Small businesses need cyber insurance – just like everyone else.

Used to be, hackers would spend most of their time hitting big companies with deep pockets and troves of customer data.  

But the times have changed. Launching a hack is as cheap and as easy as never before. Because of this, lots of hackers are playing small-ball by going after small businesses.  

Their calculations make sense. A ransomware payout might only be a few hundred dollars, but if hackers can hit hundreds of businesses simultaneously, their ill-gotten loot adds up pretty quickly.  

Small businesses know they’re at risk. According to a recent Insurance Information Institute (I.I.I.) and J.D. Power 2018 Small Business Cyber Insurance and Security Spotlight Survey, 70 percent of surveyed businesses said that the risk of being victimized by a cyberattack is growing at an alarming rate.  

But only a minority have cyber insurance. Only 31 percent said they have cyber insurance – and 70 percent said they don’t have plans to purchase a policy. (Commercial cyber insurance varies across policies but will usually cover expenses incurred from a data breach, like lost revenue, legal costs, and crisis-management.) 

Meanwhile, we found that 10 percent of respondents said they have experienced at least one cyber incident in the prior year. To give you some perspective, that’s about the same rate as drivers get into auto accidents.  

Imagine getting into an accident and not having auto insurance. It’s an expensive proposition. The same goes for cyberattacks – we found that the average small business cyber losses for the past year were $188,400. That’s a lot of money for a small company to absorb.   

As hackers continue to get nimbler, the need for small businesses to have cyber insurance will grow. It’s incumbent on insurers to educate their business clients about the value of cyber coverage.  

And the value is there to see: 97 percent of our survey respondents who had cyber insurance and were hacked said that their coverage was good enough to make them whole again.  

Mobile claims units are on the ground in Panama City to assist insurance customers impacted by Hurricane Michael

Earlier in the week, Lynne McChristian, our I.I.I. representative based in Tallahassee, wrote about her  life in the aftermath of Hurricane Michael. Today she returns with a follow-up post.

 By Lynne McChristian

Tallahassee, FL – We were six days without power; it felt longer. Two back-to-back days of record-breaking October temperatures peaking at 90 degrees. The generator was a godsend, even if it was not powering air conditioning, only the refrigerator, an oxygen concentrator for my ailing mother, and random lights. I was trying to keep only one light on at a time to minimize the number of gasoline refills required for the generator.

At dusk, however, it became too dim for mom to navigate the house, so we flipped on more lights – and that meant refilling the generator every 8-10 hours. It ran out of gas at approximately 2:30 a.m. two nights in a row. The first night, I gassed it up in the pitch darkness with a camping light resting on the hood of my car. The second night the generator sat silent, to be refilled at daylight.

I highly recommend having a portable generator ready in advance, rather than waiting (as I did) until you experience two days without power. Here are a few models that FEMA recommends.

On Monday, I drove to Panama City to connect with insurers, many of whom had been on the scene since Sunday. Fleets of insurance company mobile claims units were in multiple places in the area, including a Lowe’s parking lot where claims adjusters from Allstate, USAA and Met Life were helping people start the insurance claims process.

Insurance claim checks were being written on the spot to storm victims for preliminary damage and for additional living expenses. I tried to drive further into town to tour the most severely damaged areas, but traffic was at a crawl. Perhaps the traffic snarl was a combination of residents trying to get back to their homes, those coming to render aid – and the curious. It felt more chaotic as fire trucks and ambulances, law enforcement vehicles and Florida Highway Patrol escorts for utility trucks were splitting through traffic and edging along the shoulder of the road. It was clear the area was still in disaster response mode, not recovery.

Panama City Beach is a tourist area about 10 miles Panama City. On Monday it was a ghost town. Beach Front Road had blocks of mainly empty hotels, closed shops, shuttered amusements, and an occasional restaurant serving meals mainly on their outside patios. It was eerie. Bay County instituted a curfew from 6 p.m. to 6 a.m.

Back in Tallahassee, 95 percent of residents had power by Tuesday. This city known for its tree-shaded canopy roads has a great deal of that canopy lying flat alongside the road, waiting for crews to haul it away. In areas hardest hit by Hurricane Michael, the road to normalcy will be a long one. Insurers are serving policyholders throughout the affected regions – to help people recover and rebuild.

Lynne McChristian, is I.I.I.’s Florida Representative, and Assistant Lecturer and Executive Director of the Center for Risk Management Education & Research at Florida State University’s College of Business.

What motivates people to shop for auto insurance? A study conducted by Facebook and comScore

To discover what motivates people to shop for auto insurance in the U.S., Facebook and comScore teamed up to survey 1,010 U.S. adults who had purchased a car in the last 6 months. Our guest blogger, Brad Auerbach, provides key insights from the survey, which we think will help insurance producers and marketers target potential customers.

By Brad Auerbach, Head of Industry, Facebook

Mobile devices are facilitating consumer research

Smartphones and other mobile devices clearly play a major role in how customers research their insurance options. Thirty-nine percent of survey respondents reported being heavy mobile users, and 64 percent said that they have previously used a smart phone to shop for auto insurance.

But it appears that most customers aren’t using mobile to buy insurance online. Sixty-one percent of respondents reported that they believed research to be important before selecting their provider, but less than half reported that they actually purchased auto insurance online. Of the respondents who purchased offline, 45 percent said they purchased through an agent and 10 percent through a call center.

Key takeaway: The relative lack of online sales activity may be an indication that auto insurers need to improve their online purchasing experience, such as providing a faster and more streamlined design and experience for their users. Note that survey respondents pointed to a good website (25 percent) and mobile app (15 percent) as potential reasons for why they chose their auto insurance provider.

Consumers don’t shop around for very long

Thirty percent of respondents reported that they selected their provider within a single day, and 60 percent said that their shopping window lasted less than one week.

Advertising is one way that affects which insurance provider consumers choose. Almost half (49 percent) of respondents who recalled seeing or hearing auto insurance ads reported that the ads helped them discover new insurance brands. Forty-four percent agreed that encountering ads motivated them to consider an insurance provider that they hadn’t previously considered.

Key takeaway: Insurance producers and marketers should be prepared for consumers to make quick decisions once they’ve found an auto insurance provider that meets their needs.

The 4 major types of buyers and their motivations

We identified 4 major buyer-types in our survey. They included:

Millennials

33 percent of respondents

Millennials are actively seeking out others’ opinions before buying auto insurance. They’re more likely to be motivated by price. Important triggers for them to begin shopping for insurance include life events, such as buying a new car or moving to a new location.

Loyalists

55 percent of respondents

Loyalists are loyalists for a reason.  They are less likely to do deep research, but instead may place a high emphasis on customer service. Their triggers include contract renewals (51 percent), followed by a new car purchase (34 percent).

Switchers

37 percent of respondents

Switchers are motivated by pricing above all else. They’re receptive to advertising and they’re likely to research multiple channels such as friends and family, insurance company websites, social media, etc., to ensure that they’re getting the best deal.

Heavy mobile users

39 percent of respondents

The heavy mobile user intuitively turns to their mobile platforms to conduct their auto insurance research. As expected, they tend to be younger, with lower incomes and credit scores. Their triggers include a recent car purchase (41 percent) and the desire for lower pricing (39 percent). 44 percent also reported that they’ve switched auto insurance providers in the past.

Conclusion
Auto insurance producers and marketers can improve their sales performance by understanding who their customers are, including their motivations and how they’re using technology to buy auto insurance.

For more insights on the path to purchasing auto insurance, download the full report.

 

Brad Auerbach is the Head of Industry at Facebook, where he is focused on leading the operational excellence, revenue growth and strategic partnerships with the largest U.S. financial services and insurance companies. Brad’s team consults with marketers to empower mobile connections that drive business results. Brad is a regular speaker at the McKinsey Property & Casualty Leaders Forum, TransUnion Digital Disruption Summit and Northwestern University’s Kellogg Marketing Conference. Brad attended Indiana University and lives in Chicago with his wife and their two children.

Pot is now legal in Canada. What could it mean for homeowners insurance?

As of today, recreational pot is legal across Canada. Two weeks ago, we looked into how pot legalization could impact Canada’s road safety. 

Now let’s talk a little bit about homeowners insurance and marijuana. 

Except for Manitoba and Quebec, all Canadian provinces will let people grow a small amount of marijuana at home – usually up to four plants.  

Unfortunately for the aspiring bud-growers out there, growing pot isn’t as easy as growing basil. Marijuana is a fickle weed and needs a lot of care to grow into a viable plant. It can be grown outside or on the window-sill, but a healthy and vibrant marijuana especially likes a hot, light-intensive, steamy environment – not exactly an accurate description of Canada’s climate.   

Which is why a whole industry has grown up around providing home-growers with hydroponic, lighting, and climate control systems to grow pot indoors, safely tucked away from the blinding snows and sub-zero temperatures of a Canadian winter.  

How will home-grown marijuana affect homeowners insurance?  

Higher risks. Well, for one, these grow systems are definitely not risk-free. High-intensity heat lamps can mean a strung-out electrical system, which can lead to fires. Humid temperature controls mean lots of moisture, which can damage your house with mold and fungi growths. 

Higher premiums. Higher risks mean that an insurance company will probably ask for more premium to make up the difference. A spokesperson for the Insurance Bureau of Canada has been quoted as saying that insurers asking about home-grown pot may become routine: “[insurers] just want an accurate idea of what you’re doing and any risk factors that should go into determining your premium […] they’re going to underwrite your policy based on a number of factors. It’s just another factor that gets consideration when setting an insurance premium.” 

Coverage questions. It’s also important to know what your insurance does and does not cover. For example, some damage caused by mold or fungi is often excluded by a standard homeowners policy. And most policies limit the amount of money an insurer will pay for damaged plants. This limit might not always be high enough to reimburse for marijuana plants, which can be pretty valuable.  

So if you’re a Canadian planning to use a marijuana grow system at home, talk to your insurer – especially if you’ll be installing complicated equipment.

Hurricane Michael’s trail of destruction

Our guest blogger, Lynne McChristian, is an I.I.I. representative based in Tallahassee, about 100 miles from where Hurricane Michael came to shore.

 By Lynne McChristian

After a major natural disaster, there are various levels of survivor conditions – ranging from total devastation to mild inconvenience. In comparison to what people are experiencing in Mexico Beach and the Panama City areas of Florida, my inconveniences are extremely inconsequential. I was asked for a first-person account, and here’s where things stand on a Sunday afternoon.

In my Tallahassee neighborhood, we have been without power since about 2:20 p.m. on Wednesday. This is Day 5 of powerlessness. The air conditioners are silent in the 88-degree heat, but the rumble of portable generators is a bit overbearing, especially at night. The choice is to keep the refrigerator contents cool, or sleep.

At least we have that option and a place to sleep, whereas so many do not. Immediately after the storm, about 90% of the town was without electricity. What makes Tallahassee a beautiful part of the state is the same thing that makes it vulnerable to high winds. Decades old, stately oak trees and towering pines offer shady respite one day, and following a major storm, they become something altogether different – a barrier to returning to a comfort zone.

All over town, trees are twisted up in power lines.  The utility company has a goal of restoring power to most before the weekend is over – and so we wait. On Sunday night, 30 percent of residents still do not have power, and I among them.

I am the owner of a brand-new generator. For some, the purchase is a gamble. Bet on a fast recovery or spend $700 on a bulky tool, use it once and store it forever. My purchase was a risk management decision; my mom turned 95 last week, and she lives with me. The generator gives me confidence that she will have the steady stream of oxygen from the concentrator she uses, so it was a wise purchase in my situation. Thanks, Home Depot, for restocking the generators multiple times to aid.

Streets are clear here in the state capitol, lined with mounds and mounds of tree trunks and tree limbs. Many gas stations are out of gas. It’s an inconvenience; that is all. The focus of recovery is on the countless others who would look at this town’s Hurricane Michael experience and think it barely a blip. By comparison, it is.

 

Lynne McChristian, is I.I.I.’s Florida Representative, and  Assistant Lecturer and Executive Director of the  Center for Risk Management Education & Research at Florida State University’s College of Business.

Before you sign anything, talk to your agent

is this guy legit?

Were you well-prepared for Hurricane Michael? Good. Hurricanes are extremely dangerous.

But if you’re not careful, what happens after the storm can be just as harmful as the hurricane itself.

Beware the shady contractor. It’s a terrible story: someone’s home is damaged from a hurricane. A contractor shows up at their property and offers to complete immediate emergency repairs. All the homeowner needs to do is sign some paperwork and, the contractor assures them, their insurance company will pay for the repairs – easy as that!

Wrong. Shady contractors are not your friend. If you live in Florida, then the paperwork they want you to sign is often an “assignment of benefits” (AOB), a document that gives the contractor the right to receive payouts from your insurance company directly for repairs. (You can read all about how it works – or doesn’t work, as the case may be – on the Florida state website.)

Fraud is real and rampant. In the worst-case scenario, the shady contractor makes minimal or no repairs to the person’s home at all, but they’ll file a large claim with the insurance company anyway. If the fraudster is lucky, they’ll get the insurance payout and skip town. Meanwhile, the house is still ruined, and the homeowner didn’t get help to fix it.

Your home could go unrepaired for weeks, even months. Or the shady contractor will do unnecessary repair work, like ripping apart the kitchen because of “potential mold damage.” He promises to re-install the kitchen – but in the meantime, he bills the insurance company and the insurer pays. Sometimes, the contractor won’t reinstall the kitchen, often on some pretext or other.

This has especially been a huge problem in Florida. You can read some AOB abuse horror stories on the Consumer Protection Coalition website.

There are a lot of scams out there. Not all shady contractors are using AOBs. The Florida Department of Financial Services has also issued warnings about fraudsters who offer to provide repairs for cash – and then never provide repairs.

Talk to your agent before signing anything. Never, ever sign anything before you talk to your insurance company. Especially not if a contractor is putting up red flags, like pressuring you into signing an AOB or demanding large repair deposits up front. Contrary to what the contractor might say, you do not need to sign an AOB to get your home repaired or your insurance claim processed.

Instead, call your insurer. Many insurers will dispatch approved companies to complete emergency repairs on your property. And you’ll still be in control of your insurance policy, which hopefully will make you whole again. No shady contractors needed.

National Flood Insurance Program take-up rates in select Florida counties

Hurricane Michael is approaching the Florida Panhandle on October 10 as very dangerous Category 4 storm. The map below shows the percentages of properties in high-risk counties that have National Flood Insurance Program flood policies. None of the counties most exposed to storm surge have a take-up rate above 32 percent, and in Liberty County, only 0.6 percent has insurance through NFIP.

The NFIP currently has about 85 percent of the flood insurance market which private companies have shunned for many years. But private companies, including innovative new start-ups like the one described here, are now entering the market and giving consumers a variety of options.

 

Hurricane Michael: The top-10 insurers in impacted states

Hurricane Michael is nearing landfall on the Florida Gulf Coast on Wednesday October 10. The storm is bringing damaging wind gusts and flooding to Florida and Alabama, where a state of emergency has been declared, and heavy rains from the storm are expected in the Carolinas and Georgia.

Preliminary estimates from CoreLogic® show that 57,002 homes in the Florida Gulf Coast are at potential risk of storm surge damage from Hurricane Michael based on its projected Category 3 status at landfall. The total reconstruction cost value of these homes is approximately $13.4 billion. This is likely to change as the storm develops.

I.I.I.’s Hurricane Fact Files for Florida, Alabama, Georgia and the Carolinas include the top 10 property insurers for each state.

Hurricane Michael: Dos and Don’ts

be safe out there.

If you live in the projected path of Hurricane Michael, you should be prepping your home and finalizing your emergency and evacuation plans. The storm has grown to Category 2 – and there are concerns that it’ll be a Category 3 by landfall.  

Here are some Dos and Don’ts to consider for prepping and riding out the storm.  

Don’t: 

  • Don’t go outside during the storm. This is a no-brainer. Even a Category 1 hurricane can reach sustained winds of 74 mph. Category 5 winds are over 156 mph. Wind speeds like this can turn even small debris into deadly missiles. And don’t be fooled by the eye of the storm – there will be a period of calm before the hurricane force winds return from the opposite direction.  
  • Don’t grill indoors. If your power goes out, don’t be tempted to throw some steaks onto a grill indoors. Charcoal or gas grills can release deadly levels of carbon monoxide.
  • Don’t drink non-bottled or untreated water. Flood waters are often filled with bacteria and other contaminants – including sewage. Don’t drink tap water – and don’t drink any water exposed to flood water, including bottled water. The FDA has tips on how to make your tap water safe to drink.
  • Don’t drink alcohol. I repeat: Don’t drink alcohol during a hurricane. You never know when you will need to evacuate at a moment’s notice or deal with a life-threatening emergency. You’re going to want all your wits about you while the hurricane is raging – lives could depend on it, yours included. That’s why some jurisdictions will ban alcohol sales prior to a hurricane.  

Do: 

  • Do stock up on lots of water. The CDC recommends at least 5 gallons of water per person. You may also want to buy iodine tablets to clean drinking water.  
  • Do make sure you have more to eat than chips and salsa. Or bread, for that matter – you’re going to want to have lots of non-perishables with nutritional value, especially canned foods. A minimum 3 to 5-day supply per person is recommended. 
  • Do prepare your house properly. Clear your yard of furniture or anything else that could blow away. Cover your windows and doors using storm shutters or plywood – and stay away from windows and doors during the storm, if you can. Make sure your carbon dioxide detector has enough battery life to prevent CO poisoning. (Check out a longer list for house prep here.) 
  • Do be responsible and prepare for the worst. Make sure you have emergency and evacuation plans in place before the storm hits. Communicate these plans to everyone at your house. Find out where the nearest storm shelter is. Keep track of the storm. Have flashlights and extra batteries ready. Buy a first aid kit. Ready.gov has more advice here 

These are not exhaustive lists. Make sure to check governmental information for help on prepping for a hurricane. And be safe out there. Hurricanes are not a joke.

What will legal marijuana mean for Canada’s road safety?

don’t drive stoned.

As you’ve probably heard, recreational marijuana will be legal across Canada come October 17, 2018. Will stoned driving increase? Will this lead to more accidents and fatalities?

We can’t divine the future, of course.  But perhaps we can learn something from the past. Did roads become more dangerous after states began legalizing recreational pot in the U.S.?

The short answer: probably, to some degree.

  • The more stoned a driver is, the more likely she is to be involved in an accident. Motor and cognitive skills are important for safe driving. Getting stoned makes both these skills worse – and the more stoned a person is, the more these skills deteriorate.
  • The number of “THC-positive” drivers on the road increased after legalization. In Washington state, at least. There’s evidence that the percentage of stoned drivers went up noticeably after the state legalized recreational pot.
  • Fatal crashes involving drivers who tested positive for THC increased. Some studies indicate that more people with “detectible” levels of THC in their bloodstreams were involved in fatal accidents after legalization.
  • Collision claim frequency appears to have increased. Early analysis suggests that states with legal marijuana have higher rates of car collisions than they would have had without legalization.

There is an important caveat to all this. You’d think that figuring out when someone is stoned would be easy. It’s not. Unlike alcohol, measuring marijuana impairment is complicated. THC can remain in a user’s bloodstream for days, even weeks, after getting high. Having THC in her bloodstream at the site of an accident does not automatically mean a driver was stoned at the time of a crash.

To make matters worse, to what degree marijuana impacts one person’s driving skills is also not so clear-cut as you’d think. Marijuana impacts different people differently. Researchers are currently trying to figure out how to account for things like THC tolerance when they measure how much marijuana increases crash risks.

But despite these complications, most evidence suggests that stoned driving is a bad idea – it endangers the driver, passengers, and other drivers. For this reason, Canadian provinces have begun revising their impaired driving laws to come down harder on stoned driving.

So what does this mean for road safety in Canada? It’s still too early to tell, but marijuana legalization in the U.S. should serve as a warning.

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