Web vs. Real World: Panel Urges E&O Protection

Brokers should recognize when to stop tweeting, texting or posting.

Brokerages and agencies using a Facebook page, Twitter or other forms of social media may be opening up their client community, but they could expose themselves to E&O claims if they don’t use these tools properly.

Social networking has proven to be fertile ground for new leads and relationship-building, but it’s not necessarily the best place to service clients, according to speakers at a recent Independent Insurance Agents and Brokers of America (IIABA) web panel.

Broker-related E&O claims typically involve misrepresentation, incorrect advice, or negligent referral, said Sabrena Sally, senior vice president and underwriting leader for Swiss Re’s U.S. insurance agency E&O. “We haven’t seen these developing out of social media [yet], but we’re making an assumption that we will see them stem from what takes place in the social media environment.”

“It’s okay to be social, but when it becomes business, take it to the back room,” urged Rick Morgan, an industry technology consultant, at the May 20 event.

Keep social networking “social”


The chatty nature of Facebook posts, Tweets or even texts can cause new or existing clients to overlook the seriousness of the information they transmit to brokers. Some may use social media to share key policy information, or answer questions a broker has posed by phone. “This information needs to find it’s way to the customer file,” says Dave Houlter, assistant vice president of the IIABA. In the event of a problem, “the agent needs to be able to prove that that information came from the client.”

Customers may also try to notify brokers of a claim over the web, or contact them to make policy changes or request certificates. If they’ve developed a habit communicating with you over the web–as they did prior to becoming a customer–they might keep it up.

That calls for clear guidelines on when to take the conversation offline. “It’s no different than the traditional world in which you operate–the same rules and best practices apply,” points out Sally. “The same rules apply whether you’re in a chat room a blog or Twitter. The minute it becomes specific, it’s time to move offline.”

Even something basic like a web link to a supplier or service provider might drive a negligent referral E&O claim down the road, she adds. Brokerages can avoid this by steering clear of making recommendations online, or offering clients several links to providers, so that the choice goes back to the consumer, she says.

Social media best practices

How can brokers safely deal with social media?

*Have an internal guide: one that’s consistently adapting to the changing web environment, says Dave Houlter. Most important, employees need to understand when it’s time to take the conversation off the web and into traditional workflow.

When online conversations go beyond social contact to business prospect–or when it moves from general insurance topics to specific insurance needs–employees should take it offline.

*Use disclaimers: Disclaimers–like the ones brokers use on faxes and  voicemails–should direct clients to use proper procedures when reporting a claim or making policy changes.”Have it reviewed by your legal counsel,” advises Houlter.

Text messaging and Twitter are particular challenges–since there’s no room for a disclaimer. Make sure that in-house education makes it perfectly clear what brokers and clients can and can’t discuss online, adds Morgan.


*Keep information in the right place: Make sure relevant customer communications on the web get into the customer files–most E&O claims are “he said, she said affairs,” and documentation is key, Houlter notes.

“We’re just assuming that the potential for the claim is there, and we need to prepare and minimize the potential for those claims,” says Morgan.

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