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6 Glenn W. Clark, CPCU, Publisher CHART Exchange Earliest Adopter
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Recent Ban Of All Vaping Products In Massachusetts UnfairTo Industry & Consumers
15
Rebrand Announcment: Vantage Agora, Inc. D.B.A. EOX Vantage
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Best Laid Plans Cyber Risk Analysis by BlueVoyant
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Agency Networks On The Rise Influencing Insurance Distribution
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Employment Practices Liability: Using Handbooks As Loss Control Tool
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Single Cyber Attack On Asia-Pac Ports Could Cost $110BN, Equal To Half Of 2018 Natural Disasters
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Fully Licensed CHART MGA Created To Handle Distribution For London Syndicates
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Non-Financial Issues Crying Out For An Ever-Increasing Share Of Time In Today’s Boardroom
Lloyd’s Builds New Partnership With Habitat For Humanity Great Britain
35
First Of The Vape-Lung Product Liability Cases Has Been Filed
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New Lloyd’s Report Shines Spotlight On Business Interruption Losses In Supply Chain
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Recent Ban Of All Vaping Products In Massachusetts UnfairTo Industry & Consumers
Cover Image: The image is released free of copyrights under Creative Commons CC0.
WHEN IT COMES TO CYBER SECURITY, THE BEST LAID PLANS CAN MAKE A DIFFERENCE... - ANALYSIS BY BLUEVOYANT PG 16
NOVEMBER 2019 VOLUME 4 - ISSUE 11 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
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MESSAGE FROM THE EARLIEST ADOPTER
FULLY LICENSED CHART MGA CREATED TO HANDLE DISTRIBUTION FOR LONDON SYNDICATES
We are looking to identify a core product suite of ten offerings by the first quarter of 2020. Syndicates that are developing products for the domestic U. S. market should consider CHART MGA as an essential tool in their efforts to get clear, consistent and essential feedback from experts who have been in the U.S. market their entire insurance careers.
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R
egular readers of this magazine know we regularly use this column as a forum for discussing new initiatives that are being launched as part of CHART 2.0. In this edition, we will be reviewing the concept of CHART MGA. Our team has been approached by a number of London Syndicates interested in learning more about product distribution. They have insurance offerings that were developed for the domestic market. The advantages of an excellent coverage form, automated underwriting, London expertise, etc. are somewhat mitigated by an inability to launch efficiently in the U.S. It is both timeconsuming and expensive to find just the right wholesaler
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Glenn W. Clark, CPCU Publisher & Earliest Adopter
willing to make the investment required to distribute a new product. Licensing also becomes an issue here, as the authority to transact business on a non-admitted basis is needed to finalize a Lloyd’s-underwritten sale in almost every state in the U.S. We have formulated a strategy to specifically address this need: CHART MGA. This new facility is fully licensed to handle lines insurance transactions within every state – on both an admitted and surplus lines basis. Our administrative team possesses the necessary expertise in a variety of disciplines,
www.chart-exchange.com
including underwriting, premium collection/remittance, marketing, and compliance. More importantly, we already have Delegated Underwriting Authorities through Lloyd’s. Technology plays a key role within the new operation (on both ends). Whenever possible we will feed the existing technology of the London partner yet utilize a CHART branding on the U.S. end. A high level of automation allows CHART MGA to administer a number of diverse product lines efficiently and effectively. If the necessary level of technology does not currently exist, we can collaborate with one of our Preferred Vendor Partners to develop a webbased system that handles all submission, quote, bind, and billing functions. The application will also possess a robust reporting feature. Participating members can utilize this capability to monitor key performance statistics like submission activity, quote-
www.chart-exchange.com
to-bind ratios, premium specific initiatives to generate production, and more. We’ll submission flow from specific capture all submission data to target niches. enable us to build marketing databases for future solicitations. Retail agents wishing to place We are looking to identify a core business through a CHART MGA-administered program product suite of ten offerings do not have to be surplus lines by the first quarter of 2020. licensed. The facility will handle Syndicates that are developing the collection/remittance of products for the domestic U. S. premium taxes as well as all market should consider CHART MGA as an essential tool in their compliance and reporting functions. efforts to get clear, consistent and essential feedback from experts who have been in the U.S. market their entire insurance careers. Each product line administered by CHART MGA will have its own unique storefront in CHART Markets. Promotional campaigns targeting retail insurance agencies will be implemented in an effort to drive traffic to this unique Internet platform. We will utilize media advertisement, direct response mail, broadcast e-mail, and other methods to raise awareness. CHART Markets can also develop product-
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Feel free to e-mail us at info@ chart-exchange.com with any questions or feedback you may have about this new and innovative strategy.
Glenn W. Clark , CPCU CHART’S Earliest Adopter
NOVEMBER 2019
7
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ANALYSIS - KROLL
NON-FINANCIAL ISSUES CRYING OUT FOR AN EVERINCREASING SHARE OF BOARD TIME IN TODAY’S BOARDROOM By Neil Kirton
N
eil Kirton, Managing Director of the Business Intelligence and Investigations practice discusses non-financial issues crying out for an ever-increasing share of board time in Today’s Boardroom.
N
eil Kirton is a managing director in Kroll’s Business Intelligence and Investigations practice and head of London Office. Neil has a deep understanding of financial and capital markets, and has spent his entire career operating and advising at senior management or board level. He joined Kroll in 2013, having spent 27 years working in the securities industry and investment banking in the city of London.
www.chart-exchange.com
Sitting in today’s boardroom, you might be forgiven for thinking that life has changed. While the financial metrics—the profit and loss, balance sheet and cashflow statement— remain core considerations, a growing number of non-financial issues beyond those invested in debt or equity cry out for an ever-increasing share of board time—both inside the boardroom itself and outside. Adapting to this new and evolving environment looks to be one of the defining characteristics of a successful executive and non-executive board member in listed and unlisted companies. As companies respond to the new environment, it is also likely the composition and make up of boards will change.
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SO, WHAT ARE THESE “NONFINANCIAL” ISSUES? In a media report last year two pension funds were reported to be questioning their allocations to a global asset manager. The problem? In both cases, the concerns were non-financial. The asset manager had delivered double digit growth per annum. Rather than the returns themselves, the pension funds were concerned about the ethics of how the returns were achieved. In the listed company arena, there are a number of recent examples of non-financial issues exposing the shortcomings of corporate culture, poor ethical behaviour and corporate governance weaknesses. As a board member, the reputational consequences of these shortcomings occurring on your watch can be significant - at one level, career limiting, and at another level inviting scrutiny from both regulatory and law enforcement bodies. The non-financial issues can have a direct impact on the financial. See Non-Financial Issues Page 27
NOVEMBER 2019
9
THERE’S A BETTER WAY TO CONNECT WITH LONDON …
CHART CAN GET YOU THERE FASTER! Most of us know about Lloyd’s of London. The market’s 332 year track record of innovation, technical expertise, and product diversity has cemented its reputation within the industry. Unfortunately, the vast majority of U.S.-based agencies with new program or product ideas are unsure of how to access the world’s oldest insurance brand. The CHART Exchange can help. We were established for the sole purpose of growing the U.S./London marketplace by serving as the conduit between domestic producers and Lloyd’s Risk Takers. Our vast network of Vendor Partners can provide the support needed to help develop your program proposal. Available services include Actuarial, Claims Administration, Marketing, Legal, and Systems. We can even assist in expediting the implementation of your new program through our unique “Incubator” facility. Interested in learning more? Visit our website at www.chart-exchange.com. We are also available via e-mail (info@chart-exchange.com) or by phone at the number below.
855-716-3660 The CHART Exchange 3001 Philadelphia Pike Claymont, DE 19703 www.chart-exchange.com • Fax: (302) 334-0325
ANALYSIS - WILSON ELSER
RECENT BAN OF ALL VAPING PRODUCTS IN MASSACHUSETTS UNFAIRLY PREJUDICES THE VAPE INDUSTRY AND VAPE CONSUMERS By Tori Levine
of illicit and unregulated THC cartridges from the black market.
M
assachusetts has taken a drastic and abrupt step by banning the sale of all vaping products, nicotine and THC, within its state borders for the next four months. This drastic and sweeping prohibition against vaping products will have farreaching economic consequences for many small businesses that make up the bulk of this new and burgeoning industry. The root cause of the recent vaping-related illnesses appears to be the result
REPORTS AND CAUSES Dr. Michael Siegal, a professor at Boston University’s School of Public Health, recently stated: “Given the fact that close to 90% of the cases and 100% of the deaths for which products have been reported are associated with marijuana vaping, it is inexcusable that the CDC [Centers for Disease Control and Prevention] fails to distinguish between the products being vaped.”
The communications from CDC also have failed to distinguish between vaping oil-based e-liquids − which were used in the illicit THC cartridges that have given rise to multiple arrests in Arizona and Wisconsin and cause lipoid pneumonia − and the water/ alcohol-based e-liquids that are used in virtually all e-cigarettes. More troubling is the fact that the media largely has overlooked that the manufacturers of nicotineSee Vaping Ban Prejudices Industry Pg 46
A
bout the author: Tori Levine is a trial attorney with significant experience representing a broad range of clients in diverse industries, including manufacturers, suppliers, retailers, distributors, contractors and professional service providers. In all types of litigation, whether its product liability, mass tort, commercial litigation, e-discovery or privacy, Tori understands that in today’s complex environment every client is faced with multiple challenges. To mitigate adverse effects, she assists in developing strategies to avoid litigation altogether or end it following investigation, all the while preparing for trial. In addition to maintaining an active practice in Texas and Oklahoma, Tori serves as national counsel in litigation, pre-suit investigations, and class actions and multidistrict litigation. She uses her broad understanding of the practical needs of business clients to manage the ramifications of peripheral issues while preserving the bottom line.
www.chart-exchange.com
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NEWS - LLOYD’S OF LONDON
AIG LAUNCHES NEW SYNDICATE AT LLOYD’S FOR THE U.S. HIGH NET WORTH CUSTOMER SEGMENT
A
merican International Group, Inc. (NYSE: AIG) today announced proposals to launch a new syndicate at Lloyd’s serving the specialist U.S. high net worth market that will start writing business effective January 1, 2020, subject to regulatory approval. This specialist syndicate represents substantial, accretive new business to the Lloyd’s market, writing up to US$1bn in gross written premiums. Syndicate 2019 will be managed by Talbot Underwriting Limited, the managing agency acquired by AIG in 2018, and will underwrite risks in the U.S. high net worth segment, where AIG Private Client Group (“PCG”) is a recognized market leader in the ultra-high net worth segment, with an established strong distribution network and a sophisticated client
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proposition. The syndicate has undergone the normal scrutiny Lloyd’s applies to any potential new entrant to the market and has also benefitted from some of the framework improvements for new entrants being piloted as part of the Future at Lloyd’s Blueprint One, including a much-streamlined initial application-to-approval process of around four months. Syndicate 2019 will enable AIG PCG’s clients to benefit from
additional products and holistic risk management solutions provided though the Lloyd’s market. It TABLE OF CONTENTS
represents significant new business to the market, driving profitable growth for both Lloyd’s and AIG, and expanding the value proposition for U.S. high net worth customers. “AIG’s industry-recognized Private Client Group and its differentiated distribution network are highly compatible with Lloyd’s blueprint for innovation and sustained growth,” said Peter Zaffino, Chief Executive Officer, General Insurance, and Global Chief Operating Officer, AIG. “We look forward to working closely with Lloyd’s to bring Syndicate 2019 to market, and to delivering enhanced differentiation and value to the US high net worth customer base.” Lloyd’s Chief Executive Officer, John Neal, said: “AIG Private Client Group is regarded as one of the flagship high net worth portfolios in the U.S., providing a bespoke underwriting and www.chart-exchange.com
NEWS
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within the insurance industry by assisting firms with their corporate development and acquisition/divestiture objectives. M&A Services is
NEWS - EOX VANTAGE
REBRAND: VANTAGE AGORA, INC. D.B.A. EOX VANTAGE
C
LEVELAND, OHIO, UNITED STATES, October 16, 2019: Big changes are propelling a newly reinvented product company to new heights. The company once known to many as “Vantage Agora” recently announced they will be doing business as (D.B.A.) EOX Vantage, effective September 22, 2019.
goals, as well as its current success and growth. EOX Vantage is amplifying business efficiencies by leveraging their world-class Enterprise Operating System, while still providing the same premium Managed Services they’ve become known for.
EOX Vantage CEO Sudhir Achar states, “There are a lot of changes, but we’re still the same great company delivering innovative products and services with a relentless focus on our clients. Our new company name, logo, positioning, tagline and mission statement are reflective of our exciting future direction.”
The company announced their re-brand at their 2019 Inspire Innovation conference, where they also launched version 3.0 of their Enterprise Operating System. The conference proved to be a success in more ways than one. Tara McKendry of JMI Reports, stated, “The re-branding that was presented today was really exciting because my company’s been using the services side, but to hear about the Enterprise Operating System, I’m really excited to get on, demo and find out more.” A customer-centric approach to doing business was the driving force behind the re-brand to become a product company with a services arm. The team is confident that the change will drive increased value and ensure long-term sustainability. The name change reflects the company’s future innovations and
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meaning a good view and an advantage in the marketplace. EOX Vantage’s name perfectly depicts what the company offers - visibility and control - into all areas of an organization.
SUDHIR ACHAR CEO and co-founder EOX Vantage
The new name is derived from two parts: ‘EOX’ is an abbreviation for enterprise operating system and ‘Vantage’ stems from the company’s former name, “Vantage Agora”,
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About EOX Vantage: At EOX Vantage, our goal is to deliver premier service with insights that boost overall operations. Clients choose EOX Vantage products and services to improve their operational efficiencies through direct assistance from the managed services team, and by leveraging the customized Enterprise Operating System. The end result is that EOX Vantage allows clients to focus on what they do best, because they have reduced the time it takes to manage the essential, non-core aspects of their operations and improve their effectiveness with data and insights.
NOVEMBER 2019
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ANALYSIS - BLUEVOYANT
BEST-LAID PLANS… By Austin Berglas and Jennifer Rothstein
T
he famous quote from John Steinbeck’s novella, “Of Mice and Men”, is adapted from Robert Burns, “To a Mouse” poem; “the best laid schemes o’ mice an’ men…often go awry”. This quote doesn’t apply to cyber security planning. Studies have shown that a proactive approach to cybersecurity greatly reduces the chances of business interruption when an
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incident turns into a breach. It is high time for organizations of all sizes to take a proactive, defensive stance when it comes to cybersecurity. You must plan as if you have already been compromised, take a threat actor’s view into your organization, and prepare for the inevitability that you will be targeted and breached.
•
A threat actor’s view into your organization – while a bit unsettling – should help you assess:
•
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• • •
Have you performed any assessments to determine your risk level? Are you accurately measuring your cyber risk? Are your personnel properly trained to defend and respond? Do they understand what’s expected of them to prepare and/ or remediate incidents? As a leader, are you prioritizing See Best-Laid Plans Page 32
www.chart-exchange.com
www.bluevoyant.com
••
For insureds that need forensics, incident response, or proactive security services
••
BlueVoyant is a pure play cybersecurity firm
••
WE GET IT – we do it faster and better
Austin Berglas | Global Head of Professional Services austin.berglas@bluevoyant.com Vincent D’Agostino | Head of Cyber Forensics & Incident Response vincent.dagostino@bluevoyant.com Jennifer Rothstein | Business Development Head, Insurance & Legal jennifer.rothstein@bluevoyant.com Breached: incident@bluevoyant.com | Info: contact@bluevoyant.com
ANALYSIS - PL COMMUNICATIONS
NETWORKS ON THE RISE By Paul Lavenhar
W
hile much of the attention in the independent agency community has been on mergers and acquisitions, networks ranging from national to regional are having a significant impact on the insurance distribution system. Independent agencies are competing against the mega players in the market that are buying up smaller agencies to fuel growth and add specialty market expertise. On the other hand, they are also faced with internet insurance providers that are tapping into consumer demand for the convenience of immediate service response online.
“Rapid changes in the world of insurance distribution are shaping a new ecosystem for insurers, distributors, and customers,” said Matt Sternat, Vice President, Insurance Research at Conning. “The traditional agent, broker, and direct channels remain dominant, but are expanding to offer a wider array of alternatives. As the industry evolves from product-centricity to customercentricity it is pursuing advances in technology and communications, and responding to demographic and behavioral changes.”
According to Marshberry, 85% of all independent agencies in the US will be part of a network or aggregator group within the next five years.
More and more independent agencies are realizing to stay competitive and survive they need the added strength that network membership brings. Many multi-generational agencies want to continue keeping their family business in the family.
Agencies small and large are joining networks to obtain more access to carriers who keep upping individual agency performance expectations. Networks also provide support services, agent training, and access to technology.
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 principal of the insurance marketing communications firm PL Communications.
As networks emerge, it is in carriers’ interest to adapt their needs. Independent agents write 35 percent of personal lines property and casualty premiums and 83 percent of commercial policy premiums according to a 2018 study by J.D. Power and the Independent Insurance Agents & Brokers of America.
Networks create a bridge between carriers and agents. Networks with strong carrier relationships understand what carriers want. They help member agencies align their organic growth efforts with carrier appetites. SIAA (Strategic Insurance Agency Alliance) is a leading national alliance of independent insurance agency members. In a recent blog post Matt Masiello, EVP & Chief Operating Officer of SIAA, said, “SIAA has a unique view
See Networks On The Rise Page 38 www.chart-exchange.com
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ANALYSIS - LAURDAN ASSOCIATES
EMPLOYMENT PRACTICES LIABILITY: USING EMPLOYEE HANDBOOKS AS AN EFFECTIVE LOSS CONTROL TOOL service proposition for its customers. We are delighted that AIG has made the strategic decision to partner with the Lloyd’s market to bring specialty niche business which wouldn’t otherwise naturally find its way into Lloyd’s. Syndicate 2019 is a significant endorsement of the Future at Lloyd’s and represents strong support for our vision to build the most advanced insurance marketplace in the world.” By Ronald Adler
E
mployee handbooks are an essential part, if not the foundation, of sound HR management and employee communications. Employee handbooks engender positive employee relations, are a critical component of effective employment practices liability risk management, and play a significant role in demonstrating employment law compliance.
When employee handbooks are aligned with strategic and business objectives, are properly drafted, and are effectively implemented, they: •
•
Serve as a valuable tool in communicating the organization’s policies and procedures; Play a key role in the orientation and onboarding process for new
See Employment Practices Liability Pg 23
A
bout the author: Ronald Adler is the president-CEO of Laurdan Associates, Inc., a veteran owned, human resources management consulting. Ronald Adler is the president-CEO of Laurdan Associates, Inc., a veteran owned, human resources management consulting firm specializing in HR audits, employment practices liability risk management, HR metrics and benchmarking, strategic HR, and unemployment insurance cost management. Mr. Adler has more than 45 years of HR consulting experience working with U.S. and international firms, small businesses and non-profits, insurance companies and brokers, and employer organizations. Mr. Adler is the developer the Employment-Labor Law Audit™ (ELLA®), the nation’s leading HR auditing and employment practices liability risk assessment tool — now in the tenth edition. g firm specializing in HR audits, employment practices liability risk management, HR metrics and benchmarking, strategic HR, and unemployment insurance cost management. Mr. Adler has more than 45 years of HR consulting experience working with U.S. and international firms, small businesses and non-profits, insurance companies and brokers, and employer organizations.
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www.chart-exchange.com
One Star Insurance Solutions, LLC offers a comprehensive Excess Program available to all independent agents for excess coverage with limits from $1 million to $10 million. Additional limits are also available upon request. We received our Lloyd’s Coverholder designation in 2016 and have underwriting authority to offer follow-form excess in 13 states. This program is open to all agents with a specific focus in the oil & gas sector, who have needs for increased limits /coverages over underlying policies and want to take advantage of the follow-form coverage. This Excess coverage is also available on risks such as contractors for building trades, transportation construction, utility construction, land improvement, forest products, structural moving and general contractors. It is our recommendation that you offer our indication unsolicited to all of your oil & gas clients. The reason is two-fold: Our Rate Indication Workbook provides fast, accurate indications for your clients. In most cases, the indication that is calculated will be the final quote*. Most importantly, by offering an excess quote you have alleviated the burden of a potential E&O claim. Gunnar Kephart, E&O Specialist for the Independent Insurance Agents of Texas has indicated that the largest number of E&O claims have come as a result of not offering enough limits or not offering the coverage at all. Over BITCO:
Submission Requirements
Signed Acord 125 & 131 BITCO Auto Questionnaire Oil Lease Operator/Contractor Questionnaire Underlying Quotes Underlying Limit Requirements: CGL 1M/3M, AL 1M, PL 1M/3M, EL 1M/1M/1M
5-year Currently Valued Loss Runs If applicable: Well Schedule Drilling footage for wells to be drilled MSA Program Manager, Hannah Walters Hannah@1starins.com *Complete submissions will need to be made with all required data before a formalized quote can be issued.
ANALYSIS - LLOYD’S OF LONDON
SINGLE CYBER ATTACK ON ASIA-PAC PORTS COULD COST $110BN, EQUAL TO HALF OF ALL 2018 NATURAL DISASTERS
T
hese losses could occur in an extreme scenario in which a computer virus infects 15 ports across Japan, Malaysia, Singapore, South Korea and China, according to the report – ‘Shen attack: Cyber risk in Asia Pacific ports’ – produced by the University of Cambridge Centre for Risk Studies, on behalf of the Cyber Risk Management (CyRiM) project, in partnership with Lloyd’s. Despite the high costs to business and international trade, the report showed that the global economy is underprepared for such an attack with 92% of the total economic costs uninsured, leaving an insurance gap of $101bn. An attack via a computer virus carried by ships could scramble the cargo database records at major ports and lead to severe disruption, according to the plausible scenario depicted in the report. Although the virus only directly affects ports in Asia-Pacific, economic losses would be felt around the world due to the global interconnectivity of the maritime supply chain.
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An attack of this scale targeted at ports would cause substantial economic damage to a wide range of businesses through reduced productivity and consumption, incident response costs, and supply chain disruption.
A single cyber attack on major ports across AsiaPacific could cost $110 billion, which is roughly equivalent to half of all losses from natural catastrophes globally in 2018*. This is according to new research released today by Lloyd’s, the world’s (re)insurance market.” THE REPORT ESTIMATED THAT : •
transportation, aviation and aerospace sectors would be the most affected ($28.2bn of economic losses in total), followed
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•
by manufacturing ($23.6bn) and retail ($18.5bn). Productivity losses would affect each country that has bilateral trade with the attacked ports. Asia would be the worst affected region, set to lose up to $27bn in indirect economic losses, followed by $623m in Europe and $266m in North America.
OTHER KEY FINDINGS FROM THE REPORT INCLUDED: • The transportation sector in Singapore would take the biggest economic hit, followed by the same sector in South Korea. • ‘Business interruption’ and ‘contingent business interruption’ insurance coverages would be the main drivers of the insured losses (60% of the loss in the most extreme version of the scenario). • Non-affirmative cyber, meaning cyber risk that is not explicitly mentioned in an insurance policy, would account for up to 57% of the total insured losses. • Insurance claims would arise from port operators (50% of
See Asia-Pac Cyber Attack Page 38 www.chart-exchange.com
ANALYSIS - LAURDAN ASSOCIATES Continued From Page 20
EMPLOYMENT PRACTICES LIABILITY
•
•
•
employees; • • •
•
•
Enhance the employment brand; Play a key role in recruitment and retention; Enhance employee commitment and engagement, employee morale, and productivity; ► Contribute to the uniform and consistent application, interpretation, and enforcement of organizational policies and rules; Reduce the organization’s exposure to claims of improper employee/supervisor conduct; and Reduce the organization’s exposure to employment related liabilities.
When misaligned, improperly drafted, or ineffectively implemented, employee handbooks are a doubleedged sword, that: • •
Undermine the employment brand; Mislead employees about what is important and misdirect www.chart-exchange.com
•
employees about what action they should take; Reduce employee commitment and engagement; Create binding contracts that may be entitled to judicial enforcement; Increase the risk of employment related claims and lawsuits; and Increase the organization’s vulnerability to third party intervention.
Organizations are using employee handbooks as a method of meeting business, legal, and talent management challenges. Unfortunately, organizations limit the effectiveness of their handbook policies by ineffective handbook practices. In many organizations there is a disconnect between the drafting and issuing of handbook policies and the practices that ensure those policies are properly implemented and effective.”
Accordingly, your organization should review with counsel’s assistance the employment policies and procedures discussed in your employee handbook — as well as, employment policies that you issue separately from your employee handbook — to minimize potential vulnerabilities and risks. A nationwide survey of employers’ employee handbook policies and practices by Laurdan Associates, Inc. provides insight and recommendations for organizations. The survey found:
1. Ninety-one percent of survey participants indicated they had issued HR management policies, either as sections in their employee handbooks or as discrete policy statements.
2. The size of the organization, measured by the number of employees, influenced the number and breadth of HR management policy statements issued and employee handbook practices used. Larger employers reported the inclusion of more comprehensive policies, a more structured approach to employee handbook development, and more effective employee handbook practices.
See Employment Practices Liability Pg 40 TABLE OF CONTENTS
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NOVEMBER 2019
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ANALYSIS -EOX VANTAGE
WHAT HAPPENED TO REALITY: THE PROS AND CONS OF AUGMENTED REALITY
A
By Mehul Kenia
A
bout the author: Mehul is the Product Architect for EOX Vantage. He is responsible for technology & software architecture including development of the patent-pending Business Operating System, OX Zion. Mehul has more than 20 years of experience in the industry with a wide range of platforms and tools, as well as experience deploying enterprise-wide solutions at several companies across the globe. His work has allowed organizations to implement strategies to achieve success. Mehul has a Masters in Computer Information Systems from Cleveland State University and a Bachelor of Science in Physics. Despite the pressure of managing and running teams spread across two continents, Mehul still finds extra time to do hands-on software coding.
www.chart-exchange.com
ugmented reality, virtual reality…what happened to our reality? As we progress through the digital age, technology is rapidly becoming ingrained into every part of our lives. Is this for better or for worse? While these advancements are seemingly fascinating, is there a point where the technology we are using can become invasive or even dangerous? In this Tech Tuesday, we are going to take you on a journey through the captivating technology that is Augmented Reality (AR); the pros and cons, benefits and dangers. We will leave it up to you to decide if reality as we know it is dwindling or enhancing to new heights. With the advent of technologies like AR, VR, AI -the list goes on and on- our world is quickly changing, but what is it exactly, and what can it provide? Like virtual reality, AR provides an altered experience through 3D, high definition sound and video. It’s a way to integrate digital images and sounds right into a user’s real surroundings. Sounds pretty cool, right? Actually, you may have used AR before, and perhaps didn’t even know it.
Remember the game “Pokémon Go”? AR was used to make all the Pokémon creatures appear right on screen. AR is an immersive experience as it combines the digital and real world, allowing for a user experience unlike any other. THE BENEFITS: Combining the physical and digital world makes for new advancements right at our fingertips. Take the medical field for example; they have taken advantage of “medical AR” which will allow surgeons to have a “heads-up” display of a patient’s electronic medical records (EMR). This ultimately leads to more engaging 1-on-1, doctor-to-patient discussion, and less time searching through files. In surgery, AR can improve accuracy by providing detailed images of veins and organs so surgeons can improve the precision of their incisions, and decrease errors. Besides surgeries, AR is enhancing the way people interact and perceive information. AR headsets, like Microsoft’s HoloLens, allow users to visualize digital images through a lens, creating an all too seemingly real See Augmented Realty Page 26
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ANALYSIS - E.O.X. VANTAGE Continued From Page 25
PROS AND CONS OF AUGMENTED REALITY experience. With the headset, users can look around, walk through and expand digital objects. Take a student studying anatomy for example; he or she can place the headset on and view a life-like image of the human body. The student is able to walk around it, examine it, zoom in to see veins, arteries, muscles and tissues. It allows
an enhanced learning experience. Students studying space can put the headset on and take a walk around the solar system. How else could you take a 5-second trip around the sun? AR is also becoming practical for the business world, by giving end-users an improved experience by adding value to the buying process. For example, clothing stores will begin
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to have “virtual fitting rooms” where customers can superimpose clothing onto themselves to see how it looks. In fact, Ikea has already done this. Customers can superimpose furniture into their homes to ensure it fits and looks exactly the way they want. Now, that’s one creative way to enhance the buying process! Are you a product or services company? Don’t worry, there’s room for AR in your operations too! Add value to your product or service by allowing AR to take the wheel and give users a 360-degree, augmented view of your product or service, so they can see first-hand exactly what they’re purchasing. Providing visibility into your operations is one of the top ways to enhance the user experience -we at EOX Vantage know that firsthand with our innovative Enterprise Operating System.
Doesn’t all this technology sound impressive? It is, however there are still a few potential downsides, as with most technologies. THE DOWNSIDES: When you’re superimposing digital realities into actual realities, potential physical injuries are prone to happen. We saw it with Pokémon TABLE OF CONTENTS
Go. People became too engulfed in their virtual reality, and unaware of the dangers surrounding them; cars, other bystanders, buildings, walls, etc. Are we all going to be walking around with our faces glued to our phones? With the introduction of AR, are we losing the sense of real communication? The simple answer is yes, but we were already on this trajectory…this is only adding fuel to the fire. Privacy concerns may also halt the mass adoption of AR. The devices that use the technology require data, and lots of it. It’s not only on the user of the device, but also the environment and surrounding people that are viewed through the device. This raises major privacy concerns, and brings up the question of when is enough, enough. When will we begin living in the moment again, rather than through a screen? What’s your consensus? Like all technologies, AR has the power to become life-altering; some may say for better, and others may say for worse. Imagine all the ways that AR could improve our lives, making businesses run smoother, processes easier and learning enhanced. On the other hand, it can become an invasion of privacy, cause serious injuries, and in some ways, make us a less connected as a society. In what ways do you think technology is impacting our lives? We’ll leave that up to you to decide. www.chart-exchange.com
ANALYSIS - KROLL Continued From Page 9
NON-FINANCIAL ISSUES CRYING OUT FOR AN EVER-INCREASING SHARE OF BOARD TIME
Photograph by D Ramey Logan, NHYC boardroom by Don Ramey Logan, CC BY-SA 4.0
In today’s world, a scandal can make an already cautious buy-side more nervous and feel pressurised to sell down equity. The pool of investors potentially interested in acquiring stock reduces and the rating placed
on the shares could fall. The growing army of advisors available to assist in a crisis costs time and money to manage, leaving aside the impact on the morale of the staff. Add to this a heightened level of engagement by your shareholders and a scandal can create a full timetable for a board. If you do sit in a boardroom - a word to the wise. Issues such as your www.chart-exchange.com
lingering concerns about a CEO’s behaviour and approach to the staff; the company’s internal controls; the handling of a whistleblower; the actions you took to integrate an acquisition; the reputation and
possible actions of the buyer of your business or subsidiary that’s for sale; your management of a conflict or even a potential conflict; or the leak of information from your boardroom, are likely to be worthy of your focussed attention. This is hardly news to the informed board member but what may be less TABLE OF CONTENTS
obvious is the extent to which these issues are being considered and processed by other parties when constructing the investment case. Certainly, if those parties have hostile intent, get ready. At the “extreme” end, the growing instances of short selling attacks can play hard to the non-financial issue tune. The hostile aggressor knows this, as does the army of advisors, who have likely been consulting a wide range of sources, not just investment banks, to identify extra leverage to undermine the management. In short, money still talks but it’s speaking a more nuanced language. If the house isn’t in order, investors will get harder to court and fewer pools of capital will want to invest. So, recognising and embracing this at board level is key. A response could come in various ways depending on the context of your situation. Elevating and sustaining the debate at board level first requires a recognition that this is actually an issue but second, requires a level of understanding and board level sponsorship that may be different. The virtues of reviewing or investigating sensitive issues independently is growing. Allowing yourself to be benchmarked against best practise whether it be around sustainability,
See Non-Financial Issues Page 31 NOVEMBER 2019
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NEWS - LLOYD’S OF LONDON
LLOYD’S BUILDS NEW PARTNERSHIP WITH HABITAT FOR HUMANITY GREAT BRITAIN Report explaining why communities choose to live in flood-prone lowland areas to be released in 2020
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loyd’s Charities Trust has launched a new disaster resilience partnership with Habitat for Humanity Great Britain, as part of Lloyd’s ongoing response to emerging risks and the challenges they pose to communities around the world. The partnership will encourage a Lloyd’s market wide approach to help fulfil Habitat for Humanity’s goal of a world where everyone has a safe and decent place to live. The partnership will focus on the joint vision to create braver and more resilient communities in climate risk areas. Habitat for Humanity Great Britain is keen to utilise Lloyd’s and the (re) insurance sector’s expertise in natural hazard risk modelling and mapping to help them develop new tools and models. In particular, expert advice on flood risk reduction strategies will enable the most vulnerable communities to build their capacity to successfully tackle flood threats.
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A key component of the new partnership is funding a project in Malawi’s Chikwawa District that was affected by severe flooding and devastation from Cyclone Idai in March 2019. The project will analyse why certain communities choose to live in floodprone lowland areas, and the best way to improve the resilience of these communities to future disasters. The report will help Habitat for Humanity and other disaster response organisations respond to future disasters more effectively and will be applicable to other regions that are affected by similar natural disasters. The Malawi project will also provide access to community rescue hubs for more than 20,000 individuals; giving local families access to training sessions and materials to ‘disaster proof’ their homes. They will also function as emergency shelters for 36 families, reducing vulnerability in the region. Collaboration with local communities and authorities and capacity building is key to the success of disaster preparation and this is the heart of what we will do. Lloyd’s Charities Trust will also be running a Build trip to Malawi for TABLE OF CONTENTS
individuals working across the Lloyd’s market to share their skills and experience to support Habitat for Humanity Great Britain, utilising a range of professionals from companies across the (re)insurance sector. Vicky Carter, Chairman of Global Capital Solutions, International at Guy and trustee of Lloyd’s Charities Trust, said: “Sharing risk is central to the work of the (re)insurance sector and the Lloyd’s market. This is an incredibly exciting partnership for us as the charity responsible for driving disaster resilience initiatives on behalf of the market. With a wealth of knowledge and intelligence in our market around climate related risks and mitigation to share, it is a natural fit for us to partner with Habitat for Humanity to build the resilience and coping capabilities of the most vulnerable communities.” Tum Kazunga, CEO at Habitat for Humanity Great Britain, added: “This new partnership with Lloyd’s Charities Trust is an important step toward helping communities prone to natural disasters build their resilience, and See Habitat For Humanity Page 40 www.chart-exchange.com
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“WHEN YOU’RE FINISHED CHANGING,
YOU’RE FINISHED” - Benjamin Franklin
Benjamin Franklin: Scientist, philosopher, Founding Father … and business strategist? Mr. Franklin’s advice about adapting to thrive is especially appropriate in the highly fluid insurance industry. The CHART Exchange began with a good idea back in 2015: become the catalyst for growth in the U.S./London marketplace by facilitating interaction between domestic wholesalers/agency specialists and Syndicate underwriters. Large-scale networking events were held annually in elegant venues. While this approach produced results, feedback from the meeting participants indicated we could do much more to achieve our goal. As a direct result of this feedback, CHART 2.0 adopted a more proactive operating model intended to provide advocacy-level support to U.S.-based agencies seeking to place business within the London market. The expertise of our various Vendor Partners — when combined with new brokerage placement capabilities — gives CHART 2.0 clients access to a broad array of services they need to be successful. Interested in learning more? Visit our website at www.chart-exchange.com. We are also available via e-mail (info@chart-exchange.com) or by phone at the number below.
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Phone: (855) 716-3660
•
Fax: (302) 334-0325
ANALYSIS - KROLL Continued From Page 27
NONFINANCIAL ISSUES CRYING OUT FOR AN EVERINCREASING SHARE OF BOARD TIME diversity, due diligence or areas like data security can achieve a lot both internally and externally. Understanding the culture of a business - the working environment, ethics, core values - and the board’s commitment to these non-financial issues represents a rapidly growing area of both pre-acquisition spend and ongoing management for acquirers. Investors increasingly demand high standards and tangible evidence of commitment and consistency. While the value proposition centres on the financials, an increasingly large group of professional investors www.chart-exchange.com
believe businesses are easier to sell with these attributes embedded in them and perhaps also the earnings these businesses can generate can be rated more highly. Returning to the boardroom, the list of items on the agenda is undeniably getting longer. Forbes believes 60% of assets managed for EU investors now incorporate sustainable investment strategies. In a recent survey, leading asset manager Schroders suggests investors hold ESG investments for on average of two years longer than their usual investments. The London Stock Exchange ESG report in January 2018 indicates millennials - presumably the investors of tomorrow - rank some of the nonfinancial issues as equally important as investment outcomes in terms of investment decision making. It seems inescapable that a board’s objective is to build long-term stable ownership that supports development and growth. There are several component parts to creating this, but an understanding at the highest level in an organisation that an increasing proportion of the capital pools are configuring around these non-financial issues will continue to shape the board agenda. This article first appeared in Today’s Boardroom on September 13, 2019.
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ANALYSIS - BLUEVOYANT Continued From Page 16
THE BEST LAID PLANS... your cybersecurity roadmap to address risks appropriately? Adversaries are going to get through your layered defenses eventually. No matter how high you build your walls, they will eventually get over them, but there are steps you can take to make yourself less attractive to threat actors. You don’t want to be a quick and easy target. You need to secure your enterprise. Planning is a crucial cybersecurity activity - the question of whether or not you’ll be a target isn’t a question at all. It’s not “if” you’ll be targeted, it’s “when”. Incident response planning allows you to develop both a strategic and a tactical plan for an incident. Your plan must include an examination of organizational information and security policies, and should be aligned with the organization’s objectives. When it comes to policies, your plan should outline in detail how your organization will respond to incidents. Once you have a plan, then you can begin to
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develop playbooks for specific incidents. Playbooks work like an “if/then” flowchart. For example, a ransomware playbook could include “If we are hit with WannaCry, then we will do 1, 2, 3, etc.”. Playbooks can help you plan for fraud incidents, insider threats, and more. Each playbook should include actual step by step details about how the organization needs to respond to those particular incidents. A proper plan will outline how you plan to accomplish and perform necessary tasks, such as a network isolation or host containment. Planning for a variety of scenarios will arm your organization with the actual step-by-step process necessary to make the proper decision under pressure. When the heat is on, you want to have a plan instead of panic. Robust IR Plans will take into account the multiple business divisions, such as finance, legal, and HR. For example, when an incident strikes, the plan should ensure that the chief financial officer, the general counsel, the head of HR, and all personnel are aligned and coordinated so nothing is left up to chance. TABLE OF CONTENTS
Don’t simply talk about the “what ifs” and the responsibilities. Use a written plan that’s been tested through a tabletop exercise so that everyone knows their role and responsibility. As you build out your IR Plan, there are several key components to consider: a threat classification system, internal and external roles and responsibilities, processes for responding to incidents, and internal communications. Classifications and Severity Matrix: Understanding whether an incident has a low, medium, or high impact on business operations will determine the severity and response. Using a matrix can help you triage.
Co-Author Austin Be of Professional Servi practice at K2 Intellig years in the U.S. Gov Agent in charge of th oversaw all national s agency’s largest cybe Award for Excellence achieved the rank of
Co-Author: Jennifer R
Insurance & Legal, for in New York City. She a Women in Cyber Leade rooted in STEM and the for women to start and efforts to providing eve confidence to succeed as Kroll and AIG, she h with her deep knowled demystify two complex both cybersecurity and
www.chart-exchange.com
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Low level: minimal impact, minor loss of operational efficiency Medium level: data at risk of exfiltration and may have been compromised, operations impacted High level: service disruptions, sensitive information exfiltration, data compromise
Levels should be assigned once you understand what has been impacted - from the asset type to the scale and scope of the threat.
to incident response panels, insurers are building proactive panels. This model allows insureds to access experts who can help with the prebreach preparation. In fact, some insurers offer financial incentives to increase the uptake. The benefits are tangible; insurers position its insureds as better risks and in turn, they may reduce losses and claim payouts.
NEVER MISS AN ISSUE OF THE CHART EXCHANGE!
Further, the matrix outlined above mirrors the underwriters’ criteria they factor into the risk evaluation Cyber insurers can help you prepare. process. Underwriters consider Insurers are offering proactive the impact an event will have on services to encourage organizations business operations and try to to develop these plans. In addition predict the possible frequency and severity of particular events – especially erglas comes to BlueVoyant as the Global Head ices after building and leading the Cyber Defense the current persistent gence. Prior to K2 Intelligence, he served 22 threat of ransomware vernment. Austin was the Assistant Special attacks.
he FBI’s New York Office Cyber Branch. There, he security and criminal cyber investigations in the ber branch and was awarded the FBI Director’s e in a Cyber Investigation. Prior to the FBI, Austin captain in the U.S. Army.
Rothstein is the Business Development Head, BlueVoyant, a cybersecurity provider headquartered also co-founded and serves as the President of ership Corp. As the cyber security industry has been e military, she recognized that it can be intimidating d thrive within the space, and has dedicated her eryone with the tools, opportunity, knowledge and d in cyber. Throughout her career at companies such has lead the effort in combining cyber expertise dge in insurance. She is driven by a resolve to x categories allowing access and understanding to d insurance in our increasingly interdisciplinary and
www.chart-exchange.com
It is imperative for you to take an analytical approach and an honest assessment of whether or not your current cybersecurity meets industry standards. Using tests and controls, you can ensure that your organization is more fully prepared, with policies and processes, to efficiently and quickly respond to a breach.
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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
SPECIAL REPORT: WILSON ELSER
THE FIRST OF THE VAPE-LUNG PRODUCT LIABILITY CASES HAS BEEN FILED by Ian Stewart
A
product liability lawsuit has been filed in Washington state court against several manufacturers of THC vape cartridges. The case, Charles Wilcoxson v. Canna Brand Solutions LLC et al.,was filed on September 23, 2019, in the Superior Court of Pierce County, Washington. The complaint alleges that the plaintiff, a 44-year-old police officer and former member of the U.S. Army Special Forces, had consumed various THC vape products between January 2018 and September 2019. He purchased several cannabis brands, including Conscious Cannabis, Rainbows Aloft, Leafwerx, MFused and Jane’s Garden, all of which are named as defendants. Also included as a defendant is Canna Brand Solutions, the distributor of plaintiff’s vaporizer device (called a “pen” or
“battery”), which was manufactured by C-Cell, a Chinese corporation. According to the complaint, plaintiff vaped on September 11, 2019, and woke up with severe wheezing that night. He continued to have difficulties through the weekend and on Monday morning presented at the emergency room. Plaintiff was diagnosed with lipoid pneumonia caused by vaping. A pathology report noted “numerous lipid laden macrophages” on his lungs, “reactive endobronchial cells” and disease-fighting cells called eosinophils that are seen in reactive airway disease. Plaintiff spent three days in the hospital before being discharged home and allowed to return to work on light duty with the police department. The complaint states that “since the injury, plaintive has been unable to run, work full-time or participate in physical activities with his young daughter,” and that
“the full extent of the injuries caused by defendants’ products is not yet known.” The complaint asserts causes of action for strict liability and negligence against the various defendants. It is alleged that the vape cartridges were not reasonably safe and were not fit for human consumption “as a result of being flooded with particles.” The plaintiff similarly alleged that the vaporizer pen was defectively designed and that the distributor “knew or should have known that the product was not safe for human consumption.” It is further alleged that the defendants are jointly and severally liable for the entire damages suffered by the plaintiff due to their alleged status as successive tortfeasors. This strategy of alleging
See First Vaping Suit FiledPage 36
Co-author Ian Stewart has defended complex litigation in state and federal courts for more than 20 years with a focus on product liability, complex general casualty, cannabis law, transportation and marine claims, data privacy and security, and intellectual property litigation. Ian is co-chair of the firm’s Cannabis Law practice and a member of the Information Governance Leadership Committee. Ian is committed to client communication and cost-effective litigation management. He is a proponent of efficient claim resolution and Legal Project Management. Ian goes out of his way to ensure that he understands his clients’ business and goals so that an agreed strategy can be identified and implemented at the outset of any litigated matter.
www.chart-exchange.com
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SPECIAL REPORT: WILSON ELSER Continued From Page 35
THE FIRST OF THE VAPE-LUNG PRODUCT LIABILITY CASES HAS BEEN FILED
Here, plaintiff may be using the joint-and-several liability strategy due to the fact that establishing medical causation against any specific vape manufacturer may prove difficult in the absence of reliable scientific evidence of what is causing these illnesses. The plaintiff’s injuries appear similar to what was seen in the “popcorn lung” cases of a decade ago. Those
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UPDATE ON VAPE-RELATED ILLNESSES According to the Centers for Disease Control, there are now more than 800 confirmed or probable cases of vape-related lipoid pneumonia, with 12 deaths across 10 states. However, health officials still do not know specifically what is making people sick and no common thread has been identified. Potential contaminants are suspected, including vitamin E acetate, an unregulated synthetic thickening agent used in some illicit-market THC and CBD vape products.
The recent increase in confirmed cases has confounded officials, though some believe that more cases are being identified due to heightened public awareness and TABLE OF CONTENTS
specific questioning of patients by medical professionals. Until recently, few physicians have questioned patients specifically about vape use, and many vape consumers deny THC consumption due to social stigma or fear of prosecution. Many vape consumers also distinguish vaping from smoking and deny a history of “smoking” when asked. Recent media coverage and alerts by state and county health agencies have prompted physicians to question patients specifically about vape use when confronted with acute respiratory illness without an infectious cause. Manufacturers of state-licensed and regulated cannabis products, including THC vape products, widely support meaningful regulation that would help to prevent health problems caused by illicit and unapproved products. A sensible public health strategy devised by the federal government likely could have prevented many of these illnesses and deaths by stopping unregulated illicitmarket THC vape products from getting into the hands of consumers. Until the cause of the recent illnesses and deaths is identified, all companies that manufacture and distribute THC and CBD vape products may be exposed to some risk of litigation. www.chart-exchange.com
Lindsay Fox from Newport beach, United States, Vaping, CC BY 2.0
joint-and-several liability is often seen in tobacco, asbestos and other “toxic tort” litigation, where the plaintiff sues all potential defendants and attempts to shift the burden to those defendants to disprove that each is partially responsible for the injuries alleged.
cases were caused by diacetyl oil, an imitation “butter” used in popcorn products, which was vaporized and inhaled by people when they ate popcorn. The result was a wave of popcorn lung toxic tort litigation.
NOW HERE’S A REAL SHOCK… The first 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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ANALYSIS - PL COMMUNICATION Continued From Page 22
Continued From Page 19
NETWORKS ON THE RISE into the lens of the insurance industry. We do business with many players in the insurance industry – including local agents all the way through the most senior executives of insurance companies. This gives us a perspective like no one else from Main Street to Wall Street.” Masiello points out that network members and carriers benefit from the services SIAA provides. “These programs bring them new and better points of distribution and the services bring carriers better educated agents.” An added advantage for network membership is the opportunity for members to network and share information. “Agency owners realize that while they want to maintain their independence and their strength, they often feel that they’re on an island by themselves. They really want to be a part of something else,”says Elizabeth Schenk, CEO of ANE (Agency Network Exchange). ANE is a regional network ranked 11th largest agency network in the country by Insurance Journal. “It’s just a matter of deciding what’s best for them, what group is best for them, and how they can maintain that independence without giving that up, but yet gaining strength.”
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WOULD YOU LIKE TO HAVE YOUR MESSAGE DELIVERED TO 100,000+ FOCUSED INSURANCE INDUSTRY EMAIL ADDRESSES EVERY MONTH?
CYBER ATTACK ON ASIAPAC PORTS COULD COST $110BN
•
insured losses), companies along the supply chain (21% of insured losses), and logistics and cargo handling companies (16% of insured losses). There are opportunities for insurers and policyholders to expand their view of cyber risks ahead of the next event and the report helps to inform in a way to support new products, services and mitigation strategies that make businesses and communities more resilient.
READ THE REPORT HERE.
I’m Kate Boyle Managing Editor. I handle CHART Exchange Advertising. Call me at 302 765-6056 and let’s have a conversation.
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Angela Kelly, Singapore Country Manager, Lloyd’s, said, “We are pleased to once again collaborate with the University of Cambridge and CyRiM founding members on this groundbreaking research. Cyber risk is one of the most critical and complex www.chart-exchange.com
ANALYSIS - LLOYD’S OF LONDON challenges facing the Asia Pacific maritime industry today. As this risk grows with the increasing application of technology and automation in the industry, collaboration and future planning by insurers and risk managers is critical. With nine out of ten of the world’s busiest container ports based in Asia, and high levels of underinsurance in the region, this exposure must be addressed.”
Alan J. Wilson, CEO of MSIG Asia said, “MSIG is proud to partner with CyRiM in producing this second report on potential cyber events, which we believe is extremely relevant in the context of today’s digital economy. This report highlights how cyber-attacks in the maritime industry can result in significant security and financial threats for shipping companies, with a wider impact on other interrelated sectors around the region and the
effective risk management, which includes a clear and comprehensive understanding of the risks and mitigating factors in the global supply chain. Together with its predecessor, the report shines a light on the large insurance gap and how insurers can enable effective risk transfer.”
Andrew Mahony, Head of Cyber Solutions, Risk, Asia at Aon added, “The Shen Cyber Attack Scenario Dr Shaun Wang, Director of highlights the complicated Insurance Risk and Finance impact of supply chain Research at Nanyang disruption in the cyber Technological University, context. For organisations, it said, presents a chance to review “This research sheds light both direct exposure to the on the interplay of cyber financial impact of a complex risk and physical world cyber-attack and the indirect of complex logistics and financial impact of such an supply chains of major attack in an interconnected ports in Asia. It deepens economy. For insurers, the our understanding of Shen Cyber Attack provides a potential cyber-risk liability useful model through which The Port of Singapore is among the world’s busiest and aggregation and helps to view accumulation risk and and ranks second globally as a containerized cargo strengthen risk management is a good reminder of the need transhipment center. U.S. Coast Guard photo by Petty of critical infrastructure.” to carefully manage contingent Officer 2nd Class Patrick Kelley. business interruption coverage.” Dr Andrew Coburn, Chief Scientist at globe. Through collaboration with the Cambridge Centre for Risk Studies, academia, technology companies, Sébastien Heon, Deputy Chief said, “This report highlights the financial services and governments, Underwriter Officer, Cyber Solutions vulnerability of the interconnectivity we aim to bring value to societies at SCOR said “The Shen report has of the global economy, and how and help companies and individuals brought together a diverse panel of disruption of marine cargo shipments to be prepared to meet ongoing and experts to analyse what can happen causes widespread loss in supply emerging cyber threats.” if port and maritime infrastructures, chains and business operations. which play a vital role in the global Modelling this complexity has been Elizabeth Geary, Global Head of Cyber economy, are disrupted by a cyber a research challenge but we hope at TransRe, said, “This second piece event. We are delighted to have the report highlights opportunities of important research reinforces that contributed to this far-reaching for the cyber insurance market to we all need to pay close attention to report, which furthers our collective assist with protection against these systemic cyber risk within the different, understanding of the cascading effects vulnerabilities.” interlinked components of the global of such attacks”. economy. It highlights the need for www.chart-exchange.com
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NEWS - LLOYD’S OF LONDON Continued From Page 28
Continued From Page 23
LLOYD’S EMPLOYMENT BUILDS NEW PRACTICES PARTNERSHIP LIABILITY WITH HABITAT FOR HUMANITY GREAT BRITAIN 3. Employers reported numerous purposes for issuing an employee
handbook: from controlling and managing the risk from employment related liabilities (95% of the survey participants) to assisting in hiring and retention processes (62%).
help us as an organisation respond even more effectively. “East African coastal communities, including, as we’ve seen in the case of Cyclone Idai, landlocked countries like Malawi, are increasingly at risk from the growing frequency of tropical cyclones. With Lloyd’s Charities Trust support, we will be able to not only rebuild but to also train these communities and help them to become more resilient to flooding. These training programmes are designed to support communities, local authorities and other stakeholders to prepare, withstand, and recover from future disasters.”
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4. There is a gap — in some cases sizeable — between the creation of employee handbook policies and the practices used in implementing, monitoring, and ensuring the effectiveness of those policies. While survey participants indicated that they included many of the currently recommended and required policies in their employee handbooks, only: •
•
•
74% ensured that all employees received a copy of handbook revisions; 57% assessed the policies in their handbook to ensure that the handbook was consistent with comments and information communicated during the hiring and onboarding process; and 42% indicated that they assessed the effectiveness of TABLE OF CONTENTS
their handbooks in meeting the handbook’s purposes and objectives. 5. Once an employee handbook is issued, organizations moved on to other activities. Only 11% followed up with employees to determine if the handbook answered routine questions. 6. Employee handbooks are written for the moment. Only 47% indicated that they considered future organizational needs or emerging employment issues when drafting their handbook. 7. The alignment between employment policies and organizational strategies is weak in many organizations. Only 70% of survey participants considered their employee handbook as an element of their strategic HR activities. As noted in the Conclusion of the survey report, “…organizations are using employee handbooks as a method of meeting business, legal, and talent management challenges. Unfortunately, organizations limit the effectiveness of their handbook policies by ineffective handbook practices. In many organizations there is a disconnect between the drafting and issuing of handbook policies and the practices that ensure those policies are properly implemented and effective.”
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NEWS - LLOYD’S OF LONDON
NEW LLOYD’S REPORT SHINES SPOTLIGHT ON BUSINESS INTERRUPTION LOSSES IN THE SUPPLY CHAIN Lloyd’s and the risk modeler AIR Worldwide have co-produced a new framework to help risk managers and insurers close the protection gap before the next catastrophic supply chain disruption occurs.
T
he method is outlined in a new report – Hidden Vulnerabilities in Supply Chain Risk: A quantitative risk modelling framework – that analyses almost one million disruption events. Insurers can expect claims made up entirely of ‘business interruption’ and ‘contingent business interruption’ losses in the future, according to the research. A failure of critical infrastructure on one side of the world can cause catastrophic supply chain losses on the other, according to the report, which analysed three case studies: the 2011 Tohoku Earthquake and Tsunami, the 2011 Thailand Flood, and a hypothetical cyber-attack on an engine manufacturer in New York. www.chart-exchange.com
Physical impacts arising from supply chain failures can also affect intangible assets, notably brand and reputation, noted the report. In addition, the increased frequency and severity of extreme weather can exacerbate risks to infrastructure, manufacturing and distribution networks.
Complex World. Our study presents a methodology that helps (re)insurers to understand risks and exposures more scientifically. We hope that this will help risk managers build resilience into their businesses, and we are urging insurers, brokers and risk managers to work together to develop solutions.”
With a scarcity of historical claims data and the evolution of unforeseen threats in value chains, there are few systematic methods for an insurer or a corporate risk manager to quantify a supply chain’s risk, according to Lloyd’s and AIR.
Dr. Jayanta Guin, Executive Vice President & Chief Research Officer at AIR Worldwide, said, “With increasing globalisation and complex supplychains, it is important for corporations and the insurance industry to use advanced analytics to develop a holistic view of risk and identify pockets of risk that are not otherwise obvious and visible. We’re pleased that Lloyd’s has supported this critical study on interconnected risks.”
The industry-agnostic modelling framework presented in this study shows insurers a plausible solution to fill the data gaps within the current modelling for both ‘business interruption’ and ‘contingent business interruption’. And provides insurers with a rich set of metrics to help to more accurately assess risks and exposures. Trevor Maynard, Head of Innovation at Lloyd’s, said: “We have published this research alongside Airmic’s new guide – Complex Supply Chains in a TABLE OF CONTENTS
Julia Graham, Airmic’s deputy CEO and technical director, commented, “Supply chain disruption is a consistently front-of-mind risk for Airmic members, so we very much welcome this study. Quantifying risk in a modern supply chain is exceptionally complex and a See Business Interruption Page 43 NOVEMBER 2019
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EVERYBODY KNOWS ONE Meet Mr. Inappropriate. He is the King of unfiltered commentary. There is no remark too crass or topic too sensitive for this guy. Worse still, he may be working for one of your clients. The recent Hollywood scandals and resulting rise of the “#MeToo” Movement has made people more sensitive to the prevalence of harassment and other wrongful acts in the workplace. There was a time when otherwise harmless comments from someone like Mr. Inappropriate would have either been brushed off or ignored. Now they may be interpreted to have a more nefarious meaning. This perception can quickly turn into legal action. The cost of defending against such a lawsuit – even a groundless one – could be financially devastating. 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: 800-558-8808 • f: 302-764-5477 • e: sales@rockwoodinsurance.com
REPORT - LLOYD’S OF LONDON Continued From Page 41
huge challenge for businesses and underwriters. Any development that enhances the market’s understanding of this critical exposure will be of great benefit to our members - both for improved insurance coverage as well as an enhanced understanding of this key risk.”
Lloyd’s began with a few courageous entrepreneurs in a coffeeshop. Three centuries later, the Lloyd’s market continues that proud tradition, sharing risk in order to protect, build resilience and inspire courage everywhere. ABOUT AIR WORLDWIDE
The Lloyd’s market provides the leadership and insight to anticipate and understand risk, and the knowledge to develop relevant, new and innovative forms of insurance for customers globally.
AIR Worldwide (AIR) provides risk modelling solutions that make individuals, businesses, and society more resilient to extreme events. In 1987, AIR Worldwide founded the catastrophe modelling industry and today models the risk from natural catastrophes, supply chain, terrorism, pandemics, casualty catastrophes, and cyber incidents. Insurance, reinsurance, financial, corporate, and government clients rely on AIR’s advanced science, software, and consulting services for catastrophe risk management, insurance-linked securities, longevity modelling, site-specific engineering analyses, and agricultural risk management.
It offers the efficiencies of shared resources and services in a marketplace that covers and shares risks from more than 200 territories, in any industry, at any scale.
AIR Worldwide, a Verisk (NASDAQ:VRSK) business, is headquartered in Boston, with additional offices in North America, Europe, and Asia. For more information, please visit www.air-worldwide.com
ABOUT LLOYD’S Lloyd’s is the world’s leading insurance and reinsurance marketplace. Through the collective intelligence and risk-sharing expertise of the market’s underwriters and brokers, Lloyd’s helps to create a braver world.
ABOUT AIRMIC The leading UK association for everyone who has a responsibility for risk management and insurance for their organisation, Airmic has over 450 corporate members and more than 1,300 individual members. Individual members include company secretaries, finance directors, internal auditors, as well as risk and insurance professionals from all sectors. Airmic supports members through: training and research; sharing information; a diverse programme of events; encouraging good practice; and lobbying on subjects that directly affect our members. Above all, we provide a platform for professionals to stay in touch, to communicate with each other and to share ideas and information.
And it promises a trusted, enduring www.chart-exchange.com
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CC0 Public Domain - https://www.maxpixel.net/Time-Out-Break-Interruption-3789005
BUSINESS INTERRUPTION LOSSES
partnership built on the confidence that Lloyd’s protects what matters most: helping people, businesses and communities to recover in times of need.
FORESTRY WORLDWIDE FORESTRY (RE)INSURANCE FACILITY Pardus was established in 2013 by Keith Thompson, formally CEO of Advent capital Holdings Ltd and Darren Stockman Active Underwriter of Syndicate 780 and Director of Advent Underwriting Ltd. Pardus are an independent Managing General Underwriter, a Lloyd’s approved Coverholder, and an appointed representative of Capita Commercial Insurances Limited.
Cover
Maximum line of USD 8.5M any one risk, any one location. Capacity provided by Lloyd’s of London and “A-” rated company paper. Perils covered mainly Fire and Windstorm, but we can offer additional coverage for hail, ice, snow, frost. We cannot cover Pest and Disease, although we can offer cover under a small sublimit for Pest and Disease treatment costs. Sublimits available for fire-fighting costs, aerial photography, debris removal, claims preparation costs etc.
Frost
Hail
Snow & Ice Storm
Flood
PERILS COVERED Rainfall Deficiency
Fire
Malicious Damage
Windstorm
Business Interruption is offered when fruiting trees are destroyed by covered physical damage perils, leading to a loss of yield while the new trees develop •
We have specialist Pardus facilities in place to cover Public Liability (in Europe) and associated forestry Plant and Machinery risks
OUR TAILORED PRODUCTS
Full Value and Value at Risk
Full Value works in the traditional way with insurer retaining any salvageable value from the insured property. Value at Risk leaves an agreed salvage (based on salvage scales developed by Pardus using age and species data) in the ownership of the client. Pardus then only insure the non-salvage element meaning the final rate will be applied to a fraction of the TSI generating a lower overall cost to the client.
Target business: •
We are keen to see any enquiry for standing timber commercial planation forestry
• •
Information requirements for quote: •
Perils to be insured against
•
Schedule of forest locations by values, age, species
Forestry risks with accreditation from the Forestry Stewardship
Locational information needs to be provided in either
Council (or similar)
shape file format (.kmz) or the latitude/longitude
Forest Owners comprise:
coordinates of the centre point of each location
-
Individual investors
•
5-10-year ground-up loss experience by peril
-
Commercial Plantation Companies
•
Desired policy structure:
-
Individual Forest Owners
-
Timberland and Investment Management Organisations
-
(TIMO’s)
•
Additional features: -
-
Forest Management Organisations (FMO’s)
-
Real Estate Investment Trusts (REIT’s)
-
Banks loans made to forest owners or fruit tree owners
-
Forest Owner Associations
Deductibles, limit etc Firefighting costs, claims preparation, aerial photography, plantation infrastructure
To download our full forestry questionnaire, please visit our website https://pardusunderwriting.com/products/forestry/
Exclusions
Property
Buildings
Terrorism
Pest and Disease
Drought
Crop
Fruits, Nuts etc
Phil Cottle - Senior Agricultural Underwriter Direct +44 (0)203 735 1608 Mobile +44 (0)7769 895048 phil.cottle@pardusunderwriting.com Dan Longden Cert CII - Underwriting Assistant
Direct +44 (0)203 735 1610 Mobile +44 (0)7756 961500 daniel.longden@pardusunderwriting.com
Pardus Underwriting Ltd. 1st Floor, 3 Lloyd’s Avenue, London, EC3N 3DS www.pardusunderwriting.com
“We have access to a worldwide forestry binding authority covering the physical damage to commercial forestry. There is a maximum line of USD 8,500,000 any one risk, any one location and the covered perils can be found on this flyer. This is written 100% Lloyd’s/company market and Prospect are the Insurance broker”
ANALYSIS - WILSON ELSER Continued From Page 11
BAN OF ALL VAPING PRODUCTS IN MASSACHUSETTS UNFAIRLY PREJUDICES THE VAPE INDUSTRY AND USERS containing e-liquids filed their ingredient lists with the FDA years ago. On September 27, 2019, the CDC released the following information: •
•
•
•
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There are 805 lung injury cases reported from 46 states and 1 U.S. territory. Twelve deaths have been confirmed in 10 states. CDC has received sex and age data on 771 patients. • About 69% of patients are male. • Nearly two thirds (62%) of patients are 18 to 34 years old; with 22% of patients between 18 and 21. • Sixteen percent of patients are under 18 years of age. All reported patients have a history of e-cigarette product use or vaping. The latest findings from the investigation into lung injuries NOVEMBER 2019
associated with e-cigarette use or vaping suggest products containing THC play a role in the outbreak. • CDC has received data on substances used in e-cigarettes or vaping products in the 30 days prior to symptom onset among 514 patients: • About 77% reported using THC-containing products; 36% reported exclusive use of THC-containing products. • About 57% reported using nicotine-containing products; 16% reported exclusive use of nicotinecontaining products. While some policy makers appear to be confused over the cause of the recent reports of lung disease, there is no coincidence that the recent use of vitamin E acetate and possibly other unapproved TABLE OF CONTENTS
thickening agents by the illicit THC manufacturers caused the public health crisis that prompted Massachusetts’s ban of all vapor products. One should ask whether it makes sense that vaping nicotine e-liquids, which have been available since at least 2007, would suddenly cause lipoid pneumonia lung disease (which is a rare condition that occurs when fat particles enter the lung) disproportionately in white males with an average age of 19. IMPACT OF THE BAN The abrupt action of Massachusetts resembles the witch hunts of that former colony’s past. With a single stroke of a pen on an emergency order from Governor Charlie Baker, Massachusetts has foreclosed the right of its citizens to their freedom of choice, denying them the right to an arguably safer alternative to smoking cigarettes, and caused far-reaching economic harm to many small businesses that manufacture and sell vaping products. Such an action will surely cause many bankruptcies, as these legal businesses can no longer afford to pay rent or buy products made and/or sold by other U.S. companies, pay salaries to employees, or pay taxes to Massachusetts and the federal government. The economic impact of the vaping industry in the United States in 2018 was almost $24 billion, which means that the impromptu actions www.chart-exchange.com
Image Credit: DOD
of Massachusetts will likely cause a reversing trend and cast a negative shadow over a legitimate and safe industry. The broad scope of the ban smacks of an unconstitutional taking of property without due process. Many affected businesses will have difficulty surviving without four months of revenue, which is why national trade organizations such as The Vapor Technology Association and others are considering legal options. CALL FOR INTERNATIONAL FORUM ON SAFETY AND HEALTH BENEFITS Unfortunately, as the witch hunts continue, consumers will not be safer. Any person who was vaping legal nicotine containing e-liquids rather than smoking combustible cigarettes will have to make the choice to return to smoking combustible cigarettes or buy a www.chart-exchange.com
black market e-liquid product. Citizens of Massachusetts who legally use THC through vaping for medicinal purposes also will be affected by the ban. Since all the data shows the lung disease breakouts were overwhelmingly caused by illicit THC cartridges made with vitamin E acetate or other unregulated thickening agents, the public health ban on legitimate products only increases the black market demand and the risk of illicit THC cartridges finding their way back into the hands of consumers, in addition to creating a black market for nicotine e-liquids while the CDC warns consumers not to buy these products off the street The manufacturers of both nicotine-containing e-liquids and THC-containing products
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support meaningful regulation so health problems caused by illicit manufacturers can be prevented. A sensible public health strategy devised by the federal government likely could have prevented many of these illnesses and deaths by stopping unregulated illicitmarket THC vape products from getting into the hands of consumers. But the voices of science and good public policy are falling on deaf ears while legitimate small businesses are being harmed and consumer choices for legitimate products are being eliminated. One can only hope that Massachusetts reconsiders this ban and that other states do not follow this type of overreaching prohibition. Public policy regulators should discuss these issues in an international forum such as The E-Cigarette Summit, where the public health benefits experienced by the UK and other countries as well as the detailed facts of the recent cases of lung disease can be debated before businesses are closed. Until then, the black market profits while legal small businesses are “vaporized.�
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NEWS - SIAA
3RD ANNUAL “A PINK EVENING IN BOSTON” WITH SIAA RAISES OVER $80,000 FOR DANA-FARBER CANCER INSTITUTE AND THE JIMMY FUND Over 300 insurance professionals attended
professionals from each of SIAA’s 48 master agencies nationally. Over three days, insurance professionals attended several speaking engagements, workshops, and presentations specific to the independent insurance agency distribution channel.
O
ctober 16, 2019 – Hampton, N.H. – SIAA’s (Strategic Insurance Agency Alliance) 48th National Business Meeting kicked off October 9th with the 3rd Annual “A Pink Evening in Boston with SIAA”, a fundraiser for Dana Farber Cancer Institute and The Jimmy Fund. All guests were asked to wear pink to honor Breast Cancer Awareness Month.
Matt Masiello, CEO of SIAA, said, “We are pleased to continue our support which provides funding for treatment of all types of women’s
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cancers. A Pink Evening raised over $80,000 this week, increasing contributions to more than $200,000 over three events. SIAA will continue to support the fight for a cure.” SIAA further motivated guests with a $15,000 match for any contributions given by the end of the three-day conference. Regarding the business meeting itself, Masiello continued, “Innovation and technology are changing the industry daily, and we are working with our strategic partner companies and master agencies to see that member agencies evolve with us.” The meeting brought together representatives and executives from more than 20 of the top insurance companies and insurance TABLE OF CONTENTS
SIAA is the largest national alliance of independent insurance agencies in the country, having signed 13% of all independent agencies in the U.S., and is projected to write $8.8 billion of total in-force premium in 2019. ABOUT SIAA SIAA is a national alliance of independent insurance agency members generating hundreds of millions in new premium business annually. SIAA is dedicated to the creation, retention and growth of the independent insurance agency distribution system. To learn more about SIAA, visit siaa.net. SIAA, 234 Lafayette Road, Hampton, NH 03842 siaa.net 603-6011223 www.chart-exchange.com
2018 IN REVIEW $8.1 billion
$ $
$ $
$ $
$ $
$ $
$ $
$ $
$ $
$ $
$ $
$ $
$ $
$ $
$ $
total in-force premium
$690 million
9.3%
total in-force premium growth
growth in total in-force premium
465
independent strategic members signed
36
1 983
13%
4,487
signed of independent agents in U.S.
national strategic partner companies
2 0 19
new agencies created
28
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strategic master agencies
The Total Solution for the Independent Agent The Proven Distribution System for Strategic Partner Companies
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phogel from germany [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)] NOVEMBER 2019
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Credit: Loco Steve Attribution-ShareAlike 2.0 Generic (CC BY-SA