Insurers anticipate boom in social media liability coverage

As businesses continue to expand their use of social media in branding, marketing, communication and customer service strategies, they may need to equip themselves with social media liability coverage in light of risks sparked by the creation and delivery of social content.

A recent survey conducted by the global insurance company Torus at the 2012 Professional Liability Underwriting Society International Conference in Chicago highlights an expected increase in requests for social media liability coverage this year.

Of 105 insurance professionals included in the survey, 42 percent expect a boost in business demand for social media coverage.

Another 16 percent expect a significant increase in demand this year.

“As technology continues to increase the scope of exposures for (small- and medium-sized enterprises) utilizing social media, insurers must mitigate the risks associated with the rapid proliferation and dissemination of such content,” said Christopher Cooper, assistant vice president and media liability product manager at Torus. “An increasing number of respondents to this survey recognize the need for broader coverage – specifically media liability coverage – due to the potential risks small businesses face when introducing this medium into their business model.”

Among the identified risks are data leakage, lack of authority over damaging content distributed by employees, greater personal injury exposure, copyright and trademark infringements, and insufficient risk management policies and procedures.

A third of the professionals surveyed cited data leakage as the most pressing concern small- and medium-sized businesses face in relation to social media use.

Phil Gerbyshak, chief connections officer at Milwaukee Social Media, reiterates this concern.

“If you don’t have a strong social media policy in place for your employees, data leakage is definitely a concern because you’re looking at possibly leaking out some proprietary secrets of what your company does or how they do business,” Gerbyshak said.

And as professional and personal social media activity continues to blend, there is more room for employee error in misrepresenting a company, he said.

In protecting a business against social media risks, employers should start with a strong policy that is signed by every employee, includes consequences and is reviewed frequently, he recommends.

Gerbyshak also advocates establishing a point person who can answer all employee questions surrounding social media as well as facilitating ongoing social media education for employees.

“In the absence of information, employees are left to make their own decisions, which are based often not on fact but instead are based on their own experience which may not be business experience,” Gerbyshak said. “It’s likely personal experience, and that could be very different.”

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