy regulatory requirements or your company s own policies? Bricker & Eckler 9

10 Unfair Trade Practices Act Applies to social media postings by your company and producers Broad tool for regulatory action Bricker & Eckler 10

11 Advertising If the post meets the statutory or regulatory definition of advertising, it is subject to all applicable requirements Similar to old fashioned Internet websites, print ads Unfair Trade Practices Act applies Prior Approval (if needed) Record Retention For Consideration: Consider links to lengthy disclosure documents and other required information. But, ensure your ability to retain needed documentation. Bricker & Eckler 11

12 Complaint Handling Social Networking provides consumers the opportunity to talk to you and about you. Important to identify each communication that meets your definition i i of complaint Should be handled in compliance with applicable laws and regulations, and your policies and procedures including documentation requirements Do your current procedures translate to social media? Bricker & Eckler 12

13 Complaint Handling (cont.) Establish protocols for: private follow-up to resolve the complaint For Consideration: Most people who use social media are accustomed to instantaneous feedback. Relying on a policy intended for complaints via U.S. mail or telephone may not meet your customer s s expectations. Bricker & Eckler 13

14 Document Retention Many communications via social media will be subject to document retention and recordkeeping requirements. Remember that t properly categorizing i the communication is important. Is it: An advertisement? Correspondence? A Complaint? A Solicitation? Vendors can help! Bricker & Eckler 14

15 Endorsements Is your company or product being endorsed? If so, state regulations may impose certain requirements, such as disclosure of any ypayment made by yyour company to the person making the endorsement Spontaneous endorsement by satisfied customers don t require this Bricker & Eckler 15

16 Endorsements For consideration: If there is an endorsement or another accolade for your company or products, and the person making the post is an employee or anyone with a relationship with your company, someone will figure that out. Consider requiring that the relationship be affirmatively disclosed. Bricker & Eckler 16

17 Privacy It s amazing what people will post on social media! State and federal privacy laws apply to your social media postings Your policies should apply to all social media. Bricker & Eckler 17

18 Privacy For consideration: Establish guidelines or protocols for use of your site by others. For example, tell people that they shouldn t post telephone numbers or Social Security Numbers. Your protocols for your own staff and producers should detail the appropriate response to a third party who begins to provide this information. Example: I m sorry that you re having a problem with your claim. Please call me at XXX-XXXX, or send an to me at jsmith@abcinsurance.com i so we can discuss the details. Bricker & Eckler 18

19 Reputational Risk Specifics about protecting your brand, trade secrets and other intellectual property are beyond the scope of this webinar But, many insurance regulators are using a risk analysis approach to financial and market conduct exams. In this context, regulators may begin to focus on how a company handles social media issues. Bricker & Eckler 19

20 Reputational Risk (cont.) Likely questions from regulators include: Do you have policies and procedures covering social media for employees? For producers? What is your training program related to social media? How do you monitor compliance with your policies? what s being posted by your employees and producers? How do you monitor what s being said by third parties about the company? How do you respond? Bricker & Eckler 20

21 Third Party Postings on Your Site FINRA has addressed third party postings made on your company s site Generally, postings by others on your site are not considered to be a communication by yyour company y( (the firm). Bricker & Eckler 21

22 Third Party Postings on Your Site (cont.) But, third-party posts may become attributable to the firm under the following circumstances: The Entanglement Theory: the firm is involved (entangled) with the preparation of the content third-party post or paid for the post The Adoption Theory: the firm has adopted the content of the third-party post, such as by explicitly or implicitly endorsing or approving the post. Bricker & Eckler 22

23 Third Party Postings on Your Site (cont.) For Consideration: Use of a disclaimer informing customers that third-party posts do not reflect the views of the firm, will be part of the facts and circumstances considered by FINRA during an analysis of whether a firm had adopted or endorsed a third-party post. Bricker & Eckler 23

24 Third Party Postings on Your Site (cont.) FINRA s Guidance on this topic may be appropriate generally: if your company prepares social media content, or pays someone else to prepare p it, consider applying your standard review procedures. content prepared by someone else, but then endorsed, approved, or recommended by the company or your producers may be considered your content. Bricker & Eckler 24

25 Posts on Third Party Sites Social Media is characterized by User- Generated Content. Anyone with access can post about your company, your employees, and your producers. In most cases, there are no standards for postings, and no one to ensure that posts are accurate Bricker & Eckler 25

26 Posts on Third Party Sites For Consideration: Identify someone to determine whether and how to respond to posts on third-party sites about your company, products, and producers. Consider responding to factually inaccurate statements. t t Consider strategies for responding to uncomplimentary opinions that are posted about your company. The most effective responses will come from other customers who have a positive relationship with your company. Official i responses from your company may only provoke an argument, or prolong the discussion. Bricker & Eckler 26

27 Questions? Faith M. Williams