The CHART Exchange September 2019 by The CHART Exchange

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Ransomeware Attacks: The Current Virtual Hostage Situation

One Star Insurance Solutions Excess Program FAQs

Adding Clarity: How To Break Down Information Silos With Technology

Underwriting And Claims: An Oddly Perfect Pair

SPECIAL REPORT: Human Trafficking And Businesses: Educate, Activate And Report (E-A-R)

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

More Opportunities To Participate In CHART Value Propositions

Case Study: Transatlantic Cyber Investigation Unmasks Insider Threat

In The Market To Buy? Components Of A Good Offer: Letter Of Intent

Human Resource Teams Providing Crisis Support For Workplace Violence And Active Shooter Incidents

HUMAN RESOURCE TEAMS PROVIDING CRISIS SUPPORT FOR WORKPLACE VIOLENCE AND ACTIVE SHOOTER INCIDENTS - PG 13

Cover Image: Dmitry Tonkonog, Lloyds building London, Cropped by AdMax, CC BY-SA 3.0

(U.S. Air Force photo by Don Lindsey)

SPECIAL REPORT:

SEPTEMBER 2019 VOLUME 4 - ISSUE 9 Publisher: CHART Exchange Glenn W. Clark, CPCU

HUMAN TRAFFICKING AND BUSINESSES: EDUCATE, ACTIVATE AND REPORT (E-A-R)

Membership Services Kate Boyle Advertising: Kate Boyle Managing Editor: Kate Boyle Contributing Editor: Frank Huver Layout, Design & Circulation: Ron Manera AdMax Corp., Inc.

CHART Exchange

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

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

ADVERTISING IN THE CHART EXCHANGE MAKES SENSE: CALL KATE: 302.765.6056

“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.

www.chart-exchange.com

The CHART Exchange, 3001 Philadelphia Pike Claymont, DE 19703

Phone: (855) 716-3660

•

Fax: (302) 334-0325

NEVER MISS AN ISSUE OF CHART EXCHANGE

SUBSCRIBE NOW

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MESSAGE FROM THE EARLIEST ADOPTER

MORE OPPORTUNITIES TO PARTICIPATE IN CHART VALUE PROPOSITIONS AS CHART EVOLVES, BROKERS ARE FINDING INCREASED VALUE IN THE RELATIONSHIP

We now have the resources needed to support clients through all phases of the program business life cycle. Our team can collaborate on the development of submissions, secure necessary delegated underwriting authorities (tribunalization), handle placements, and facilitate new growth via product expansion and cross-sell opportunities.”

SEPTEMBER 2019

y now, readers of this Magazine are very familiar with the concept of “CHART 2.0”. For the uninitiated, this term refers to the new operating model being embraced by our organization. We have transitioned away from almost “collegial” approach embraced by many other association groups within the insurance industry in favor of a strategy designed to deliver optimal benefit to those who turn to us for assistance in placing business within the London market. The natural inclination for most entrepreneurs is read about CHART’s new operating philosophy is to think “that sounds all well and good, but what’s in it for me and my business?” Let’s take some time to do a little bit of a deeper dive into the value

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Glenn W. Clark, CPCU Publisher & Earliest Adopter

proposition we offer to specialist agencies seeking to establish a relationship with Lloyd’s of London.

1. We are going to make you work. To paraphrase the famous quote attributed to Benjamin Franklin: “CHART helps those who help themselves”. No one knows your agency’s area of specialization better than you. Clients must invest the time and effort to clearly articulate such information as the product(s) being sought, the unique demographics of the target audience, the competitive scene within the marketplace, etc. CHART has developed a program questionnaire to help structure this process. Once this data is available, our team can get to work to find the markets with the most compatible risk appetites.

www.chart-exchange.com

2. CHART is with you all the way. Under our previous business model, CHART’s affiliation with its agency members would dissipate once they attended their first meeting. The reason? The business relationship we initially fostered transitioned to one of several different London Broker partners to aid in the placement of any new program opportunities within Lloyd’s. That all changes under CHART 2.0. We now have internal brokerage capabilities – meaning we now have the resources needed to support clients through all phases of the program business life cycle. Our team can collaborate on the development of submissions, secure necessary delegated underwriting authorities (tribunalization), handle placements, and facilitate new growth via product expansion, cross-sell opportunities, etc.

3. Solving the need for instant

CHART’s Incubation initiative. Under this arrangement, clients can be teamed with a firm already possessing the necessary authorities, state licenses, back-office administrative capabilities, etc. to transact business on a national scale. Agreements made between the two parties prior to launch govern such issues as contract duration, duty segregation, revenue sharing, and expiration ownership. This strategy inures to everyone’s benefit.

4. It’s good to have friends. CHART has a network of vendor partners with expertise in a variety of disciplines. We can tap this network to help clients address issues related to actuarial analysis, claims administration, systems development, marketing, legal support, and more.

gratification. There is a process involved in securing delegated underwriting authorities from London. Agencies looking to expedite the launch of new programs into the marketplace can avail themselves of

www.chart-exchange.com

Need a practical demonstration of how CHART can help your agency? Then plan on coming to the next regional event being held in New York City on September 30, 2019. This one-day event will feature a businessdriven agenda designed to help you succeed. While there is no cost associated with attendance, space is limited. Write to us at info@chartexchange.com to reserve your spot for the event. There is still one more opportunity to participate in a CHART meeting this year if your schedule prevents you from joining us in September. Our team has recently finalized the timing of the west coast meeting; it will be held on November 18 in Los Angeles CA. More information on that event will be available shortly.

Glenn W. Clark , CPCU CHART’S Earliest Adopter

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SEPTEMBER 2019

Protect data, people, reputation and the bottom line with end-to-end cyber security solutions from Kroll. CY B E R R I S K A N D B R E AC H R E S P O N S E Incident Response

Deep & Dark Web Monitoring

Managed Detection and Response

Data Breach Notification Solutions

Cyber Risk Assessments

CISO and Data Protection Advisory

PFI / QSA Services for PCI

Table Top Exercises

kroll.com

CASE STUDY - KROLL

CASE STUDY – TRANSATLANTIC CYBER INVESTIGATION UNMASKS INSIDER THREAT, PREEMPTS RANSOM ATTEMPT By Michael Quinn, Ben Hawkins & Justin Price

global software company based in Europe received an email from an anonymous source stating the sender had access to highlysensitive data belonging to one of its European subsidiaries. The data included, but was not limited to, personally identifying information (PII) of staff and executives, confidential sales and purchase agreement (SPA) terms, banking information and source code for some of the firm’s intellectual property. The sender gave Kroll’s client two weeks to pay a ransom of one million euros in bitcoin to a number of cryptocurrency accounts; he threatened to start “spamming everyone” with the client’s data if his demand wasn’t met. HOW KROLL HELPED Because the client’s information security team was located in the

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U.S., they initially reached out to the New York office of Kroll, a division of Duff & Phelps, where our Cyber Risk team began the investigation. One of Kroll’s senior forensic examiners in the New York office analyzed the ransom email message and found several leads that resulted in the identification of a suspect Gmail address. Additionally, through the deployment of Kroll’s CyberDetectER Endpoint tool and other sophisticated forensic methods, our forensic investigators were able to detect early on that an external cybercriminal infiltration was the source of the threat. That finding, coupled with the type of data displayed in the ransom note, pointed to an insider threat. Interviews with the client’s staff led us to focus on a former employee who had been asked to leave the company a few years ago. As it happened, the client still had that former employee’s companyprovided computer at its European

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location. Sensitive to EU General Data Protection Regulation (GDPR) mandates, one of Kroll’s senior forensic examiners based in London was enlisted to analyze the computer. His review uncovered that an old smartphone profile once connected to that machine had clear connections to the Gmail address used for the ransom note. In addition to isolating information that identified the likely culprit, our Cyber Risk team deployed Kroll’s CyberDetectER DarkWeb to determine if any of the sensitive data had already been posted to dark web, including closed source forums. Our findings of no evident leaks provided a measure of peace of mind to the client. KEY DELIVERABLES Kroll provided our findings to the client’s attorneys, who initiated a

See Cyber Investigation Page 25

SEPTEMBER 2019

ANALYSIS - M&A SERVICES

IN THE MARKET TO BUY? COMPONENTS OF A GOOD OFFER: LETTER OF INTENT By Christopher M. Hughes

hether you are evaluating an offer to sell your firm, or preparing an offer to buy another company, the basic offer will come in a written Letter of Intent or LOI. This article will describe the basic components of a LOI, and offer guidance on how to best utilize the LOI to create reach acceptance of the offer, as well as to minimize legal execution risk once the offer is signed.

First, a LOI should be a specific written offer signed and dated by both the buyer and seller, and have a definitive time expiration that defines how long the LOI is valid. Generally speaking, most LOI’s have an expiration date that is good for 5 to 10 business days from the time the Offer is delivered to the other party. It is important to have both parties execute and date the LOI to ensure that the offer is valid and that both parties have agreed to the terms and are duly authorized to enter into the transaction.

The substantive components of a good LOI include: 1. What is being Purchased; 2. Purchase price components (i.e. earn-out, promissory note, stock, cash); 3. Offer Conditions; 4. Exclusivity (“No Shop”) Clause; 5. Standard Provisions (Binding/ Non-Binding Provisions, Expiration Date).

See: A Well-Drafted LOI Pg 20

bout the author: Christopher M. Hughes serves as Managing Director of Insurance Distribution for Merger & Acquisition Services, specializing on insurance agencies, MGAs, MGUs, E&S agencies, wholesalers, and ancillary insurance businesses. Mr. Hughes comes to Merger & Acquisition Services, Inc. with over 10 years of insurance and legal experience, working on engagements with Property / Casualty and Life / Health insurance distribution businesses. He previously served as an advisor for a boutique firm in CT where his exclusive focus was on insurance distribution companies. In addition, Mr. Hughes spent 7 years as a senior product manager for Hartford Financial Services Group (“HIG”) with full P&L accountability for specialty products, and as director of HIG’s internal retained asset and structured settlement departments. Prior to The Hartford, Mr. Hughes practiced commercial litigation in Boca Raton, Florida. Mr. Hughes was honorably discharged from active duty in the United States Marine Corps (USMC) in 1992, after serving with E Company, 2nd Battalion, 8th Marines, 2nd Marine Division. While in the USMC, he served as an infantryman in the 1991 Northern Iraq operations: Provide Comfort, Encourage Hope, and Force Hope. Mr. Hughes has earned a J.D. degree from Northern Illinois University, a M.B.A. from the University of Connecticut, and a B.A. from the University of West Florida.

SEPTEMBER 2019

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www.chart-exchange.com

NEWS

Merger & Acquisition Services

serving the insurance industry

Merger & Acquisition Services is a

SPECIALIST ADVISORY AND FINANCIAL SERVICES FIRM firm specifically to participants within the insurance industry. Our mission is to provide

CONCIERGE-LEVEL SERVICES AND EXPERTISE

PROUD SPONSOR OF

SOLELY FOCUSED ON THE INSURANCE INDUSTRY. This allows our advisors to obtain critical industry knowledge and subsequently, provide clients with sound advice.

M&A Services has closed

MORE THAN 100 TRANSACTIONS IN 10 YEARS and has earned continuous placement within the "Top 5 Financial Advisors in Insurance Underwriting" according to SNL Financial. Investment banking services and securities transactions are provided through and completed by Merger & Acquisition Capital Services, LLC., a broker-dealer registered with the U.S. Securities and Exchange Commission and member of FINRA and SIPC.

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

info@maservices.com http://maservices.com

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

within the insurance industry by assisting firms with their corporate development and acquisition/divestiture objectives. M&A Services is

ANALYSIS - MCGOWAN PROGRAM ADMINISTRATORS

HUMAN RESOURCE TEAMS PROVIDING CRISIS SUPPORT FOR WORKPLACE VIOLENCE AND ACTIVE SHOOTER INCIDENTS By Paul Marshall

HR professionals should evaluate security and risk management holistically. No matter the size of a business, a plan to prevent workplace violence must be put in place.”

fter a major incident of workplace violence, we often focus on the immediate needs of our people and our organization. While dealing with the aftermath of an incident of workplace violence is essential, it is also important to realize that your emergency response is not over. You need to consider the long-term impact of an incident of workplace violence on your organization and employees. When dealing with the aftermath of an incident of workplace violence, it is crucial to address post-event stressors that your team has experienced, and that can affect your team’s ability to return to work. Exposure to violence and the potential death of co-workers places survivors at a higher risk for emotional trauma after an active shooter event. According to the National Center for PTSD, 27% of people who experienced a mass www.chart-exchange.com

shooting will develop Post Traumatic Stress Disorder (PTSD), and one-third develop acute stress disorder. SYMPTOMS OF PTSD AFTER AN ACTIVE SHOOTER EVENT VARY WIDELY, AND MAY INCLUDE: •

Nightmares about the event

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•

• •

Thoughts or memories of the event that are triggered by news articles, television shows, movies, or conversations about the event Avoiding activities that remind survivors of the event, especially places where a survivor feels he or she could experience a similar event again Anxiety or fear upon hearing sounds similar to a gunshot, such as a car backfiring or fireworks Feeling constantly on edge Difficulty sleeping

Survivors of mass shootings are at a higher risk for mental health difficulties when compared to survivors of other traumas like natural disasters. Human resource departments must identify additional resources available to support employees after incidents of workplace violence or active shooter events.

See Active Shooter Pg 17 SEPTEMBER 2019

ANALYSIS - WOMEN IN CYBER LEADERSHIP CORP

RANSOMWARE ATTACKS: THE CURRENT VIRTUAL HOSTAGE SITUATION CAN INSURANCE COMPANIES RESCUE VICTIMIZED COMPANIES? By Jennifer Rothstein

cholars believe Helen of Troy may be the first case of kidnapping in our history of Western Civilization. Whether mythological or not, the storytelling and memorialization in the Iliad supports the theory that it was a plausible explanation for the Trojan War. As we trace the history of kidnapping, ransom payments and now ransomware attacks in our current society, the intent remains the same: taking someone or something of value in exchange for something of value to the attackers.

Consider adding cyber insurance to your defense strategy. These policies are wrought with virtual versions of the same shields, spears and helmets the ancient Greeks donned to win their physical battles. As we are fighting a cyber war, we should embrace all the various weapons we have at our disposal.â&#x20AC;?

The first people kidnapped in the United States were two young boys from Philadelphia in 1874. The first computer ransomware attack took place in 1989 and targeted research from the healthcare industry. It was carried out through malware on floppy disks that infected the computer systems after the computer was powered on 90 times. In the story of Helen of Troy, the value was the victory of war. As it relates to people, data or intellectual property, the intended outcome is monetary gains, societal disruption and theft of trade secrets. Ancillary See Ransomeware Attacks Page 29

About the Author: Jennifer co-founded and serves as the President of

Women in Cyber Leadership Corp. As the cyber security industry has been rooted in STEM and the military, she recognized that it can be intimidating for women to start and thrive within the space, and has dedicated her efforts to providing everyone with the tools, opportunity, knowledge and confidence to succeed in cyber. Throughout her career at companies such as Kroll and AIG, she has lead the effort in combining cyber expertise with her deep knowledge in insurance. She is driven by a resolve to demystify two complex categories allowing access and understanding to both cybersecurity and insurance in our increasingly interdisciplinary and interconnected world. She also serves on the Board of Directors of NY Metro InfraGard, a liaison between the private sector and the FBI. Jennifer is a native New Yorker and graduate of Columbia University. She earned her JD from Cardozo School of Law with a concentration in intellectual property.

SEPTEMBER 2019

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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

ANALYSIS - MCGOWAN PROGRAM ADMINISTRATORS

Continued From Page 13

SUPPORT FOR WORKPLACE VIOLENCE AND ACTIVE SHOOTER INCIDENTS

MCGOWAN PROGRAM ADMINISTRATORS ACTIVE SHOOTER / WORKPLACE VIOLENCE INSURANCE PROGRAM

include low morale, absenteeism, conflicts, low productivity, and mistakes.

SYMPTOMS OF PTSD AFTER AN INCIDENT OF WORKPLACE VIOLENCE

SUPPORTING YOUR TEAM AFTER AN INCIDENT OF WORKPLACE VIOLENCE

•

Team members who experienced a workplace tragedy face a wide variety of symptoms as the experience of acute stress sends our bodies and brains into survival mode.

Managers and owners of an organization that has experienced an incident of workplace violence need to have open lines of communication and should share facts to keep staff informed.

•

Physical symptoms of PTSD following an incident of workplace violence include a racing heart, dizziness, shaking, difficulty sleeping, fatigue, and upset stomach. Mental symptoms of PTSD include denial, self-blame, confusion, poor memory, increases in mistakes, and trouble focusing. Emotional symptoms may include feelings of guilt, shock, fear, feeling overwhelmed, frustration, or anger. Organizational symptoms may www.chart-exchange.com

Show concern for staff by checking in after an incident of workplace violence, and by continuing to check in long after an incident of workplace violence has passed. Managers and owners of businesses that experienced a mass shooting should be prepared with resources to assist in the event of an incident of workplace violence. •

Prepare a list of contacts and resources that can be used TABLE OF CONTENTS

• •

for specific critical situations, including contact information for a mental-health related crisis response team. Know the contact information for police and other emergency response personnel. Distribute a detailed list of company personnel who should be contacted in case of emergency. Ensure all staff have emergency contact information on file. Post distress hotline numbers in workplace washrooms and other private spaces.

If your business has experienced an incident of workplace violence, be prepared to offer counseling and debriefing to staff members. It can be helpful to bring in a qualified mental health professional to help staff members process an incident of workplace violence. It is useful for all

See Active Shooter Page 30 SEPTEMBER 2019

NEWS - ONE STAR INSURANCE SOLUTIONS

One Star Insurance Solutions, LLC is a dba of CertEssentials, LLC ; a Managing General Agent and Lloyd’s Coverholder located in Wichita Falls, Texas. One Star has been developing and managing insurance programs for trade groups, such as the Texas Alliance of Energy Producers, the Texas Propane Gas Association and the Trade Contractors Safety & Insurance Group since 2005. We have programs for General Liability, Pollution, Business Auto, Property, Control of Well, Workers’ Compensation, Oil Field Property, Care Custody Control, Rig Physical Damage, Lost in Hole, Cyber Liability, Excess and PEO/ASO Services. We received our Lloyd’s Coverholder designation in 2016 and have underwriting authority to offer follow-form excess in 13 states. Our comprehensive Excess Program is available to all independent agents for excess coverage with limits from $1 million to $10 million. We can accept submissions from any agent but our primary focus is over BITCO underlying coverage. Submissions with the underlying coverage from other carriers are evaluated on a case by case basis. Additional limits can be purchased as well. 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.

Excess Program FAQs

Coverage comparisons are important in deciding the primary/underlying and the excess. It is also important to have the same coverage wording apply from the primary through the excess. Several markets such as Travelers, ACE, and AIG have the same wording available with limits of $1,000,000 primary and $10,000,000 excess. This is very attractive and simple for the insured and the agent. However, these companies’ forms include wording with a Time Element factor to be met or coverage is excluded. Q: A:

Q: A:

Q: A: Q: A: Q: A:

What is Time Element wording and what does it mean? Time Element says the incident must be known to the insured within a certain number of days and reported to the insurance company within a certain number of days. These Time Element requirements can be very limiting to the insured and can cause E & O exposure for the agent. The BITCO Stand-Alone Pollution Policy simply says the “pollution incident” commences on or after the retroactive date shown in the declarations. This means any incident beginning prior to that date is not covered as would be expected. There is NO Time Element limitations in the BITCO Policy. What is a Pollution incident? Travelers, ACE, and AIG forms defines it as being sudden and accidental, abrupt, and unexpected or unintended by the insured while occurring during the Policy Period and reported to the company within the Time Element. To the contrary, the BITCO Policy says the Pollution incident commences on or after the Retroactive date and has NO Time Element factor and does not have sudden and accidental wording. What wording is in the Excess Policy? Travelers, ACE, and AIG uses the same wording as the primary in the excess. Only with One Star’s Excess Program can we provide the broad BITCO Pollution wording. Our program provides the same terms and conditions up to $10,000,000 limit as the BITCO primary policy. What if the agent moves from Travelers, ACE, or AIG and the insured has a pollution incident that occurs in the last day of coverage? The insured would still be subject to the Time Element reporting provisions. What about with BITCO? The BITCO form allows for a one year extended reporting period for those instances. This would be much broader than the Time Element wording.

For Submission Requirements please contact our Program Manager, Hannah Walters Hannah@1starins.com , or visit our website www.1starins.com

SEPTEMBER 2019

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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 - M&A SERVICES Continued From Page 10

A WELL DRAFTED LETTER OF INTENT The first part of a LOI describes in detail what is actually being purchased. Most insurance distribution firm transactions are structured as a purchase of assets, rather than the purchase of the firm’s stock. In some instances, there may be assets that are excluded from the transaction, and those will be defined in this section as well. The Consideration or Purchase Price component of a LOI spells out the exact purchase price being paid and all of its components. Most transactions have the following: 1. Cash at closing 2. Earn-Out Payments that are contingent on future performance; 3. Hold Back Consideration – there may be a 10 – 20% “hold back” of the total purchase price, contingent upon the business maintaining a minimum Revenue or EBITDA amount; 4. Performance Based Earn-Outs

SEPTEMBER 2019

are additional Consideration that will be paid in future years, the amount of which will vary depending on the performance of the business. 5. Stock of the Buyer; 6. Assumption of Liabilities; 7. Promissory Notes (“Seller Financing”). The Earn-Out section should be very clear in defining (1) the time period the Earn-Out will be measured, (2) the metric that will be measured, and (3) the definitions of how the metric will be calculated. Almost all performance-based earnouts are measured on either Revenue or EBITDA, and are measured over a period of 1 to 5 years depending on the needs of the Buyer and Seller, and have a clear definition of EBITDA or Revenue. In defining the Earn-out terms, it is important for the LOI to spell out exactly what is being measured, whether it is Gross Revenue (either including or excluding contingent or profit sharing commissions), Net Revenue (after Broker Commissions expenses have been paid), or EBITDA. If the metric is EBITDA, it is very important to spell out the exact definition of EBITDA and how it will be calculated (will it include any corporate allocations from the buyer). The next part of the LOI will spell out the Conditions of the Offer. Common conditions include that the offer is contingent upon the TABLE OF CONTENTS

Buyer completing legal, financial and operational due diligence, completion of appropriate purchase and employment agreements, and approval of all relevant 3rd parties (Carriers, Lienholders, etc…).

A well written LOI should be a clear and concise offer that (1) defines exactly what is being purchased and for what consideration, (2) spells out all relevant definitions, terms and conditions in plain language, (3) minimizes execution risk with exclusivity, reps/warranties, and other conditions, and (4) is time constrained in both the validity of the offer as well as the exclusivity period.” In addition to the common conditions listed above, the conditions section can be used to spell out other legal and financial issues that are likely to arise in the drafting of the Asset or Stock Purchase Agreement. The LOI may spell out the terms of the Representations and Warranties, how long they will last, the maximum and minimum liabilities, and define any Reps/Warranties www.chart-exchange.com

that may last indefinitely (i.e. title to the assets, taxes, authorization). By having basic parameters for Reps, Warranties and Indemnities spelled out in the LOI, it minimizes legal issues that are likely to arise later. Other matters that can be addressed in the Conditions section include, employment terms of key employees (and NonCompete/Non-Solicit clauses), requirement to purchase tail E&O insurance, and any Working Capital requirement to remain in the firm. The LOI may also include Conditions that the Buyer will agree to including: (1) that they have the available Capital to consummate the transaction or that the deal is Contingent upon obtaining financing, (2) that the Buyer has the authorization and ability to consummate the transaction, and (3) to a much lesser extent, a “Break Up” Fee in the event that Buyer is unable or unwilling to complete the transaction. EXCLUSIVITY Most LOIs have a binding exclusivity time period of 60 to 120 days. This provision states that once the Buyer and Seller have signed the LOI that the Seller will not discuss, negotiate, or engage with any other Party. This is commonly called the “No Shop” www.chart-exchange.com

provision and it gives the Buyer time to conduct due diligence and for the attorneys to draft and negotiate asset purchase agreement and ancillary documents necessary to close the transaction. Lastly, there are provisions that should be included in every LOI. There should always be an expiration date for the LOI stating that the Offer is good until a certain date and must be executed and dated by both parties prior to the expiration. There is a section that states that the LOI is non-binding, except for certain sections of the LOI. Binding sections of the LOI would include the Exclusivity Clause, Confidentiality Section, and Choice of Law/Venue. A well written LOI should be a clear and concise offer that (1) defines exactly what is being purchased and for what consideration, (2) spells out all relevant definitions, terms and conditions in plain language, (3) minimizes execution risk with exclusivity, reps/warranties, and other conditions, and (4) is time constrained in both the validity of the offer as well as the exclusivity period. TABLE OF CONTENTS

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

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

SEPTEMBER 2019

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ANALYSIS - VANTAGE AGORA

ADDING CLARITY HOW TO BREAK DOWN INFORMATION SILOS WITH TECHNOLOGY INTERVIEWED BY JAYNE GEST

SUDHIR ACHAR CEO and co-founder Vantage Agora

echnology is supposed to make everything easier, but that’s not always the case. Across all industries, multiple systems are put in place to solve business challenges. While each department may have visibility and control, that information remains locked within the department. C-suite executives must go to several places, whether it’s software applications or Excel spreadsheets, to access companywide data. And in even the smallest companies, departments can become siloed.

When departments run various technologies, they cannot always access each other’s systems, which generates different metrics, different data and different outputs. Your employees may be spending valuable time compiling reports, which are already outdated when they reach the executive level. However, these obstacles can be overcome. You can navigate your enterprise more efficiently and easily share information with the right enterprise operating system. Smart Business spoke with Sudhir Achar, CEO and co-founder at Vantage Agora, about utilizing technology for better visibility and control. WHEN EXECUTIVES ARE ISOLATED FROM DATA, WHAT PROBLEMS DOES THIS CREATE? Companies often prescribe for symptoms and don’t get to the root of the problems. Department heads or managers know what’s going on, but top executives don’t have a See Adding Clarity Page 24

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ANALYSIS - VANTAGE AGORA Continued From Page 23

ADDING CLARITY: HOW TO BREAK DOWN INFORMATION SILOS WITH TECHNOLOGY quick, universal way to review data from one place; this slows decisionmaking and may keep them from taking the right action. Also, when departments are on different platforms and the applications don’t talk to each other, a problem might arise between them that needs to be escalated. If a CEO can’t understand what’s going on, how is he or she supposed to help resolve the issue? HOW CAN TECHNOLOGY HELP? Even before you look at technology, start with discipline. People have different personality traits and methods, but there should be some standardization that leads to procedure. Once a standard operating procedure (SOP) is in

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place, it’s easier to draw out the common connections from each application and put that information together into actionable dashboards through an enterprise operating system. This overarching software should be updated in real time where problems are easy to see, whether that’s at the top of the page and/ or using colors, like a traffic light’s red, yellow and green, to show the company’s health and give executives the ability to dive deeper into problem areas. Eventually, you can automate some SOPs and add triggers, so if something happens — good or bad — an automated notification goes to the staff who need to know. Some examples include alerts before sales misses a goal or a department falls out of compliance, as well as notifications when someone hits an incentive-based threshold. An enterprise operating system can also help track trends, like daily output. If employees are high or low, does the workload need to be rebalanced? WHAT ELSE IS IMPORTANT TO UNDERSTAND WHEN ADDING THIS KIND OF TECHNOLOGY? Start by mapping and auditing what you have. How many systems are you using? Do you need them all? Can you consolidate systems to make the data clearer?

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You and your team can talk through the pain points and inventory of processes to see what can be automated. What can be done to make it easier with the current resources, as well as additional resources? Can technology help eliminate processes, so people are focused on more high-value tasks, such as sales or customer interaction, rather than repetitive processes, like creating reports? Next, research enterprise operating systems to find one that fits your organization. The company that develops the system should have an implementation team who can help tailor the software so that it works for your operations. Keep in mind what’s financially viable and whether the enterprise operating system offers anything to subset a system you currently pay for. Also, look at whether the technology can scale up in a viable way. Are additional features based on the number of users or added straight to the software? Finally, the technology should be easy to use and streamlined, which will increase employee buy-in and help executives organize and manage the business. Contact Vantage Agora (216) 452-0324 info@vantageagora.com SAVE THE DATE: Register for the 2019 Inspire Innovation conference on Sept. 22 and 23 at vantageagora.com/ conference. www.chart-exchange.com

CASE STUDY - KROLL Continued From Page 9

CASE STUDY – TRANSATLANTIC CYBER INVESTIGATION UNMASKS INSIDER THREAT, PREEMPTS RANSOM ATTEMPT criminal complaint with the local jurisdiction police. Our sensitivity to GDPR-related concerns eliminated a potential weakness in the body of evidence. The police noted that Kroll’s well-documented and conclusive file of evidence enabled them to move quickly to apprehend the suspected former employee. The evidence was so overwhelming that when the police presented it to the former employee, he immediately admitted his guilt as well as his continued unauthorized access to the client’s network. The police seized several computers at the former employee’s home, on which they found significant amounts of the client’s data, including the passwords to bank accounts identified in the ransom message. Although the former employee claimed he held these passwords lawfully, the client was made aware so as to ensure the passwords were changed. www.chart-exchange.com

More troublesome still was the discovery of massive amounts of data (including emails) dating from after the former employee’s departure from the company. He acquired this data through various means, including his access to enterprise applications, such as Salesforce, which had not been terminated at the end of his employment.

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As a result of Kroll’s work, the client joined the public action as a civil party in order to seek indemnification of the damages it sustained. The client has also used Kroll’s findings to inform a review of its data security policies and procedures, particularly those that relate to fully terminating all network access privileges of employees or third parties at the end of their relationship with the company. TABLE OF CONTENTS

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

SEPTEMBER 2019

ANALYSIS - FORTEGRA

UNDERWRITING AND CLAIMS: AN ODDLY PERFECT PAIR By Howard Fishbein

uch like the titular characters in the 1988 comedy classic Twins, underwriters and claims adjusters are a pairing so different they’re perfect together. To illustrate, take this excerpt from the movie: Mitchell Traven: We were making the most fully developed human the world has ever seen. Vincent Benedict: But instead of just one perfect kid, Mom had the two of us. Way to go, Mom. Mitchell Traven: Wrong. The embryo did split in two, but it didn’t split equally. All the purity and strength went into Julius. All the crap that was left over went into what you see in the mirror every morning.

Vincent Benedict: Whoa, whoa, whoa, you’re telling me that I’m the crap? Depending on your point of view, you may decide differently whether the underwriter or the claims adjuster represents the leftover crap in this twosome. But together, just like Julius and Vincent, a truly collaborative effort between an underwriter and claims adjuster can result in the most fully developed insurance asset the world has ever seen. For example, underwriters and claims adjusters can utilize a unified approach toward accomplishing corporate business objectives in the same manner that Julius Benedict approaches a crisis situation. Specifically, Julius had three rules in a crisis situation:

1. Negotiate first and attack last; 2. If you choose to bluff, you must be prepared to have your bluff called; and 3. Duck.

NEGOTIATE FIRST AND ATTACK LAST The negotiation process is far more complex than simply providing policy terms and pricing to a prospective MGA or insured. The synergy between underwriting and claims allows for a dialogue regarding the decision to pursue such accounts, the risks associated with various classes of business, and the impact of changes in the law and market conditions.

See Perfect Pair Page 41

bout the author: Howard Fishbein serves as Senior Vice President, Specialty Claims at Fortegra Financial, a Jacksonville, Florida based carrier with over $1 Billion in annual sales and an A.M. Best Rating of A-. Howard has almost twenty years of insurance claims experience combined between his private practice and inhouse experience. Howard earned his B.S. in Accounting at The Pennsylvania State University and his J.D. at St. John’s School of Law. He is a licensed attorney passing the bar in both New York and New Jersey.

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As a CHART vendor partner, Fortegra’s admitted paper helps coverholders and MGAs gain access to premier markets. Learn how Fortegra’s admitted program can help you Experience More at fortegra.com/programs, or via email at programs@fortegra.com. Fortegra® is the marketing name for the specialty underwriting operations of Fortegra Financial Corporation and its subsidiaries. Specialty underwriting program availability varies by jurisdiction. Where available, the programs are underwritten by admitted insurance companies.

CHART 2.0 — FASTER CONNECTIONS TO LONDON!

Has your agency ever considered placing business with Lloyd’s of London — the oldest and most recognized insurance brand in the world? Then make plans to attend the upcoming CHART Exchange regional meeting. Our next event will be held in New York City on September 30, 2019. CHART was established in 2015 with one ambitious goal in mind: becoming the catalyst for sustained, organic new business growth within the U.S./London marketplace. Our organization has been instrumental in launching over a dozen new binding authority agreements to date, with more on the way! This success is attributable to the advocacy-level support we offer to domestic agencies seeking to place business within this exclusive market niche. The meeting will be ﬁlled with workshops, presentations, and networking opportunities for every agency attendee in a more focused atmosphere. There is no registration fee required to attend this unique one-day event. A detailed agenda will be sent to every registered attendee. Act quickly, as participation will be limited to 50 agency attendees. Interested in reserving your spot or 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.

www.chart-exchange.com

The CHART Exchange, 3001 Philadelphia Pike Claymont, DE 19703

Phone: (855) 716-3660

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Fax: (302) 334-0325

ANALYSIS - WOMEN IN CYBER LEADERSHIP CORP

dollars to thousands, payable to cybercriminals oftentimes in bitcoin.

Continued From Page 14

RANSOMWARE ATTACKS: THE CURRENT VIRTUAL HOSTAGE SITUATION damage comes with it – war, grief, and amongst others, physical damage. Christiaan Colen Cryptolocker Ransomeware Attribution-ShareAlike 2.0 Generic (CC BY-SA 2.0)

By definition, ransomware is a form of malware that encrypts a victim’s files. It blocks access to data and may shut down computer systems which results in catastrophic

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consequences, including business interruption and damage to an organization’s reputation. Typically, the bad actor demands a ransom from the victim to restore access to the data upon payment. Users are shown instructions for how to pay a fee to obtain the decryption key. The costs can range from a few hundred

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Any organization qualifies as an appealing target for a number of reasons. For example, a small family run business may not have adequate security measures established, but because they accept credit card payments, that information is still worth something on the dark web. Schools are ripe targets as they possess a wide variety of information about students, as well as intellectual property related to research and development projects. Manufacturing, utility companies and the maritime industries are sectors now being recognized as newer See Ransomware Page 31

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Continued From Page 17

(U.S. Air Force photo by Don Lindsey)

SUPPORT FOR WORKPLACE VIOLENCE AND ACTIVE SHOOTER INCIDENTS

owners should be visible and continue to check in with staff to see how they are processing the event. Managers and owners should applaud teamwork and recognize success in the wake of an incident of workplace violence and should find ways to honor employees who were injured or passed away. They should also actively encourage employees to engage in self-care. •

employees to discuss experiences in a group setting. To encourage group discussions it is helpful to integrate counseling into your active shooter or workplace violence preparedness plan. Businesses should provide an Employee Assistance Program that provides consultation and guidance to supervisors of employees who are experiencing difficulties in the aftermath of an incident of workplace violence. An EAP can provide short-term counseling and referral service to employees. An EAP can also provide threat assessments, as well as longterm counseling and treatment resources. As time passes after an incident of workplace violence, managers and

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HR PROFESSIONALS ARE THE FIRST LINE OF DEFENSE AGAINST WORKPLACE VIOLENCE HR professionals have a lot to manage, and sometimes, ideas can often be conflicting: •

•

Employees’ rights need to be addressed quickly and promptly. HR needs to follow federal, state, and local labor laws. Should a violent event occur, lawyers will look to see if any violations of OSHA took place. Human resource professionals need to know and understand the rules and exemptions when it comes to protecting employees. They need to know when to disclose information and when to keep information private, primarily when risks to others occur. TABLE OF CONTENTS

Human resource professionals must look for warning signs and concerning behaviors of employees. If these signs or behaviors continue without any intervention, it could lead to workplace violence incidents. Warnings signs may include depression or disgruntlement, but these don’t necessarily mean they part of zero-tolerance policies like sexual harassment or more physical incidents. However, depression and disgruntlement can be clues.

THE ROLE OF HUMAN RESOURCES IN WORKPLACE VIOLENCE PREPAREDNESS The job of a human resource professional is more dangerous than

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ANALYSIS - WOMEN IN CYBER LEADERSHIP CORP

Continued From Page 29

RANSOMWARE ATTACKS: THE CURRENT VIRTUAL HOSTAGE SITUATION

A form of defense that is becoming increasingly popular is the purchase of cyber insurance. Generally speaking, cyber insurance is a risk transfer tool that provides monetary funds for costs associated with investigations including, the retention of experts, system restoration, and most relevant for this article, ransom payments. The decision to pay ransom is difficult with many stakeholders taking various positions. The positions vary from immediately paying the ransom demand in order to unlock the systems, to refusing to pay the ransom because it may fund terrorism if attribution reveals a foreign government may be responsible.

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Additionally, an organization may turn to law enforcement or a private investigation firm to assist with data recovery. The availability of standalone cyber insurance is a significant factor. Similarly, any existence of kidnap and ransom insurance, which

Before tapping into an insurance policy, an insured organization must understand the process an insurance company requires before a ransom payment is made or under what set of circumstance would exclude a ransom payment from coverage. Some insurance policies will be reluctant to approve a payment if they deem the payment to signal availability of funds that may inspired bad actors to seek other insureds who are insured by the same insurance carrier, thereby tapping into multiple policy limits and diluting policy premiums. Insurance companies might also require prior approval before agreeing to pay. During the policy procurement process, it is prudent to ask these questions especially when comparing policies.

historically existed for the recovery of individual victims, may now include solutions to recover data. Equally important, and a direct comparison to the handling of traditional kidnapping cases, is the importance of an experienced negotiator to handle the discussions with the bad actor to ensure if payment is made, the bad actor holds up his end of the bargain. A negotiator may also be the right resource for access to bitcoin and it

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Cyber insurance companies have assisted many organizations recover successfully from ransomware attacks. Consider adding cyber insurance to your defense strategy. These policies are wrought with virtual versions of the same shields, spears and helmets the ancient Greeks donned to win their physical battles. As we are fighting a cyber war, we should embrace all the various weapons we have at our disposal. SEPTEMBER 2019

Monitor Image CC0 1.0 Universal (CC0 1.0) Public Domain Dedication

targets â&#x20AC;&#x201C; that when compromised affect the physical safety of individuals globally. One common thread, in addition to being vulnerable, is that these companies are starting to adopt defensive mechanisms to respond to an incident, and even proactively, build incident mitigation plans.

must be confirmed in advance that an insurance company willing to pay ransom is willing to pay in various forms of cryptocurrency.

Bringing U.S. Entrepreneurship to the London Market The CHART/Wilson Elser strategic partnership combines the innovative underwriting philosophy of the worldâ&#x20AC;&#x2122;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.

SPECIAL REPORT HUMAN TRAFFICKING AND BUSINESSES: EDUCATE, ACTIVATE AND REPORT (E-A-R) By Marisa A. Trasatti and Zachary A. Miller of Wilson Elser

E U.S. Air Force graphic by Airman 1st Class Kyle Cope

very year, hundreds of thousands of men, women and children are trafficked worldwide, according to the Department of Homeland Security. The recent media attention surrounding human trafficking has shed light on the latest efforts to expose the extreme depths of the transnational epidemic, one that has existed for more than a century. Trafficking can take many forms and includes those who are forced to engage in involuntary sex acts (sex trafficking) as well as those who are forced to work (labor trafficking) under threats of violence or by other means such as accumulated debt, passport retention, or threats of being reported to immigration authorities. Recently, we have seen an uptick in civil liability arising from trafficking events, and these claims are cropping up against software developers, web providers, hoteliers, and other retailers and manufacturers. Because of the increase in these newfangled filings, which secondarily exploit trafficked victims, the industry faces a new frontier and must be trained and educated on how to respond to such claims. Reduced to their most basic See Human Trafficking Page 34 www.chart-exchange.com

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HUMAN TRAFFICKING AND BUSINESSESS form, these claims sound in premises liability and negligent training and retention, and the plaintiffsâ&#x20AC;&#x2122; bar seeks to hold unwitting and unknowing business owners liable for damages resulting from these unforeseeable acts. Not surprisingly, these cases turn on notice and foreseeability, the cornerstone of all premises cases, but unlike many traditional premises cases, the trafficking acts are hidden and clandestine, making it exceedingly difficult for police personnel, the courts and business owners to spot, let alone thwart this crime even with the most extensive and sophisticated surveillance. To hold retail establishments liable for third-party criminal acts under these circumstances is wrong and contrary to long-established premises liability law. The purpose of this article is to provide insight into how businesses, particularly hotels, can navigate these new claims. EDUCATE I. WHAT IS HUMAN TRAFFICKING? The first step in helping combat this

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problem is understanding the type of acts that are considered to be human trafficking. Human Trafficking, as defined by Article 3, paragraph (a) of the United Nations Protocol to Prevent, Suppress and Punish Trafficking in Persons, is the: [R]ecruitment, transportation, transfer, harboring or receipt of persons, by means of the threat or use of force or other forms of coercion, of abduction, of fraud, of deception, of the abuse of power or of a position of vulnerability or of the giving or receiving of payments or benefits to achieve the consent of a person having control over another person, for the purpose of exploitation. Exploitation shall include, at a minimum, the exploitation of the prostitution of others or other forms of sexual exploitation, forced labor or services, slavery or practices similar to slavery, servitude or the removal of organs. Trafficking is not always akin to what is portrayed by Hollywood, but instead takes many forms and includes those who are forced to work under threats of violence or by other means such as accumulated debt, passport retention, or threats of being reported to immigration authorities. Human trafficking primarily exists in the labor area and also includes forced prostitution. Not surprisingly, labor trafficking surfaces in manual laborintense industries, particularly those that rely on third parties to provide inexpensive labor. Construction, TABLE OF CONTENTS

domestic services, agriculture, mining, forestry, fishing and manufacturing are vulnerable to such claims, whereas sex trafficking claims arise against hotels, strip clubs, hotel franchisors, website host providers, website software providers, dating sites, massage parlors and nail salons. Indeed, the anti-trafficking advocacy organization Polaris Project recorded more than 3,300 cases of trafficking in hotels over the past ten years. II. BECOME FAMILIAR WITH THE HUMAN TRAFFICKING LAW(S) THAT APPLY TO THE BUSINESS States are beginning to enact legislation. For example, Californiaâ&#x20AC;&#x2122;s governor approved SB 970, enacted as Section 12950.3 to the Government Code. The new California law requires hotels and motels subject to the Fair Employment and Housing Act (FEHA) to provide at least twenty (20) minutes of classroom or other effective interactive training and education regarding human trafficking awareness to each employee who is likely to interact or come into contact with victims of human trafficking. Indeed, the author and expert Kimberly Mehlman-Orozco, Ph.D., completed a video intended to train businesses on this topic and was in line with new California law. Importantly, the new law provides that beginning on January 1, 2020, an employer must provide human trafficking awareness training and education once every two years to each employee likely to interact or come into contact with victims of human trafficking. Those employees www.chart-exchange.com

o-author Marisa Trasatti focuses her practice primarily on civil litigation, with an emphasis on product liability litigation, including cases involving drugs and medical devices. She serves as outside General Counsel for Sciton, Inc., a prominent medical and dermatological laser company based in Palo Alto, California. Marisa has experience litigating medical malpractice and insurance defense cases and has defended, locally and nationally, several large corporations in connection with toxic tort litigation. Her experience in life sciences includes domestic and international regulatory issues; negotiation, design and drafting of clinical trial agreements; interpreting court pronouncements; and vetting marketing materials for domestic and international regulatory compliance.

o-author Zachary Miller concentrates his practice in complex tort and general casualty, products liability, negligence-based torts, premises liability and commercial litigation claims. He has achieved success in two negligence claims: a summary judgment in defense of a swimming facility alleged to have failed to prevent a child from nearly drowning, and a motion to dismiss in Delaware on behalf of a charter school accused of failing to protect a student from being attacked at school. Prior to joining the firm, Zachary was an associate at one of Baltimore Countyâ&#x20AC;&#x2122;s oldest continuously operated civil defense law firms. After law school, he served as a judicial law clerk to the Honorable Melissa M. Phinn, Circuit Court for Baltimore City. In addition, Zachary served as a legal intern to the Honorable Clayton Greene Jr., Maryland Court of Appeals.

include, but are not limited to, employees who have reoccurring interactions with the public, e.g., employees who work in a reception area, perform housekeeping duties, help customers in moving their possessions or drive customers. The mandatory training must include: (1) the definition of human trafficking and commercial exploitation of children (addressed supra at section I); (2) guidance on how to identify individuals most at risk for human trafficking (addressed infra at section III); (3) the difference between labor and sex trafficking as it applies to the hotel sector (addressed supra at section I); (4) guidance on the role of hospitality employees in reporting and responding to this issue (addressed infra at sections VIII-IX); and (5) contact information of www.chart-exchange.com

appropriate agencies (addressed infra at section X). Cal. Civ. Code Â§ 52.6(e) also mandates that by January 1, 2021, businesses that operate an intercity passenger-rail, light-rail or bus station shall provide at least twenty (20) minutes of training to its new and existing employees who may interact with or come into contact with a victim of human trafficking or those who are likely to receive, in the course of their employment, a report from another employee about suspected human trafficking. The requisite training will provide information on recognizing the signs of human trafficking and how to report those signs to the appropriate law enforcement agency. III. LEARN THE SIGNS OF HUMAN TRAFFICKING TABLE OF CONTENTS

There is no silver bullet and human trafficking is regularly misidentified, which is why this training becomes essential. The hope is that through training, retailers can increase the correct identification of the crime and diminish the many false positives that are reported yearly. Human trafficking can happen in any community and its victims can be any age, race, gender or nationality. Traffickers can be men and women. They use violence, manipulation, or false promises of well-paying jobs or romantic relationships to lure victims into trafficking. Consumers of labor and sex services come from all walks of life. Human trafficking is well hidden: victims will most likely dress in street clothes, and their traffickers

See Human Trafficking Page 36 SEPTEMBER 2019

SPECIAL REPORT Continued From Page 35

HUMAN TRAFFICKING AND BUSINESSESS may appear to be their boyfriend, significant other, family member or friend. Human trafficking signs include: nervous behavior, guests with large amounts of cash, tipping front desk staffers, guests who ask for rooms far from the front desk, excessive phone calls to and from the room, excessive cell phones in the room, excessive tablets or phones in the room, and multiple male guests going to one room. In general, a guest that comes to the front desk every day asking for toiletries should not be an issue, but coupled with some of these other red flags, could be a sign of human trafficking. Also, be mindful of foot traffic on the premises and/or vehicle traffic near rooms, especially if it has outwardfacing doors. Foot traffic may also come from adjacent parking lots. Be vigilant of one man traveling with several women or one man registered to a room with several females. Look for adjoining rooms being booked

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together and flanking rooms being registered to yet another person, which may indicate that the flanking rooms are being used to sound proof the adjoining rooms where the illegal activity is taking place. There is a recognized legal right of privacy behind a closed hotel door, depending on the jurisdiction; however, know that there is no right of privacy in terms of trash. Tell the housekeeping staff to report if they see excessive condoms, needles, or other drug paraphernalia. Implement a policy requiring housekeeping to clean rooms every certain amount of days if only to assure cleanliness. A guest may decline for a period of time but, at some point, housekeeping must be permitted to enter the room. Publish the policy as part of the literature provided at check-in. If access to a room is declined repeatedly, have housekeeping report this to management and document same. In addition, business owners should be aware of seasonal traffic, construction jobs in the area, other similar hotels and/or trafficking claims at nearby establishments. Look for extended stays that are booked from day to day, or guests who come to the front desk daily to request toiletries. It bears repeating that no single one of these signs is a definitive indication of human trafficking, and itâ&#x20AC;&#x2122;s important to consider the totality of the circumstances. Do not confront guests, or allow employees to take the law into their own hands, or make accusations regarding TABLE OF CONTENTS

any of the individuals involved in a suspected trafficking act. Engage law enforcement. IV. ACTIVATE Consistently Execute on the Protocol of the Employer/ Franchisor If a business finds itself in the crosshairs of litigation, it becomes very important to the defense that the business has followed its own protocols, even if those protocols have no causal connection to the acts giving rise to the alleged trafficking. The reptile theory is alive and well in these cases, and therefore, following protocols and procedures becomes essential to the defense. If the business is required to keep notes at the hotel front desk, do so. If there is a blacklist of guests who are not allowed on the premises, follow through and make sure the list is current, but make sure to consult with an attorney first regarding the legality of keeping such a list. Consider blocking certain web access (e.g. dark web, commercial sex advertisement, and the like) from the hotelâ&#x20AC;&#x2122;s free Wi-Fi. Have all new employees and contractors trained at every level of the company, and make the training an annual requirement. Create a policy where facts only (and not opinion) are included in written documents maintained in the usual course of business. Retain notes, minutes, conclusions and records of any administrative and/ or property management meetings

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V. RE-VISIT SECURITY MEASURES AT THE PREMISES Security is a focus in corporate designee depositions in these cases. For example, if they have security cameras on the premises, make certain that they are pointed to the right areas, that they are functioning properly, and that the footage is maintained for a reasonable period of time, such as more than twenty-four (24) hours. Making a determination of what is “reasonable” can be challenging; that includes decisions relating to video looping, back-up tapes, and cloud-based storage. Can the business see foot traffic with the cameras? If not, they need to be adjusted. Can they see all room entrances and hallways with the cameras? Monitor the cameras that are on computer screens regularly at the front desk. Remember, if a business is implementing a security protocol, they must do so in a www.chart-exchange.com

reasonable, non-negligent manner. Consider having an employee or contractor patrol or walk the premises periodically. Consider hiring private security; although, this is not yet the required standard of care. VI. IMPLEMENT OTHER PREVENTATIVE POLICIES Successful defense of these cases requires the business owner to have situational awareness at all times. For example, in the hotel arena, be aware of hotel guests paying in cash daily, who is having breakfast at the hotel, whether any children are being brought in for free breakfast who are not guests, excessive visitors in the room, or visitors who come at off hours. Document the names of guests and visitors in a guest folio at the front desk and obtain each person’s driver’s license information so long as the jurisdiction’s privacy laws permit retention of same. Do not permit elevator access without a guest room key. Limit the number of people in a hotel room to no more than two (2) to four (4) adults or two (2) adults and two (2) children.

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Consider requiring all visitors to check in at the front desk, requiring all vehicles to obtain a parking pass, and limiting visitors on the property from 10:00 p.m. to 6:00 a.m. Post signage that the premises is being monitored and consider posting signage regarding combating human trafficking. Consider discontinuing “do not disturb” cards outside doors. Have an employee manual, written protocols, training materials and/or guidelines and have the employees acknowledge in writing that they understand and will follow the manual. In the context of hotels, these manuals should address housekeeping, security, surveillance cameras, suspicious behavior, human trafficking, guest interactions, reservations, whether photo identification is required, age requirements for renting rooms, alcohol on the premises and parties in the room and/or conference rooms, and the number of guests and friends allowed in a room. Where applicable, a business should also

See Human Trafficking Page 38 SEPTEMBER 2019

Lembagai KITA, Stop Human Trafficking, CC BY-SA 4.0

consistent with the state’s records retention policy. Failing to produce documentation can lead to spoliation jury instructions at trial.

SPECIAL REPORT Continued From Page 37

HUMAN TRAFFICKING AND BUSINESSESS address inspections and the division of labor between the company and its franchisor, if applicable, as well as any training offered by the franchisor in these areas. Enforce rules created by the hotel consistently, including the rates they charge its guests. Guests who are given discounts draw the attention of plaintiffs’ lawyers who seek to paint a picture of some sort of relationship between business staff and traffickers. Plaintiffs’ bar loves to point out any inconsistencies in enforcement to advance their cases. VII. NOTICE AND FORESEEABILITY ARE KEY At their heart, human trafficking cases are premises liability cases. In any premises case, the key issues are notice and duty. If a business is on notice of trafficking, the business has a duty to act. Plaintiff’s counsel goal, then, is to show that they either had notice or that trafficking was foreseeable on the premises. Plaintiff will look for prior criminal incidents on the premises to show that this crime was foreseeable. This underscores

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why it is important to be familiar with the police call log relating to the business’s property. Any individual can access the call log at the local police station by a Public Information Act request.

It is essential for business owners to become more aware of the human trafficking epidemic. By better understanding the problem, a business will be able to create a protocol for employees to follow in order to more accurately identify and combat this illegal activity on its premises. Ignorance is not bliss nor the solution.” Plaintiff’s counsel will use prior alleged criminal acts, regardless of whether they involve human trafficking, to show that the hotel or business knew or should have known that human trafficking was happening (or was foreseeable) on the premises. By being vigilant with respect to these records, businesses inform future conduct and hopefully pre-empt unnecessary phone calls to the police where possible or allegations of a “disorderly house.” The admissibility of this evidence in these cases depends TABLE OF CONTENTS

on the jurist and case law in the applicable jurisdiction. VIII. PREVENT NEGLIGENT HIRING, RETENTION, AND SUPERVISION CLAIMS These cases include negligent hiring, retention and supervision claims. Therefore, it becomes critical for businesses to do their due diligence on applicants—again within the confines of local law. Simply put, they should know who they are hiring. Research any criminal background, online presence, and reasons for dismissal(s) from prior employers of applicants. Training of human resources is essential for insurance purposes, lawsuit purposes, the hotel’s reputation, and the safety of invitees on the premises. As provided in the California statute, Cal. Gov. Code 12950.3 recommends training using materials and information provided by the Department of Justice, the Blue Campaign of the Department of Homeland Security, and private nonprofit organizations that represent the interests of victims of human trafficking. Some of those organizations and their contact information are listed below: • •

Freedom Light, LLC - https:// www.freedomlight.org Safe House Of Hope - http:// safehouseofhope.org

Be wary of employees who break the rules. The breach could be wholly unrelated to human trafficking, but a crafty plaintiff’s lawyer will use that history to argue negligent hiring and www.chart-exchange.com

retention to buttress their premises cases arising from alleged human trafficking.

REPORT IX. WORK WITH LAW ENFORCEMENT AND STAY VIGILANT Businesses should cooperate with law enforcement; however, it is important to be mindful of overreporting, as anyone can obtain a copy of call logs to the police from a particular individual or establishment pursuant to a Public Information Act Request. Overreporting can result in a business getting a reputation of being a disorderly establishment. Monitor the company’s reputation in the community and make sure they are aware of any media attention, particularly attention that presents the establishment in a negative light. Monitor TripAdvisor and other online review websites, and address them with the customer, the police, and with any franchisor. As basic as it may seem, the more monitored and vigilant employees are, the less likely the premises is to be a target for human trafficking. Have the police and fire personnel numbers accessible at all times at the front desk for staff. They should not have to search for same. Have hotel security monitor commercial sex advertisements and review websites for reports of business. Websites such as USSextratrafficking.com rate hotel front desks with respect to visitor’s ability to bypass same. Ask guests for a phone number upon www.chart-exchange.com

check in, and search the phone number for listings on commercial sex advertisement or review websites. X. PROVIDE GUESTS AND STAFF WITH CONTACT INFORMATION OF APPROPRIATE AGENCIES Consider providing guests with a human trafficking hotline phone number, and establish referral relationships with local service providers for trafficking victims. If anyone sees something, then they need to say something to the hotel managers or call the police. For immediate assistance, call the National Human Trafficking Hotline at 1-888-373-7888. They can reach the hotline 24 hours a day, 7 days a week in more than 200 languages. Calls are confidential and answered by trained “Anti-Trafficking Hotline Advocates.” The California statute also requires that the telephone numbers of the appropriate local law enforcement agencies be provided as part of the employee training. It is essential for business owners to become more aware of the human trafficking epidemic. By better understanding the problem, a business will be able to create a protocol for employees to follow in order to more accurately identify and combat this illegal activity on its premises. Ignorance is not bliss nor the solution. If workers see something, they need to say something. By engaging in human trafficking training now, businesses can help thwart liability claims down the road.

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CHART DEFENDER COVERHOLDER E&O AVAILABLE NOW!

Mark Lann Phone:

302-765-6070 Email: chart.eo@rockwoodinsurance.com

SEPTEMBER 2019

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

SEPTEMBER 2019

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ANALYSIS - FORTEGRA Continued From Page 26

CLAIMS & UNDERWRITING THE PERFECT PAIR

Ultimately, such a collaborative approach mitigates uninformed negotiation, and the result is a better risk selection process focused on protecting corporate capital.

various information, including an application. The content of the application is material to both pricing and risk evaluation. At times, insureds can be overly concerned about their ability to obtain insurance and may understate their revenues, past loss history, or scope of business. In such instances, insurance companies may call the insured’s bluff and file a declaratory judgment action intended to void the policy ab initio. On the other hand, if the carrier attempts to liberally apply a provision of the policy, an insured may call the carrier’s bluff and file a declaratory judgment action in order to seek coverage.

DUCK

As for the attack, in instances where a claim is reported, a move against the claimant’s allegations not only meets the needs of the insured but should also reflect the risks evaluated in negotiation. In the end, a more predictable result can be achieved for the book of business.

Finally, the best evaluation an underwriter and claims adjuster can jointly provide is the determination of which risks to avoid. The continued collaboration between underwriters and claims adjusters is a recipe for success because it allows carriers to dodge risks that contribute to poor loss history.

IF YOU CHOOSE TO BLUFF…

I’ve worked with one of our underwriting leads for almost a decade, spanning three different employers. Our working relationship has persisted because we share the same philosophy on new business opportunities: expansion of our corporate footprint and the resolution of claims. Though we each possess different expertise, when combined, we form the perfect insurance employee.

You might ask: in what context would an insurance company bluff? While in the adjustment of a claim, an adjuster may present their position as inflexible when they actually intend to bend – this is especially applicable to insureds. In determining which risks to bind, insurance companies will review www.chart-exchange.com

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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

SUPPORT IN CONGRESS FOR CANNABIS-RELATED PROTECTIONS FOR BANKS AND INSURANCE COMPANIES 2020 ELECTION LIKELY TO CAUSE DELAY By Ian A. Stewart and Ruben Espinosa

hrough the Secure and Fair Enforcement (SAFE) Banking Act and the Clarifying Law Around Insurance of Marijuana (CLAIM) Act, members of Congress seek protections for banks and insurers that provide financial services to cannabis-related businesses. Both bills enjoy rare bipartisan support. Indeed, the SAFE Banking Act has 206 co-sponsors and a full House vote is expected this fall. The hurdle for both bills, however, is achieving a Senate floor vote. Senate majority leader Mitch McConnell to date has blocked all cannabis-related legislation in that chamber.

SAFE BANKING ACT The SAFE Banking Act prevents federal banking regulators from punishing financial institutions that assist a â&#x20AC;&#x153;cannabis-related legitimate businessâ&#x20AC;? (CRLB) legally operating under state, local or American Indian tribal laws. Many CRLBs operate on a cash-only basis because most

SEPTEMBER 2019

financial institutions will not provide banking services for fear of potential racketeering and trafficking charges attached to handling monies generated by activity still illegal at the federal level.

BANKING PROTECTIONS The bill creates a safe harbor for depository institutions, including banks and credit unions, to the extent they would not be liable or subject to federal forfeiture action for providing financial services to a CRLB. Such businesses include not only manufacturers, producers, and any person or company engaging in a cannabis-related business pursuant to the law of a state or political subdivision but also businesses that provide financial services to those organizations. Key protections of the bill include prohibiting a federal banking regulator from (1) terminating or limiting the deposit insurance or share insurance of a depository institution

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solely because the institution provides financial services to a CRLB; (2) prohibiting or otherwise discouraging a depository institution from offering financial services to such a business; (3) recommending, incentivizing or encouraging a depository institution not to offer financial services to an account holder solely because the account holder is affiliated with such a business; and (4) taking any adverse or corrective supervisory action on a loan made to a person solely because the person either owns such a business or owns real estate or equipment leased to such a business.

LENDING PROTECTIONS The SAFE Banking Act prevents regulators from taking a corrective supervisory action on a loan made to a person or entity solely because the loan is affiliated with a cannabisrelated business. Loans designed for leasing real estate and equipment

See Cannabis-Related Protections Pg 48 www.chart-exchange.com

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

888-235-3525 www.nsminc.com

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SEPTEMBER 2019

ANALYSIS - MCGOWAN PROGRAM ADMINISTRATORS

Continued From Page 30

SUPPORT FOR WORKPLACE VIOLENCE AND ACTIVE SHOOTER INCIDENTS many people realize. HR professionals are often leaders in workplace violence prevention initiatives. They have a special duty to advance proper prevention initiatives within their organizations. HR professionals develop, interpret, and enforce organizational policies, and are responsible for handling terminations, hiring, promotion, and zero-tolerance protocols. They are often held accountable for overlooking or disregarding evidence

of threats or criminal convictions uncovered in the hiring process. Business owners must recognize that HR personnel are often at higher risk of being the victim of an incident of workplace violence than other employees.

On February 15, 2019, a shooter at a manufacturing plant in Aurora, Illinois killed five victims.

The Bureau of Labor Statistics reports that 458 of 5,000 workplace fatalities in 2017 were homicides. Co-workers or other work associates perpetrated fifteen percent Labor of those homicides.

The Bureau of Statistics reports that 458 of 5,000 workplace fatalities in 2017 were homicides. Co-workers or other work associates perpetrated fifteen percent of those homicides.” RISKS OF WORKPLACE VIOLENCE (STATISTICS) The Society of Human Resources Management, the largest HR professional society, revealed that 48% of HR professionals surveyed said that their organization had experienced workplace violence. While the workplace shooting at a Virginia Beach government office was the deadliest workplace shooting of 2019, it was not the first.

HR professionals cannot do it all, especially in smaller businesses. Knowing when to bring in law enforcement or other experts is critical in accounting for organizational “blind spots.”

It is wise to work with law enforcement in incidents of risky terminations, to counsel those involved in a risky termination on de-escalation techniques, and to offer outplacement services, resume help, and a letter of reference to terminated employees, if appropriate. COLLABORATE WITH OTHER PROFESSIONALS TO REDUCE THE LIKELIHOOD OF WORKPLACE VIOLENCE Having the right team of HR professionals in place to connect

bout the author: Paul Marshall has of over 25+ years of insurance and risk management expertise and is responsible for the formation, growth, profitability and overall strategy, of McGowan Active Shooter / Workplace Violence Programs. Since the program’s inception in 2016 he has insured over 1,000 businesses, organizations and events throughout the Unites States. He is frequently interviewed by media outlets has authored multiple articles/blogs and presents at industry conferences throughout the US and internationally.

SEPTEMBER 2019

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NEWS employees with additional resources is a critical step in reducing the likelihood of workplace violence. HR departments should strive to create a psychologically healthy workplace where employees have no fear of repercussion for speaking out when they suspect someone might be displaying warning signs of workplace violence. All employees should receive training from a conflict management firm. With more staff awareness, violent situations are less likely to occur. NO MATTER THE SIZE OF THE BUSINESS, A PLAN IS NEEDED HR professionals should evaluate security and risk management holistically. No matter the size of a business, a plan to prevent workplace violence must be put in place. Taking proactive steps to reduce workplace violence and creating the ability to respond to an incident of workplace violence quickly makes the workplace a difficult target for violent offenders. McGowan Program Administrators knows what an effective insurance response can do if there’s an emergency. Our Active Shooter / Workplace Violence insurance program helps organizations and provides comprehensive coverage, including day one coverages for victims, primary liability, business interruption, extra expense, and crisis management services. We’re ready to help set up a plan for businesses and organizations of any size.

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JENCAP TO ACQUIRE SPECIALTY INSURANCE BUSINESS ARAN

ugust 20th, 2019 – JenCap Holdings LLC agreed to acquire privately held specialty program administrator Aran Insurance Services Group, Inc. Aran specializes in developing and acquiring insurance underwriting facilities for the property casualty and accident health markets. It has offices in Arizona, Colorado, Massachusetts and New York.

the Firm and its affiliates provides investment banking and insurance consulting services globally, including; merger & acquisition advisory capital raising, valuations, program placement/fronting, and reinsurance advisory. Merger & Acquisition Capital Services, LLC., a registered brokerdealer and member FINRA / SIPC, is an affiliate of Merger & Acquisition Services, Inc. To learn more about Merger & Acquisition Services, visit https:// maservices.com.

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Merger & Acquisition Services Inc. served as the sole financial advisor to Aran Insurance Services Group Inc. ABOUT MERGER & ACQUISITION SERVICES, INC. Merger & Acquisition Services, Inc. is a specialist advisory and financial services Firm to the insurance and reinsurance industry, with offices in New York, Connecticut, Georgia & Cayman Islands. Founded in 1999, TABLE OF CONTENTS

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ANALYSIS - WILSON ELSER Continued From Page 44

SUPPORT IN CONGRESS FOR CANNABISRELATED PROTECTIONS to cannabis businesses are explicitly protected. The bill also prevents financial regulators from incentivizing banks not to offer services to an account holder solely because the account holder is affiliated with a legitimate cannabis-related business.

INSURANCE PROTECTIONS Congress is expected to include additional protections for insurance companies once the House of Representatives reviews the bill. Ohio Representative Steve Stivers has advocated for insurance companies to obtain similar protections for the same scope of services afforded financial institutions under the bill’s banking provisions. Representative Stivers has proposed an amendment, which passed in a voice vote, that expands the legislation’s protections to insurance companies. Many of these protections also are addressed

SEPTEMBER 2019

in the CLAIM act, discussed below. A joint statement praising Stivers’s amendment has been issued by the American Property Casualty Insurance Association, The Council of Insurance Agents & Brokers, the American Land Title Association, the Reinsurance Association of America, and the Wholesale & Specialty Insurance Association.

It is expected that banks and other financial institutions will be provided further guidance about how to work lawfully with legal cannabis businesses. H.R. 1595 directs the Secretary of the Treasury to ensure new Financial Crimes Enforcement Network (FinCEN) guidance is consistent with the purpose and intent of the SAFE Banking Act.” CLAIM ACT The CLAIM Act was introduced as Senate Bill 2201 in late July 2019 by New Jersey Senator Bob Menendez to provide CRLBs with greater access to insurance. A week later, a similar bill was introduced in the House by New York Representative Nydia Velázquez. The CLAIM Act extends federal protections to insurers that provide coverage to CRLBs and creates a TABLE OF CONTENTS

federal safe harbor for agents, brokers and insurers active in the cannabis industry. The bill’s protections include preventing the federal government from (1) penalizing or discouraging insurers from offering policies to CRLBs operating in legalized states; (2) terminating or limiting an insurer’s policy solely because it has engaged in business with a CRLB; and (3) incentivizing or otherwise encouraging insurance companies to downgrade or cancel their services to a policyholder simply because they are associated with a CRLB. The CLAIM Act also prevents insurance companies from dropping coverage of those who do business with CRLBs. A prime example includes landlords that rent property to cannabis dispensaries. Senate Bill 2201’s chief sponsor, Senator Menendez, recently stated: “Current federal law prevents these small business owners from getting insurance coverage, and without it, they can’t protect their property, employees, or customers. We can solve this problem with legislation that allows insurance companies to provide coverage to these enterprises without risk of federal prosecution or other unintended consequences.” Supporters of the bill argue that providing insurance to CRLBs not only mitigates safety risks but also grants policyholders more access to banking and financing options. Financing is often denied when a business lacks adequate insurance coverage.

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Senate Bill 2201 has been submitted to the Committee on Banking, Housing and Urban Affairs while H.R. 4074 was submitted to the House Committee on Financial Services. No date has been scheduled for either committee to review these companion bills.

BROADER PROTECTION STILL MAY BE NEEDED The SAFE Banking Act and CLAIM Act are designed to address public safety concerns for marijuana businesses operating under the protection of state laws. Better access to banking services and insurance protects businesses and the public. The CLAIM Act should provide most insurance carriers with adequate safeguards to justify offering a much wider variety of insurance coverages and greater policy limits.

Although the SAFE Banking Act, if enacted in its current form, could be a significant step toward gaining access to badly needed financial services for CRLBs, it remains to be seen whether H.R. 1595 provides enough protection for financial institutions to offer services widely. On one hand, the bill arguably addresses the issue of liability under anti-money-laundering (AML) laws, but on the other hand it doesn’t appear to address liability under other federal laws such as RICO and the Controlled Substances Act. Without broader protections, financial institutions may continue to defer providing bank services to cannabisrelated businesses. It is expected that banks and other financial institutions will be provided

further guidance about how to work lawfully with legal cannabis businesses. H.R. 1595 directs the Secretary of the Treasury to ensure new Financial Crimes Enforcement Network (FinCEN) guidance is consistent with the purpose and intent of the SAFE Banking Act. Regardless of bipartisan support, any cannabis-related legislation faces an uphill battle in the Senate largely due to the Majority Leader’s refusal to allow a floor vote in that chamber. Also, with the 2020 election cycle heating up, it does not appear that federal legalization of cannabis will be a significant campaign issue. The SAFE Banking Act, the CLAIM Act and similar bills may therefore be delayed until after the election.

o-author Ruben Espinosa Wilson Elser Associate - White Plains 914.872.7434 ruben.espinosa@wilsonelser.com Ruben Espinosa represents established businesses and individuals in all aspects of civil litigation. His practice focuses on the defense of claims related to general liability, automobile liability, premises liability, personal injury, and business and real estate litigation. Ruben also is a member of Wilson Elser’s Cannabis Law practice, advising medical professionals, growers, processors, insurers, distributors and vendors within the legalized cannabis industry as well as organizations outside the industry impacted by the rapidly evolving state and federal regulatory landscape.

o-author Ian A. Stewart Wilson Elser Partner - Los Angeles 213.330.8830 ian.stewart@wilsonelser.com. 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.

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SEPTEMBER 2019

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

1 983

13%

4,487

signed of independent agents in U.S.

national strategic partner companies

2 0 19

new agencies created

strategic master agencies

The Total Solution for the Independent Agent The Proven Distribution System for Strategic Partner Companies

SEPTEMBER 2019

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LLOYDâ&#x20AC;&#x2122;S OF LONDON

phogel from germany [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)]

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Credit: Loco Steve Attribution-ShareAlike 2.0 Generic (CC BY-SA