Alex Vizer
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Proper E-data Strategies Protect Brokerages: Data Experts | Canadian Insurance
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Proper E-data Strategies Protect Brokerages: Data Experts

Brokerages that don’t adequately store electronic information could leave themselves vulnerable to legal action, network specialists warned during the Canadian Signassure Users’ (CSU) conference.

Brokers should be aware that the courts are asking companies of all sizes to produce electronically formatted information during the discovery phase of civil litigation lawsuits, a process that is commonly referred to as e-discovery, according to Ian Barrett, account executive at Fortify Solutions and Jacques Fortin the company’s president, as both addressed conference attendees September 25 in Toronto. “It’s not just for the big guys,” Barrett says, “Electronically stored information is becoming a feature of even the most routine civil cases.”

To truly risk-proof their business, brokerage owners must realize that there are important variations between electronic data and more traditional types of communication. For starters, there is a whole lot more of the former than there is of the latter. “One of the key differences is that electronic information has metadata: information about the information,” says Barrett. Among other things, metadata documents when the file was created and who created it, and is as crucial to preserve as the file itself. “There’s almost as much importance put on the fact of the metadata as the information,” he says, “[the courts] wants to know: has that E-mail been tampered with?”

Brokers also need to be aware that simply backing up the data is not enough. Painstakingly preserving gigabytes of information is useless if there is no way to properly search and categorize it. As a result, Barrett says that brokers need to ensure that the information has been indexed, meaning that “if you need to search for specific information, there is a method to do that.”

  1. Failure to do so can result in serious consequences. In 2006, Morgan Stanley was ordered to pay a $15 million fine after repeatedly failing to produce tens of thousands of e-mails relating to a major investigation. “Precedence has been set,” says Barrett, “where judges have said that if you can’t produce [the electronic information], we are going with the claimant.” As a general rule of thumb, Barrett recommends treating electronic information as one would treat income tax records: both should be kept for at least seven years.

A key point to remember is that though most electronic data consists of E-mails sent to and from company computers, other forms of electronic communication do exist. “What if somebody in your office has a personal relationship with a client or a friend who is now an insured?” asks Fortin, pointing out that in such an event, insurance related information could be transmitted via instant messaging, personal E-mail and/or social networking sites such as Facebook. Barrett added that smart phones with online capabilities, like Blackberries, also allow employees to transmit information and thus need to be accounted for.

Even if that scenario seems unlikely today, Barrett suggests that could change in the near future. “Are you using Facebook, LinkedIn and Twitter in your business today? Probably not. But guess what, the next generation relies less and less on E-mail,” he observes, noting that “Generation Y” is very comfortable with social networking tools and online interactions.

Regardless of a brokerage’s electronic comfort level, it is important to develop a clear and consistent web browsing policy that sets out what is and is not permissible. “The policy should dictate the technology, not the other way around,” says Barrett. “If the technology that you’ve got doesn’t support the policy you want to implement, look to changing the technology.”

 General Industry Best Practices

  1. Permanence: Data must be maintained in its original form without distortion or deletion.
  2. Security: Data must be protected against all threats of viruses and unauthorized access so it is not changed or tampered with.
  3. Audit-ability: If requested, must be able to provide the information in a timely fashion.

Barrett and Fortin pointed to the Sedona Conference as a useful tool for brokers needing more guidance  on electronic information and the law. The Sedona Conference is a non- profit law policy think tank that brings together working groups consisting of legal experts, academics and jurists to discuss current laws and areas that need to be addressed when handling electronic information. In 2007, the think tank published a set of suggested electronic information handling guidelines for Canada, which can be accessed at: