Insurance companies and claims adjusters are increasingly relying on social media as an investigative tool to verify and, in some cases, challenge the accuracy of personal injury claims. Yet many appear reluctant to discuss their policies for accessing and using social media information on platforms such as Facebook, MySpace, hi5 and LinkedIn.
Specifically, little public information is available about policies and procedures that insurance companies have in place to monitor how social networking information is collected and the purpose for which it is used. “Insurers and adjusters are using social media more and more, but I think the policies for using it are still in the early stages,” notes Kadey Schultz, a lawyer and partner with Hughes Amys LLP. “The case law around this is new and the technology is still emerging. I don’t think formal policies are really there yet for most companies.”
The number of referrals for social media claims investigations by insurance companies has certainly increased significantly, observes Keith Elliott, vice president of operations and business development for Reed Research, an investigation firm. But as of yet, investigators don’t see the numbers warranting the creation of a whole new approach for handling them. “We analyze and investigate the referrals on a case-by-case basis,” Elliott says. “There are no blanket strategies.”
Insurance companies are clearly using social media in claims investigations, says Michael Fitzgerald, a senior analyst with research firm Celent. But most do not have an “operational strategy” to evaluate the information gathering process around online social networking sites, he adds.
Collecting Social Media Information
“A major part of that discussion has to be how the social media information is collected, the purpose for which it can be used and any ethical considerations surrounding the information,” says Fitzgerald, whose firm published a report in October 2011 entitled Using Social Data in Claims and Underwriting. “For example, even if data is available on a certain site, will an insurer rope off some of it or use it all?”
Several Top 10 property and casualty insurance companies contacted for this article declined to comment on their use of social media in claims. While case law is evolving on the production of personal information stored on these sites, some sources say insurers are still wrestling with internal protocols for how employees should access social media.
“Some companies have internal blocks and restrictions on employees or adjusters using social networking sites such as Facebook, so how could they do research if they can’t access the site?” asks Schultz, whose law firm recently published a paper, “Creeping” Up on Plaintiffs: The Use of Facebook in Litigation.
State Farm Canada has developed a social media policy for the collection of information on networking sites, according to Brian Donaher, Canadian claims section manager for the company’s special investigation unit. “Our social media policy is relatively new,” he says. “We have had policies in place for safeguarding information, but we developed this to guide our employees’ use of social media. Our employees always advise claimants that they are representatives of the company. Everything we do is identified as being on behalf of State Farm.”
Social media are certainly of value to the company, Donaher adds. They are becoming an increasingly better-known tool the company can use to investigate claims. “However, it is not the first place we go,” he says. “Social media supplements our investigation techniques.”
Schultz concurs that social media represent simply one component of a claim investigation. “As much as these sites can help to inform, it is also important to view the information as a snapshot,” she says. “You have to incorporate it into a total assessment of the claim; you can’t just hang your hat on social media.”
Crawford & Company (Canada) Inc. is also informing its adjusters about the benefits of using social media. It issued a training bulletin last fall educating adjusters about how social networking sites can be a potentially valuable source of information.
“A casualty or accident benefit adjuster should relish the prospect of being given the opportunity to view information and/or photos posted by a claimant on such (social media) sites, which may or may not lend credence to their claim,” notes Crawford & Company’s director of professional development Stephen Scullion. “Adjusters must have an unquenchable thirst for information regarding the claimants they are dealing with in order to reach a settlement that accurately reflects the facts of the loss.”
Creative strategies may be required to access relevant data, according to adjusters, lawyers and investigators. For example, although social media sites might display public — and hence usable — information, what if the security settings render such information private?
“Given social media’s nature, there are alternate approaches [to accessing information],” Elliott says. “For example, a claimant can’t control or manipulate what other people are posting about him or her. That claimant’s ‘friends’ may also have open profiles that include information about the person, which is publicly available information.”
A little strategy must also be used, notes Scullion. “If the claimant knows that you are going to be viewing their Facebook page, you can be sure nothing further is going to be put on it,” he says. “Therefore, be discreet. Review the page from time to time, perhaps on diary.”
Insurers and adjusters have to ensure the information they are seeking is relevant and that the timing of requests for information is appropriate, Schultz says. “They also need to be aware of how to search and document social media information,” she says. “It does no good for an adjuster to note on a file that he or she saw Facebook pictures of a claimant engaged in certain activities. You have to save the file, print it, date it.”
Several sources say insurers should consider ethical boundaries in any coherent social media policy. There is little in the way of regulation or legislation on the use of social media for claims, Fitzgerald notes. But some legal groups have established ethical guidelines. For example, both the New York State Bar Association and the New York City Bar Association have issued opinions that outline the appropriate scope for obtaining evidence from social networking websites. For example, the associations consider 1) anonymous “friending” of people to gain access on sites such as Facebook and 2) directing a third party to “friend” someone for the purposes of investigation to be unethical practices.
These guidelines are being followed in the insurance industry, according to sources. “Our social media policy governs how we collect information, what we use it for and how we safeguard personal privacy,” says Donaher. “In social media, you need to be careful about how you are gathering information and that you are respecting privacy regulations.”
An adjuster must collect permitted information in a fashion that shows the highest obedience to ethical conduct, according to Scullion. “Information garnered that has any taint of underhandedness will nullify its value in the eyes of the court.”
Elliott says his firm obtains information valuable to its clients. “If it is not properly obtained, it is not valuable to our clients,” he adds. “Roughly 70% to 80% of ou
r cases on social media are in litigation, so there are rules about contacting people represented by counsel.”
Speaking of counsel, judges in Canada are sorting through the ramifications of social media in litigation. Several court decisions in personal injury claims have ruled that content posted on social media sites such as Facebook is producible and admissible as evidence, at least in limited form. In Ontario, cases such as Kourtesis v. Joris (2007), Murphy v. Perger (2007), Leduc v. Roman (2009) and Wice v. Dominion of Canada General Insurance (2009) show defence lawyers have successfully argued for the production and preservation of private social networking information in some capacity.
More recently, an Ontario Superior Court Justice ordered production of a plaintiff’s social media photos in Morabito v. DiLorenzo (2011). In the case, which involved a lawsuit for injuries sustained in a motor vehicle accident, Ontario Superior Court Justice James A. Ramsay ruled that photographs, but not necessarily status updates or wall posts, were relevant to the matter at hand and producible. He also ordered the plaintiff to re-attend examination for discovery to answer questions about the photos posted on Facebook and MySpace sites.
Conversely, in Schuster v. Royal and Sun Alliance Insurance Company of Canada (2009), the court ruled the plaintiff did not have to preserve or produce her Facebook site because the defence did not provide evidence to show it contained relevant information.
“The case law on social media and disclosure of information does not provide a clear direction or guidance one way or another,” says Donaher. “This is an emerging area and I think each case is being decided on its specific merits. You may have one case where social media information has been ordered to be produced as evidence at trial or arbitration or as a discovery undertaking and another where it has not.”
Arbitration rulings from the Financial Services Commission of Ontario (FSCO) on production of social media information have also been mixed. In a decision released in January 2011, Prete and State Farm, FSCO arbitrator Denise Ashby found the relevance of images posted on a social networking site was too remote when weighted against other factors such as sensitivity and practicality. She therefore declined a request from State Farm for disclosure of a claimant’s photo and video posts to his Facebook account.
In a more recent decision, FSCO arbitrator Robert Bujold ordered a claimant to produce photos of herself posted on Facebook and hi5 sites. In Rakosi and State Farm, a dispute arose between Eniko Rakosi and State Farm about the claimant’s entitlement to benefits stemming form a car accident on May 5, 2008. State Farm asked for production of photos posted during a two-year period from 2008 to 2010. Bujold noted that the request from State Farm met the test for a “semblance of relevance.”
“For every one of these cases heard by an arbitrator at FSCO, I know there are several more lined up,” Schultz notes. “The arbitration decision in Rakosi may lead to even more requests for social media information.”
And so it should, according to Fitzgerald. “Instead of this being a ‘Big Brother’ issue of insurers spying on their customers, it can have a positive side and a real value,” he says. “Social media investigations can help establish the accuracy of a claim and also reduce the amount of insurance fraud. I don’t know of any adjusters who would ignore a potential source of information if it could help them do their jobs.”
And since the courts have shown themselves to be amenable to accepting evidence from social media sites, “a review of these sites should now constitute a mandatory part of an adjuster’s investigative repertoire,” notes Scullion.
But social media investigation should be conceived as a single element of an insurer’s or adjuster’s overall claims strategy, according to Schultz. “It has to become a best practice,” she says. “Insurers and adjusters should take a strategic and well-researched approach to social media, not bury their heads in the sand in this electronic age. Like surveillance, it is one tool that has to be looked at in the entire context of the claim.”