Insurance and social media: Brave new world or fleeting fad?

(l to r) Susan Stead (Nelson Levine de Luca & Horst), Brian Atchinson (IMSA), Phyllis Dent (Aflac) and Michael Heinle (Illinois DOI) engage attendees by expressing their views on the impact social media is having on consumer and insurers.

As the marketplace evolves and the use of electronic communication becomes more and more the preferred distribution channel for consumers, the insurance industry professionals—especially those involved in consumer affairs—must review and reassess how business is done in the virtual marketplace. Equally important, how are regulators to review and assess actions through this evolving marketplace? ICAE took on those questions and more in this panel presentation on social media.

Overview of social media
Social media is a forum for interactive online discussions. As a whole, social media outlets serve a bigger-than-marketing function because social media provides for instant interaction and immediate consumer touchpoints. Experts agree that social media is not a fad—it’s here to stay. Experts further agree that the insurance industry needs to be proactive in how it deals with this consumer-oriented phenomenon.

Consumer reaction
Consumers who use social media outlets like the option—and those numbers are growing. Social media gives consumers the ability to interact with others about anything—resulting in instant information and feedback for ideas. For consumers, social media outlets provide research on companies and products 24/7—significantly reducing the reliance on official websites.

Impact on business
Social media is expected to have an overall positive impact on business. Through social media outlets, prospecting for clients will become quicker and a company’s reach and brand awareness can be meaningfully extended to specific target markets and individuals. Via social media, consumers have the ability to quickly access corporate decision makers.

Drawbacks
Unfortunately, with the good comes the bad. Social media outlets provide an electronic back-yard-fence-opinion-swapping opportunity, meaning there are no guarantees information is complete, accurate or useful. Social media also presents some substantial drawbacks for businesses including, but not limited to, reducing:

• Control over messages being sent out in the marketplace (consumer-sponsored).
  
  Brian Atchinson (IMSA) states that regulations for the insurance industry and the use of social media are currently under review by a number of entities.
• Safeguards, because the social interaction is outside old regulations and old safeguards for branding and identity reputation and because communication is typically presented as unfiltered and candid.

Additionally, social network outlets at this point provide cluttered landscapes where corporate messages can easily get lost.

Where is the insurance industry on social media?
Some companies actively use social media, yet frequently have prohibitions in place for company personnel—meaning the sites cannot be accessed during work hours. Interestingly, this prohibition is also in place for many regulators—restricting those who have a legitimate need to actively assess a social media complaint.

As of March 2010, a survey was completed showing:

• Almost 50 percent of the responding companies do not allow the use of social media for business purposes,
• Only 35 percent have a formal social media policy in place,
• Approximately 90 percent acknowledged controls related to social media need to be enhanced and,
• Almost 86 percent of companies do not have a social media training program.

Regulatory implications
Currently, no department of insurance has established exact social media-specific statutes. Some departments use social media outlets, but (as noted above) most governments have prohibition against using these outlets at work.

The panelists agreed the biggest issues on the regulatory side for companies and consumers with the use of social media outlets are:

• Accuracy—how to ensure accurate information and copyright protections for information transmitted via social networks?
• Disclosures and notices—how can these consumer protections be incorporated into social media, especially given the keystroke limitations?
• Complaints—how are complaints defined, counted and handled when transmitted via social media?
• Ethics and standards—what applies to this distribution channel where corporate control over communication is significantly diminished?
• Privacy issues—how can companies and consumers be protected from privacy violations?
• Records retention—what will be required to be saved and for how long?

Michael Heinle (IL DOI) expresses his views on various scenarios surrounding the industry’s use of social media.

Regulations for the industry and use of social media are under review by a variety of advisory and governing bodies. Currently, laws and regulations are being applied to social media to the extent feasible. However, all agreed that it may be best if regulators create social media-specific regulations. Until that time, companies and producers are still responsible for various applicable regulations, but it was acknowledged that enforcement may be more difficult.

Some regulatory scenarios* were discussed within the social media framework, specifically:

• A company is responsible for third-party information provided via a social networking site when the company provides a platform where third-party comments become integrated, or entangled, with the company through some sort of action by the company. Meaning if a company replies to comments via social media or sponsors a venue for comments, the company may become responsible for information about the company posted—even though the comment did not come from a traditional source.
• Advertising via social media outlets must be reviewed and approved prior to use just as for all communications.
• Records retention and social media outlets represents an undefined area—but most agreed that companies should retain social media interaction with consumers in accordance with current regulations covering traditional interaction.
• Producers using social media representing an insurer must be monitored by the insurer just as when the producer uses traditional paper-based letters, brochures or documents.

*Information provided as discussion only and should not be interpreted, considered or followed as legal advice.

Recommended next steps
The opportunities and challenges presented by social media shatter old barriers in terms of reach, accessibility,

immediacy, permanence and origination of content. Industry professionals present were encouraged to work proactively within their organizations to integrate social media opportunities for consumer interaction so that the insurance industry can harness the power of social media within regulatory confines.

As moderator, Susan Stead (Nelson Levine de Luca & Horst) sets the tone for the panel on social media.

This can be done by:

• Building awareness throughout organizations so that all stakeholders can better understand the value of social media.
• Identifying the right audiences in the right channels; ensuring oversight and monitoring activities are in place for any premeditated interaction.
• Monitoring, listening to and moderating all communications.
• Monitoring regulator guidelines of other industries in addition to insurance industry guidelines. Monitoring industry publications for best practices.
• Working directly with appropriate regulators to define application of regulations and, for now, applying rules available for traditional media to all social media activities. Companies were offered the caution that by accepting business from producers who use social networking makes the company responsible for their conduct.

Engage and educate
All organizations present (companies, associations and DOIs) were encouraged to work now to develop a social media strategy. Ideally, any organization’s strategy should include:

• Policy controls,
• Best business practices,
• An education component with programs that will help producers and consumers, and
• Established benchmarking and testing programs.

The complete story on social media has yet to be written—but all present were encouraged to get out and get active now to ensure each organization can help steer a positive course to the future—a future that will include social media outlets.

Phyllis Dent shares Aflac’s experience in dealing with customers through social media. One company’s story: Aflac and social media Viewing social media as an opportunity to connect with customers, Aflac determined it would proactively establish a monitoring and response system for social media activity. To that end, Aflac worked to create an identity on specific social media networks where the company could engage consumers with one another and with Aflac to better define the company and its value proposition. Currently, Aflac monitors social media outlets and engages audiences where appropriate. Here’s how: Consumers: The company has determined it will engage with any consumers who state a problem. Producers: Aflac monitors what producers are saying so that compliance issues such as false claims can be identified and corrected. Employees: Employee comments are monitored so that disgruntled employees with inappropriate complaints can be proactively handled. Aflac’s overriding goals are: To identify potential customers who use social media into leads and ultimately sales, and Strengthen loyalty of existing customers WHILE maintaining privacy. How it works Aflac’s social media unit has established a response tree, as follows: When a negative comment is posted to a monitored social networking site… The unit determines the need for resolution—could this be a real issue or is it an individual merely venting? If a need to engage is established: The issue is researched and information is sent to… Executive management—ultimately responsible for a go/no go response official response via the social network site. Time to respond: Typically fewer than 12 hours for Monday-Friday posts. Worthy investment Aflac’s representative noted the work load as significant and increasing, but benefits were clear. According to Aflac, immediate interaction with consumers has worked to the company’s advantage—time after time the use of social networking enabled the company to cite consumer problems and resolve the issues—resulting in disgruntled consumers becoming raving fans.

CONTACT INFO

Brian Atchinson
President & CEO
Insurance Marketplace Standards Association (IMSA)
4550 Montgomery Ave.
Bethesda, MD 20814
240.744.3020
BrianAtchinson@IMSAethics.org
www.imsaethics.org

Phyllis Dent
Brand Protection Manager
Aflac
1932 Wynnton Road
Columbus, GA 31907
706.660.7072
Pdent@aflac.com
www.aflac.com

Michael Heinle
Staff Counsel
Illinois Department of Insurance
100 West Randolph Street
Chicago, IL 60601
312.793.4923
Michael.Heinle@Illinois.gov
www.insurance.illinois.gov

Susan Stead
Partner
Nelson Levine de Luca & Horst, LLC
280 North High Street, Suite 920
Columbus, OH 43215
614.221.7543
sstead@nldhlaw.com
www.nldhlaw.com

PRESENTAITONS

Click here to view Atchinson’s presentation

Click here to view Dent’s presentation

Click here to view Heinle’s presentation

Click here to view Stead’s presentation

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