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The use of social media by surplus lines insurers and agents to promote business is advertising.
Despite the casual nature of social media sites such as Facebook and LinkedIn, the use of social media is subject to state insurance laws that govern advertising and unfair trade practices.
Although people often think of surplus lines insurance as an unregulated part of the industry, the reality is that many states have specific advertising restrictions for surplus lines insurance and unfair trade practices laws that apply. Those in the surplus lines market who take advantage of social media to promote their insurance business need to be aware of these laws.
State insurance regulators have yet to issue any formal compliance guidance on the subject. In their defense, they are once again left with the unenviable task of applying old laws to new issues and technology.
The unfair trade practice laws of every state prohibit the making of any unfair, false or misleading statement about insurance and persons in the business. Any statement, including advertising in any medium, is subject to this standard.
Some, but not all, states further restrict the content of advertising by surplus lines brokers. Not too surprisingly, the laws vary significantly among states and the laws of the states in which one does business should be reviewed.
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