Insurance companies are successfully tapping into the engagement opportunities on social media at both the brand and local agent levels. Take State Farm's recent “Shotgun!” promotion. The brand posted 50 car photos on the corporate Facebook page over the course of 10 days. The first fan to tag himself or herself in each photo was automatically entered into a drawing to win a new hybrid car.
There's also Farmers Insurance, which has provided catchy "Request an Insurance Quote" tabs to its local agents' Facebook pages. Last quarter, Farmers also sponsored several sweepstakes for major sporting events, which they promoted across corporate and agent pages on Facebook. Talk about campaigns that spur customer engagement.
It comes as no surprise that state insurance commissioners deem these interactive campaigns and lead-generating techniques advertisements. The NAIC model rules, adopted by many states, interpret the definition of advertising broadly to include “any material designed to create public interest in an insurance product, an insurer, or in an insurance producer; or to induce the public to purchase, increase, modify, reinstate, borrow on, surrender, replace or retain a policy.”
Before your insurance company launches into social media advertising, it is crucial that you understand the legal obligations and restrictions resulting from this definition in all states in which you operate. We have developed a five-step checklist for insurance executives that includes marketing, advertising, compliance and legal considerations.
- Establish a “system of control” over social media content. Creating a written and oral advertising policy to control the content, form, and methods of advertising is a formal requirement in most states. Your company likely has a procedure in place for controlling other advertising media, which can be extended to social. This may be a good time to shore up your agent and employee training and revise agent and employee handbooks to include use of social media. Creating a system of control and resulting employee policies and procedures are the initial and most important steps for a successful social rollout, as the legal responsibility ultimately falls on the company if an employee utilizes social media in a non-compliant manner.
- Pre-approve advertisements internally (and externally as needed). Once you have established an internal system to control advertising, you’ll need high-level support to implement it within your organization. Keep in mind that a few states require management to pre-approve and archive all insurance advertisements. Besides internal approval, you may also need to seek external approval with the departments of insurance across the states in which you operate. Both internal and external approval procedures may require the use of technology solutions to automate requests and create a workflow system.
- Avoid prohibited words and phrases. Most states ban guarantees about products and potentially misleading statements. For example, many states prohibit agents from conveying a time-sensitive deadline when one does not exist, or that buying through a certain agent will save the consumer money. Pay special attention to advertisements involving life insurance, mutual funds, variable annuities and other securities, which are regulated more heavily by state commissioners, FINRA, and the SEC. Many states have special provisions on these products as a means of consumer protection. For this reason, some firms have decided to avoid mention of these specialized products in their initial social media efforts.
- Use licensing disclaimers where appropriate. Disclaimers present obvious changes to the short and punchy nature of tweets and posts, but may be necessary. Some states require that advertisements list the states in which the insurer is licensed and/or the license number of the agent running the advertisement.
- Archive advertisements for the minimum period. Minimum advertising archiving periods vary by state, but usually fall between three and six years. Several technology partners can now automate archiving of all social media content for your distributed employees, including that created from home, remote office, or mobile device.
About the authors: Clara Shih is the author of How to Make Money Marketing Your Business on Facebook (Financial Times Press 2011) and The Facebook Era (Prentice Hall 2010), used as a textbook at Harvard Business School. Shih was named one of BloombergBusinessweek’s Best Young Tech Entrepreneurs of 2011. Alexandra Basak Russell, Esq. is a member of the Illinois Bar and author of several social media compliance whitepapers targeted at helping compliance officers in regulated industries to draft and implement effective social media policies. Their company, Hearsay Social, provides social media compliance and marketing solutions for insurance companies.