The CHART Exchange June 2018

TABLE OF CONTENTS

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Glenn W. Clark, CPCU, Publisher CHART Exchange Earliest Adopter

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The Secrets To A Successful Program Submission

9

The High Cost Of Stress And How To Reduce It

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Lloyd’s Brussels Subsidiary Granted Regulatory Approval

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The Specific Goals You Seek To Achieve

14

Police Body Cams And Dash Cams: Better Guidance Needed As Departments Accelerate Deployment

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The Power Of Words Or A Few Words About Words

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But They’re Not My Clients!

22

NSM Insurance Group Selects ValueMomentum’s BizDynamics Digital

24 27

The Secret Life Of Apps

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Why Customization Is Key To Keeping Millennial Customers

32

There Are A Lot Of Myths Out There About Insurance Underwriters

35

Ascot US Holding Corp.

To Acquire Greyhawk Insurance Co.

39

The Sky Is Falling! Part II Of A 3-Part Series For SIAA Member Agencies

41

U.S. Execs Aren’t Ready For New EU Data Protection Laws - Here’s Why This Could Be A Risk

45

David Copperfield Negligent - But Not Liable For Damages

46

Specialty Program Group Acquires Marine & Crane

How Do You Improve Communication In The Workplace?

By Dronepicr [CC BY 3.0 (https://creativecommons.org/licenses/by/3.0)], from Wikimedia Commons

By Ryan Johnson [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons

SPECIAL REPORT: KROLL ANALYZES THE RISKS AND EXPOSURES POLICE DEPARTMENTS FACE AS THE USE OF BODY AND DASH CAMS PROFLIFERATES AND OFFERS GUIDANCE PG 14

JUNE 2018 VOLUME 3 - ISSUE 5

Publisher: CHART Exchange Glenn W. Clark, CPCU Membership Services Kate Boyle Advertising: Kate Boyle Managing Editor: Kate Boyle Contributing Editor: Frank Huver Layout, Design & Circulation: Ron Manera AdMax Corp., Inc.

CHART Exchange

info@chart-exchange.com 3001 Philadelphia Pike Claymont, Delaware 19703 www.chart-exchange.com 302-765-6001 Last Issue:

PREFER TO READ IN PDF FORMAT? DOWNLOAD THE PDF VERSION HERE

ADVERTISING IN THE CHART EXCHANGE MAKES SENSE: 302.765.6056

Talk to your clients about the importance of Employment Practices Liability Insurance …

“Harmless” office banter

#Metoo

before somebody crosses the line.

Anyone keeping track of current events is well aware of the workplace-related scandals that have rocked both Hollywood and corporate America recently. The topic has certainly hit home, as evidenced by the impact of the phenomenon known as the “#MeToo” Movement. This social media platform has been used to help raise awareness about the prevalence of inappropriate behaviors within the business world.

It would be naive to think this problem is limited to large corporations. Similar wrongful employment acts can occur in smaller firms as well. Even an innocent remark can be misinterpreted, leading to an allegation that needs to be addressed. The cost of paying for a legal defense and a potential adverse judgment/award could be financially devastating for any company.

Let Rockwood Programs help protect your clients. Our Employment Practices Liability Insurance (EPLI) product protects companies from allegations of discrimination, wrongful termination, harassment, and workplace bullying. Coverage can be further enhanced to protect your client against alleged violations of the Immigration Reform Control Act, Wage & Hour disputes, and Third Party Wrongful Acts.

Visit us at www.rockwoodinsurance.com to learn more

Rockwood Programs, Inc., 3001 Philadelphia Pike, Claymont, DE 19703 p: 877-242-2487 • f: 302-762-4200 • e: sales@rockwoodinsurance.com

NEVER MISS AN ISSUE OF CHART EXCHANGE

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Message from the earliest adopter

THE SECRET TO A SUCCESSFUL PROGRAM SUBMISSION Hint: Start With An Innovative Underwriting Partner

O

ur team has been specialists in programs for over thirty years.

As small company entrepreneurs we have been fierce advocates for our unique business niche and have been the catalyst to begin two different agency associations for Program Administrators (Target Markets from 2001 through 2011; the CHART Exchange from 2015 through today).

Let’s take a quick trip down Memory Lane. During our inaugural Association meeting in 2001 we heard sixteen different programs companies make the

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Glenn W. Clark, CPCU Publisher & Earliest Adopter following statement with pride: “We looked at two hundred opportunities last year and only wrote two”. This mindset is totally foreign to any insurance agent who invests significantly in marketing designed to generate application flow. What program specialist could afford to have a one percent bind to submission ratio?

A second theme heard in 2001 was: “If you have $10 million in aggregated accounts and five years worth of great loss experience, we’d love to speak with you.” The consensus response from the audience of business-minded agents was “if we had $10 million in aggregated niche accounts and five years’ worth of great loss experience we

www.chart-exchange.com

wouldn’t need your help.”

Just like the Bob Dylan song title says, “the times they are a changing”. Seventeen years later it seems as though everyone is in the programs space. Sixty plus domestic U.S. carriers, RRGs, RPGs, captive insurers, etc have grown this business niche geometrically.

Program administrators have become a hot commodity and are targets for acquisition by wholesalers, agency conglomerates, and even the insurance carriers themselves.

In an age of consolidation there are also some repercussions. Smaller agencies trying to develop specialized niches find it increasingly difficult to be “heard.” Organic growth is what fueled significant expansion of program business in the early 2000’s.

Where does the entrepreneurial agency go today to address the insurance needs of an under-served market or make a significant impact on an existing niche?

The simple answer is that today’s forward-thinking specialist should look to the same innovative underwriting partner they looked to before the year 2000 – London. The market that is best equipped to take on a new program idea in the start-up phase is Lloyd’s. In future columns we will articulate the mechanics of exactly how this is done.

www.chart-exchange.com

Composing a programs submission for a new idea is similar to creating the business case on the longterm profitability of an existing book of business.

One key limitation is the lack of past experience data to make your case. A new programs submission must tell a compelling and convincing narrative. It must demonstrate mastery of the niche, articulate the most important issues, and propose viable solutions. This document must also tell the story of the submitting agency: back-office capabilities, expertise within the target business community, and the level of financial commitment they are willing to make in order to fund the necessary marketing initiatives.

There is no substitute for an effective track record in delivering on a successful program by an agent.

A well-conceived Program Submission Plan (PSP) can help the aspiring insurance specialist convince a market to back them.

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Glenn W. Clark , CPCU CHART’S Earliest Adopter

JUNE 2018

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Simplify your workflow!

Give your team a clear path to winning new policies!

For over 18 years the NetRate Systems team has been tailoring insurance processing solutions to meet the unique requirements of each of our MGA, Program Administrator, Carrier, and Lloyd’s clients in the P&C marketplace.

From submission portal through rating to policy issuance, our solutions will help you minimize key strokes, simplify workflow, and reduce systems maintenance.

“Not only do they understand insurance terminology, but they also understand the flow of business.”

Jeremiah O’Donovan President, O’Donovan & Associates

Contact us today to learn how our experienced, U.S. based, insurance-savvy team can help you.

Call 8

Learn More

877-738-2411TABLE OF CONTENTS www.netrate.com www.chart-exchange.com

JUNE 2018

ANALYSIS - NETRATE

THE HIGH COST OF STRESS — AND HOW TO REDUCE IT

O

n-the-job stress costs U.S. companies bundles — an estimated $300 billion annually in absenteeism, reduced productivity, added health care costs and employee turnover. Stress, however, is a very individualized phenomenon — what causes stress in one person may not cause stress in another. The good news is that research has identified stressors that often affect employees, and it is suggesting ways employers can help address them.

Surveys show that one of the biggest source of stress for workers is balancing work and family demands.

That’s why telecommuting and flextime are sought-after options for a growing number of workers nationwide. Studies show allowing workers the option of working just

one day of each week at home can dramatically reduce their stress levels. Telecommuting isn’t the only answer, however. Ask your employees how you can help them meet the demands of work and family life. A bit of flexibility in how they get their job done can make all the difference.

Some other ways to reduce stress at the office: Let the sick stay home. At many companies, it’s a badge of honor to go into work sick. Leaders often set See High Cost of Stress Page 43

R

ob Zuzula is Director of Marketing at NetRate Systems, a leading insurance solution provider of cloud-based underwriting, rating, and issuance software applications targeted at the Program Administrator, MGA, Carrier, and Lloyds Coverholder and Syndicate markets. Rob and the NetRate Systems team work with these markets to develop cloud-based solutions that deliver more efficient daily work processes, more consistent and controlled underwriting and rating, improved data reporting and analytics, and other custom business enhancing solutions that are rooted in the company’s long history of delivering rating solutions that support ISO®, NCCI, and proprietary rate plans.

www.chart-exchange.com

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Merger & Acquisition Services

serving the insurance industry

Merger & Acquisition Services is a

SPECIALIST ADVISORY AND FINANCIAL SERVICES FIRM firm specifically to participants within the insurance industry.

Our mission is to provide

CONCIERGE-LEVEL SERVICES AND EXPERTISE

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MORE THAN 100 TRANSACTIONS IN 10 YEARS and has earned continuous placement within the "Top 5 Financial Advisors in Insurance Underwriting" according to SNL Financial.

Investment banking services and securities transactions are provided through and completed by Merger & Acquisition Capital Services, LLC., a broker-dealer registered with the U.S. Securities and Exchange Commission and member of FINRA and SIPC.

OUR SERVICES Agency M&A Transactions Carrier M&A Transactions Agency Financing Capital Raising Strategic Advisory Valuation Services Program Business Renewal Rights Fronting

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(212) 750-0630 320 East 53rd Street New York - NY - 10022 Copyright 2017 Merger & Acquisition Services, Inc. & Merger & Acquisition Capital Services, LLC. All Rights Reserved.

NEW YORK, NY - ATLANTA, GA - MYSTIC, CT - CAYMAN ISLANDS

within the insurance industry by assisting firms with their corporate development and acquisition/divestiture objectives.

M&A Services is

News

LLOYD’S BRUSSELS SUBSIDIARY GRANTED REGULATORY APPROVAL Lloyd’s, the world’s specialist insurance and reinsurance market, announced that it has received licence approval from the National Bank of Belgium for Lloyd’s Insurance Company S.A. (Lloyd’s Brussels)

T

he licence means that Lloyd’s Brussels will be able to write non-life risks from the European Economic Area (EEA), ensuring that Lloyd’s customers can continue to access the market’s specialist underwriting.

Inga Beale, Lloyd’s CEO, said: “Since the UK referendum on EU membership Lloyd’s has been working hard to ensure that whatever the outcome of the Brexit negotiations our partners across the EEA will continue to enjoy access to Lloyd’s unique offering.

“I am delighted that Lloyd’s has received regulatory approval for its new Brussels subsidiary. This will www.chart-exchange.com

deliver certainty for all our customers, reassuring them they can continue benefitting from Lloyd’s specialist expertise, innovative policies and financial security postBrexit.”

Vincent Vandendael will take up the post of Chief Executive Officer of Lloyd’s Brussels in addition to his role Brussels in Belgium - de facto capital of the EU as Lloyd’s Chief Commercial Officer. to announce that the National Bank of Belgium has today officially He said: “Today marks an exciting granted a licence to Lloyd’s after a next step in the setting up of our thorough due diligence process. By operations in Brussels. The new establishing an insurance company subsidiary will mean that our in Brussels, Lloyd’s will significantly customers within the EEA continue strengthen Brussels as a financial to have access to Lloyd’s specialist centre and build a bridge to London policies, and it will also provide us for specialised insurance and rewith opportunities to continue to insurance. We are looking forward grow our business on the continent. to welcoming more London-based insurance companies and brokers “Lloyd’s Brussels will be at the to Brussels, which lies at the heart forefront of our modernisation drive, of Europe and is home to the main with a platform in one of our most European decision-making centres.” important markets that harnesses all the benefits of Lloyd’s whilst Regulated by the National Bank utilising the latest technology, of Belgium and fully Solvency II expertise and talent available.” compliant, Lloyd’s Brussels will start writing business from 1 January Minister of Finance, Johan Van 2019.

Overtveldt, said: “I am very happy TABLE OF CONTENTS

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11

ANALYSIS - COST FINANCIAL

THE SPECIFIC GOALS YOU SEEK TO ACHIEVE Five Key Reasons To Own Your Premium Finance Company

A

s you know, having the proper resources in place can make all the difference in business. Adding a premium finance company to your existing business can provide you with increased profits, control over the policies you sell, better customer service, expanded market share, and enhanced agency value.

time shopping rates or begging for a better rate on a quote. When you own your own premium finance company, you are in control.

You make these decisions, enabling you to leverage or improve your relationships with your clients. You have total control over the premium finance process without the headaches of day-to-day operation.

INCREASE PROFITS By owning your own premium finance company, you can increase your profits and expand your client services.

As owner of a premium finance company, you will earn the interest, late fees, cancellation fees, etc. - adding substantial income from existing clients without the need for additional staffing, equipment, or overhead. Instead of giving away this revnue to outside sources, This increased revenue will help you grow your business.

GAIN CONTROL OF THE FINANCE PROCESS When you place business with an outside premium finance company, that company makes the decisions on late fees and policy cancellations if the insured does not make payment on time. You are often forced to waste www.chart-exchange.com

The additional revenue that your premium finance company will generate becomes a key profit center for your business” IMPROVE CUSTOMER SERVICE If the premium finance company treats your clients poorly, often you take the blame. You can improve the customer service your customers receive when the finance company is your own.

You will have complete control over the procedures and policies that COST utilizes to operate and manage your premium finance company.

Rest assured that your customers will receive the same level of outstanding service from us that they do from you.

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REDUCE PAPERWORK AND EFFORT Setting up premium financing for your policyholders should not be difficult or time-consuming. COST uses a state-oftheart online system to enable you to produce premium finance quotes, print finance contracts, submit contracts electronically, view realtime account statuses, generate reports on-demand, and view all documents on any of your accounts digitally and paperless.

Training takes minimal time and your employees will be up and running quickly and easily.

ENHANCE MARKET AND AGENCY VALUE The additional revenue that your premium finance company will generate becomes a key profit center for your business. When you use outside financing, you are essentially “renting” their company. By forming your own facility, you are building a separate profit center that can be a valuable asset, providing you with the security you need in case you wish to sell the agency or take on some financing of your own for a capital project, business expansion, or other ventures.

Contact David E. Gebhardt Chairman, C.E.O. COST Financial Group, Inc JUNE 2018

13

analysis - kroll

POLICE BODY CAMS AND DASH CAMS: BETTER GUIDANCE NEEDED AS DEPARTMENTS ACCELERATE DEPLOYMENT Along With The Many Benefits Of Police Cams Comes Costs And Complexities of Storage And Content

By Alan Brill & Dan Linskey

P

many of which have received little or no attention as departments accelerate deployment of these devices. Going forward, police departments will need more guidance to make effective use of these technologyAccording driven tools.

olice departments are increasingly using body cameras and vehicle dash cameras to provide objective evidence in case force is used. These cameras are powerful to a 2014 One of the most tools which help ensure analysis by the under-appreciated there is transparency in encounters with Police Executive issues is the law enforcement — Research Forum, volume of data that these devices especially in high-stress running 900 produce, and the situations where officers cameras would need for that data and civilians alike will view and remember cost a municipal to be stored and protected should events with their own government $2 it be needed. bias. Body cameras million a year, Corporations have not only provide an independent record mostly for data learned that while the cost of digital of use-of-force events storage.” storage has come with law enforcement, down substantially, it is still sizable. they can also show the whole story In fact, some communities have of the circumstances that led up to discovered that the cost of data them. storage can far exceed the cost of the cameras. By way of example, But as valuable as these cameras according to a 2014 analysis by the can be, they bring with them a Police Executive Research Forum, number of serious questions —

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running 900 cameras would cost a municipal government $2 million a year, mostly for data storage. And as dashboard cameras and cameras in jails, interrogation rooms, and other police-related sites proliferate, the data volume keeps going up.

TO ASSESS AND CONTROL COSTS, AND HELP AVOID UNNECESSARY LITIGATION, A NUMBER OF DECISIONS NEED TO BE MADE: •

How many hours per day will each camera record?

For example, will officers be expected to record every citizen interaction? The full duration of stops and arrests? Prisoner or other person transportation?

•

How long will the data be retained? This is a difficult question because unless there is a relevant law or regulation, it is subject to a lot of secondguessing. The decision depends on several factors, such as how long a complainant can See Police Cam Data Guidance Page 36 www.chart-exchange.com

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WE DO NOT REPLACE RELATIONSHIPS We will work with you and your advisors to find the right solution for you.

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WE ARE HERE TO HELP YOU We are experienced, creative, responsive, and responsible.

Providing customized solutions rather than off the shelf products.

And, that solution might not require one of our products.

Turn-key captive management includes • Regulatory compliance and oversight • Corporate compliance and oversight • Bookkeeping and recordkeeping services • Coordination with tax professionals for timely filing of all tax returns and tax payments

The staff of Enterprise Risk Strategies (ERS) has over 100 years of insurance and risk management experience. Our staff includes accountants, CPAs (certified public accountants), CAs (chartered accountants), attorneys, business and insurance professionals.

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OUR TEAM IS THERE FROM THE START TO THE FINISH NSM Insurance Group Comprehensive Insurance Coverage for: Social Services I Addiction Treatment I Professional Liability Staffing Firms I Workers' Compensation I Collectible Vehicles Coastal Condo Associations I Breweries and Wineries Sports and Wellness I Specialty Aviation

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www.chart-exchange.com

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Analysis - PL Communications

THE POWER OF WORDS - OR A FEW WORDS ABOUT WORDS

By Paul Lavenhar

I

n the world of insurance words are everything - from policy terminology to advertising copy.

What we say and how we say it and how we “send” what we say is the difference between two words – yes and no.

Poet Emily Dickinson said, “I know nothing in the world that has as much power as a word.” Business guru Tony Robbins said, “Words cannot only create emotions, they create actions.”

HERE ARE A FEW WORDS ABOUT WORDS AND INSURANCE. FIRST IMPRESSIONS In job search classes job hunters are taught how to write a resume as well as interview skills and techniques. A resume has to stand out in a pile of dozens in a few sentences in a matter of seconds.

Some job search experts believe that the person recruiting you in a job interview makes a decision in the first 60 seconds. Your words, your voice, and your tone all send a message. You either “fit in the club” that is their workplace or not. In the insurance business every interaction is a job interview. Every word counts.

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TALK YOUR PROSPECT’S LANGUAGE

DON’T SELL, CONVERSE

The producers that really dig in to understand their prospect’s work environment are the ones that succeed. If you show a prospect you have invested in him or her, then you start with a bond. People work hard. They often feel beleaguered, unappreciated, overworked, and not understood. When what you say shows them you “get it,” you get their attention. Rich Skorupski is a producer for Meeker Sharkey & Hurley that focuses on nonprofits.

He does more than show up at renewals. He takes the time to attend safety meetings, events, conferences, and more. He not only talks the talk, he lives it with his clients.

Consumers are bombarded with information. Whatever you are selling, you are competing for attention not just for your product, but every other product promoting itself. Most of it is a one-way dialogue. People don’t want to be sold, they want to have a two-way conversation. They tell you their problems, concerns, issues, worries, or complaints. You discuss how you can help.

DON’T JUST TALK, LISTEN Perhaps the most common mistake salespeople make is talking too much. You are wound up, ready to roll, and you rehearsed your pitch in your head. But, how do you know

A

bout the author: Paul Lavenhar’s firm PL Communications has provided marketing communications services for 25 years to such insurance clients Rockwood Programs, Capacity Coverage, MetLife, Selective, York Risk Services, and Admiral Insurance, among others. He has has written for 500+ companies in various industries.

Paul also leads a band called GoodWorks that provides music and marketing services to help nonprofits raise money and awareness pro bono. Paul Lavenhar is the principle of the

insurance marketing communications firm PL

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www.chart-exchange.com

your pitch is the right one? You find out if you listen. Most people want to talk about themselves.

And, sadly most people don’t want to listen. When you listen, your “pitch” is now a response to what your prospect told you they want to hear.

TELL STORIES

origin of the word “insurance” is from the 1550s. It is a variant of an Old French word “ensurance” "meaning an “assurance, pledge, guarantee." Insurance is a promise.

When you don’t keep your promise in these days of social media, the “word” gets out.

Reviews are built into businesses like Amazon. Everyone is virtually on the staff of “Consumer Reports.”

Insurance carriers, agents, and products are reviewed online.

Many people trust those words of fellow buyers more than any words you can say.”

Insurance can be very technical. It can be hard to understand. When people don’t understand, they tune out. But, stories are easy to understand. They make the case for you. Dave Quinn of NAESIP sells environmental with stories like this one. Last week an agent called Dave after seeing a prospect who owns a plastics manufacturing facility.

The building burned down. The manufacturer was responsible for $125,000 in pollutant cleanup costs.

But, he only had $25,000 in the property form - no other coverage.

That's a $100,000 out-of-pocket expense. Time to look for a new insurance company. That is the short version – but that is a story.

GIVING YOUR WORD Agents often fight the battle of time spent on service versus sales.

But service is what sells. The Online Etymology Dictionary says the www.chart-exchange.com

ENDORSEMENTS VS. ATTACKS.

Today everything is reviewed on Yelp, Facebook, blogs, and more. It’s not just restaurants and movies anymore.

Reviews are built into businesses like Amazon. Everyone is virtually on the staff of “Consumer Reports.” Insurance carriers, agents, and products are reviewed online.

Many people trust those words of fellow buyers more than any words you can say. It goes back to service – service sells. Good service or bad service both get written about. Reviews help you get higher rankings on Google. Responding to negative reviews does, too.

SPEAKING OF SEO SEO stands for “search engine optimization.” In other words, how to get on the first page of search results for Google and other search engines. The great advantage of niche insurance products is that they are very specific like TABLE OF CONTENTS

“insurance for drones used for crop scanning.” Content is one of the main drivers for strong Google results. Not canned, generic content, but specific content. How many articles do you think there are on, “insurance for drones used for crop scanning?” For that specific search phrase, there are none. So, it could make a great article title that helps with SEO. JARGON. Insurance is built on jargon. Two words –avoid it. Maybe in the past technical sounding words that made you sound well informed impressed the less informed. Now it just annoys them.

SENDING WORDS Words can be sent in conversations, social media, in the press, presentations, advertisements, emails, brochures, plus heard or read or seen. Teachers recognize that students have different learning styles. Some absorb information they hear more easily than words they read. Others are visual learners. When you deliver your words, consider your delivery system. When you do send words, don’t make them so much about yourself. Make your words about the people you want to reach.

People are more interested in themselves than you.

Paul Lavenhar is the principal of the insurance marketing communications firm PL Communications.

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Bringing U.S. Entrepreneurship to the London Market The CHART/Wilson Elser strategic partnership combines the innovative underwriting philosophy of the world’s oldest insurance brand with the entrepreneurial mindset of U.S. agencies.

For close to 40 years, Wilson Elser has helped organizations to better navigate challenging markets and realize improved combined ratios. We provide London- and Europe-based insurers with ready access to more than 60 discrete legal services delivered by nearly 800 attorneys in 34 strategic locations throughout the United States.

Guided by a proprietary, systematic legal project management program, we help clients define strategies and achieve outcomes that align with agreed business requirements. We also implement dedicated Program Claim/Litigation Management services, creating value and driving efficiencies with respect to legal spend and indemnity.

Wilson Elser is especially proud of its strategic partnership with CHART Exchange and our shared commitment to strengthening relationships between cover holders and risk takers on either side of the Atlantic.

wilsonelser.com Š 2017 Wilson Elser. All rights reserved. 567-17

news & aNALYSIS - Wilson Elser

BUT THEY’RE NOT MY CLIENTS! And other famous quotes from accountants who did not protect against claims by non-client third parties.

By Peter Larkin

N

o one questions a client’s right to sue his or her accountant if the accountant erred in providing professional services to the client. If a mistake was made or something was overlooked and the client was harmed, then the client has the right to sue the accountant.

However, depending to some extent on where you practice, the potential list of plaintiffs that might be able to sue for negligence could include people and companies that are not clients, such as third parties that are in some fashion related to the client or the services provided.

Knowing the law in the jurisdictions where you practice and understanding how third parties might gain the right to sue you can provide valuable insight into practices that could help avoid potential liability to non-clients.

At one time, the law of most jurisdictions limited the right to sue an accountant to the accountant’s clients. A legal concept known as “privity of contract” was used to justify this limitation, which some courts reasoned was necessary to help ensure that claims against accountants remained predictable, thereby avoiding an avalanche of unforeseeable claims. There are

a few states that still follow this strict privity approach, allowing only clients to sue accountants for negligence. However, many states, either through statute or case law, have arrived at less-stringent standards, resulting in claims against accountants being permitted by people and companies that are not clients.

ALTERNATIVE STANDARDS An approach adopted by many states is the “near privity” standard, which was first articulated by the courts in New York in European See Not My Clients! Page 31

P

eter Larkin provides legal counsel and representation to accountants and accounting firms in connection with all aspects of their businesses.

He is co-chair of Wilson Elser’s national Accountants practice. In addition to professional malpractice defense and commercial disputes, Peter’s practice encompasses regulatory investigations and proceedings, risk management, ethics proceedings, and transactional matters involving accounting firms.

He also represents businesses and banking institutions in a wide array of commercial disputes. Peter has represented accounting firms of all sizes in hundreds of lawsuits involving the full range of professional services that accountants provide to their clients. Allegations in these cases have ranged from the failure to detect criminal or fraudulent activity to faulty tax structuring in a major transaction, and from negligence associated with the implementation of a billing system to negligence in tax preparation, estate planning or business valuation. Peter has taken several accounting malpractice cases to trial.

www.chart-exchange.com

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News

NSM INSURANCE GROUP SELECTS VALUEMOMENTUM’S BIZDYNAMICS DIGITAL NSM goes live with their Pet Insurance program in under Six Months

V

alueMomentum, Inc., a provider of software and services to the insurance, healthcare and financial services industries, announced today that NSM Insurance Group (NSM), a leading program administrator selected ValueMomentum’s BizDynamics Digital Engagement Platform and the iFoundry Rating & Product Design solutions to enable the MGA to transform how they distribute, underwrite and service customers for their many unique niche specialized programs and expand into new markets. Pet Insurance was their first program to go live, with more to follow in 2018.

NSM Insurance Group is an industry leader in the development, implementation, marketing and underwriting of profitable, industry-specific niche programs.

The challenges for NSM included disparate systems for each program, many of which are legacy desktop applications. This leads to lack of workforce productivity and lack of

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insight into production data. In order to implement a common platform for all programs, christened by Mike Anselmo NSM’s CIO, as NSMOneTM, NSM selected ValueMomentum’s BizDynamics Digital Engagement Platform and iFoundry Rating Engine with support for ISO Electronic Rating ContentTM (ISO ERC).

We selected ValueMomentum’s solutions to build upon our current technology investments, improve the productivity of our workforce, and our agency partners, by having them access a single system to perform their work.”

The first program to benefit from this solution was NSM’s new program for pets – 4Paws Insurance, and the program went live with ValueMomentum’s solutions in TABLE OF CONTENTS

less than 6 months. Targeted at consumers and available online on any device – mobile, tablet or PCs, the quoting and policy issuance process is completed in under two minutes.

NSM’s CEO, Geof McKernan adds “A key aspect of our growth plans is executing efficiently. While we are laser-focused on profitable and sustainable products for niche industries, we are pleased that we have established a partnership with ValueMomentum to focus on the software and technology that will help us achieve our growth aspirations.”

“We selected ValueMomentum’s solutions to build upon our current technology investments, improve the productivity of our workforce, and our agency partners, by having them access a single system to perform their work, while affording us the ability to rapidly set up new programs, some of which are based on ISO, and some, proprietary.” shares Mike Anselmo, CIO of NSM Insurance Group.

See NSM Selects ValueMomentum Page 42 www.chart-exchange.com

www.chart-exchange.com

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SPECIAL REPORT

THE SECRET LIVES OF APPS The impact on privacy and coverage concerns when it comes to data collection

By Jonathan Meer

T

his article is part of CLM’s publication Professional Times magazine, a production of CLM’s Management & Professional Liability Community. Click to view previous digital editions of Professional Times.

The smartphone and related applications have changed society, yet evolving technology often finds the law and insurance playing catch-up.

Apps and their behind-the-scenes use of GPS, Bluetooth, and audio beacons make the phones seem “smarter,” but they have generated privacy

issues regarding their collection of information. In response, a number of lawsuits have been filed seeking to address the apparent insufficient or total non-disclosure about apps and their data collection. The evolution of lawsuits against companies and their technology partners have not only led to potential liability, but also created questions pertaining to insurance coverage for such allegations.

Lawsuits regarding privacy concerns about apps are not new, but the recent type of actions may be part of a growing trend. While the disruptive technology of apps is creating corporate liability for the apps’ owners and creators, sometimes such claims are not covered by insurance due to the evolution of liability.

RECENT LITIGATION INVOLVING APPS AND PRIVACY

Noncompliance may lead not only to government investigations, but also potential private actions for a company’s failure to meet the standard of care in controlling such information.”

The inclusion of GPS access in an app is nothing new, but some claimants have alleged that not enough is being disclosed on how that information is being used or whether that collection is even permissible. One such pending action, Moreno v. San Francisco Bay Area Rapid Transit [BART] District See The Secret Life of Apps Page 40

A

bout the author: Jonathan Meer focuses his practice on insurance coverage, including monitoring and coverage determinations, with a concentration on directors and officers (D&O), professional errors and omissions (E&O), lawyers’ (LPL), employment practices and cyber liability programs. Jonathan represents the interests of primary and excess insurers based in the United States, China, London and Bermuda in high-exposure claims against directors and officers of public and private companies, nonprofit boards, financial institutions and insurance companies. He has addressed claims related to shareholder class actions seeking multimillion-dollar damages against public companies and their directors and officers, as well as other high-profile fraud cases involving a variety of issues.

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www.chart-exchange.com

Now here’s a

REAL SURPRISE…

A firearm liability product that can be sold by independent insurance agents!

It is estimated that nearly 80 million Americans own at least one firearm. But what happens if a law-abiding citizen is actually forced to use that weapon to protect themselves, a loved one, or their personal property? Many homeowner policies specifically exclude firearm use — even in self defense — as a covered exposure, deeming it to be an intentional act. That leaves the gun owner personally liable for legal expenses, bail bond costs, and any judgments awarded through a civil action.

As an insurance agent, you are in the best position to explain the significant personal liability exposure faced by your gun-owning clients. Unfortunately, you haven’t been able to help your clients by offering a product to address this need — until now.

Rockwood Programs now offers a firearm liability policy designed to protect insureds against civil or criminal actions resulting from the use of a gun in self-defense. It is the only one available in the industry that can be sold through insurance agents. A wide variety of limit options are available, ranging from $50,000 to $5 million. Annual premiums start at just $135.

Best of all, we make it easy for you to present the firearm liability product to your clients. An inventory of customizable sales aids is available, including marketing brochures, simplified self-rating applications, and more. Our team can even help provide product-specific content for your website!

Visit us at www.rockwoodinsurance.com to learn more We can also accommodate group accounts (police, security, gun clubs, etc.).

E-mail: president@rockwoodinsurance.com Rockwood Programs, Inc., 3001 Philadelphia Pike, Claymont, DE 19703 p: 800-558-8808 • f: 302-764-5477 • e: sales@rockwoodinsurance.com

www.chart-exchange.com

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Partners who understand your needs.

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

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Vantage Agora - Analysis

HOW DO YOU IMPROVE COMMUNICATION IN THE WORKPLACE?

By Dawn Kreager

How Do You Improve Communication in the Workplace?

“True communication goes beyond talking and listening; it is about understanding.” – Gerald Campbell

W

ithin the workplace (or within the hive), everyone has a part to play when it comes to clear and honest communication. Without it, team projects can fall apart, making it challenging to work efficiently. Often times, companies even lose valuable clients and employees when there is a lack of understanding and trust. When companies are burdened with this struggle, there are certain

skills that assist in improving communication leading to quicker turnaround times and helping to build long-lasting, professional relationships.

BEE ATTENTIVE When working on projects, meeting with coworkers or attending a conference, there will always be disagreements. That is why active listening can be a respectful way to form trust and improve your communication skills. Give the person who has the floor your full-attention, let them speak and attempt to understand their viewpoints. Sometimes, how others feel about a situation is something you never see when only viewing situations from your own perspective. Who knows,

listening to your fellow worker bees may lead to a huge batch of honey!

BEE HONEST On the other hand, speaking your mind can be frightening especially when you are in a new work environment. When trust has not yet been achieved, it can be difficult to know how your peers will react. If you BEElieve in yourself and remain honest with your queen bee or team they will begin to understand you and start to see your side of the situation.

BEE SINCERE Gossip can buzz around in every work environment, sometimes it could be subtle chatter or it could turn into a swarm of issues that can truly impact yours and See Communication in Workplace Page 45

A

bout the author: Dawn Kreager is the Customer Experience Manager for Vantage Agora. Dawn started her career at VA as the Global Logistics Manager and expanded her role to work with our services clients, in addition to acting as a primary liaison between the marketing team and the line of business. Dawn assists clients with the onboarding process and beyond, cultivating relationships that yield success through collaboration and visibility. Dawn continuously seeks out ways in which Vantage Agora can provide the best solutions to organizations’ unique challenges.

www.chart-exchange.com

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Analysis - fortegra

By Steve Davidson

Millennial spending will grow to $1.4 trillion by 2020—and they continue to lead popular trends. Can retailers keep up?

A

bout the author: Steve Davidson is Vice President of Warranty for Fortegra Financial Corporation (a Tiptree Inc. company). Fortegra® and its subsidiaries comprise a singlesource insurance services provider that offers a range of consumer protection options including warranty solutions, credit insurance, and specialty underwriting programs.

Delivering multifaceted coverage with an unmatched service experience for domestic and international partners and their customers, Fortegra solves immediate, everyday needs, empowering consumers to worry less and experience more.

M

illennials latest influence on retail?

Playing digital retail against brick and mortar. In a recent Accenture survey, 41 percent of respondents said they’ll look for an item in store, but then try to find it for a cheaper price online. But despite being price conscious, Millennials welcome experiences and are always looking to set the next big trend.

So, how can retailers offer a customized experience to take advantage of Millennial purchasing power?

UTILIZE DATA Employing behavioral data,

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retailers can follow the purchase path of a Millennial consumer. For example, retailers can observe past purchasing habits or browser history to target potential customers, allowing consumers to see only what they’re interested in. In following the steps these consumers take to evaluate and make decisions, you’re not only paying attention to the process, but also curating a buyer experience. Which brings us to our next point...

MAKE IT PERSONAL As part of that experience, Millennials expect to have not just an informative, but also a friendly exchange with you and your team.

Make sure your sales team is on their ‘A’ game, ready to provide answers in a clear, personable manner.

In doing so, you should make every attempt to meet Millennials where they often are: online. Take retail

www.chart-exchange.com

Attribution 2.0 Generic (CC BY 2.0)

WHY CUSTOMIZATION IS KEY TO KEEPING MILLENNIAL CUSTOMERS

Analysis - fortegra

giant Target, for example. When they announced their new partnership with Harry’s—a shaving company— they developed a Snapchat filter that gave users a clean shave with facial recognition. Even if someone wasn’t initially planning to purchase Harry’s, the next time they went to Target and saw the Harry’s brand they might recall the Snapchat campaign, increasing awareness for both brands and improving the odds of a purchase. With methods like

www.chart-exchange.com

these, you’re showing you’re willing to take the extra step to engage Millennial consumers.

OFFER PROTECTION Speaking of a little extra, if you’re looking to provide a boost to consumer confidence at purchase, consider the value of service contract offerings. Whether it’s protecting a piece of furniture from unwanted stains, or safeguarding a

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new phone from a cracked screen, they’ll walk out the door with peace of mind knowing you’ve got them covered. And by partnering with the right third-party warranty provider, you can customize plans for your Millennial consumers, improving their experience even more.

Want to learn more on how to adjust your retail business to attract and retain Millennial shoppers? Check out our coverage here!

JUNE 2018

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News Continued From Page 21

NOT MY CLIENT! American Bank and Trust Company v. Strauhs & Kaye et al., 65 N.Y.2d 536, 546 (1985). Under Strauhs, a non-client can sue an accountant in a “near privity” jurisdiction if the following elements can be established: “the accountants must have been aware that the financial reports [or other written communication prepared by the accountants] were to be used (1) for a particular purpose or purposes; (2) in the furtherance of which a known party or parties was intended to rely; and (3) there must have been some conduct on the part of the accountants linking them to that party or parties, which evinces the accountants’ understanding of that party or parties’ reliance.”

Accordingly, the non-client must have been known to the accountant (at least as a class if not individually), the accountant must have been aware the non-client was going to use the accountant’s work for a particular purpose (such as a particular transaction), and there must be some objective conduct by the accountant linking the accountant to the non-party in such a way that it demonstrates the www.chart-exchange.com

accountant’s understanding that the non-client was going to rely on the accountant’s work.

The “linking conduct” element of the near privity standard is probably the most important for the practitioner to keep in mind.

While you should always pay attention to any indication that a client is going to share your work product with a third party as part of a transaction or business relationship, it is even more important in a near privity jurisdiction to carefully limit your contact with any such third party.

No contact is best since even limited contact may raise a question as to whether there is sufficient linking conduct.

Moreover, many lenders are well aware of the near privity limitation and may ask that you send copies of your work product directly to them or provide some type of representation concerning the information they received from your client. These requests are traps for the unwary accountant. A better practice is to insist that the client provide all information to the lender and carefully limit responses to requests for “comfort letters” with the assistance of an attorney or risk management professional.

Other states are said to be Restatement jurisdictions,” referring to their adherence to the approach spelled out in section 552 of the Restatement (Second) of Torts.

Under this approach, liability

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extends beyond clients, but only to the limited group of entities that will receive the information directly from the accountant or that the accountant knows will receive it from the client, and who justifiably rely on the information.

In Restatement jurisdictions, it is important to avoid providing reports, tax returns and other information to anyone other than the client, and to the greatest extent possible limit the client’s ability to pass such information along to third parties. While you cannot entirely control who a client may share its information with, you can incorporate provisions into your engagement letters stating that you are not aware of any other recipients and that your client must obtain your consent prior to sharing your work product with any third party.

Additionally, if you provide paper copies of your work product to the client, you should only provide as many copies as the client reasonably needs for its own purposes, thereby avoiding the appearance that you knew the client would be sharing the information because you provided extra copies.

Still other jurisdictions adhere to the “foreseeability” approach, which extends liability to anyone who might foreseeably rely on the accountant’s work product.

See Not My Clients! Page 37 JUNE 2018

31

ANALYSIS - Fortegra

THERE ARE A LOT OF MYTHS OUT THERE ABOUT INSURANCE UNDERWRITERS Fortegra takes these common claims to task

by Joe Alberti

T J

oe Alberti is Vice President of Specialty Programs and Products for Fortegra Financial (a Tiptree Inc. company). Fortegra® and its subsidiaries comprise a singlesource insurance services provider that offers a range of consumer protection options including warranty solutions, credit insurance, and specialty underwriting programs.

Delivering multifaceted coverage with an unmatched service experience for domestic and international partners and their customers, Fortegra solves immediate, everyday needs, empowering consumers to worry less and experience more.

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he role of insurance underwriters is pretty straightforward: they work with insurance companies to evaluate the risk of insuring a car, a home, a piece of furniture, a mobile phone, something, and advise if the insurer can afford to take on that risk. It’s incredibly beneficial for insurance companies to team up with an underwriting partner to help inform policies, but the common rap against underwriting is that it’s slow, inflexible, and a big hassle.

Is it all true? We take a look at these three common claims and how a partner like Fortegra can bust these myths.

MYTH 1: UNDERWRITERS WORK TOO SLOW They say slow and steady wins the race, but our team of experts work around the clock to make sure your policies are filed quickly and efficiently not only for you, but also for your clients. We evaluate the policy, ask key questions to gain a better understanding of your goals, and offer a complete action plan. Sounds like a winning strategy!

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MYTH 2: UNDERWRITERS AREN’T FLEXIBLE While it’s easy for insurance underwriters to turn down a policy claim based on previous customer filings, a great underwriting partner should be willing to proactively reevaluate the situation with you to see how they can better meet clients’ needs. In addition, an underwriter like Fortegra offers custom policies tailored to your clients’ needs and lifestyles. Some may say there’s no flexibility in underwriting; we say that myth is busted.

MYTH 3: UNDERWRITERS ARE A BIG OL’ HASSLE Sure, it’s easy to feel working with an underwriter can be a hassle, but the reality is that the juice is worth the squeeze—if you’re interested in saving time and money in the long run. Plus, underwriters tend to be detail-oriented, helping you gain clarity while identifying positive opportunities for your clients to save even more.

While these claims may be true for some, at Fortegra our underwriters deliver comprehensive, customized policies for clients, busting myths so our partners can worry less and Experience More.

Let’s get started. Learn more about our underwriting capabilities today!

www.chart-exchange.com

Your Partner for Admitted Market Capacity

1

PROGRAM CARRIER WITH NEARLY

$

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A- RATING A.M. BEST

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As CHART's newest vendor partner, Fortegra's admitted paper helps coverholders and MGAs gain access to premier markets.

Learn how Fortegra’s admitted program can help you Experience More at fortegra.com/programs, or via email at programs@fortegra.com.

Fortegra® is the marketing name for the specialty underwriting operations of Fortegra Financial Corporation and its subsidiaries. Specialty underwriting program availability varies by jurisdiction. Where available, the programs are underwritten by admitted insurance companies.

BRIDGING THE GAP

BETWEEN USA AND LLOYD’S OF LONDON

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www.chart-exchange.com

News

ASCOT US HOLDING CORP. TO ACQUIRE GREYHAWK INSURANCE CO. AND ITS SUBSIDIARY

M

ay 22, 2018 – Ascot US Holding Corp. will acquire Greyhawk Insurance Co. and its subsidiary Greyhawk Specialty Insurance Co. Greyhawk is a Colorado domiciled admitted lines insurer that has been in runoff since 2006. Greyhawk Specialty is a dormant Rhode Island domiciled excess and surplus lines insurer. The acquisitions are subject to regulatory approvals.

a managing agent for Syndicate 1414 at Lloyd’s; Ascot Reinsurance Co., a Bermuda based specialty reinsurer; and Ethos Specialty Insurance Services, a New York based managing general agent (MGA). Ascot Group is owned by the Canadian Pension Plan Investment Board, the largest pension plan in Canada with over C$300 billion in invested assets.

Proud supporters of CHART

Serving coverholders’ needs since the 1930s … and into the future

The Greyhawk companies will expand Ascot’s U.S. platform and provide increased access to the U.S. insurance markets.

Ascot Group Limited is a Bermuda domiciled global specialist in insurance and reinsurance. The group compromises three divisions: Ascot Underwriting, www.chart-exchange.com

Bespoke solutions Packaged lines Enhanced commissions Web-based platforms US domiciled marketing office Access us through 170 Lloyd’s brokers

AtriumUw

www.atrium-uw.com

Atrium Underwriters Ltd

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35

analysis - Kroll a racial or religious group?

Shorter retention periods save storage costs, but can also leave departments open to criticism that they are deliberately erasing data to protect their officers from complaints.

Continued From Page 14

POLICE CAM DATA GUIDANCE

•

wait to file a complaint. If the complaint and storage periods aren’t coordinated, then complaints filed after the video is destroyed are hard to verify or defend. Is a department likely to have requests based on a belief that an officer has a long-term problem with

•

How many of the videos contain evidence that must be preserved as long as a criminal case is pending?

Is data processed and stored in an in-house repository, or outsourced to a cloud-based storage system?

Certainly, the problem is partly technological — how efficiently can video be compressed for storage

without losing too much detailed information? How can systems protect all this data from hackers?

Yet the most important issues will require legislators at the municipal, state and federal levels to provide police with applicable standards, including: •

What should be recorded?

Without some guidance, a court may find that an officer should have recorded more of an encounter. Saying “the camera is always on” is unrealistic. Where should the line be drawn?

Should restroom breaks and meals be recorded? If so, how can the privacy of others be See Police Cam Data Page 48

About the Authors: aniel Linskey is a Managing Director in Kroll’s Investigations and Disputes practice, and is head of the Boston office. As the former Superintendent-in-Chief of the Boston Police Department (BPD) and a 27-year veteran of the force, Dan provided strong leadership through some of the most tragic and contentious events in the city’s history, including the Boston Marathon bombings and the Occupy Movement. Dan serves clients in diverse industries with uncommon experience in investigations, crisis response, and risk management, as well as personal, physical, and operational security strategies.

Widely respected for his knowledge of the complexities inherent in law enforcement and homeland security, Dan has also consulted with numerous national and international government agencies on a broad range of challenges, including large-scale event management, crisis leadership, and preparedness and community engagement strategies.

D

A

lan Brill is a Senior Managing Director with Kroll’s Cyber Security and Investigations practice, based in the Secaucus office. As the founder of Kroll’s global high-tech investigations practice, Alan has led engagements that range from large-scale reviews of information security and cyber incidents for multibillion-dollar corporations to criminal investigations of computer intrusions. He has worked on many of Kroll’s major international projects. Alan serves as both a consulting and testifying expert in major cases where his ability to explain complex technology concepts provides counsel with a valuable litigation resource.

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News Continued From Page 31

NOT MY CLIENT!

What is a prudent accountant to do?

•

• This approach essentially abandons the concept of privity and opens the accountant up to claims by just about anyone. Defending a claim based on the absence of a relationship with the plaintiffs is very difficult and there are no meaningful risk management steps that can be taken to limit liability to third parties.

Finally, some jurisdictions have adopted statutes and regulations that specifically address when non-clients can sue an accountant.

In New Jersey, for example, if the non-client third party is a bank, the bank, in addition to meeting the elements applicable to all other non-client third parties, also must obtain a letter from the accountant in which the accountant acknowledges the bank’s intended reliance.

This is an important protection for accountants in New Jersey since banks pursuing claims against their defaulting borrowers’ accountants is one of the most commonly encountered third-party claims against accountants.

•

First, know your state’s rules regarding who can sue accountants for negligence.

Make sure your partners and staff are aware of these rules and act accordingly.

Second, to the greatest extent possible limit communications and distributions of reports or tax returns to the client.

Third, avoid oral communications that could give any credibility whatsoever to any claim of reliance by the non-client. If compelled to discuss a client with the client’s lenders, creditors or investors, be sure to document what was said to confirm that there were no representations and that the nonclients were informed that they should not rely on anything conveyed during that discussion.

WOULD YOU LIKE TO HAVE YOUR MESSAGE DELIVERED TO 100,000+ FOCUSED INSURANCE INDUSTRY EMAIL ADDRESSES EVERY MONTH?

These considerations do not directly impact other claims that are often brought against accountants, which have their own elements and own legal analysis, such as breach of fiduciary duty or fraud.

Moreover, auditors of publicly traded companies also are governed by federal securities laws, which have their own rules for who can and cannot sue accountants.

When in doubt, contact a knowledgeable attorney or risk management professional.

I’m Kate Boyle Managing Editor. I handle CHART Exchange Advertising. Call me at 302 765-6056 and let’s have a conversation.

SUMMARY www.chart-exchange.com

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www.chart-exchange.com

News

THE SKY IS FALLING! A 3-PART ARTICLE FOR SIAA MEMBER AGENCIES: PART 2

By Matt Masiello, EVP & Chief Operating Officer

I

n part 1 of this article, I discussed changes coming to the insurance industry. Now let’s talk about SIAA and what we’ve done - and are doing - to meet the challenges associated with this evolution.

SIAA is NOT sitting idly by watching the industry evolve. We and your local Master Agency are incentivized by the GROWTH of YOUR agency. We are ONLY successful if you grow and succeed. We don’t win if you lose business, we don’t win if your agency shrinks, and we certainly don’t win if you don’t survive. Our model is built on the success of the overall member agency, your agency, not just placing business or receiving fees. Add to

this the fact that your agency is your and your family’s livelihood, and that’s a BIG responsibility that we take very, very seriously. It’s pretty motivating.

SIAA is dedicated to being the future of the local agency distribution system. That’s a significant claim, so let’s back it up and get you in the loop.

•

•

Collectively, we write $7.4 billion of insurance premiums. If we were one sole agency, we would be the third largest agent in the U.S. (and soon to be the second largest). You are part of a business model that writes a significant amount of the Strategic Partners business each year.

SIAA member agencies write $3.5 billion in premium – 58% of our business – with Strategic

Partner Insurance Companies.

In 2018, we’ll collectively write almost $720 million of new business with these 23 insurance companies.

•

We have over $800 million of E&S business and, in just a few short years, have consolidated $225 million with three Strategic Partner Wholesalers. This is opening new doors for all of us with specialty markets and programs.

•

Our 7-year organic growth rate with Strategic Partner Companies is 76%. The organic growth rate of their TOP brokers over that same time is only 4.2%. Who looks good now?

See The Sky Is Falling! Page 44

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bout the author: Matt Masiello is executive vice president and COO of SIAA. Matt is responsible for operational management of the largest alliance of independent insurance agencies in the United States and its related companies, providing leadership to over 50 direct employees, 49 Master Agencies and more than 6,500 independent insurance agents across the United States. Matt is also president and CEO of SAN Group and Strategic Independent Insurance Agency Solutions. He can be reached at mattm@siaa.net.

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Analysis - Vantage Agora Continued From Page 24

THE SECRET LIVES OF APPS et al., alleges that the BART Watch app collects unique cellular number identifiers and user physical location without consent. A second amended complaint, filed on January 16, 2018, continues to allege that BART is still collecting such data without consent for certain users, allegedly violating the California Cellular Communications Interception Act. Another major area of concern in connection with apps is the collection of user preferences and personal information and what constitutes adequate consent. An example is the pending action of Zak v. Bose Corporation, which claims that Bose, through its Bose Connect app, “(i) collect[s] and record[s] the titles of the music and audio files consumers

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choose to play through their Bose wireless products, and (ii) transmit[s] such data along with other personal identifiers to a third-party data miner without consumers’ knowledge or consent.” This information is collected via Bluetooth and provided to third parties, along with the users’ “personally identifiable serial number.”

A similar pending litigation, JD Rushing et al. v. The Walt Disney Company et al., claims that Disney is collecting children’s personal information from 42 of its apps, such as “persistent

identifiers,” typically a unique number linked to a specific mobile device, and is sharing the data with advertisers without parental consent. In an action that recently settled, N.P. v. Standard Innovation (US), Corp., the plaintiffs claimed that the vibrator manufacturer “collect[s] and record[s] highly intimate and sensitive data regarding consumers’ personal We-Vibe use, including the date and time of each use TABLE OF CONTENTS

and the selected vibration settings,” and transmitted and stored that along with the user’s personal email address without consent.

A potentially growing concern on privacy involves those apps that use audio beacons, which would turn on the microphone of a user’s smartphone or other electronic device. One litigation, Satchell v. Sonic Notify Inc. et al., claims that the audio beacons for the Golden State Warriors app would constantly record all audio, including personal and private conversations.

While the app does seek certain permissions, including a request to use a device’s microphone, the plaintiff alleges that the defendants do not ask consumers to “opt-in” to beacon technology and its recording capabilities.

This litigation includes claims for alleged violation of the Federal Wiretap Act. POTENTIAL COVERAGE CONCERNS As the types of claims submitted for coverage involving apps have evolved, there are a number of possible policy exclusions, especially on cyber policies,

See The Secret Life of Apps Page 42 www.chart-exchange.com

NEWS

U.S. EXECS AREN’T READY FOR NEW EU DATA PROTECTION LAWS - HERE’S WHY THIS COULD BE A RISK

By MIa Papanicolaou, COO, Striata

A

bout the author: Mia Papanicolaou started her career in South Africa in the media sector before moving to the electronic messaging space, where she served as business director for email marketing firm eMessageX. She joined Striata in 2006 as Head of Email Marketing. Papanicolaou moved to the UK as Head of Operations in 2010, after which she moved to the US in 2013 to take up the post of General Manager of the US region.

She currently heads up North, Central and South American operations in her position as COO. Papanicolaou is a regular speaker on her areas of expertise – secure electronic document delivery and email marketing.

www.chart-exchange.com

O

n May 25 2018 the European Union’s (EU) data protection regulation, known as GDPR, is going into effect. While many businesses in the EU have been readying themselves for this regulation change, US businesses that provide services in the EU may not be as prepared.

The GDPR governs the collection of personal data or behavioral information from people who are in the EU. Given the global and virtual nature of business in the internet era, it is often difficult to establish where a customer or potential customer resides at the point that they consume the service. It is this that makes the GDPR applicable to American businesses.

The purpose of the GDPR is to force businesses to be transparent and careful while processing personal information when providing services in the EU, regardless of where the information is processed or whether

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the data subject is a citizen. The type of information protected under this legislation is broad: identity, contact, banking, medical, employment, education. The definition of processing is also broad - anything from collecting, storing, using and sharing.

A research report released by cybersecurity specialist Trend Micro in September shows that 95% of global business leaders surveyed know they need to comply with the GDPR. Worryingly, however, analyst house Gartner Inc is predicting that fewer than half of businesses will be fully compliant with the GDPR by the end of 2018.

The reason for this low level of compliance? Executives are unaware that even if the business is located in the USA, it’s where the service is delivered that determines this regulation applies. They may also be unclear on what personally identifiable information needs to be protected.

For example, 64% of those surveyed See Execs Not Ready For GDPR Page 47 JUNE 2018

41

NEWS Continued From Page 22

Continued From Page 40

NSM INSURANCE SELECTS VALUEMOMENTUM’S BIZDYNAMICS

THE SECRET LIVES OF APPS

“NSM recognizes the importance of digital engagement with customers, agents, and employees combined with product innovation, as levers to realize their goals for market expansion and competitiveness”, said Abhijeet Jhaveri, CMO of ValueMomentum. “We are excited to partner with the NSM team in their transformation journey.”

ABOUT NSM INSURANCE GROUP For more than 27 years, NSM Insurance Group has been an industry leader in the development, implementation, marketing and underwriting of industry-specific insurance programs.

The company’s insurance programs include social services and behavioral health; CAT driven property; collector cars; workers’ compensation; staffing; sports and fitness; breweries and wineries; professional liability for architects and engineers; and pet insurance. NSM Insurance Group is aggressively seeking to acquire additional program managers and niche specific insurance businesses.

For more information, contact Bill McKernan at 610-808-9561 or visit https://www.nsminc.com/.

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that may preclude or limit coverage.

Two of these are the “collection of private data without consent” and the “web scraping and data harvesting” exclusions. As presented by certain of the above-referenced cases and others, it is alleged that the collection of data through an app was not done with the full consent of the end users. As noted, certain lawsuits are alleging that apps are collecting information regarding the users’ location and preferences and how they interact with marketing and advertisements without the users’ consent. There will be debate between litigants as to what constitutes personal information and what data the users have consented to share, but such allegations alone may impact coverage.

Related to this are exclusions that preclude coverage for unlawful surveillance, in particular allegations of eavesdropping and audio recording, especially those apps that use audio beacons and the use of a phone’s microphones to listen and temporarily record audio. Claims involving the distribution of the information gathered from these apps and later used to target the user via content suggestions or emails also may be excluded under an unsolicited communications endorsement. As the

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language in E&O and D&O policies often has not evolved to cover such risks, and wording in cyber policies lacks uniformity and can be everchanging, specific language needs to be carefully considered, matching the insured’s area of specialty to the coverage sought.

GOING FORWARD Corporate innovations through smartphone apps are changing by the day, each looking for that competitive edge or the ability to monetize user data. Government regulation has been playing catch-up; as certain aspects of people’s lives have become more public, they seek to enforce their right to privacy and/or the right to be “forgotten.” With additional rules in the United States such as the new regulation on cybersecurity and the protection of data from New York State’s Department of Financial Services, as well as the General Data Protection Regulation (GDPR) in Europe, future claims involving the collecting, storing, or sharing of personal information will engender a heightened concern.

Noncompliance may lead not only to government investigations, but also potential private actions for a company’s failure to meet the standard of care in controlling such information. It is unlikely that litigation and government regulation will stunt the exponential growth of the apps.

However, with the greater potential for future claims, companies should be aware of the potential limitations on insurance in responding to such claims. www.chart-exchange.com

NEWS Continued From Page 9

CHART THE HIGH COST DEFENDER OF STRESS & COVERHOLDER E&O

WHAT TO DO ABOUT IT

AVAILABLE NOW! the example by doing it themselves.

Create a culture where people do not feel guilty staying home when they are ill. Even more important, encourage your employees to take all of their vacation days each year.

Mark Lann Phone:

305-248-9495 Email: chart.eo@rockwoodinsurance.com

Have a sense of humor. Humor can be a powerful tool for relieving stress.

Share a laugh with your employees.

It’s a great way to help diffuse a

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Create an after-hours work policy.

Another big stressor? After-hours e-mails. Studies show that many employees feel like they have to answer e-mails and solve client problems after-hours. Simply put, it is stressing workers out.

Be a good communicator. When was the last time you simply talked with your employees about the changes happening in your company?

Sometimes not knowing what is happening or why changes are being made can affect stress levels. It doesn’t mean your employees need to know the sensitive information; but basic information can calm their nerves.

Offer food. Do you order in food for your employees occasionally? How about breakfast during a morning

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meeting and offering some bagels, fruit, yogurt and coffee? Need to have a training meeting? How about incorporating it over the lunch hour and have lunch catered? It’s a proven way to raise morale at the office.

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Analysis - Siaa Continued From Page 39

THE SKY IS FALLING! •

SIAA has signed over 6,700 agencies. We have helped over 4,200 insurance professionals realize their dream of owning an agency. More importantly, YOU (member agencies) are a significant distribution system for the Strategic Partners. YOU and your peer agencies have opened up distribution that carriers traditionally believed was too expensive to access or manage.

•

We are investing in YOU and your local independent agency distribution system: a. SIAA has made significant investments in our Agency Foundation program, to bring in former captive and exclusive agents and help them build a sound business. We are going after that 40% personal and 12% commercial market share. b. We have had over 600 member agents complete the Business Insurance Advantage program, helping them develop or increase production efficiencies in commercial lines. In 2017, our small commercial growth will approach $130 million in premiums.

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c. We’ve launched dozens of SIAA member exclusive training programs in the Training & Learning Center to give principal owners and their staff the tools and skills to make the evolutionary steps.

only looking out for their piece of the pie in your agency, our professionals WIN if you grow your entire agency and succeed.

Yet another great partnership.

•

The results of these services and benefits are not lost on our Strategic Partners. They view the resources that we provide to you, our member agents, as a benefit to them as well. These programs bring them new and better points of distribution and the services bring them better educated agents. Our field organization augments their field representatives, lowering their marketing expenses and remember – they’ll get $720 million of new business in 2017!

SIAA assists these companies in managing a portfolio of local agents and a portfolio of books of business.

•

Remember those ‘disruptors’ and ‘insurtech’ mentioned previously?

Well, some of those folks tried to go directly to consumers only to realize they actually need traditional distribution. SIAA is implementing or piloting four of these platforms now. Also, believe it or not, our Strategic Partners are investing in these systems, but not for the reason you might think. They are doing it to learn what works (and what doesn’t). When they find something useful, they’ll apply it to benefit their successful distribution channel to make us even better. Several companies

Everyone likes money and we are still a capitalist society, employing and paying over 16,000 insurance professionals in agencies as part of SIAA due to the results we are generating with the Strategic Partners.” d. We’ve made available marketing tools, traditional marketing materials, seminars and webinars, direct mail, target marketing, websites, mobile apps and more. We don’t care if you use our stuff or not– we just want you to use something (and we try to make it easy for you)! e. Collectively, SIAA and the 49 Master Agencies have a field organization of over 120 insurance professionals - and it’s growing. We now have as many people in the field as most larger insurance companies…

However, unlike the insurance company representative who is TABLE OF CONTENTS

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are openly sharing these initiatives and results with SIAA to keep us informed.

•

MONEY: Everyone likes money and we are still a capitalist society, employing and paying over 16,000 insurance professionals in agencies as part of SIAA. This is due to the results we are generating with the Strategic Partners. Because of the benefit that we provide you, and the partner companies in managing the portfolios, we get paid more (more than standalone agents and more than agents who are part of other groups), and you get these funds. As an SIAA member agent you have five separate ways to earn money on your book: highest commissions available (paid directly on codes), local profit sharing, local bonuses/incentives, national quarterly FIXED bonuses and national year-end profit sharing!

You are part of the organization that is looking to go to the moon and plant a flag. Well, not the moon – but let’s collectively plant the flag as the proven local agency distribution system, with the best agents (advisors!) generating the best results and providing the best solutions to your community and clients.

Stay tuned for the 3rd part of this article where I discuss YOU, our Member Agencies, and actions you can take to be immersed in the evolution. www.chart-exchange.com

Continued From Page 27

COMMUNICATION IN THE WORKPLACE AND HOW TO IMPROVE IT others entire careers. So when you are bothered or concerned with something (or someone) go directly to who you know could alleviate the issues in the situation.

Talking “behind their backs” can lead to miscommunication and broken trust between coworkers.

Every company should use these skills to build good communication within their own work environments. Whether you are a drone, a queen bee or if it’s your first day in the hive, using honest communication can lead

to a less stressful and productive workplace.

Vantage Agora can provide you with the right set of wings to improve communication within the workplace today! With our (BOS) OX Zion®, there are a variety of tools that can help the hive like OX Calendar, OX Mail, group chat and other beneficial applications. Want to learn more?

Contact Us Today!

DAVID COPPERFIELD NEGLIGENT - BUT NOT LIABLE FOR DAMAGES

A

British tourist who claimed his injuries from participating in a David Copperfield Las Vegas magic show cost him $400,000 in medical costs was disappointed when a jury found negligence by Copperfield, but no liability for damages. from the magician, the TABLE OF CONTENTS

MGM Grand Hotel or Copperfield’s company, Backstage Disappearing, all named in the suit. While negligence is usually followed by responsibility for monetary damages, in this case the jury awarded nothing to the plaintiff Gavin Cox who claims he fell while being ushered out a back door during an illusion trick by Copperfield.

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NEWS

SPECIALTY PROGRAM GROUP, LLC. ACQUIRES MARINE & CRANE BUSINESSES

S

ummit, New Jersey, April 12, 2018 – Specialty Program Group, LLC. (SPG) a leading insurance holding company for specialty brokerages and underwriting facilities announced today that it has acquired the assets of Norman-Spencer Agency’s (NSA) crane program, personal lines watercraft program and commercial lines recreational marine program divisions.

Terms of the acquisition were not disclosed. With offices across the country, NSA’s personal lines watercraft program and commercial lines recreational marine program divisions focus on providing solutions for personal and commercial recreational marine risks including personal watercraft, yachts, marinas, boat dealers, yacht brokers, boat repair businesses, and yacht clubs.

NSA’s specialized crane and boom underwriting facilities are recognized industry leaders and are based in Eastern Pennsylvania. “This is a great acquisition for SPG for several

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reasons. It further strengthens our growing position as the undisputed leader in the recreational marine & personal watercraft space. In addition the crane business will provide us with a foundation as we build our construction platform. Both businesses have great leadership and add to our deep bench of talent within SPG” said Chris Treanor, President and CEO of SPG. “The Marine and Crane Businesses have been long-held and highperforming components of our underwriting and distribution strategy. The timing, however, was right for us to focus more attention and resource upon emerging opportunities in our insurance underwriting, distribution and related services portfolio. It was important that these businesses and employees were placed in good hands for the next phase of their life cycle and we believe SPG is a great fit” said Brian Norman, President of NSA. Merger & Acquisition Services, Inc. served as Financial Advisor to the Norman-Spencer Agency.

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WOULD YOU LIKE TO HAVE YOUR MESSAGE DELIVERED TO 100,000+ FOCUSED INSURANCE INDUSTRY EMAIL ADDRESSES EVERY MONTH?

I’m Kate Boyle Managing Editor. I handle CHART Exchange Advertising. Call me at 302 765-6056 and let’s have a conversation.

www.chart-exchange.com

News Continued From Page 41

EXECS NOT READY FOR GDPR

by Trend Micro were unaware that date of birth constitutes personally identifiable information. A further 42% wouldn’t classify email marketing databases, 32% physical addresses and 21% a customer’s email address, as protected information. All of these are personal identifiers and failure to protect them could result in a fine of up to 4% of annual global turnover or $24.4 million (€20 million) (whichever is the larger) for breaching the regulations in the GDPR. If your business sends email marketing communications that may result in a service being delivered in the EU, then the safest approach is to plan as if the GDPR does apply to you and take steps to comply. Likewise if you collect personal data as part of a marketing survey and the respondent could be in the EU. Complying includes ensuring you have opt-in consent from everyone you send email marketing to, that you have that consent on record, and can show what they agreed to receive. You also need to ensure that

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any personally identifiable data you hold is adequately protected from data breaches, whether accidental or criminal. If there is a breach, you may need to comply with the GDPR rule that an EU regulator or ‘supervising authority’ needs to be informed of a breach within 72 hours of finding the breach. The GDPR lays out the parameters which define whether or not a breach needs to be reported including whether the breach of personally identifiable data will place the rights and freedoms of EU citizens at risk. If that risk is high, the data subjects themselves need to be notified as well.

Relying on consent as the legal basis for processing information is just one of the reasons allowed under the GDPR. If you are already providing a service to an individual, and the legal reason for processing their information could be ‘legitimate interest’ or ‘contractual obligation’, then consent is not required for the purposes of that processing. However, if you want to use that personal information for a different reason, you would have to get consent.

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GDPR compliance is a complicated and multi-faceted matter that merits expert attention from both legal and technology experts to ascertain just how much at risk you are and how securely your data is protected. Questions of enforcement are still being answered, as well, but nevertheless, US companies (and those with a strong Web presence, in particular) need to evaluate their risk and take steps to comply with the GDPR, if need be. The penalty for noncompliance is high.

ABOUT STRIATA Striata provides strategy, software and professional services that enable digital communication across multiple channels and devices.

We are experts in message design, generation, security, delivery and storage.

Clients choose our technology and services to encrypt, send and store confidential documents; execute integrated marketing campaigns; and distribute high volume electronic communications.

The world’s largest financial services, utility, insurance, retail and telecommunications companies trust us to achieve unrivalled results in digital adoption and transformation.

We have operations in New York, London, Johannesburg, Hong Kong, Sydney and partners in North and South America, Africa, Europe and Asia Pacific. www.striata.com

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analysis - Kroll Continued From Page 36

POLICE CAM DATA GUIDANCE protected? Or if a meal is not recorded, could a plaintiff claim that this was because the officer drank alcohol? What about an officer’s interactions with a confidential informant? Or a rape victim? Should the camera footage be made available even where victim-shield laws are in place?

•

How long should the video be retained if it is not flagged as being needed for evidence?

A month? A year? Forever?

Rules or laws are needed at municipal, state and federal levels to provide departments with a defensible basis for these decisions.

•

What are the rules for access?

How is the privacy of individuals on the videos protected? If a file is provided to counsel in a case, for example, and it includes images of innocent people, can counsel decide to make it public on the internet? Can news media make Freedom of Information requests for large volumes of video to pursue their

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own investigations of police actions? Does video given to them first have to de-identify innocent persons? How does the individual’s right to privacy affect the recording of noncriminal interactions with the police? A traffic stop should probably be recorded, but what about a citizen who comes up to an officer and asks for directions or who asks how to make a complaint?

There are additional risks to police departments and municipalities that collect this data if they do not have an audit function to conduct reviews and ensure compliance with policies and applicable laws and regulations. For example, an officer can be involved in a high-profile event today. What if, in the course of investigating the incident, it is revealed that in the previous 90 days the officer had been frequently violating the laws, policies, and procedures, instances of which were recorded and in possession of the department prior to the event that triggered the investigation?

Without an independent auditing program to identify issues before they become a problem, the community could face a significant erosion of the very trust it was hoped this technology would bring.

However, it is impossible to have supervisors watch eight hours of video for hundreds of officers each day. Departments and elected officials will need to consider how to manage and audit the data as TABLE OF CONTENTS

they implement policies.

Likewise, every government’s budget will have to assess and address the annual data storage costs associated with these devices.

Without some form of regulation or legislation, the risks of litigation costs and court-imposed penalties could prove to be overwhelming.

The time for attention and action is now.

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Image Credit: Creative Commons

LLOYD’S OF LONDON

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