Category Archives: Business Risk

Small business and cyber insurance

Risk management services are an important way cyber insurance adds value for small businesses, according to a new I.I.I. paper.

In Protecting Against #Cyberfail: Small Business and Cyber Insurance, I.I.I. co-authors James Lynch and Claire Wilkinson say:

“The provision of these types of services is considered a growth area in the cyber market for SMBs, where price may be a barrier to insurance coverage in the first place. For larger companies, cyber-related risk management services may be offered at a discount or for free.

“For SMBs in particular, offering a risk management or training solution where they can learn more and keep themselves up-to-date on current threats is perhaps most valuable.”

Also heard at the Advisen Cyber Risk Insights Conference in NYC last week: part of the value proposition for SMBs is that cyber policies offer solutions, not just coverage.

Andy Lea, vice president underwriting for E&O, Cyber and Media, CNA, told the conference: “The value proposition is more prominent with SME and middle market companies that just don’t have resources available in-house to manage risks. This is an opportunity for brokers and carriers to add value.”

What cybersecurity measures do businesses have in place?

In the third week of National Cyber Security Awareness Month, Insurtech Insights newsletter by CB Insights gives a timely update on the cyber insurance market, and where startups are playing in this growing industry.

It notes the “tremendous opportunity” to sell cyber insurance to small businesses.

A recent Better Business Bureau study estimates that 15 percent of small businesses have cyber insurance. BBB Accredited Businesses are almost three times as likely to include cybersecurity insurance.

Fortunately, about nine out of 10 businesses reported to the BBB they have some cybersecurity measures in place, with the most common ones: antivirus; firewall; and employee education:

How to protect employees against harassment

What are companies doing to protect employees against harassment? This question has added weight after the October 8 firing of Harvey Weinstein by the board of Weinstein Co. following reports of sexual harassment complaints against him. Earlier firings at Fox News and Uber have also brought the issue into focus.

From MarketWatch: “Companies are increasingly buying insurance, including employment practices insurance to cover costs associated with employment lawsuits,” said David Yamada, a professor of law and the director of the New Workplace Institute at Suffolk University.”

Some insurers are also providing training materials for companies to teach their employees about sexual harassment in hope of avoiding it, Yamada added.

Per this 2016 Betterley report, more insurers are partnering with vendors to offer risk management services, such as training and education, consultation and outreach to insureds:

“EPLI value-added services remain an important part of the product when done right, offering employers access to tools that can truly make a difference in the frequency and the severity of claims—as well as the bad feelings that accompany employee/ employer disputes.”

Gross written premium for employment practices liability insurance (EPLI) increased to $2.1 billion in 2015, according to MarketStance data.

I.I.I. information on EPLI coverage is available here.

The October issue of Latest Studies

The October issue of our Latest Studies digest is now available.

In this issue:

  • Wharton, The Congressional Budget Office and B.E. Journal of Economic Analysis & Policy all have recent reports on the National Flood Insurance Program
  • Lloyd’s of London on the future of cargo insurance
  • The latest on marijuana impaired driving from the National Highway Traffic Safety Administration
  • J.D. Power on U.S. homeowners insurance customer satisfaction

And more…..

Things to know before your eclipse viewing party

The first total solar eclipse to sweep across the entire country since 1918 will happen on Monday and understandably there are some insurance issues that arise:

Business Insurance, via today’s I.I.I. Daily, explains what a company needs to know about workers compensation issues that may arise if it is hosting a viewing party.

Amy K. Harper, a director at the National Safety Council, said, “An employer should provide ISO 12312-2 compliant viewing glasses if they are encouraging or hosting a viewing party.” Employers should also be familiar with NASA’s safety guidelines that suggest people not look directly at the sun. Employees injured using a camera, binoculars or telescope to look directly at the sun can cause eye injuries in which employees may be covered under workers compensation.

Erie Insurance brings us a solar eclipse safety check: 1. Don’t look directly at the sun; 2. Keep your eyes on the road; 3. Renting out your home? Check your liability coverage.

NASA’s excellent safety information here.

The Week in a Minute, 8/17/17

The I.I.I.’s Michael Barry briefs our membership every week on key insurance related stories. Here are some highlights.

Insurance coverage for riot-caused damage became a media issue this week after a 32-year-old woman was killed, and scores were injured, in Charlottesville amid violent, dueling protests centered on the removal of Confederate General Robert E. Lee’s statue.

Reporters want to know if the number of car accidents might rise on Monday, Aug. 21, when the population soars in 14 U.S. states, from Oregon to South Carolina (see page 4), as tourists flock to witness a total solar eclipse.  It is the first one to be visible in the U.S. in 38 years.

Gert became the second hurricane of 2017 to develop in the Atlantic Basin but it never came near the U.S. before drifting into the middle of the ocean.

Proper protection is key in a sharing economy

Whether you’re sharing rides, homes, workspaces, driveways, food experiences, or even, as in China, umbrellas and basketballs, the sharing economy continues to expand into new areas.

And so do the associated risks and liability.

From today’s I.I.I. Daily, via The New York Times: “Airbnb, the peer-to-peer vacation rental and hospitality site, is facing a lawsuit in which a guest says that the company did not perform appropriate background checks on a host who allegedly sexually assaulted her. According to the plaintiff, a background check would have uncovered information that the owner had been arrested and charged with battery, preventing him from listing property on Airbnb according to the terms of service.”

Whether you’re looking to rent out your space to someone or rent a space from someone via a peer-to-peer network, it’s important to know whether you’re insured.

Some tips on peer-to-peer home rental from the I.I.I.

Note: Airbnb has a Host Protection Program that provides hosts and landlords up to $1 million coverage for property damage and liability claims that occur in a listing or on an Airbnb property, during a stay.

But here are the risks that the Airbnb policy doesn’t cover:

“The Host Protection Insurance program does not apply to liability arising from (1) Intentional Acts including: (i) Assault and Battery or (ii) Sexual Abuse or Molestation – (by the host or any other insured party), (2) Loss of Earnings, (3) Personal and Advertising Injury, (4) Fungi or Bacteria, (5) Chinese Drywall, (6) Communicable Diseases (7) Acts of Terrorism, (8) Product Liability, (9) Pollution and (10) Asbestos, Lead or Silica.”

 

Why are securities class action filings at record high?

Federal class action securities fraud filings hit a record pace in the first half of 2017 and are on track for a year-end total that hasn’t been seen since 2001.

From Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse:

“Over the past six months, plaintiffs initiated 226 securities fraud class actions in federal court, more than in any equivalent period since enactment of the Private Securities Litigation Reform Act of 1995 (PSLRA).”

The first half of 2017 saw 4.7 percent of U.S. exchange-listed companies sued in federal securities class actions:

“If activity continues at the same pace, 9.5 percent of exchange-listed companies will be the subject of filings in 2017—the highest annual rate since 1997.”

Pharmaceutical firms were the most common targets of filings, according to the report.

A significant factor in the record number of filings? The continued upsurge in merger objection lawsuit filings. The D&O Diary has more on this trend.

Both traditional and M&A-related filings were at record levels. Traditional filings increased from 95 in the second half of 2016 to 131 in the first half of 2017. At the same time, M&A-related filings rose from 57 to 95.

“London Calling…”

I.I.I.’s James Ballot, Senior Director of Marketing and Content Strategy, contributes these highlights from the IIS Global Forum 2017.

Established millennia ago and since visited continually by perils ranging from fire, flood, pestilence, civil unrest and wave upon wave of attacking foreign enemies, it’s no great stretch to call London the de-facto global headquarters of resilience. So it’s fitting that London should host this year’s International Insurance Society’s (IIS) Global Insurance Forum (GIF), given that the event’s focus was set squarely on Global Resilience and the Role of Insurance.

At the Forum more than 500 delegates and other attendees gathered to set a truly global agenda for how insurance and other parties–NGOs, policymakers, businesses, educational institutions, the media, among others—will respond to challenges ranging from political instability to cyberthreats to the need to create the right talent infrastructure to master the technological changes presently shaping our industry to innovating ways to address threats posed by intensifying natural catastrophe cycles.

Among the highlights:

  • A video address from HRH The Prince of Wales to open the Day 3 Insurance Development Forum (IDF) in which he outlines four key areas where insurance can assume leadership in fostering resilience.
  • Wide-ranging discussions of the “insurance gap” and how narrowing it is essential to building financial resilience against cyberattacks, as well as mitigating uninsured natural catastrophe losses among vulnerable populations in developing nations.
  • The Nature Conservancy, a top-line partner at this year’s GIF, introduced an innovative insurance product underwritten by Swiss Re that insures coral reefs and other natural coastal fortifications.
  • Insurtech and emerging innovations are changing the business—mostly by creating a climate in which, as one insurance fund capital manager asserted, insurance and tech startups can partner to help make “yesterday’s risks insurable today.”

A lot to cover in a single posting, to be sure. For a deeper dive into the goings-on at IIS Global Forum, Asia Insurance Review (AIR) offers gavel-to-gavel coverage of the event, as well as valuable insights from Forum participants.

 

 

Cyber protection gap akin to nat cat

FedEx Corp has disclosed in a securities filing that its international delivery business, TNT Express BV, was significantly affected by the June 27 Petya cyberattack.

Apparently, the courier company did not have cyber insurance or any other insurance that would cover losses from Petya, according to this report by The Wall Street Journal, via the I.I.I. Daily.

A new emerging risk report from Lloyd’s and risk modeling firm Cyence notes that cyberattacks have the potential to trigger billions of dollars of insured losses, yet there is a massive underinsurance gap.

Take its first modeled scenario: a cloud service provider hack. The event produced a range of insured losses from $620 million for a large loss to $8.1 billion for an extreme loss (overall losses ranged from $4.6 billion to $53 billion).

This left an insurance protection gap of between $4 billion (large loss) and $45 billion (extreme loss), so between 87 percent and 83 percent of the overall losses respectively were uninsured.

In another modeled scenario, the mass vulnerability attack, the underinsurance gap is between $9 billion for a large loss and $26 billion for an extreme loss, meaning that just 7 percent of economic losses are covered by insurance.

From the report:

“In some ways, the cyber insurance market can be considered in the same light as underinsurance in the natural catastrophe space – risks are growing and insurance penetration figures are low.”