Insurance Technology Industry News
[February 26, 2013]
Social media and cyber liability: a new frontier
Feb 26, 2013 (Datamonitor via COMTEX) -- Emerging cyber threats such as libelous social media comments are posing new legal risks for businesses, and in particular for UK SMEs that are less well-equipped to deal with the issue compared to firms in North America. Therefore insurers should be prepared for this new risk area and work to increase awareness among their clients.
The impact of libelous and reputation-damaging comments made on social media platforms, as demonstrated by the Chris Cairns Twitter case, saw claims of tens of thousands of pounds awarded last year. This is now an emerging threat in the UK, where specific risks hidden under the cyber liability term are often misunderstood or belittled by both insurers and businesses, compared to North America where this specific cover is more widely offered. Most such incidents that carry legal litigation risks involve SMEs. This is not surprising as SMEs are usually less aware of such risks and have fewer social media controls and policies in place, compared to larger businesses.
As a consequence, several insurers - with Arc Legal being the most recent - have launched social media cover, with this also being in response to the publication of new Crown Prosecution Service guidelines on sentencing for online abuses, and the Defamation Bill currently under review.
According to Datamonitor's 2012 SME Insurance Survey over 45% of SMEs have professional indemnity cover but only 2% have a cyber policy in place. Moreover, a staggering 40% of SMEs surveyed say they are not at all concerned about damage to business reputation via social media.
This highlights the lack of awareness among UK SMEs of the damage that social media defamation can cause, while opening a market opportunity for insurers to start designing relevant products for this advancing threat as well as drawing SMEs' attention to the social media cyber risk.
For further information on this topic please contact Irina Petre at firstname.lastname@example.org.
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