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Is Your Website a Potential E&O Headache?

Is your agency's website a potential Errors & Omissions headache? The answer could be "yes." However, with proper planning and execution, there is a...
July 1, 2011

Curtis M. Pearsallby Curtis M. Pearsall, CPCU, AIAF, CPIA

Is your agency's website a potential Errors & Omissions headache? The answer could be "yes." However, with proper planning and execution, there is a good chance the headache will never even develop.

Most businesses - the current estimate is 84 percent - have a website. A web presence will be key as the Internet continues to grow and replaces other forms of business searches. However, a website alone isn't the be-all and end-all anymore. In the past, a web presence would enable potential customers to find you. While this has great value in your marketing efforts, today social media tools allow you to find and target prospects and educate them on your services and expertise. Of the businesses with a web presence, less than half (47 percent) say they use social media to promote themselves. This is a huge "missed opportunity" for those businesses.

A web presence obviously offers an agency tremendous marketing potential and power. For this reason, whether you have a website or want to develop one, it is extremely important to know what you want to accomplish with it. The myriad opportunities are significant and many can play a significant role in achieving your business goals. Start with a plan defining what you want to accomplish. Plus, updating your web approach and philosophy annually is time well spent, even for agencies already with a website. Let's look at some of the options and the potential E&O issues.

Protect Your Agency's Reputation

Your web presence must indicate who you are and your expertise. Your website is an extension of your agency and will give visitors to it a strong indication of your agency's professionalism and the type of clients you want to attract. Because visitors to your site can literally be anywhere, it is important to provide details on where your agency does business and what products are available in what states. For all agencies, efficiency is critical and will help limit inquiries from prospects who are really not customer opportunities. The last thing you want is to solicit a prospect only to find out you are not licensed in that potential client's state.

There are also issues to consider for agencies that allow prospects to submit online applications or secure quotes via the web. If prospects are prompted to provide information to secure a quote for various coverages, this information must be provided in a secure setting to avoid any identify theft/breach of privacy issues. This is critical when the information includes driver's license, Social Security and credit card numbers, etc. However, even if you do not secure this type of confidential information, it is still advisable to take security precautions.

For example, say a potential customer divulges a significant jewelry or art collection through an unsecured environment. They could expose themselves and your agency to issues if their home was robbed and it was discovered the background about their collection was "stolen" from information entered through your website.

Bottom line: there are many state and federal laws to which agencies must adhere to protect personally identifiable information. Identity theft is the fastest growing crime in the United States, with one victim every 3 seconds. Violations of these laws carry sizeable financial penalties and can severely damage your agency's reputation. Many states are implementing encryption requirements for information transmitted across public networks. Check with your state's agents' association for the latest requirements in your state and ask for any necessary assistance.

Consider This

Certificates of Insurance - A significant concern among the other services agencies allow customers to handle online is the completion of Certificates of Insurance. Your system settings must be reviewed to ensure the customer cannot modify or add any information to the certificate, such as listing an additional insured or modifying the "description of operations" field. Improper execution of certificates of insurance has resulted in significant Errors & Omissions claim activity. Therefore, if your agency allows customers to print their own certificates, make sure the necessary procedures are in place. While your system may provide your agency with a final copy of the certificate for your records, it may be too late if one was modified in error.

Articles and Questions - It is also common for agencies to use their websites for educational purposes. This allows customers and prospects to learn more about specific products. For example, many agencies post articles of interest or develop a "Frequently Asked Questions" section. These are tremendous tools that should lead to increased sales while, at the same time, reducing the agency's E&O exposure. However, the accuracy of the information is critical. It is recommended that you periodically review the material to ensure accuracy.

Advertisements - If your agency decides to allow advertisements on its site, understand that these advertisements are subject to applicable existing statutory and regulatory guidelines and restrictions, just like advertisements in any other medium. Your agency would have an advertising liability exposure based on the use or misuse of a trademark, or from using the copyrighted material of others. In addition, statements regarding services available through the agency may be subject to regulatory requirements. A good general rule is to use the same degree of care you would for printed advertising to help reduce this potential exposure.

Referrals to Service Vendors - If your agency receives customer requests for referrals to service vendors (windshield repair, body shops, etc.), linking on the agency website to vendors presents essentially the same exposure as if you made the referral verbally or through other forms of written communication. The best practice is to get the written permission from the vendor to allow the link and to provide a minimum of two referrals for each type of work. This can help you avoid any problems in case your customer has a poor experience with the vendor. It also provides the customer with a choice they would be responsible for making. Links to a vendor can also expose the agency to allegations of trademark infringement. Consult with legal counsel to avoid any unknown pitfalls.

Moreover, ensure your website has the appropriate Privacy Statement and Disclaimers prominently displayed on it. Your web developer or legal counsel should be able to assist with this.

Remember, too, that rarely is the presence of a website enough, even if it is well-designed. Visitors to the site - customers, prospects, partners, locals, etc. - need a reason to come back to it. Keep the content fresh, accurate and useful.

Strategic Thinking, Ongoing Effort

To truly reach and communicate with current and potential customers, many agencies use one or more of the available social media tools (blogs, LinkedIn, Twitter, Facebook, etc.). Social media allows your agency to focus specifically on the audience you want to target. Since these capabilities are not available by solely having a website, it is best to have an integrated marketing communications program to ensure you market to people the way they want to be marketed to.

Yet using social media has some potential liability associated with it. For example, while using blogs is a great means to provide information to the public to show your capabilities and expertise, take the necessary steps to ensure accuracy of the content (just like on your website). If your agency provided inaccurate information or advice, you run the risk of an E&O claim alleging such. Verify the expertise of the source and determine any copyright issues if you are looking to post information from another source, because you could still be held responsible. It is also advisable to secure the written permission from the owner of the material prior to posting.

When you interact with a customer via social media, take it off of social media to a more secured environment when the conversation gets to a degree of specificity.

Julie Ferguson, a Massachusetts-based insurance communications consultant and developer of websites (including mine), cautions that agencies considering marketing via e-mail should proceed carefully.

"E-mail marketers must comply with spam laws," she explains. "You need an opt-out mechanism on any marketing emails. Get familiar with the law. Not only could you be fined, but you could be profiled as a spammer and blackballed from many Internet service providers."

She also suggests being careful when buying e-mail lists, making sure to only work through reputable mail houses and publications. "There are a lot of junk lists."

"For effective marketing of your agency," she continues, "be careful of the some of the 'search engine optimization' services as there are no quick fixes. It takes strategic thinking and ongoing effort."

Serving You Well

Where is agency technology heading? It is only a matter of time (and it may already be happening) before agencies develop mobile applications customers can access. What will they look like? What will the functionality be? Will they strictly point the customer to the agency website? Stay tuned. Until then, focus on a well-constructed website with a strong social media extension. This should serve you well.

Curtis Pearsall is President of Pearsall Associates Inc., a Risk Management Consulting firm specializing in helping agents protect themselves. He is a Special Consultant to the Utica National Errors & Omissions Program. Mr. Pearsall holds the following designations: CPCU, AIAF, ARM, AU and CPIA.

This article originally appeared in the2011 PIA National Agency Marketing Guide.


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