Playing Publisher

Everyone has an opinion, a few facts to share, or some keen advice to offer. But today, such words of wisdom are posted on Facebook and LinkedIn, published in blogs and tweeted to followers. It seems everyone is becoming a de facto publisher, without understanding the related risks.

Publishers, advertising firms and professional journalists are acutely aware of costly and damaging financial exposures like libel, slander, defamation of character, plagiarism, invasion of privacy and copyright/trademark infringement, among others. They’re also apt to be well-versed in so-called “fair use” laws (Section 107 of the copyright law, title 17, U.S. Code) governing material borrowed from others for personal publication. Large corporations leveraging social media for advertising, marketing and other purposes arguably share this knowledge. But, what about midsized and smaller businesses—not to mention the general public?

For the most part, they appear to be winging it. “Several surveys indicate that while many companies engage in the use of social media tools and platforms, roughly one-quarter have no social media policies in place,” says Ken Goldstein, vice president and worldwide media liability manager at Warren, N.J.-based Chubb Group of Insurance Companies. “They’ve effectively become publishers, thereby exposing themselves to a range of claims, with little to no appreciation of this fact.”

Many companies also erroneously believe their general liability or professional liability insurance policies will absorb the financial costs of their publishing mistakes. While these instruments may offer a modicum of protection via incidental advertising and personal injury coverages, the extent depends on the terms, conditions, exclusions and financial limits. “Companies that do a fair amount of social networking would be wise to consider buying media liability insurance, which is what publishing groups purchase, or cyber liability insurance,” Goldstein advises.

Independent insurance agencies are among the myriad small to midsized businesses that have shifted some resources to social media outlets, publishing blogs and posting information and advice on Facebook, LinkedIn and Twitter. Fortunately, some agents are aware of the related risks and have implemented policies and procedures to limit their financial exposures.

Many agents, armed with their own know-how, are sharing their best practices with commercial lines and personal lines customers. “We’re ahead of the curve here, pointing out what may become a potential claims situation down the line, even though for the moment there doesn’t seem to be much action,” says Paul Saich, CEO of Thoits Insurance, a San Jose, Calif.-based agency. “It reminds me of [employment practices liability] in the 1990s. Nobody was paying attention to this emerging area of exposure, and then the claims started hitting.”

Anti-Social Behavior Hits the Courts?
For now, the claims against unwitting “publishers” are not yet hitting, but given the litigious nature of and the United States, coupled with the sheer growth in social media messaging, a sea change may be in the offing. For one thing, social media exponentially increases the speed of information and the size of the audience being reached. “In the old days, if someone made a buffoon of someone else, a few people took notice,” says Pete Piotrowski, senior vice president of claims and risk management at Chartis Personal Lines in New York. “Today, you tweet a disparaging comment to an audience of hundreds that then goes viral.”

As an example, Piotrowski cites some unfortunate remarks singer Courtney Love posted about a fashion designer in 2009, culminating in a lawsuit for libel and emotional distress that was reportedly settled for $430,000. “I’ve heard of instances where a contractor sees his business dropping off and wonders why,” he says. “Then, they hear that a client was dissatisfied with the work done on their home and posted their displeasure. The contractor sues the homeowner, then subpoenas the person’s Internet, phone, email, texts and Facebook records—you name it. Up till this moment, the homeowner believed this information was private, but with the power of the subpoena they soon learn otherwise. They now face litigation, and their privacy has been exposed.”

Businesses are just as exposed as private individuals. It is not uncommon for executives to write blogs that include links to other people’s works, without the original writers’ permission, and with no knowledge or proof that the information is correct. Although many publishing companies have fact checking departments, few businesses outside of the institution of journalism have the same rigor. “While there is advertising and marketing power in social media, there is also risk,” says Ron Kopacka, vice president of commercial lines at Otterstedt Insurance Agency in Englewood Cliffs, N.J.

“There’s no question that blogs, Facebook and Twitter are great ways to get your message across to the public, so long as that message has been vetted by an attorney or someone who understands the nuances of libel, defamation, copyrighted material and other risks,” Kopacka adds. “Once you’ve put out something that may result in a lawsuit, there’s no way of pulling it back. The damage has been done.”

In some cases, acting quickly can forestall litigation. “Often when a company blogs something that is copyrighted material owned by another company or entity, the owner will inform the user to cease and desist,” says Ted Way, cyber liability practice leader at Thoits Insurance. “If the blogger immediately retracts the messaging, it usually takes care of the matter. The problem arises when the email from the owner falls into the black hole of the email inbox. That’s when things escalate out of control.”

Sometimes the wrong message is one that borrows from another person’s work and twists the meaning to suit a particular objective. “You need to beware taking someone else’s story and transforming its original purpose to fit yours,” says Goldstein from Chubb. “That’s a big red flag.”

Another is lifting someone else’s intellectual property without permission or failing to reference the source, which may encourage a copyright infringement lawsuit. “It’s very easy to ‘copy and paste,’ ” says Stewart Tosh, a producer and business development leader at Norwalk, Conn.-based agency Pierson & Smith, a division of First Niagara Risk Management.

Tosh speaks from personal experience. “Before we were acquired by First Niagara, we had a little blog we did and some postings on Facebook to communicate with current and prospective customers,” he explains. “We had no media liability policies in place or any process for approving what was written.”

“Too many companies dabble in this, failing to have procedures in place with respect to the use of social media,” says Saich. “We’re located in the heart of Silicon Valley, where plenty of tech companies have executives writing blogs and using Facebook to express their opinions, caveats and advice. But, these companies are aware of the risks, by and large. Smaller companies are blissfully unaware. Frankly, we agents, brokers and the industry at large need to increase our efforts to educate clients of these threats.”

Policies, Procedures and Insurance
Reducing social media risks begins with articulating a clear policy about its use. The observers counsel that rules must be established regarding who can use social media and which types for specific purposes and defined audiences. Way from Thoits further recommends a chain of command approach to vetting content. “The best person to review material would be in-house counsel, but assuming there is none, then it is wise to select someone on staff who understands what is and isn’t permissible to peruse the content,” he adds. “It’s like having a strong editor-in-chief in place. You may sacrifice a bit of efficiency, but you’re making sure everything you put out is correct and won’t come back to bite you.”

Tosh says such policies are now in place at his agency, post-acquisition. “No blog or posting is permitted to become public without approval,” he explains. “We now have rules regarding what is allowed and what isn’t. We’ve become very knowledgeable of the risks.”

This knowledge is now being passed along to the agency’s commercial clients. “A year ago, it was rare for us to ask an account if they blogged or posted on Facebook; now we ask it all the time,” Tosh says.

If a blog is going to contain a broad amount of information provided by another entity, Goldstein says this may require licensing the content. He notes that fair use laws are gray when it comes to how much intellectual property can be presented, even with attribution, hence the need to confer with an attorney or someone proficient in the law.

Perhaps the grayest area of media liability is risk transference. General liability, professional liability and homeowners insurance include some protection for incidental advertising, personal injury and other exposures, but the devil is in the details. “You may get modest coverage in a homeowners policy, but if you don’t have umbrella insurance on top of it, there may not be enough limits to absorb the financial costs,” Piotrowski says.

Not all homeowners policies automatically provide personal injury coverage, making this another matter to consider. On the commercial lines front, general liability policies may specifically exclude or restrict risks related to social media, Goldstein says. While a broadly written errors and omissions liability insurance policy addresses the exposures more squarely, the purchase of a media liability policy provides true peace of mind. “It will respond to the same risks that publishers face—libel, slander and so on,” he explains.

Certainly, this emerging risk is a ripe subject for agents to discuss with clients. Says Saich: “If we don’t, then we may face an E&O exposure.”

That’s nothing to broadcast.

Banham (russ@russbanham.com) is an IA senior contributing writer.

Getting Out the Message Without a Mess

How many agents these days blog, post advice on Facebook or tweet to a bunch of followers? In this day and age, a lot.

Not only do social media platforms provide a way to reach clients with valuable advice and information, they assist agency client retention and cross-selling efforts. “It’s a great way to get better branding—to get your name out there more easily and economically,” says Ron Kopacka, vice president of commercial lines at Englewood Cliffs, N.J.-based Otterstedt Insurance Agency.

But there is a downside. Sending out the “wrong” message can result in costly litigation, ruin an agency’s reputation or threaten its survival.

Charles Gibson, vice president of Deland, Gibson Insurance associates Inc., exemplifies today’s social media-savvy agent. “I’ve been tapping into virtually all social media outlets—Twitter, LinkedIn, Facebook and a blog,” says Gibson from the agency’s headquarters in Wellesley, Mass. “Often, I will receive some important information about a particular litigation trend or emerging risk and I’ll take advantage of social media to get the word out.”

This, in turn, helps the agency’s search optimization efforts, which guides more inquiries and business to it. “I know many other agents who do the same thing,” Gibson adds. “We’ve got a producer here who has two or three blogs. Heck, my wife even has a [personal] blog.”

Gibson is more than a personification of today’s media-savvy agent—he’s also media liability-savvy. “We have policies with regard to what can be posted or blogged, and then have a risk manager internally vet the content,” he explains. “He’s just like an editor who makes sure the reporters don’t say something stupid.”

At Thoits Insurance, cyber liability practice leader Ted Way is tasked with approving all social media messaging. Otterstedt Insurance Agency takes a different tack, outsourcing responsibility to the agency’s advertising firm. “Their job is to control the content to prevent potential mishaps—like posting something that is libelous or slanderous,” says Kopacka. “Even a simple Facebook posting has to go through the channels before it sees the light of day.”

Both agencies have purchased either cyber liability insurance or media liability insurance in case something falls through the cracks. Says Kopacka, “When we advise clients about their social media risks and the ways to transfer them, they often ask us if we buy the insurance. When we tell them we do, it strengthens their trust in us.”