Social Media and Insurance Law - Kennedys

Social Media and Insurance Law
By Eden Winokur
Introduction
Good afternoon Judges, ladies and gentleman. It is a privilege to speak before you
today and to honour the memory of Ron Shorter.
Today I am speaking about Social Media and its impact on the world, particularly,
on aspects of the legal industry.
We will first briefly hear about some Social Media facts. Second we will briefly
examine the impact of Social Media on the social, political and commercial world.
Then, most importantly, we will examine the impact of Social Media on the legal
industry and consider where the law may develop.
There are two important questions you should ask yourself when it comes to Social
Media:
How can Social Media benefit me? and
What are the risks involved.
The key message to take away from today’s talk is that although there are risks
when using Social Media, know how it works, embrace it and take advantage of the
benefits.
Social media and the facts
Social Media has had a significant impact on shaping the world as we know it. Only
7 years ago, the word Facebook was unknown, YouTube sounded like the London
underground, nobody was LinkedIn and ‘tweet’ was a sound made by a bird.
Yet, a mere 7 years later and Facebook has membership totalling over 900 million.
Twitter is growing rapidly with almost 350 million tweets per day, and by March of
2012, LinkedIn was growing at a rate of 2 new members per second.
This growth has been accompanied by monumental financial implications. The day
the facebook IPO became public the company was valued at over $100 billion.
YouTube is now the second largest search engine in the world having been acquired
by Google for $2.2 billion, and the ‘Application’ or ‘App’ Instagram was purchased
by Facebook for $1 billion.
The rapid rise of Social Media has had an impact on many aspects of life.
Social and political impact
Social Media, like most technological advancement, has its pros and cons. One of
the major pros is the rapid interconnectedness of the world.
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Through Social Media the world has witnessed the Arab Spring and the overthrow of
dictators. Oppressed people without a voice suddenly have a means, a mode, to
rise up and determine their destiny. The world has witnessed the potential for
rallying people toward a cause, most successfully, for humanitarian intervention
against a tyrant like Kony.
Social Media has also impacted political elections and sport. In the 2008 US
Presidential elections, Barack Obama utilised a variety of Social Media platforms to
get out his message of change and “yes we can”. It was for this reason he was
dubbed the first “Social Media President”. And with the upcoming London Games
already labelled the ‘Socialympics’, one Fairfax journalist rightly noted that “the
London Games will be tweeted, tagged, liked and rehashed like no previous
Olympics”.
It is however important to remember that the social and political impact of Social
Media can also be disastrous. No one knows this better than former US
Congressman Anthony Weiner. Weiner used Social Media to send sexually suggestive
photographs to multiple women who weren’t his wife. The photographs surfaced
but were very quickly removed. The removal of the content was insufficient.
Weiner’s career was destroyed and he resigned from Congress.
Social Media has also created a society of people who don’t look up from their
iPhone or Blackberry. Only weeks ago, Twitter was hacked and the website was
offline for an hour. When it re-emerged one user posted “Twitter went down, I
looked up & was like, who are these people in my house? Turns out I have a wife
and a daughter”
From a social & political perspective, appreciate that Social Media has its pros and
cons. Remember that the Social Media memory is long lasting, even after the
content is removed.
Commercial impact
From a commercial perspective, Social Media presents a new mode of
communication for businesses, including businesses in the insurance and legal
markets. First and foremost, businesses can and do use Social Media for marketing.
Businesses can increase brand awareness and visibility, build trust with customers
and provide superior customer service to establish and maintain long-term
relationships.
Social Media can also be used to modernise the business process. Insurance
companies and law firms that act now to integrate Social Media into the business
processes will establish a competitive advantage over those who are late adopters.
They convey themselves to the marketplace as technologically savvy, forward
thinking and ready for the future.
A further commercial benefit of Social Media is peer recommendations. An analysis
of surveys conducted by Social Media Expert Eric Qualman in 2011 showed that 90%
of consumers trust peer recommendations compared to 14% who trust
advertisements.
From a commercial perspective, if you aren’t already using Social Media, what are
you waiting for?
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Legal impact and risks
Social Media also entails risks and vast legal implications. We have already seen in
Australia legal documents served on facebook, in England we have seen an
injunction ordered on Twitter and in NZ we have seen a man sent to jail for posting
nude photos of an ex-girlfriend on facebook.
It is inevitable that the Law will continue to evolve. From privacy to defamation,
from insurance fraud to employment, Social Media will affect your future.
Within the context of the legal sphere the underlying questions are:
how does Social Media fit within the current law;
what legislation is needed to assist companies and individuals in the Social
Media age;
what can businesses do to protect themselves against and take advantage
of these changes; and
what impact will Social Media have on the legal industry and particularly
insurance law in Australia.
These questions are best explored through looking at Social Media and its impact
on different aspects of the law. We should be mindful that the law in relation to
Social Media in Australia is in its infancy and so in some cases it will be prudent to
consider how the law has developed in the other jurisdictions.
Privacy
When using the internet and particularly when using Social Media, privacy is mostly
an illusion. As Kathleen Ellis, the Senior Vice President of Multinational Solutions at
Chubb says, “Social Media opens up new opportunities for privacy violations and for
inappropriate disclosure of confidential information, such as trade secrets,
intellectual property or confidential employee information.”
More than that, every website you visit, every Facebook or LinkedIn post, every
time you tweet you are enhancing your digital footprint. The risk of this is that
there is always a way for experts who employ either legal or illegal tactics to find
that footprint. What you think is private might very well be viewable by a range of
third parties.
When using Social Media there is always the risk that a friend or third party will
post a photo or information about you or your organisation that you have no control
over. While this is a fate we share in the interconnected world of Social Media, the
risks are far greater.
Some of you may think that because you have high privacy settings your
information is secure, but think again. Digital forensic experts or hackers are highly
skilled and trained to break through what we would ordinarily believe is secure.
While digital forensic experts will usually achieve this through legal means, hackers
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can go to all lengths to retrieve your information for monetary benefits or personal
satisfaction.
Legally, since your information, photos, interest groups or posts are accessible by
the owner of the Social Media website, the information is able to be subpoenaed.
While subpoenaing information is obviously acceptable, the law ought to evolve to
recognise a common law tort of privacy, based on the principles of trespass, where
information is obtained improperly. This will protect individuals and businesses
from having personal and private information exploited.
Like any email or letter that you write, when using Social Media and before clicking
send or post, think about whether you would want to see that information on the
front page of the newspaper or being read by a Judge.
Defamation
The interconnectedness of Social Media creates an unparalleled environment for
defamation and destroying an individual or company’s reputation. Only today, the
company Shell was the victim of a vicious and calculated social media attack. As
some of you may be aware, the rights of companies to sue for defamation are
limited to those with fewer than ten employees under the Defamation Act.
Nonetheless, companies must be watchful of their employees use on Social Media.
In the workplace, Social Media provides a platform for harassment, bullying and
talking about other staff. Something to be mindful of is that LinkedIn has become
the biggest source of corporate leakage. To mitigate these risks there are simple
and yet effective steps to take.
First and foremost is the creation of a comprehensive Social Media Policy. The
policy ought to cover rules for not only those in charge of using Social Media on
behalf of the company, but also should govern your employee’s use of Social Media.
In a world where reputation is highly important, a representation by an employee
can and has had an affect on a company’s reputation. As an example, we
constantly see employee leakages and reputational damage on the website
Firmspy.
Your employment contracts should reflect your company’s position on the use of
Social Media and spell out employees’ obligations regarding the use of confidential
information both during and after the employment relationship. Another simple
step that companies can take is establishing a point person or Social Media team.
Their role should be overseeing the company’s Social Media activities and they
need to be prepared to respond rapidly and directly with customers, particularly in
the case of a crisis.
Insurance fraud
Insurance companies and law firms are searching Social Media websites attempting
to discover insurance fraud. If you aren’t looking, you should be. It should be part
of your investigation routine.
Often evidence found on Social Media will substantiate some other evidence found
in an investigation. Even when a claimant has privacy settings that prevent an
investigators ability to get to the content through legal means, solicitors can
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equest relevant social networking records that are not publically accessible. This
is exactly the same as a request for medical or employment records.
In the US for example, a Judge went so far as to compel the discovery of a
claimants Facebook password to determine whether a plaintiff has made comments
inconsistent with their claim for disability. In another case it was held that
anything posted on a social networking site is discoverable, whether the user has
privacy settings or not.
Companies should also be mindful that if they review a prospective employee on
Social Media that they keep detailed records to prevent themselves being sued for
discrimination. The onus of proof is on the employer to prove they didn’t
discriminate when hiring a range of potential candidate.
Solicitors should be mindful of rules relating to professional responsibility.
“Friending” or communicating with an opposing represented party on Facebook is
unwise, as is creating a false profile which may be considered a misrepresentation.
In fact, some scholars have argued that using Social Media to investigate claims or
whether to hire a potential employee is unethical. I disagree.
We have already seen a case in Australia where an employee was fired because
when photos of them showed up on Facebook playing in a poker tournament, when
they had called in a sick day. We have seen personal injury claims when a plaintiff
has claimed that they do not drink alcohol, only to have photos show up on
facebook of them drinking alcohol and intoxicated.
While in my view, it is clearly appropriate for insurance companies and employers
to review Social Media, a person or company’s privacy ought to be protected by
legislation preventing the handing over of passwords. It is the same as giving
someone the keys to your house.
Conclusion
Social Media has had a significant impact on shaping the world as we know it.
Social Media has impacted our social life, our political life, our commercial life and
will increasingly impact our legal life. There are currently laws that deal with
Social Media in the context of privacy, defamation, insurance fraud, and
employment. However as Social Media develops there is a need for the law to
evolve to ensure that individuals and companies are protected. This is especially
true in relation to privacy.
As a company, it is crucial that the risks are appreciated and anticipated.
Review your insurance policies: are claims arising from Social Media
covered?
Review your employment contract: Does it mention Social Media? Do you
have a Social Media policy?
Are you prepared to deal with a PR or commercial disaster through Social
Media?
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Have you put in place an appropriate mechanism to review your company’s
Social Media pages?
While the questions can go on and on, when it comes to Social Media the key
message is this: embrace it, use it properly, know the risks, and finally, take
advantage of the benefits!
Kennedys is a trading name of Kennedys Law LLP. Kennedys Law LLP is a limited liability partnership
registered in England and Wales (with registered number OC353214).
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