IN THIS ISSUE
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CHART CONFERENCE II A RESOUNDING SUCCESS After a couple of days to catch our breath, the team began the task of conducting a “forensic analysis” of the three day meeting.
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KEY PLAYERS INTERVIEWED AT BALTIMORE, MD CONFERENCE Global insurance credit rater, A.M. Best, caught up with many of them for brief video interviews that gather keen insights into the CHART conference and the market as a whole.
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Our three London Broker Partners report that they collectively scheduled over 400 appointments...
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CHART CONFERENCE II – A GREAT NETWORKING EVENT Agents, brokers, carriers, vendors and other strategic partners enjoyed eventpacked days of meetings, workshops and panel discussions.
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THE ASSUMED FUTURE OF AUTO INSURANCE Though the reality of catching up on your sleep while a car drives you may seem far off, it probably is not.
LLOYD’S APPOINTS REGIONAL HEAD FOR LATIN AMERICA Revilla, with LLoyd’s since 2014 as head of operations for Lloyd’s Global Markets Division, will move into Head of Latin America Role
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RESOLVED by the Coverholders, Prospective Coverholders, Risk Takers, and Vendors assembled, that the following Articles be proposed as amendments to the Declaration of Interdependence.
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NO BUSINESS IS TOO SMALL FOR A CYBER-ATTACK The impact of cyber intrusions can run deep into an organization and bring about devastating loss of business, reputation and create liability on an unheard of scale.
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SOME FRIENDLY “ADVICE OF COUNSEL” In the coverage determination process, so long as the lawyer is not acting in the capacity of a “claims adjuster,” the advice provided by coverage lawyers is generally protected by the attorney-client privilege.
CHART EARLY ADOPTERS BILL OF RIGHTS
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LLOYD’S DISPUTES DAMAGES FROM OKLAHOMA QUAKE The dispute whether the pollution policy held by New Dominion covers the damages suffered is a question the legal system will decide.
LLOYD’S HINTS AT CONTINGENCY PLAN POST BREXIT The Brexit vote threatens the passporting rights that British businesses have come to rely on for so many years.
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BREXIT UPDATE: NEGOTIATIONS SET FOR MARCH 2017 Initially May said that negotiations will not start until next year, but more recently has set March 2017 as the beginning of the negotiations for the U.K.’s withdrawal from the EU.”
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LLOYD’S PROFIT REPORT FOR FIRST HALF OF 2016 Lloyd’s of London announced on September 22nd a profit of £1.46 billion ($1.79 billion) for the first half of their interim report.
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FORD JOINS EFFORT FOR DRIVERLESS CAR On Monday, September 12th, Ford Motor Co. made an announcement that it plans to sell driverless cars to consumers.
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PRIME MINISTER MAY HOLDS BREXIT DISCUSSION Prime Minister, Theresa May, and members of the British P a r l i a m e n t gathered together to debate Britain’s exit procedure from the European Union.
BUILD OR BUY? HOW TO BEST ENTER THE US INSURANCE CARRIER MARKET As an alternative to building state-by-state, many groups purchase a clean shell company which has admitted licenses in all or many of their desired states.
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M&A 1ST QUARTER ACTIVITY 2ND HIGHEST IN PAST 10 YEARS The first quarter of 2016 was the second most active quarter for M&A transactions in the past 10 years. All indications are that these trends should continue for the foreseeable future...”
LONDON BROKER PARTNERS BRING GREAT VALUE TO 2ND ANNUAL CHART CONFERENCE
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2016 VOLUME 1 - ISSUE 8 Publisher:
CHART Exchange Glenn W. Clark, CPCU
Membership Services Matt Basile
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Managing Editor: Tyler Cichewicz
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Message From The Earliest Adopter
CHART CONFERENCE II A RESOUNDING SUCCESS
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n October 5 2016, the books were “officially” closed on the Second Annual CHART Exchange Event. After a couple of days to catch our breath, the team began the task of conducting a “forensic analysis” of the three day meeting. What worked? Where were the areas of improvement? Did CHART provide adequate value for the attendees?
Insurance Brokers – report that they collectively scheduled over 400 appointments amongst current/prospective Coverholders, Risk Takers, and key Vendors. These meetings were set up to discuss new programs and products surfaced through CHART’s proprietary Market Finder Facility. The fact that these appointments went as smoothly as they did is a testament to the hard work and preparation In order to get answers for these the Brokers did to make it happen. questions, we sought input from the meeting participants. A hardcopy We also received feedback survey was included with the from a number of Syndicate registration package we handed representatives almost immediately out. A web-based version of the following the meeting’s conclusion. questionnaire was also distributed to the attendees via e-mail. Our three London Broker Our partners at Wilson Partners report that they Elser will be conducting collectively scheduled telephone follow-up on over 400 appointments all of the outstanding surveys beginning in early amongst current/prospective November. About oneCoverholders, Risk Takers, and third of questionnaires key Vendors.” have been completed to date; our goal is to have Here’s a sampling of their input: 100% participation. We will compile everyone’s input and publish the “Thank you for this and for being results in the next edition of The the perfect host in Baltimore. From CHART Magazine. a personal perspective I enjoyed the event very much; it is good There are other indicators of the to meet so many people eager to meeting’s success outside of the do new business with each other. individual survey results. Our CHART is good and I only want to three London Broker Partners – make it better. I think the venue C.J. Coleman, JLT Re, and Prospect works well and everything else 6 March 2016
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Glenn W. Clark, CPCU Publisher & Earliest Adopter about the meeting was first class” - Nigel Roberts, Aegis “You have created a great affinity of people who want to trade with London with new business - beats re-cycling someone else’s business. I’m caught between singing its virtues and keeping it ’exclusive’”. - Nick Bonnar, Ark “I had good, wide-ranging conversations both regarding my Property class and sometimes on classes outside my remit (i.e. Marine/ Casualty / auto / etc) but hopefully all were positive in explaining what Lloyd’s can (and cannot) do. After these Baltimore introductory meetings a lot of hard work will have to take place - as we convert the ‘talk’ into Lloyd’s contracts. We obviously won’t succeed on everything but I am hopeful I can write new business due to attending CHART”. - Simon Jeffreys, Amlin www.chart-exchange.com
CHART Exchange
Some of our Vendor Partners didn’t wait to share their experience at Baltimore as well:
great show this month. We had 14 leads of which half look solid”. - Rob Whitton, Decision Research •
“The whole ethos of the CHART Exchange was to bring together Syndicates, Coverholders and Vendors to exchange views, ideas and war stories about the benefits of working within the Lloyd’s environment and what you need to do to get there. This information was exchanged through formal meetings, informal meetings, presentation and cocktail parties. From our perspective, we met with a number of new and interesting people but also re-connected with a number of our friends and colleagues from London”. - Kesh Sharma, Triton Global
The positive input was great, but we received our share of constructive criticism as well. Our team fielded a number of requests to have future meetings more fully optimize the limited time this diverse group has together. Among the suggestions we received:
“Thanks again for putting on a www.chart-exchange.com
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meetings to maximize attendance. Scheduling of workshops with more Lloyd’s-centric themes.
We’ll go into more detail regarding the recommended improvements in the next edition of our magazine.
Thanks to everyone who attended our Second Annual Event in Baltimore. If you were a participant, please make sure to submit your Separate “lounges” for existing survey form soon. Your feedback is Coverholders and Vendor important Partners; these would be similar to the Risk Taker facilities. Appointments would be preset in advance of the meeting. Fewer – yet more topical – workshops. The various “lounges” would be temporarily closed during these breakout Glenn W. Clark , CPCU TABLE OF CONTENTS
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2nd Annual CHART Conference The 2016 CHART Exchange Conference, held in Baltimore, MD, boasted some of the insurance industry’s most innovative leaders as over $13 billion in premium was represented. Global insurance credit rater, A.M. Best, caught up with many of them for brief video interviews that gather keen insights into the CHART conference and the market as a whole.
Interview With Glenn Clark, CHART Earliest Adopter
Interview With Robert Hilb, CEO, Hilb Group
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Interview With Calvin Foster, Dir., NewCastle Risk Mgt.
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2nd Annual CHART Conference
Interview With Duncan Dale, CEO, Dale Underwriting Partners
Interview With Jonathan Mudd, Dir., Brit Global Specialty
Interview With Earl Burkett, Pres., Strong Tower Insurance
Interview With Bill Fahy, Pres., Alliance Program Services
Interview With Andrew Bowers, Dir., Brit Global Specialty
Interview With Sheila Shaw, SVP, Irwin Siegel Agency
Interview With Scott Addis, CEO Beyond Insurance
Summary And Overview
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Spotlight
CHART CONFERENCE II – A GREAT NETWORKING EVENT
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by Mark Stroop
he recent CHART gathering in Baltimore was a very positive event. The primary focus was grounded on CHART’s main purpose which is the gathering of people with a common interest of exchanging ideas, concepts and discussions about creating new insurance business with the London market. Agents, brokers, carriers, vendors and other strategic partners enjoyed event-packed days of meetings, workshops and panel discussions. The setting in the Baltimore Harbor was indeed a bonus with entertainment and the many sightseeing opportunities. The London market offers insurance product and underwriting expertise throughout the world with the United States being one of their largest markets. The first day of the conference was busy with one-oneone sessions between brokers and
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bout the author: Mark Stroop, Sales Executive at NetRate has helped MGA’s, carriers and agencies with technology solutions that streamline the process of generating new and renewal business for 20+ years.
Union” for the CHART Exchange and an interactive session with all attendees to help them feel welcomed and engaged. A pillar of CHART is supported by Preferred Vendor Partners. The conference is an ideal venue for the preferred vendor partners, and all participating vendor partners, to exchange ideas on how their respective products and services may work together for the benefit of common customers. It is inspiring to learn in more depth about the different offerings of the vendor partners.
Ideas will surface on how products can be integrated or themes may be expanded upon to accomplish things more efficiently and carriers/syndicates where business ultimately provide a better service ideas were discussed with current to the customer. The exchange and potential Coverholders. of vendor knowledge and ideas was available through workshops, Some of the insurance needs and panel discussions or simple oneideas discussed at an event like this on-one conversations at the festive are very creative and fascinating receptions and gathering areas. in themselves. Many of the attendees are new to the Momentum is the word that comes London market so advice to mind to summarize of the 2nd and direction was available Annual CHART Conference. There to those seeking to go is only limited time for early stage through the “tribunalization” participation in the growth cycle of process required of the new an organization such as CHART. Coverholder. The second day started off with a dynamic keynote speaker and was See CHART Conference Page 36 followed by the “State of the TABLE OF CONTENTS
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THE ASSUMED FUTURE OF AUTO INSURANCE
by Tyler Cichewicz
assumption of that drop, premiums could fall more than 40 percent by echnology spreads quickly and 2050. has found its way into devices a few years ago seemed The predicted auto premium drop destined to remain the same. Take depends on several variables. for example the wrist watch, which For example, following rollout of has now been autonomous cars Cars took transformed into to consumers the calculator approximately in 2018, an 81 watch’s genius percent drop in 80 years from the younger sibling; claims frequency date of the first a computer on is expected over a wrist. Tech commercial availability time. rock stars seem to reach 90 percent focused on bigger However, the adoption, air travel consumer game severity of changers and took approximately 60 claims filed for are now pouring years, mobile phones autonomous cars billions into larger 30 years while smart are expected to be devices like cars. higher considering phones have taken the placement of Tesla and Google only 10 years.” - Aon the sensors, which lead the way are right on the Benfield report in developing bumper. Since self autonomous cars driving cars depend on these sensors and though the reality of catching up and assuming the delicacy of them, on sleep while a car drives you seems those payouts will cut the expected far off, it probably is not. savings from fewer accidents. Aon Benfield expects that once self-driving cars are adopted by Aon Benfield consumers it will cause a reduction bases their in U.S. motor vehicle premiums over a s s u m p t i o n s the next few decades. for the future of auto insurance off how quickly Some predict that premiums will other modes of transportation and drop 20 percent below 2015 levels technology were adopted. by 2035, even if autonomous cars “Cars took approximately 80 are adopted slowly. Following the
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years from the date of the first commercial availability to reach 90 percent adoption, air travel took approximately 60 years, mobile phones 30 years while smart phones have taken only 10 years,” an Aon Benfield report said. Obviously there is no precedent for self driving cars and any prediction about the future of anything depends on a variety of assumptions. However, if self driving cars rid user error from accidents, which some estimate to be 90 percent of all accidents, claims will decline. As the trend of minimal claims progresses, auto insurance will begin to adjust and premiums will reduce. Clearly, technology continues to become a more integral part of products that consumer’s use. The question is how analogous will autonomous cars be to other consumer devices like the latest smart phone? The answer may be telling of how quickly self driving cars will be adopted on the road and force the auto insurance industry to adjust.
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LLOYD’S APPOINTS REGIONAL HEAD FOR LATIN AMERICA Revilla, with LLoyd’s since 2014 as head of operations for Lloyd’s Global Markets Division, will move into Head of Latin America Role
Sistemas and AFP Integra in economies,” Vandendael added. Peru. “We have a strong established “I’m pleased to announce Daniel presence in Brazil and in the Revilla as Lloyd’s head of Latin past year we have expanded America. Daniel has played a our footprint opening offices key role in driving Lloyd’s global in Colombia and Mexico. We strategy in recent years and will will continue to build on our bring invaluable skills as we business relationships and offer look to develop our business new capacity and specialist loyd’s has appointed across Central and South products to support the growth Daniel Revilla as head of American markets,” said Vincent of the industry across the Latin America responsible Vandendael, director of Global region.” for enhancing business Markets. relationships and trading rights “As cities expand across the across the region for the region so does the value of benefit of the Lloyd’s assets requiring protection market. and we see significant potential for development in specialist insurance He will also assume the and reinsurance,” Revilla role of country manager for commented. “Lloyd’s can Mexico and will be based in help support the expansion Mexico City. of insurance penetration across Latin America to Revilla joined Lloyd’s in protect economies at these 2014 as head of operations critical stages of growth.” and strategy for Lloyd’s Global Markets division. A recent Lloyd’s study with Prior to that, he worked Cambridge University the at Zurich for nine years in City Risk Index found that M&A and strategy roles, cities in Latin America have and his last role was head Daniel Revilla, Latin America Regional Head US$520 billion of GDP at risk of strategy for the general insurance segment. He also “Latin America is an important from a series of threats. However, worked in M&A and strategy at part of Lloyd’s Vision 2025 insurance penetration rates (3.1 UBS investment bank, and held strategy to increase our support percent) are significantly lower financial roles with Telefonica for the world’s fastest growing than the global average (6.1 percent).
Image Credit: Creative Commons
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Analysis
SOME FRIENDLY “ADVICE OF COUNSEL” In the coverage determination process, so long as the lawyer is not acting in the capacity of a “claims adjuster,” the advice provided by coverage lawyers to the insurer or its representatives is generally protected by the attorney-client privilege.
By Daniel Tranen, Partner, Wilson Elser, Edwardsville, IL
Coverage Lawyers’ Advice
Insurance coverage lawyers obody likes a coverage provide insurers, brokers and dispute, but they do happen. their representatives with all In the United States, when, kinds of legal advice. Coverage and sometimes before, a coverage lawyers can explain to a broker or dispute arises, legal issues can underwriter how a court will likely multiply like weeds in an untended view certain insuring agreements, garden. When this occurs, you conditions or exclusions before need to call in a skillful lawyer to the policy is issued. Coverage address these issues and to protect lawyers more often provide those involved in the insurance similar advice to claims handlers and claims handling processes after the policy is issued and a from various threats, including the particular claim is submitted. significant threat of a bad faith or an errors and omissions claim by an Coverage lawyers also may unhappy policyholder. identify legal issues unique to the jurisdictions in which they operate that might influence a claims handling decision either for or against coverage of a particular risk or event. Every jurisdiction is different and the law is constantly changing. Accordingly, judicious efforts to secure coverage advice from counsel throughout the insuring and claims handling processes can aid an insurer or broker in avoiding pitfalls and seeking opportunities to take advantage of the local law in some jurisdictions.
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By Daniel Tranen, Partner, Wilson Elser, Edwardsville, IL
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provided by coverage lawyers to the insurer or its representatives is generally protected by the attorney-client privilege. What constitutes “protected legal advice of an attorney” as opposed to “claims handling by an attorney,” which is not generally protected, is often separated by a fine line that differs from jurisdiction to jurisdiction. As a general matter, the existence of the privilege typically depends on the question of whether the advice can be characterized as “legal” or “business” advice.
When a coverage dispute appears unavoidable, it is imperative that an insurer promptly seek legal advice from a coverage lawyer. This is particularly the case where an insurer may anticipate a potential claim for “bad faith.” An insurance bad faith claim typically arises when the insurer is alleged to have acted in an “unreasonable” way, often related to a coverage determination. By pointing to a coverage opinion from an experienced coverage attorney that supports the insurer’s coverage determination, an insurer can attempt to prove In the coverage determination to a court or jury that it acted process, so long as the lawyer reasonably (or in good faith) in is not acting in the capacity of taking the coverage position at a “claims adjuster,” the advice issue. TABLE OF CONTENTS
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Analysis
The “Advice of Counsel” Defense The effectiveness of the “advice of counsel” defense to bad faith claims varies from jurisdiction to jurisdiction. Courts in some jurisdictions hold that it is a complete defense. Other courts view the “advice of counsel” defense as one factor among others to be considered in weighing the reasonableness of the conduct of the insurer.
attorney both should recognize the potential discoverability of their communications in considering whether to use the “advice of counsel” defense or, even better, when communicating with each other about coverage issues before and during the coverage litigation. As a general practice in dealing with
CHART Exchange
Wilson Elser proudly participated in the recent CHART Exchange conference in Baltimore. Hopefully, we were able to meet each of the readers of this article at the conference. We look forward to meeting those who were unable to What constitutes “protected legal attend in the near advice of an attorney” as opposed future. In either case, at the conference Wilson to “claims handling by an attorney,” Elser demonstrated Use of the “advice of which is not generally protected, is often its impressive counsel” defense comes separated by a fine line that differs from national footprint with some risk. When an and its considerable jurisdiction to jurisdiction. insurer raises it as a defense experience in the to an allegation of bad faith, the others in the insurance industry, insurance market. We look insurer is sometimes found to have before putting any communication forward to working with placed that advice “at issue” in the in writing, insurers and coverage CHART Exchange members bad faith litigation. Many courts attorneys would be well advised and vendors on any issue find that doing so constitutes to remember that any written related to the insuring or claims a waiver of the attorney-client communication transmitted may handling processes, including privilege. In essence, policyholders some day be read by a judge (or the provision of some friendly argue that if the insurer is going jury). advice of counsel. to benefit through its reliance on the advice of counsel to prove reasonable conduct, then all of the communications between counsel and the insurer (at least with respect to the advice given) becomes fair game for discovery by the party attempting to prove unreasonable conduct by the insurer. The insurer client and the coverage www.chart-exchange.com
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THE EARLY ADOPTERS
BILL OF RIGHTS PREAMBLE The CHART Exchange begun and held at the City of Philadelphia, between Monday the twelfth and Wednesday the fourteenth of October, two thousand and fifteen. RESOLVED by the Coverholders, Prospective Coverholders, Risk Takers, and Vendors assembled, that the following Articles be proposed as amendments to the Declaration of Interdependence. ARTICLES in addition to, and Amendment of the Declaration of Interdependence, proposed by the Early Adopters and ratified by the Coverholders, Prospective Coverholders, Risk Takers, and Vendors attending the CHART Exchange event. FIRST AMENDMENT (Freedom of commerce and peaceable assembly). The CHART Exchange will foster growth in the U.S./London market by providing a forum through which Risk Takers and Coverholders can interact with domestic insurance agencies in the pursuit of new business opportunities. The event shall also provide a series of workshops moderated by CHART’s Risk Taker and Vendor partners. All attendees are expected to peaceably assemble at these sessions to expand their skillset and show support for the presenters. Participants shall be respectful of the efforts put forth by the moderators by not setting appointments during the times allotted for workshops. Ample time has been provided before and after scheduled events for holding individual meetings. CHART attendees are expected to follow the precepts of the “Golden Rule”: do unto others as you would have them do unto you. Individuals must be supportive and respectful of other participant’s efforts before presuming the same treatment from them. SECOND AMENDMENT (Right of attendees to bear business cards). Participants will be protected against spam and other forms of solicitation through the judicious and limited distribution of attendee lists. Business can best be conducted across long distances by first establishing the partnership through personal interaction. Participants shall network with others in attendance as a means of identifying new opportunities. THIRD AMENDMENT (Protection from enduring non-business activities). The CHART Exchange shall not schedule golf outings, formal dinners, or other social events, as these serve to distract attendees from the core purpose of getting business done. All participants are given the freedom to make their own plans after meeting hours. FOURTH AMENDMENT (Protection from unreasonable constraints on attendee time). The CHART Exchange shall be respectful of all attendees by making optimal use of the time they have allotted to participate in the event. Meetings shall start promptly at 8:00 AM. The agenda shall provide content designed to facilitate growth within the U.S./London market.
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FIFTH AMENDMENT (Due process and freedom from self-aggrandizing participants). The CHART Exchange shall recognize that all attendees are experts within their particular field of endeavor: risk evaluators/underwriters, product distributors, service providers, etc. As such, the meeting will be deemed as an assembly of peers. All participants are expected to check their egos at the door as part of the event registration process. Business casual shall be the dress of the day. SIXTH AMENDMENT (Judgment of new ideas by a trial of peers). All attendees shall have the right to submit their new business/marketing ideas for consideration within the Shark Tank/Dragon’s Den competition. Submissions shall be evaluated based on the innovative nature of the idea, viability of the product, and premium potential. Style points will also be awarded for the originality of the presentation itself. The winner shall be determined jointly by a panel of experts and the other attendees. The grand prize: $10,000 (£6,400). The Shark Tank/Dragon’s Den competition is sponsored by Iris Insurance Brokers. SEVENTH AMENDMENT (Civil treatment for all attendees). All participants shall have the right to expect civil treatment from all other event attendees. Moderators shall be shown respect by not having to compete with individually scheduled appointments during the times allotted for workshops. All attendees shall be granted the freedom of not having to be recipients of spam or other solicitations due to limited distribution of participant lists. Each Early Adopter is considered a full partner. EIGHTH AMENDMENT (Freedom from cruel and unusual keynote speakers). The CHART Exchange shall not retain the services of celebrity speakers to deliver speeches unrelated to the growth of the U.S./London market. Tuesday’s keynote address shall be presented by Jeff Tobe, a nationally sought after for his expertise in improving corporate profits by changing the customer experience and retaining great talent. Wednesday’s opening remarks shall be provided by Mark Cloutier, CEO of BRIT Insurance Holdings. Mr. Cloutier has extensive experience within the various aspects of the insurance transaction: as a risk-taker, product distributor, and as a vendor supporting the industry.
NINTH AMENDMENT (Enumeration of rights shall not be construed as anything critical of the great forces that build our profession). CHART recognizes the valuable role other association groups (AAMGA, NAPSLO, PLUS, TMPAA, IIABA, Trusted Choice, etc.) play within the U.S./London market. CHART shall honor the contributions these fine organizations already make and facilitate dialogue amongst risk takers, established Coverholders, U.S.based insurance agencies, and vendor partners as a means of surfacing new business opportunities. Further, the CHART Exchange shall elevate the role London Brokers play in mage credit: Lloyd’s of London the insurance transaction. Once an agreement on a new concept discussed at the meeting has been reached, risk takers and/or insurance agencies shall be encouraged to select the broker of their choice in order to transform it into a formal agreement. TENTH AMENDMENT (Powers of Risk Takers, Coverholders, Potential Coverholders, and Vendor Partners). Except for the Amendments articulated in the CHART Exchange Bill of Rights, attendees are free to pursue new business opportunities amongst themselves. Carpe Diem – Seize the Day!
Analysis
NO BUSINESS IS TOO SMALL FOR A CYBER-ATTACK
by Aubrey Fountain, SVP, York Specialty Markets
Symantec, cyber-attacks on smaller businesses are on the increase: arge companies like Sony, Over 40% of the cyber-attacks the Home Depot and Target are company prevented in early 2012 well-known today for more targeted companies with less than than just their popular brand 500 employees. names; they’ve been the wellpublicized victims of vicious cyber- All sizes and types of business attacks. Once relegated to the IT or are fair game for cyber criminals security department, cybersecurity today, with smaller organizations now has the attention of senior often viewed as a much easier executives worldwide. The impact target. Small and medium-sized of cyber intrusions can run deep enterprises (SMEs) don’t usually into an organization and bring have the in-house expertise or about devastating loss of business, resources to deal with cybercrime, reputation and create liability on and most are too focused on the day-to-day of growing and running an unheard of scale. their business to deal with the risk. And it’s not only large organizations But smaller businesses are often that are at risk; in the past few years, ripe opportunities in the eyes of cyber criminals have focused their a criminal, loaded with valuable efforts on small and medium-sized intellectual property, customer companies in a big way. The 2012 payment info and cash in the bank.
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invested heavily in sophisticated security strategies and teams and are now harder to penetrate. Cyber criminals have become increasingly sophisticated too; they often see the smaller vendors and partners of large companies as an easier way in, a stepping stone to the databases, networks and customer information of major corporations. What is cybercrime and who’s at risk?
Cybercrime refers to any criminal activity that’s conducted using the internet. Attacks of this sort can include stealing bank accounts, intellectual property and trade secrets, confiscating and distributing confidential business or financial information, disrupting everyday business operations, planting and spreading malicious Data Breach Investigations Study by Verizon shows that 71% of data Other reasons smaller businesses computer viruses and more. breaches happened in businesses are so attractive to cyber criminals? with less than 100 employees. In spite of recent highly-publicized See Cyber-Attack Page 25 And according to security expert hacks, large companies have
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bout the author: Aubrey Fountain is Senior Vice President of York Specialty Markets, with York Risk Services Group. He has been with York for 16 years. His primary goal is to continue to develop relationships & opportunities with both London market &US Coverholders, while improving Operations as it pertains to binding facility & open market claims handling. For 27 years, he has served in technical & management claims positions with the primary focus being on providing excellent customer service. York Risk Services Group is a Preferred Vendor Partner of the CHART Exchange. Mr. Fountain and other members of the York team were key participants in the organization’s Second Annual Event, held in Baltimore MD on October 3-5, 2016.
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Analysis
York Risk Services Group, Inc. is honored to be a Preferred Vendor Partner of the CHART Exchange. We are a premier provider of TPA Services, Specialized Loss Adjusting, Customized Claim Solutions, & Risk Control Services for Lloyd’s of London & the London company market. We offer:
Dedicated Binding Authority Adjusting Team Dedicated E&S/Specialty Lines Open Market Adjusters Back office team for banking, bordereau production, MI reporting Customized Physical Risk Assessments (Risk Control) Virtual Risk Evaluation Services To learn more, contact Aubrey Fountain, at 850.650.2380 or Aubrey.Fountain@yorkrsg.com.
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News
LLOYD’S DISPUTES DAMAGES FROM OKLAHOMA QUAKE Lloyd’s Says Policy Only Covers Damage By Pollution - Not Quakes
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Image Credit: Creative Commons
klahoma undertook a 5.6-magnitude earthquake early in the morning on Saturday, September 3rd. Some experts suspect fracking to be a trigger, though no causal relationship can be established.
Oklahoma 5.2 Magnitude Quake: Caused by Fracking? into wells, which is suspected to have possibly triggered the quake, did not qualify as pollution under New Dominion’s policy.
James Conca, a Forbes contributor, says, “There is a connection Damages from the earthquake between fracking and earthquakes forced state regulators to close in the central and eastern United waste water wells, which inhibits States. But the earthquakes are not producers of oil and natural gas like a result of fracking themselves.” New Dominion. The dispute whether the pollution New Dominion claims their policy policy held by New Dominion from Lloyd’s of London covers the covers the damages suffered incident. However, Lloyd’s says that is a question the legal system New Dominion’s insurance only will decide. Lloyd’s prepares for covers the company for injuries litigation in New York, U.S. District by pollutants and is not liable. Judge Denise Cote ruled that a Furthermore, Lloyds went on to say clause in Lloyd’s insurance policies that the fracking process, composed requires settlements to be resolved of injecting water and chemicals in New York
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News
LLOYD’S HINTS AT CONTINGENCY PLAN POST BREXIT
By Tyler Cichewicz
L
loyd’s held its 2016 City Dinner on Monday, September 6th, where John Nelson, Chairman of Lloyd’s, spoke on the upcoming challenges that face the world’s leading specialty insurer after the vote to leave the European Union.
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will always be London centric, but the ‘excessive delay or mixed messaging’ the UK’s government has shown, makes Lloyd’s position more difficult. Nelson’s appeal to the UK’s government essentially makes clear that to stay competitive without some form of passporting rights is a challenge, in turn causing many UK based businesses to establish offices within the EU. “These challenges I think are matters of the greatest possible importance. London and the UK’s future depend on its leaders and their leadership,” Nelson said. Managing to end on a positive note, Nelson expressed his confidence that London and Lloyd’s will overcome any difficulty on the horizon, as they have done in the past.
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The Brexit vote threatens the passporting rights that British businesses have come to rely on for “If we are not able to access so many years. These passporting the single market, either rights give privilege to any member through passporting rights or of the European Union (EU) to other means, the inevitable trade at reduced rates to any other consequence for Lloydsmember within the EU. Negotiations and indeed other insurance regarding these rights organizationshave not begun, but the At Lloyd’s we will be that we loss of these rights has will transact are very much many UK businesses, the business of the view that including Lloyd’s, onshore in the looking to implement retaining access to EU- and that their contingency plans. the EU single market will obviously have an impact is fundamental, not Nelson’s speech begins on London,” to lay out what Lloyd’s just for Lloyd’s but Nelson said, contingency plan looks the City in general.” alluding to the like. idea of Lloyd’s relocating an indefinite amount of “At Lloyd’s we are very much of the resources to an EU member state. view that retaining access to the Some have speculated Ireland as EU single market is fundamental, an attractive alternative. not just for Lloyd’s but the City in general,” Nelson said, giving rise to The struggle for Lloyds to remain the question that has plagued the UK in the UK and stay competitive all summer; what if the passporting has been complicated by Brexit rights cannot be retained? and the postponed negotiations. Nelson made clear that Lloyds
Analysis
surprisingly, many of these companies are forced out of business within months of being attacked. And while the number and frequency of major data breaches continues to increase overall awareness of the cybercrime threat, the study reports that the majority of small and medium-sized businesses have a false sense of security about their own chances of Any business that uses computers, smartphones, being victimized. While 77% of businesses studied say email, websites, social media or cloud-based services that strong cyber security is critical to their operations provides a point of entry for hackers and thieves. And, and brand success, nearly 60% have no plan for dealing if your business creates, collects, stores or processes with an attack if it were to occur. payment info, client names or records, intellectual property, has access to a business partner’s website, personal information or other sensitive financial or proprietary information, you are a potential target with much to lose. Continued From Page 20
CYBER-ATTACK
How cybercrime can impact a business: Cyber-attacks are a serious matter for company of any size, but their impact can devastate a smaller organization. A cyber-attack can: • • • •
• • • •
Damage or destroy your company’s brand image and reputation Result in the loss of sensitive and proprietary information and intellectual property Immediately and negatively impact sales volumes and market competitiveness Perpetrate fraudulent activity in the name of your company, leaving your company open to lawsuits, fines and penalties Cause employee, client, vendor and business partner identity theft Leave company owners/directors vulnerable to lawsuits and personally liable for damages and fees Be the cause of class action lawsuits by customers Expose a company to the tremendous financial burden of litigation costs, compensatory actions and awards, business interruption and brand name restoration, to name a few.
According to a 2012 nationwide study by digital security company Symantec and the National Cyber Security Alliance (NCSA), cyber-attacks cost small and medium-size businesses an average of $188,242. Not
Simple things every business can do right now Here are steps that any business can take to shore up defenses and lessen the probability of a cyber-attack: 1. Take an Inventory of data, intellectual property and other assets that your firm has. Know just what you possess and where it’s located. You can’t defend what you can’t identify and locate. Then, back up everything – consistently and frequently. 2. Train employees on the basics – Employees are often the unknowing cause of breaches. Educate them about internet safety, deleting suspicious emails, as well as offline best practices like shredding or properly disposing of sensitive documents, and not providing proprietary information over the phone. 3. Control and review – Disable user accounts when
See Cyber-Attack Page 40
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BREXIT UPDATE: NEGOTIATIONS SET FOR MARCH 2017
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ritish Prime Minister, Theresa May, and the U.K. still plan to carry out this past summer’s referendum vote to leave the European Union despite some increased pressure from other European countries. In early October, May traveled to Denmark and the Netherlands to increase relationships and communication with the leaders of those countries so that when BREXIT negotiations begin the countries can split amicably.
Initially May said that negotiations will not start until next year, but more recently has set March 2017 as the beginning of the negotiations for the U.K.’s withdrawal
the U.K.’s withdrawal from the EU. It is important to note that all the EU contracts, including those related to trading and immigration, are in place as of now and will continue to be in place until two-year’s after a BREXIT decision is reached. Still, the U.K.’s priority in regards to BREXIT remains finding a way to retain some of the passporting rights that benefit so many U.K. citizens and businesses.
from the EU.”
British Parliament currently is gearing up to debate the BREXIT negotiations Both the Netherlands and Denmark coming negotiations,” Danish Prime amongst themselves. Though, will not endorse the U.K.’s decision to Minister, Lors Lokke Rasmussen said. May and other conservatives have leave the EU, but will do their best to Initially May said that negotiations said that to not follow through on will not start until next year, but the referendum vote would be have a ‘friendly divorce.’ more recently has set March 2017 as disrespectful to the U.K.’s people and “That will be the starting point in the the beginning of the negotiations for government.
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Analysis
BUILD OR BUY? HOW TO BEST ENTER THE UNITED STATES INSURANCE CARRIER MARKET by Paul Procops Vice President, Merger & Acquisition Services
F
ollowing the Bretton Woods Conference in 1944, the insurance industry, like most other industries, has become increasingly more global in reach and scale. In the mid 1950’s, the 40 largest property and casualty global carriers drew 95% of revenues from their home country. Now, domestic revenues for the top 40 carriers have decreased to 64%. McKinsey & Company notes that insurance groups with a diverse global mix have also been shown to perform better, with a combined ratio three points lower than that of the largest carriers with less significant global footprints. Global insurers benefit from diversification of risk, weather patterns, and more negotiating leverage with distribution and administration partners. 1
is the US property and casualty market the largest in world, it is also growing at a five-year average of over 4%. While 4% might seem modest compared to China’s 15%, the US insurance market is far more mature and developed than that of China, and the year over year US DPW growth has consistently outpaced the US GDP growth (2.43% in 2015) and population growth (~1%). 22
1
Globalization has primarily been driven by European insurance groups entering the United States, and In addition to its size and scale, the US has been emerging markets in South and Latin America as well spared by major catastrophes allowing the property as Asia. At nearly $600 billion in 2015 direct written 2 SNL Financial premium, the US is nearly five times larger than the next largest markets of Germany and Japan. Not only 1 McKinsey & Company. Global Insurance Pools
See Build or Buy? Page 38
A
bout the author: Paul Procops serves as a Vice President for Merger & Acquisition Services. Mr. Procops has worked on over 50 M&A transactions since joining the firm in 2009. Prior to joining Merger & Acquisition Services, Mr. Procops worked for Citigroup, Merrill Lynch and Tradition Financial Services. Mr. Procops earned his degree in Managerial Economics from Union College. He holds the Series 7, 79, and 63 licenses and is an avid golfer.
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Analysis
LLOYD’S PROFIT REPORT FOR FIRST HALF OF 2016
Pre-Tax Profits Up At $1.779 Billion For The 1st Half of 2016
attention on having in place the plans that will ensure Lloyd’s continues trading across Europe.”
Lloyd’s Chairman, John Nelson, commented on Lloyd’s global access: “Whilst we are operating in difficult loyd’s of London announced on September 22nd conditions, we have continued to make significant a profit of £1.46 billion ($1.79 billion) for the first progress in growing our presence in the fast-growth half of their interim report. markets across the globe. In 2016 we have applied for onshore reinsurance licenses in India and Malaysia The figures show an increase in profits of £0.26 billion as well as opening a new office in Bogota, Colombia. on the same period last year for the world’s specialist This complements the growth we are seeing in Dubai, insurance and reinsurance market. Lloyd’s also China and in our more traditional markets, particularly reported an annualised return on capital of 11.7% and the United States.” a combined ratio of 98.0%.
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The key financial figures are: • • • • •
Pre-tax profits of £1.46 billion (H1 2015: £1.20 billion) Return on capital of 11.7% (H1 2015: 10.7%) Combined ratio of 98.0% (H1 2015: 89.5%) Investment return of 1.8% (H1: 0.6%) Net resources of £26.6 billion
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2016 saw major claims increase due primarily to the Fort McMurray fires in Alberta, Canada. Premiums continue to be under pressure due to the challenging environment the market is operating in, Lloyd’s financial ratings remain extremely strong with Fitch (AA-), A.M. Best (A) and Standard & Poor’s (A+). Lloyd’s Chief Executive, Inga Beale, said: “These results reflect the highly competitive environment we are operating in, but they demonstrate that Lloyd’s is in robust financial shape. Clearly the UK’s referendum on its EU membership is a major issue for us to deal with and we are now focussing our
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Report
LONDON BROKER PARTNERS BRING VALUE TO CHART CONFERENCE II By Frank Huver, SVP
business, the beauty of the CHART concept, and, one mong the nearly of the key selling points for 300 individuals Lloyd’s syndicates. It was a participating in the great event full of energy Second Annual CHART and enthusiasm from all Exchange meeting in Baltimore attendees and it was well were representatives from worth the commitment our three London Broker that the CJ Coleman team Partners: C.J. Coleman, JLT went to. As a result of the Re, and Prospect Insurance success of the two CHART Brokers. The level of effort conferences, and the values and commitment invested that it stands for, CHART has by these partners is one of become an integral part of the primary reasons why the CHART’S Earliest Adopter, Glenn Clark, our new business strategy Opens The 2nd Annual Conference event was so successful. for attracting business from the USA”. The Market Finder Facility is a Did the Brokers benefit from the - Simon Hall, Director CJ Coleman proprietary benefit within CHART, concept of “Exchange” – i.e., giving and the Brokers are tasked with something of value in order to JLT Re the responsibility of assisting obtain something of greater value? "The CHART Exchange conference domestic insurance agents in Based on the feedback we received, was attended by 9 representatives bringing a new program or product the answer is a resounding “yes”: from JLT Re who helped facilitate idea to London. They possess the over 100 meetings between US expertise, industry contacts, and C.J. Coleman Agents and Lloyd's Syndicate access to the value-added services “We were delighted to attend our second CHART Conference and our Underwriters. This was a unique needed to get the deal done. refreshing event that team of seven people attended and created an open environment for In the space of three days, the the event of one-to-one meetings Brokers facilitated over 400 and networking, well different appointments amongst attended by both U.S. agents, risk takers, and third- agencies and syndicates party specialists. In addition which we helped to to the scheduling logistics, our recruit. We organized London team put in a great deal of multiple appointments preparation work prior to the event. for 29 agencies with These activities included producer the sole aim of bringing interviews, identifying Syndicates new premium into the with compatible risk appetites, and Lloyd's market rather Members of Lloyd’s Syndicates listen to SIAA than churning existing preparing meeting presentations.
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Chairman & CEO, Jim Masiello
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professional business discussion. We were delighted to meet with many agents that showed keen interest in learning the nuances of the Lloyd's and London market and how they needed to be structured in order to take full advantage of those benefits. The feedback we have had from both agents and underwriters alike has been tremendous, with us now actively working on a number of very tangible new opportunities that will be supported by the Lloyd's market. We have always bought into the CHART Exchange concept of trying to bring new revenue into the London Market. That concept became a reality in Baltimore this October" - Neill Cotton, Partner JLT Re. Prospect Insurance Brokers ‘Prospect had a hugely productive time at the 2nd annual CHART conference in the impressive setting of the Marriot Waterfront Hotel in Baltimore. We had a hugely productive few days meeting a wide range of agents with well defined program opportunities to explore. We are confident all our agents gained a lot during the conference on how Lloyd’s operate, what the participating syndicates underwriting appetites are and what the important next steps are in becoming a coverholder or in how to develop their ideas into new bound programs. Our underwriters www.chart-exchange.com
Cocktail Networking Reception at the Marriot
enjoyed meeting a diverse, hungry and entrepreneurial selection of potential clients who want to work with Lloyd’s and importantly a lot of new friendships have been created. An overall resounding success! - Jamie Webb, Managing Director Prospect Insurance Brokers
Delegated Underwriting Authority (Coverholder status) from Lloyd’s of London. This guidance can take the form of business plan development assistance, provision of analytic/actuarial support, or providing explanations about the various compliance/regulatory requirements that must be met. Of course, not every program proposal presented to the Risk Takers will be accepted. Our Broker Partners will ascertain the reasons for the declination and will work with the agency to help address the perceived deficiencies in the submission.
Risk Taker Lounge - Where lloyd’s syndicates meet with U.S. agencies
The true value of the Market Finder Facility becomes evident after there is mutual agreement to move forward on the submission. Our Broker Partners can guide agencies through the process of securing TABLE OF CONTENTS
We will note here that either the agency or Risk Taker has the option of selecting the preferred London Broker of their choice to finalize the program submitted through the Market Finder Facility. There is no obligation to utilize one of CHART’s partner entities. OCTOBER-NOVEMBER 2016
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News
O
FORD JOINS EFFORT FOR DRIVERLESS CAR
n Monday, September 12th, Ford Motor Co. made an announcement that it plans to sell driverless cars to consumers. Ford’s CEO, Mark Fields, spoke from the company’s headquarters about how Ford wants to create an affordable model that will be available to consumers by 2025.
Ford’s announcement is not surprising as other automakers are pursuing the same goal. What Ford’s announcement really shows is that another automaker has joined the competition to produce an autonomous car.
Several other companies have announced their plan to rollout driverless cars in the near future. The potential benefits and attainment of driverless cars seem to make certain that the automotive industry is moving in that direction.
Some may see Ford’s effort to have affordable driverless cars on the market in less than a decade overly ambitious and perhaps it is. However, the competition Ford, and other automakers like them bring to the driverless car effort, can hasten the effort to get driverless cars on the road.
The 112 year old automaker’s effort approaches the driverless car with the consumer first. Ford’s effort is specific and simple; create a driverless car that is safe and gives users time to work, relax, or even sleep on the road.
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See a related story in this month’s magazine about how auto insurance may be affected by autonomous cars. Click on image below to watch the video.
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News
PRIME MINISTER MAY HOLDS BREXIT DISCUSSION
our British people and that will Contined From Page 11 include the maximum possible access to the European Market for firms to trade with and operate within the E.U.” May said.
The E.U. knows that Britain wants to retain these rights and use that condition to leverage a better deal. May has defended her vagueness concerning the details of negotiations by saying rime Minister, Theresa May, that she does not want show her and members of the British hand before entering some of the most important Parliament negotiations in gathered together to Britain’s history. debate Britain’s exit
P
procedure from European Union.
the
However, the pressure May has felt led to The forum was called, a discussion after May felt pressure in Parliament from members of where BREXIT Parliament (MPs) procedures that she was not were discussed. forthcoming enough To be clear, with the terms of the this forum held no Prime Minister U.K.’s break with the EU. Theresa Mary May political voting and Negotiations between served to allow the U.K. and E.U. are set to begin issues and idea surrounding March 2017. BREXIT to surface. May has yet to commit to keeping Britain within the E.U. single market, an aspect of BREXIT many businesses, including Lloyd’s of London, hope to retain following negotiations. “What we are going to do is be ambitious in our negotiations, to negotiate the best deal for 36
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CHART CONFERENCE
Business relationships and new friendships are incubated and grounded in a fashion that may last a very long time. Second year conference attendees were in full force and first year attendees appeared upbeat and eager to participate and learn as business ideas were discussed and explored by all participants. The CHART team is always open to new ideas on how to make the CHART exchange even better which sends off attendees looking forward to next year. About NetRate:
NetRate Systems, Inc. solutions include cloud-based portal, high performance submission, underwriting, rating, easy quote and policy document generation, data analytics and integration with 3rd parties for the Property and Casualty insurance marketplace, primarily in the MGA, Program Administrator, Coverholder and small/medium carrier environment. NetRate Since the June referendum where products include nationwide rating the U.K. voted to leave the EU, of ISO® General Liability, Property, the pound has fallen. However, Business Auto, Crime, Inland Marine, May along with other MPs have BOP, as well as NCCI Workers stated that they will respect the Comp. NetRate also offers custom people’s vote and will definitely programming of all lines of business, be proceeding with negotiations including Professional Liability. For more information, go to www. this upcoming March. netrate.com. TABLE OF CONTENTS
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M&A 1ST QUARTER ACTIVITY 2ND HIGHEST IN PAST 10 YEARS
Specialty Insurance Company’s acquisition of Professionals Direct from Hanover and State National acquisition of United National Specialty Insurance Company from Global Indemnity plc. M&A services successfully served as an advisor to all three sellers. We believe this market trend will also continue as larger carriers continue to actively pursue acquiring smaller and midsize carriers as bolt on acquisitions.
Carrier M&A activity has also remained high, as evident by M&A Services closing three transactions in the third quarter including WR Berkley’s acquisition of Intrepid Insurance Company from Daimler, Watford
M&A Services business philosophy since the firm’s inception has been to provide unbiased, focused, and value added advice to our clients and I am proud to say our team continues to deliver on that promise every day.
Recently M&A has also been involved in the Brazilian insurance market, which currently presents investment &A Market conditions and partnership options for carriers remain extremely active, looking to expand or grow their particularly with insurance existing presence in Brazil. distribution We look forward to companies. The first keep serving your Insurance quarter needs through Journal’s recently of 2016 our services that released Q1 M&A was the second most include M&A activity statistics transactions, active quarter for revealed that capital financing, the first quarter M&A transactions in fronting, renewal of 2016 was the the past 10 years. All rights, reinsurance, second most indications are that strategic advisory, active quarter for these trends should and program M&A transactions placements. continue for the in the past M&A knows the 10 years. All foreseeable future...” insurance industry indications are and our advisors that these trends should continue for the foreseeable future, as aggressive make each client’s project a priority, private equity backed buyers offering unparalleled concierge-level service. continue drive the market.
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Analysis Continued From Page 29
company which is already licensed As a whole, starting a 50 state in desired states. property and casualty company via application can take upwards Applying state-by-state for of five years. insurance licenses can seem like a road filled with decisions and As an alternative to building statespeed bumps. These include, by-state, many groups purchase and casualty industry to turn but are not limited to, the a clean shell company which has an underwriting profit, with an determination of a preferred state admitted licenses in all or many average combined ratio of 97.2%, of domicile, an ideal geographic of their desired states. While footprint, the statutory surplus purchasing a clean shell does not for the last three years. 3 3 requirements of each state, guarantee regulatory approval, it As many attendees of the October the preparation of the license streamlines the approval process application in each state, and down to the state of CHART Exchange domicile of the shell. Conference in As an alternative to building Baltimore can attest, state-by-state, many groups Entering the the British economy purchase a clean shell market through the could be heading for a acquisition of a shell hard landing following company which has admitted licenses is certainly more the Brexit vote. The in all or many of their desired states. straightforward pound is down 15% While purchasing a clean shell does than applying for against the US dollar on each individual state not guarantee regulatory approval, it a trade-weighted basis license, however since the vote, testing streamlines the approval process down there are costs the depths reached in to the state of domicile of the shell.� involved in this the 2008-2009 financial acquisition. A seller crisis. 4 taking into account complex and will require: 4 Additionally, many economists timely seasoning requirements. 1) A dollar for dollar are projecting inflation (.6% Delaware, for example, requires companies to not only be in exchange for the capital and currently) to jump to 3% next year. business continuously for three surplus currently tied up in the With the combination of a slowing shell. Often times, the seller economy and rising inflation, years prior to admission, but also will dividend any excess capital it may be wise for UK domestic to have achieved at least one year of “profitable� operations during out of the company to bring insurers to consider expanding to that time. its capitalization down to the the US market. state required minimum levels. There are two roads to take when Vermont, to use a more extreme 2) A goodwill consideration entering the US admitted carrier example, has adopted a fiveyear seasoning period requiring for each state that the company market. Building a company stateis licensed to write business by-state via application in each companies to not only be in in. This number ranges from desired state, or acquisition a shell business for at least that length of time, but also to demonstrate approximately $75k to $150k profitability in each of those five per admitted license. 3 SNL Financial years. 4 The Economist
BUILD OR BUY?
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Analysis As an example, if a shell has $8 million in capital and surplus, has 20 state licenses, and is asking $100k per state license, a buyer will need to deliver $10 million at closing. As mentioned above, since the amount paid for the capital and surplus is a dollar for dollar exchange, the buyer will acquire the company with $8 million of capital and surplus.
indemnification may impact price. If the indemnification is limited as to amount, duration or credit, it could negatively impact price and the time to sell. The stronger and wider the indemnification, the “cleaner� the shell. In other words, there are no other assets or liabilities included with the license other than capital and surplus with assets marked to market.
While acquiring a shell may seem challenging, the right expertise can make the difference between completing a successful transaction or not. For groups looking to acquire a US shell company, it may make sense to hire an advisor who specializes in this type of transaction.
M&A Services has completed over 100 insurance shell transactions. A number of factors affect price, Many of those buyers where the main one being supply and In comparison to building state- foreign companies looking for a demand. In general, companies by-state, a clean shell with 50 platform to enter the with fewer licenses US market. As a whole, starting a 50 state sell for less than property and casualty company wider licensed Merger & Acquisition shells, but this is via application can take upwards of Services Inc., was not always the case. incorporated in five years. As an alternative to building Also, shells sold 1999 with the goal state-by-state, many groups purchase a by regulators sell of providing merger for less than those clean shell company which has admitted and acquisition from a solid parent, advice and services licenses in all or many of their desired although, again, to companies within states. While purchasing a clean shell not always the case. the insurance sector. Key states, such as does not guarantee regulatory approval, it Since that time, California and New streamlines the approval process down to the firm has grown York can also impact into a boutique the state of domicile of the shell.� price. investment bank and has worked with over Those not licensed in California state licenses can be acquired in 500 insurance companies and or New York typically sell for less six to eight months. agencies throughout the world. per jurisdiction, or take longer to sell, although some sales do not indicate such. It is evident that placing restrictions on the type of future business that can be written in the company impacts the price of the company negatively. Also, as a general statement, the strength and scope of the www.chart-exchange.com
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Analysis
Continued From Page 25
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CYBER-ATTACK
•
employees leave the company, regularly audit accounts, monitor access to sensitive files and let employees know that there are consequences for misusing company assets - all ways to help mitigate the chances that assets are leaked internally. The key is regularly reviewing, which will aid in early detection and damage mitigation. 4. Practice good password management – A policy that enforces minimum password length, complexity, expiration and other basic best practices goes a long way to deterring brute force password violations. 5. Isolate business-critical functions and information – Do not browse the web, use email or social media, play games or other potentially vulnerable activities on systems that house your product software, sensitive financial information, Point-of-Sale system or other business-critical functions or data. 6. Strongly consider a Cyber Liability insurance policy. Many companies assume that their General Liability (GL) coverage includes cyber risks, but that’s most often not the case. Insurance carriers provide Cyber Liability coverage through their Professional Liability lines, so be cautious when assessing exposure. Given the devastating business and financial fallout from a cyber-attack, strongly consider coverage specifically written for these events.
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Resources that can help
An excellent ‘primer’ from a cyber-security consultant that’s easy to read and understand. StaySafeOnline.org’s list of cyber resources, including links to the National Cyber Security Alliance/Symantec study The 6 most dangerous cyber-attack types that can plague a small business Expertise to Manage Cyber Liability Claims
In the event your company is the victim of cybercrime, it’s critical to have professionals who are experienced in handling the multitude of complex business and legal issues that result, including: • • • • •
•
Assessing the scope of the breach and damages Complying with all federal and state notification and credit monitoring regulations Advising on a response plan to mitigate business interruption and brand damage. Interceding with credit/debit card processors If necessary, bringing in forensic and public relations experts to assist in investigations and brand damage control Manage and litigate any professional or management liability claims
YorkPro, a dedicated team within the York Risk Services Group family of companies, specializes in professional and management liability claims and has experienced adjustors/litigators wellversed in handling the complex management liability claims that can arise from a cyber-attack.
While cybercrime is an ever-present threat, there are some excellent resources that can help you stay a step Cybercrime is one of the most devastating ahead. Here are a few:
events that can happen to a small business; • PropertyCasualty360’s article full of links to other having knowledgeable professionals to guide, useful articles on the subject advise and defend can give an organization the • TechNet’s article on setting strong password best possible chance to minimize the damage policies and get back to business as usual. 40
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