by John Darer® CLU ChFC MSSC RSP CLTC
The explosion in social media use for business promotion seems to present some potential new compliance challenges for settlement consultants
In response to a posting of a slide show by a structured settlement broker on LinkedIn promoting the existence of state guaranty funds, this author has written to the New York Insurance Department for an opinion:
"Many insurance agents are asked about LIGCNY (commonly requests simply refer to "the guaranty fund") by clients, prospective clients and their lawyers. It is understood that Article 77 prohibits the discussion of even the existence of the guaranty in the solicitation of insurance, which includes structured annuities.
1. Is use of social media for the business of promoting insurance products, insurance companies, agencies or brokers considered advertising under New York insurance law if a Facebook Friend, Linked In, Plaxo or other social media connection is a New York resident or has an office in New York?
2. May licensed insurance agents or brokers who solicit structured settlement annuities speak or write about guaranty funds in general in connection with the solicitation of annuities to lawyers or their personal injury clients?3. Does an express disclaimer that the marketing piece is ""it's not a reason to buy insurance" or a recitation of Article 7718 (placed) on the relevant media hold any more weight in 2010 than it did in 2009?
4. Given the assumption that the Department recognizes that agents and brokers are likely to receive requests about "the guaranty fund", is there an acceptable way under the law to answer the questions of clients and prospects on the subject that does not run afoul of Article 7718?"
5. If such slide show is used in a presentation to a group of lawyers (who are prospects for annuities used to fund attorney fees) does that use violate New York law?
Do current state insurance laws around the country adequately cover the new possibilities created by the social media phenomenon?
Example: Insurance prospect from 3,000 miles away sees agent's slide show on "Guaranty Funds" which agent posted on his Facebook page. A friend of the agent clicks the Facebook "Like button" prompting a friend's friend to look at it. That person is impressed, calls the agent, relies on the solicitation and advice provided in that slide show and decides to do business with the agent. The insurance laws of the agent's "Facebook friend" and the "Facebook friend's friend" prohibit the advertising of the state guaranty fund.
This author would like to thank Milwaukee structured settlement consultant William Fazio, for posting the slide show in question (below) and inspiring the important questions being asked here today.