A component part of many PI policies is that they provide cover for forms of defamation (most commonly libel and slander) in the course of their business activities. With the scope of activities of many organisations becoming wider, and with those business activities more open to interpretation, it’s an area that can raise the level of concern for underwriters.
For example, if a business posts a blog on their website describing a great new service they are introducing, but defames a competitor at the same time, would that be construed as ‘arising from the conduct of their business activity’? The likelihood is that it would and, coupled with a generous definition of ‘Third Party’ (anyone other than the insured organisation themselves, so not just someone they provide those professional services to), it could find its way to being a claim covered under a PI policy.
Social media now plays a highly prominent role in business communications, with many organisations operating simultaneously across a number of media platforms.
The good news is that defamation cases have reduced significantly since the introduction of the Defamation Act 2013 (which applies to causes of action occurring after its commencement on 1 January 2014). Key features of that act include:
- the burden of proof has moved from the defendant (previously, the person allegedly being defamed simply had to say the comment was made by the defendant and was defamatory) to the claimant. The claimant must now prove that they have suffered serious harm, before suing for defamation;
- many previous cases were settled by jury, with high levels of unpredictability around punitive damages awards, uncomfortable territory for PI insurers. Remedies are now more likely to be arbitration-led with more predictable and consistent outcomes.
One of the main benefits of The Defamation Act is that it has encouraged a better balance between freedom of expression and protecting reputation, something you might think would put the minds of insurers at ease. This is true to an extent, but an emerging dynamic has been the explosive growth of social media. Social media now plays a highly prominent role in business communications, with many organisations operating simultaneously across a number of media platforms (Twitter, Facebook, YouTube, Instagram, etc…). This can also be considered part of their business activities, as it’s often a way of promoting their services, but social media raises the risk of making defamatory statements, and brings a much wider audience into play. Moreover, it doesn’t have the same level of editorial or legal input that traditional media would, so posted content often doesn’t pass through the standard or process of quality control. Some argue that a social media post can quickly be changed or deleted. But deleting the post does not prevent a claim because it may have been carried into a different media stream (picked up by a traditional media outlet for example). The length of time the post was visible for will affect the amount of damages payable, not whether a claim can be made.
Beyond defamation, PI policies also cover breach of privacy, confidentiality and data protection – all of which have increased exposure due to social media use. That said, the statistics on defamation appear to be trending in the right direction from the perspective of PI insurers. However, despite the number of UK cases reportedly falling by almost a third in 2016, social media cases are on the rise. The internet has given an opportunity for everybody to be a publisher, and the freedom of expression opportunities offered by social media appear to be without limit. So, whilst The 2013 act certainly offers better protection from defamation, careful consideration needs to be given to bringing a social media usage policy into the compliance and quality control procedures of every organisation.