Insurers take hit on hurricane deductible!

Sandy a Hurricane in name only......

A decision to not impose hurricane deductibles on homeowners who maintain coverage for their homes and dwellings impacted by Hurricane Sandy will likely be a costly one to insurers.

Typical 'Hurricane' deductibles are based on a percentage of the home value - usually between 2 to 5 percent. Without the Hurricane deductible, many homeowners impacted by the Superstorm will instead just face the standard policy deductible of between $500 and $1000.

Hurricane deductibles are allowed in New Jersey ONLY if the state is hit by a named hurricane with sustained wind speeds of more then 74 miles per hour. The National Weather Service downgraded Sandy to a post-tropical cyclone prior to it making landfall in Atlantic City.

Risk-modeling firms tallying the insured losses from the storm expect losses to be between $16 and $22 billion.

Claims preparation coverage….

How a ‘minor’ coverage endorsement can prevent a policyholder from incurring significant costs in developing a claim, presenting the claim to the insurer, gathering information requested by the insurer in response to the claim, and in negotiating the claim.

This frequently requires retention of various consultants, including construction consultants for building damage, accountants for time element coverages, and specialists when the claim involves complex or unique equipment or industry-specific requirements such as clean areas for computer or pharmaceutical manufacturers. Policyholders frequently hire public adjusters to oversee the claim preparation, presentation, and negotiation process, and the public adjusters frequently hire the necessary consultants. In other situations, a sophisticated policyholder will manage the claim process itself and directly retain consultants. The claim process is frequently referred to in the industry as the "adjustment" process, with both policyholder and insurer working toward an "amicable adjustment" of the claim.

Sophisticated policyholders frequently have coverage for claim preparation expenses in their policies, although most insurers specifically exclude public adjuster fees from that coverage. In a complicated claim, this additional coverage can be worth tens of thousands of dollars. One typical provision reads as follows.

This section covers the reasonable expenses incurred by the Assured for professional services such as auditors, accountants, architects, and engineers, except the Assured's own employees or public adjusters, which are required to present the loss which is covered by this Section.

As is typical in most policy provisions which provide for the insurer to pay claim preparation expense, public adjuster fees are specifically excluded.

Superstorm Sandy underlines need for Hospitals to have better Disaster Recovery Plans!

The equipment failures at NYU and nearby Bellevue Hospital, the nation’s oldest and one of its busiest, brought to the fore what emergency experts have warned for years. Despite bitter lessons from the recent past, U.S. hospitals are far from ready to protect patients when disaster strikes their facilities.

For most hospitals, “emergency preparedness” means being ready to treat a surge of patients from an earthquake or terror attack – disasters outside their walls. Even the federal program that coordinates hospitals’ preparedness at the Department of Health and Human Services has this mindset: it focuses on planning for mass fatalities and quickly reporting their number of available beds, not having redundant electrical systems.

For hospital administrators trying to keep their institutions in the black, disaster-resistant infrastructure is expensive and lacks the sex appeal of robotic surgery suites and proton-beam cancer therapy to attract patients.

Cell Phone thefts on rise in major cities.....Increased risk of Data Theft!

Police report that nearly half of ALL robberies in San Francisco this year are cell phone related - and most occur on transit lines.

Thefts of cell phones - particularly the expensive do-it-all smart phones - are costing consumers millions of dollars and sending law enforcement agencies and wireless carriers scrambling for solutions.

New York City Police report that more then 40 percent of all robberies now involve cell phones. Cell phone thefts in Los Angeles, which account for more then a quarter of all the city's robberies, are up 27 percent from this time a year ago

For the employer, increased thefts present also the issue of breech of data privacy - especially as it relates to the usage of company devices. Most employers consider information stored on company phones to be proprietary validating the reason for 'wipes' when employees leave or are terminated from a company.

Market consolidation seen as threat to Physician-owned hospitals!

The newest threat to physician-hospital ownership is market consolidation that has led to hospitals aggressively pursuing medical specialists, according to a speaker at the 12th annual conference of the physician-owned hospital trade association, Physician Hospitals of America, being held in Austin, Texas.

Kevin McDonough, a senior manager with Dallas-based consultant VMG Health, called specialists “the lifeblood of physician-owned hospitals,” and he said physician-owned hospitals are facing a growing inability to replace aging physician investors and recruit new doctors to their ranks.  Another speaker, Clinton Flume, a manager with VMG, said consolidation is being driven in part by a “herd mentality,” where one hospital is seen as “gobbling up practices” and competing hospitals become motivated to do the same.

Physicians are also driving consolidation, Flume said, as they seek employment as a way of being shielded from market forces, including reimbursement cuts—especially for cardiologists—and increasing costs for malpractice insurance and information technology. Hospitals are also seeing physician employment as the answer to staffing and on-call shortages, he added. Flume explained why a previous physician-acquisition trend in the late 1990s was “more or less a bust” as hospitals paid too much for practices and didn't receive a return on their investments while physicians became unmotivated because of a lack of decision-making authority and frustration with how hospitals managed their practices.  These pitfalls are being avoided in this acquisition cycle, Flume said, by basing future physician compensation on past productivity and developing arrangements that allow doctors to practice more independently than they did in the late '90s.

Is Hospital and Physician Group consolidation driving up the cost of medical care?

The California attorney general has launched a broad investigation into whether increasing consolidation among hospitals and physicians groups is pushing up the price of medical care, reflecting increasing scrutiny by anti-trust regulators of medical-provide deals.

The probe, which has been under way for several months, is examining hospital systems’ reimbursement from major California health insurers. The regulator appears to be focusing on whether the systems’ tie-ups with physicians, as well as ownership of hospitals, have given them the market power to boost prices in a way that violates anti-trust law.

Nationally, health-care providers are rapidly merging into bigger health systems, moves that are presumed to improve efficiency. The number of hospital consolidations in 2011 was 86 – the most since 2000. Health Affairs journal suggests that concentration among health-care providers can indeed drive up health-care prices.

Health-Care Costs Rise!

Not surprisingly, a WSJ report states that "Workers should brace for more out-of-pocket costs next year".

Most employers are planning to shift health-care costs to their employees in 2013 to help offset rising premiums.

In all, 58% of employers - a mix of large, medium and small - said they plan to increase employee contributions in 2013 continuing a trend that has persisted since 2005.

Prior to that, generally, only one third of employers said they planned to shift costs.

The Great Value in Dependent Eligibility Audits!

Reduce current and future health care costs now!

* Verify that only eligible dependents have access to receive health care coverage.

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* Give plan sponsors insight into potential issues.

Guaranteed savings if 250 plus employees.

Wal Mart to offer more vaccinations in stores as it seeks Growth in more areas!

The retailer will start offering vaccinations for infectious diseases beyond influenza and pneumonia at 2,700 US stores as the retailer continues edging into health-care services.

Wal-Mart said it would rely on patients to provide their own medical histories. The company will also send patients vaccination records to their primary care doctors electronically upon request.

Medicare set to penalize most NJ Hospitals!

Beginning in Q3, the federal Medicare program will withhold some money from nearly every hospital in New Jersey because too many elderly patients have to return within a month of being discharged, according to an analysis by the Kaiser Health News.

A total of 62 hospitals and hospital networks in the state will forfeit an average 0.67 percent on EVERY reimbursement – the highest loss among any other state in the nation.

Though some readmissions cannot be avoided, many public health experts say a chronically high rate points to poor planning and follow-up care after a patient leaves a hospital. The result: sicker patients and higher health care costs.

The penalty will be applied every time a hospital submits a claim for repayment.

5 Keys to Help Mitigate Cyber Breaches or Incidents!

Many companies do not have an action plan for what to do when they have a breach of their network. Time is of the essence to discover both the severity of the breach and how to mitigate its impact.

Some simple yet essential steps:

1. Create an action and reporting plan to refer to when an incident or breach is suspected.

2. Designate a team of individuals - not limited to just the IT Department - who will have set roles when a breach or incident is suspected.

3. Designate an ultimate decision maker - and his/her - back up who will lead the response.

4. Understand the state and federal notification requirements.

5. Ensure you discuss with your insurance broker the correct coverage’s and limits needed to respond to cyber liability or data privacy situations.

Its amazing how many companies feel that they do not need Cyber Liability-Data Privacy coverage; “IT says we are fine”………If it can happen to Sony or CIT it can happen to you!

Securing the Supply Chain in the Era of Earthquakes

Much of the world remains uninsured and underinsured against earthquakes, even in locations known for their high seismic risk.

In the aftermath of the Japanese earthquake and tsunami and the New Zealand earthquake, more and more companies are looking at insurance protection that approaches risk more holistically and more intelligently.

Not only Earthquake insurance, which pays the policyholder in the event of damage to the property caused by earthquake, many companies after closer examination of their global supply chains are investing more in Contingent Business Interruption (CBI) coverage. These policies protect a company against lost profits if there is an interruption of business at the premises of a customer or supplier.

Many companies have maintained a “trust-but-don’t verify” approach to their suppliers risk management protocols while others simply contact each supplier and ask if they have a business continuity plan, BUT rarely get into the details of that plan.

A study by ChainLink Research found that nearly 80 percent of companies do not manage risk beyond their first tier of suppliers. Without a detailed understanding of supply chain contingency plans, companies put themselves at risk. As an example, a key supplier in an earthquake zone may have a contingency plan to shift manufacturing to another facility if disaster hits. The question that needs to be asked is whether the supplier’s IT system has been coded so that shortly after the disaster event, your suppliers distribution system is able to correctly reroute shipments to your alternative locations.

(All credits to Joe Mullich, WSJ)

Insurance exposures vary in each emerging market!

Insurers expanding into new markets should be aware of the often significant differences between the countries they are moving into and not treat them as generic emerging markets, said Denis Kessler, chairman and CEO of Paris-based SCOR S.E.
Closer examination of the exposures insurers face in emerging markets will reveal the differences between the markets and the level of catastrophe risk they are taking on, which often is greater than insurers may think, he said.
“Emerging markets are not clones,” and each market requires a different strategy and approach, Mr. Kessler said during a panel session Monday at the International Insurance Society Seminar in Rio de Janeiro. Different legal systems, different family sizes, different religious beliefs and different attitudes to risk create specific characteristics for each market, he added.
Insurers can often find it difficult to assess the exposures they face in emerging markets because data is not always available and underwriting models usually cover only developed regions, Mr. Kessler said.

BRIC catastrophe profiles

An overview of the catastrophe exposures of the so-called BRIC countries—Brazil, Russia, India and China—illustrates the difficulty of assessing natural catastrophe exposures.
Brazil traditionally has been viewed as a country with few catastrophe exposures because it has not been exposed to hurricanes and it is not in an earthquake zone, he said. However, in the past several years, flooding in Brazil has led to significant landslides.
In addition, Tropical Storm Catarina made landfall in Brazil in 2004. While Atlantic hurricanes and tropical storms traditionally occurred in the North Atlantic, climate change may lead to hurricane exposures for the South Atlantic, Mr. Kessler said.
Russia also has been viewed as being largely unexposed to catastrophe risks, he said. But in 2010, it experienced a severe heat wave that had far-reaching consequences—an increase in the death rate during the summer and an outbreak of wildfires. The heat wave also led to lower crop yields, which affected countries that rely on Russia’s cereal production.
“The heat wave in Russia led to a heat wave in the streets of Tunisia,” Mr. Kessler said, referring to the so-called Arab Spring protests and revolts that began in Tunisia at the end of 2010, which were sparked in part by bit increases in the price of food.
In India, the catastrophe exposure has long been recognized, with insurers experiencing 21 catastrophes in India since 1999. But as the Indian economy has grown so rapidly in the past several years, insurers need to be aware that the catastrophe exposure is growing at a similar rate, he said.
In China, again, the catastrophe exposure is large, with four Chinese earthquakes since 1900 being among the most deadly on record, Mr. Kessler said. As the Chinese economy grows, so does the catastrophe exposure and the business interruption exposure. “There are 250 industrial parks in China that are like those affected by the Thai floods,” he said.
For insurance growth to be sustainable, insurers need to invest in training and education and carefully analyze the risks they are exposed to as they expand globally, Mr. Kessler said.

FCC Report: Top 5 Causes of 'Accidental' Avian bird deaths in the US!

A change of pace from the usual serious tone.....Not sure who had the time to count these 2.38 Billion 'incidents' but it reeks of a waste of money - no offense to our bird friends.

As reportes in the WSJ.

1. Cats (1Bn), 2. Building, windows ($1Bn), 3. Power lines (130M), 4. Hunting (120M), 5. Pesticides (67M)......

Rest of the Top 10:

6. Automobiles (60M), 7. Communications towers (6.8M), 8. Wind turbines (400,000), 9. Airplanes (25,000), 10. Misc.

Sadly, the Bay-Breasted warbler is considered the 'Super-tower collider - while the Horned lark is considered the least at risk of colliding tragically but superbly into a communications tower.

The FCC suggests deaths could be avoided by turning off steady warning signals on towers.....of course this does not consider the risk to aeroplanes, gliders, parachutists or levetators.

"TeachMe" suit first under cyberfraud initiative.

In a federal lawsuit filed in New Jersey this week, the State Attorney General alleged that the developer of "TeachMe" apps has been collecting personal information about children and selling it without telling users or asking their parents for their consent.

The "TeachMe" apps let children post pictures of themselves and they are some of the most popular educational games of their kind.

Mobile devices typically can capture and transmit a wealth of personal information about users including their identities and even their geographic location.

This personal information is primarily used for subliminal marketing purposes - who hasn't seen an offer from a coffee or retail chain on their phone or email. However, when it comes to children their can be unfortunately a more sinister motive.

Technology companies who create apps - or use them in their operating systems - typically purchase coverages to respond to Mobile or Geolocation claims; All based on privacy and data protection.

Technology Errors & Omissions policies - manuscripted correctly - also can respond to such allegations or claims.

Most Medical Malpractise claims NEVER go to trial!

A study shows that while most medical malpractice claims lead to litigation, most of these are dismissed, and only a small fraction are resolved in the plaintiff’s favor. Three quarters of the relatively small number of suits that go to trial are in fact decided in the physicians favor.

Cloud Computing and Cyber Risk.....Why companies who use Clouds STILL need Data Privacy coverage!

Many companies believe that by utilizing a Cloud provider they do not need Cyber Liability aka Data Privacy Coverage. The common belief is that the Cloud itself assumes any and all liabilities and would respond to any claims of hacking, reputation rehabilitation, data theft and copyright infringement relating to the first party.

The questions Cloud providers 'customer's should ask are in short "How bad would it be for an organization if information about it gets out (employee or customer information?"; "How bad would it be if an employee of a cloud leaked information?"; "How bad would it be if the customer could not access information the Cloud is responsible for?"

Cloud customers should never assume that they are covered first dollar if a claim is filed. Typical Cloud-Customer contracts include provisions that the Cloud's Cyber Liability policy (if they even have one) will be excess to any underlying policies.

Regardless, of this, disclosure that a Cloud is indeed handling the cyber responsibilities of a company can reduce the cost of coverage for the primary policy holder.

Company's should also be requesting that they be named as Additional Insureds on the providers Cyber Liability policy and requesting evidence of this and that the provider does indeed have coverage in place.

Insurance Buyers struggling with coverage gaps and service shortfalls!

Though conditions in the commercial casualty insurance market remain generally favorable, buyers still struggle with significant coverage gaps and service shortfalls in addressing their companies' exposures, stated a panel of risk managers at Advisen Ltd.'s Casualty Insights Conference in New York.

Global regulatory shifts, advancing technology, hybrid business models and a growing cultural proclivity for litigation are among the more distressing trends driving claims activity in the casualty space, panelists said. And in many cases, panelists said, risk managers are in dire need of new insurance solutions and services to minimize the impact of those exposures. One glaring deficiency, they noted, is the lack of insurance products tailored for the increasing number of firms that have begun blending production and service business models in response to changes in global supply chain structures.

“As more American companies move into service-oriented business models and away from manufacturing, I'm not sure insurers are keeping up with that,” said Maria Diaz, director of global risk management at Norwalk, Conn.-based Xerox Corp. “In other words, they're very good at addressing the risks of a manufacturing company, and they're very good at working with a financial institution or other type of service firm. But if you're a company that does both, it's really a challenge to design an insurance program that is creative enough to meet those needs.”
Matt Dunning (Business Insurance)

What am I paying my Insurance Broker to do - 5 Key Questions to Consider!

Are you paying your insurance broker to merely place your insurance coverage with a carrier that provides the most contingent commission? Does he partner with you to dictate the price to the marketplace?

When conducting a program review – does your broker recommend coverage’s or endorsements to address ALL of your exposures? Does he truly understand the coverage’s you really need?

With the recent soft market and depressed premium pricing - is your insurance broker giving you all the services you need?  Or is he holding back to protect his margins?

Does your broker just want to save you premium to keep you happy for another year? Does he work to decrease your total cost of risk saving potentially missions of dollars to your bottom line - allowing you to Grow, hire and profit?

Does your broker partner with you to ensure you are in compliance contractually and efficient on the supply chain side?

  

Not sure on any of these - then we are at your service.

The World's Leading Broker - Aon.

Regards,

Wage and Hour Litigation……Eureka – The Solution is Here!

Wage and hour lawsuits continue to be a major concern for employers, with the Department of Labor stating that there were 40,000 wage and hour complains during fiscal year 2010 – up 15% from the previous year’s total.

Standard Employment Practices Liability policies do NOT respond or provide coverage for Wage and Hour claims.

Until Now.

Aon Risk Solutions has introduced a manuscript endorsement to its proprietary form to allow for this exposure to be covered.

One less thing for HR and Finance to worry about.

The #1 key (and secret) for CFO’s to take advantage of rising Insurance rates……..

Its common knowledge in the insurance industry that while carriers are seeking significant rate increases for policy RENEWAL’S, in a competitive situation with an outside broker and/or carrier, rate can in fact be driven down below current levels.

It’s the old adage……"I’ll fight for what I don’t have!"

Wage and hour litigation outpacing all other workplace class actions!

According to an industry expert, wage-and-hour litigation is the "No. 1 exposure area in corporate America as far as the plaintiffs class action bar is concerned."

Wage and hour lawsuits have become a major concern for employers, with the Dept. of Labor stating the 40,000 wage-and- hour complaints during fiscal 2010 were up about 15% from the previous year's total.

The complexity of federal and state laws, the relative ease of winning class action certification and workers laid off as a result of the weak economy have led to more litigation in recent years, observers say.

Among reasons for the lawsuits' growth is establishing a class action under the Fair Labor Standards Act is relatively easy under the federal rules of civil procedures, said Paul J. Siegel, a partner with Jackson Lewis L.L.P. in Melville, N.Y.

Many claims fall into two major categories: misclassification of workers as exempt, and unpaid overtime, observers say.

However, employers can minimize the chances of litigation by taking steps that include periodic audits to determine whether employees are being properly classified, as well as careful record-keeping.

When employers are sued, experts say settling the case may be the wiser course.
Employers should keep good records, periodically audit their employee classification and record-keeping, and practice diligent supervisor training to avoid wage-and-hour lawsuits, observers say.
When employees are working off the clock, employers should be aware that federal and state laws may differ when it come to meal or rest breaks and stay up to date on regulations, Mr. Maatman said.
Companies also should have a complaint or grievance procedure for workers who feel they are not being paid appropriately, he said.

Reprinted from Business Insurance.

Employer requests for job applicants' usernames, passwords gets lawmakers' attention

WASHINGTON—Two U.S. senators are calling on the Equal Employment Opportunity Commission and the U.S. Department of Justice to launch an investigation into a “new, disturbing trend” of employers demanding that job applicants turn over their usernames and passwords for social networking and email sites.

The realities of the new world of social networking is spawning more and more questions about 'privacy'.

If an employee uses a 'screen-name' to disparage his or her employer - what recourse does the employer have?

I am sure this will end up in the courts.

Increased regulation expands directors and officers exposures: Panel!

NEW YORK—Stricter reporting and disclosure requirements, expanded enforcement efforts and greater public visibility of wrongful acts during the past several years have increased the likelihood of derivative civil litigation for some companies after a government investigation, according to a panel of attorneys at the ninth annual Anderson Kill & Olick P.C. Directors and Officers Conference in New York.

Top 5 Workplace Injuries Causes Make Up to 72% of Overall Annual National Costs!

Workers Compensation claims continue to be the biggest expense to the US Employer - the following are the top five type of claims - regardless of industry.

1.       Over exertion:  Injuries from lifting, pushing, pulling, holding and carrying -  $12.75 Billion.

2.       Fall on ‘same level - $7.95 Billion.

3.       Fall to ‘lower level’ - $5.35 Billion.

4.       Bodily Reaction – Bending, climbing, reaching, standing, sitting, slipping, tripping  - $5.28 Billion.

5.       Struck by object - $4.64 Billion

Loss control, safety management, back to work programs, regular claims and reserve reviews can all assist in mitigating these costs.

Two KEY Insurance challenges for Finance in 2012......

1.      Property and Supply Chain exposures.

2.      Contractual Liability Obligations

Catastrophic  losses – especially overseas - have exacerbated the Property and Reinsurance market resulting in a rapidly hardening rates  and  reduced capacity.

Coverage gaps  in General Liability policies  resulting  in uncovered claims can lead to millions of dollars in litigation payouts or settlement.