What’s That Little Birdie Telling Your Insureds?

What’s That Little Birdie Telling Your Insureds?

What Insurers Need to Know Before Taking Action

By Tom Wetzel

For every insurance company that has embraced Facebook, Twitter, and other social media sites, many others have remained on the fence or decided against participating at all. There are legitimate concerns about how social media can and should work in the insurance industry and what liability exposures may emerge, however, the decision to either wait or not to participate at all is often based on faulty assumptions or outright myths. To cut through the clutter, the following are some of the common misconceptions held by insurers.

Myth: Choosing to NOT participate reduces or eliminates a company’s liability regarding social media.

Fact: If a company makes the decision not to participate on social media sites, it can be argued that it has, in effect, accepted whatever conversations take place about the company and the issues it confronts. Agents, policyholders, and a company’s own employees are participating in social media in greater numbers and with greater frequency, so companies that sit on the sidelines increasingly lose their ability to protect their brands and shape how social media affects them. Moreover, companies may also be held responsible for what their employees and agents post online, even when not on the job. The only way to defend a company’s brand and mitigate liability exposure, therefore, is to monitor what is being said about the company online, be actively involved in those conversations, and develop a clear usage strategy and appropriate enforceable guidelines.

Myth: Blocking employee access to social media sites at work is a good way to limit a company’s liability exposure and prevent employees from wasting time.

Fact: There are a number of examples of insurers which have blocked employee access to social media sites, only to find their corporate logos prominently displayed and product discussions taking place without company sanction. Conversations about a company’s brand take place with or without a company’s participation, so blocking employee access to social media at work does little to limit the company’s liability. As to wasting time, there is growing anecdotal evidence that companies that have developed a social media strategy and usage guidelines and then allowed employees to participate on social media sites during business hours actually experience productivity increases, presumably because employees feel more connected to the company and are willing to be online advocates.

Myth: Only the large national insurers can afford to use social media effectively.

Fact: Insurers that are now using social media effectively come in all sizes, including large national insurers, regional carriers, and single-state operations. Some, like USAA, use a five-member team to monitor social media and direct the company’s participation on sites such as Facebook, Twitter, and a unique site known as www.whatsonyourmind.com where anyone can discuss how they’ve been coping with the economy. Most, however, operate with a much smaller staff, usually just one or two employees in the marketing department, who may also perform other duties. These companies have clear strategies and plans in place on how they use social media to efficiently accomplish their goals.

Myth: Companies that use the independent agency system cannot utilize social media to talk to policyholders.

Fact: Many of the insurers using social media effectively are agency companies that have developed closer working relationships with their producers as a consequence. To illustrate, one independent agent reported that of the insurers the firm represents, only one had developed an effective social media plan. That same insurance company coordinates its online activity with those of its agents, creating a powerful win-win arrangement: agents receive assistance on social media best practices and more access to the company’s marketing efforts while the company gets greater influence in agent marketing and more prospects.

Myth: Social media only gives industry critics a louder platform.

Fact: The critics are already out there talking on social media sites, whether your own company is out there or not. A company’s policyholders and prospects are out there, too. The insurance companies that use social media effectively start with the premise that a company’s policyholders (and the friends and neighbors they talk to) are worth listening to and that the conversations the company can conduct with them need not always be about a transaction such as a policy renewal or claim. Social media participation also allows companies to address many types of consumer questions and concerns more quickly and humanizes the institution in a subtle, incremental manner.

Myth: There is no urgency in adopting a social media policy for our company.

Fact: Because a company’s employees and/or producers are likely already participating with or without company knowledge, sanction, or guidance on its behalf, any delay by the company in taking action increases liability risks and makes the job of guiding employees in using social media on behalf of the company more difficult.

On the legal front, courts and regulators are more likely to look favorably on those companies which have taken steps to adopt policies and guidelines on their use of social media liability. The online social media phenomenon is still in its infancy and, like any development, it will take time to fully understand what liabilities may exist. There are many areas of law that may apply, including those of contracts, intellectual property, privacy, and market conduct and insurance trade practices. These risks, however, can be mitigated with a carefully crafted strategy, plan, and operating guidelines.

Myth: There is no measurable ROI of social media.

Fact: This is a popular topic in the social media community and there are many schools of thought as to the true short- and long-term measurable benefits of corporate social media participation. A small but growing body of evidence points to insurers and producers realizing tangible benefits in lead generation, customer retention, and employee recruiting. As more insurers begin using social media, that evidence will grow.

Myth: Social media is a fad.

Fact: There is no shortage of skeptics who believe social media is nothing more than a fad and will vanish at some point. These individuals believe that to get involved with it would just be a waste of their time. There is no question that social media will evolve and that some sites will vanish only to be replaced by others. However, companies that ignore social media’s power do so at their own peril.

1 Bruce Foudree, “Social Media and Insurance From a Legal Standpoint,” at A.M. Best Co.’s Fourth Annual Insurance Advertising and Marketing Summit, November 5, 2009, Westin Hotel Times Square, New York City.

2 Tom Wetzel is president of a full-service, insurance-exclusive marketing communications/public affairs firm with a special practice devoted to social media for insurers. He can be reached at twetzel@wetzelandassociates.com. The company’s website is www.wetzelandassociates.com.