The CHART Exchange April 2020 by The CHART Exchange

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

SPECIAL REPORT: Employment Law Questions Related To The Covid-19 Pandemic

LLoyd’s Launches New Cryptocurrency Wallet Insurance Solution For Coincover

Lloyd’s Launches New Report On The Renewable Energy Sector

Email Marketing Rules Your Agency Must Follow

Digital Transformation For The Insurance Industry

Valuemomentum Case Study: Appalachian Underwriters

Interview: Why “Old School” Business Development Still Works

Coronavirus Factors: Event Cancellation And Contingency Nonappearance Insurance

Stay Tuned: Re-Imagined CHART 2.0 Coming Soon!

SIM Swapping - The Achille’s Heel Of Two-Factor Authentication

Coronavirus Factors For The Insurance Industry To Consider: Business Interruption

Hospital Active Shooter Workplace Violence Threats: What You Need To Know

Five Tips For Working At Home

Lloyd’s Market Is In A Strong Position To Respond To The Impacts Of Covid-19

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Valuemomentum Opens A New Global Delivery Center In Pune India

Cover Image: The image is released free of copyrights under Creative Commons CC0.

SPECIAL REPORT:

APRIL 2020 VOLUME 5 - ISSUE 1

EMPLOYMENT LAW QUESTIONS RELATED TO THE COVOID-19 PANDEMIC

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

CHART Exchange

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

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

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MESSAGE FROM THE EARLIEST ADOPTER

STAY TUNED: RE-IMAGINED CHART 2.0 COMING SOON!

This “reimagined” vision of the original CHART concept transitions us away from a traditional associationtype model in favor of a more businesscentric approach. Our entire focus will be to assist clients in developing and placing new programs/ products within the U.S./London marketplace.”

6 APRIL 2020

e are certainly living in unprecedented times. The COVID-19 outbreak is having an impact on a global scale. Businesses and schools are being shut down. The vast majority of the world’s major sports have been placed on an extended hiatus. Phrases few have ever uttered before – like “shelter in place” and “social distancing” – are now a part of our daily lexicon. As many regular readers of this publication already know, our team has been preparing for the imminent launch of CHART 2.0. This “re-imagined” vision of the original CHART concept transitions us away from a traditional association-type

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Glenn W. Clark, CPCU Publisher & Earliest Adopter

model in favor of a more businesscentric approach. Our entire focus will be to assist clients in developing and placing new programs/products within the U.S./London marketplace. Given all of the current uncertainty within the insurance industry, most would understand if we decided to postpone implementation of the CHART 2.0 re-boot. After careful consideration, our team resolved to move forward with the launch as originally planned. There were a number of variables that factored into this decision, among them:

www.chart-exchange.com

1. Market competition. Agency specialists with innovative insurance ideas tend to do well in our industry. Postponing the introduction of new programs and/or products into the market creates a “window of opportunity” for others to step in and take over this crucial advantage. CHART’s toolkit of expertise, connections, and partners will help clients turn their business ideas into reality as quickly as possible. 2. Support for under-served niches. Many of the new product concepts brought to CHART originate from the identification of either coverage gaps found in existing policies or business segments without an adequate amount of insurance options. Our team can mitigate these issues by assisting clients with the formulation of an actionable program submission document.

3. The U.S./London marketplace needs new business production. One of the unfortunate consequences of the COVID-19 outbreak will be the inhibition of submission flow to the London market. CHART can help alleviate this issue by introducing a stream of new business proposals to those Syndicates with compatible risk appetites. We fully expect to launch the rebranded CHART 2.0 next month. Be sure to check the next edition of this publication for updates. Feel free to e-mail us at info@chart-exchange. com if you have any new program or product ideas you’d like to discuss. Stay safe!

Glenn W. Clark , CPCU CHART’S Earliest Adopter

www.chart-exchange.com

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APRIL 2020

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

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ANALYSIS - KROLL

SIM SWAPPING – THE ACHILLE’S HEEL OF TWO-FACTOR AUTHENTICATION P

ierson Clair is a managing director in Kroll’s Cyber Risk practice, based in the Los Angeles office. He has conducted extensive academic research at the forefront of cyber risk, most currently on changes of investigative significance in Mac and mobile device hardware and software. Prior to this emphasis, he focused on the dynamics within the complex framework of protecting critical national infrastructure as well as intelligence, espionage, and terrorism.

eith Wojcieszek is a managing director in Kroll’s Cyber Risk practice, based in Washington, D.C. Keith joined Kroll from the United States Secret Service, where he served with distinction for 15 years. Keith is a strategic problem-solver, who draws on not only his wealth of advanced technical expertise, but also his extensive experience working with diverse international stakeholders on complex transnational investigations and initiatives.

icole Sette is a senior vice president in the Cyber Risk practice of Kroll, a division of Duff & Phelps, based in the Secaucus office. Nicole brings unique insight to the multiple dimensions inherent in client challenges from her years of federal law enforcement and military experience. Nicole served as a Cyber Intelligence Analyst with the Federal Bureau of Investigation for nearly 10 years, and was an Intelligence Specialist with the U.S. Army Communications-Electronics Command for four years.

www.chart-exchange.com

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By Pierson Clair, Keith Wojcieszek & Nicole Sette

roll identified a variety of SIM swapping incidents via its intake process for cyber investigations between July and September 2019, two of which resulted in access to victims’ financial institutions. Subscriber identity module (SIM)1 swapping is a type of attack in which a malicious actor induces a mobile service provider to cancel the target’s SIM card and then port the target’s mobile phone number to the hacker’s SIM card and phone. The hacker can then use the hijacked phone number to request SMS-based one-time passcodes2 to access the victim’s online accounts, reset passwords, or transfer assets. One of the hallmarks of SIM swapping fraud is the speed of attacks, says Associate Managing Director Pierson Clair. “Hackers don’t waste time; once the SIM swap occurs, they immediately start accessing the victim’s online accounts, and the financial losses can rack up very See SIM Swapping Page 24

APRIL 2020

THERE’S A BETTER WAY TO CONNECT WITH LONDON …

CHART CAN GET YOU THERE FASTER! Most of us know about Lloyd’s of London. The market’s 332 year track record of innovation, technical expertise, and product diversity has cemented its reputation within the industry. Unfortunately, the vast majority of U.S.-based agencies with new program or product ideas are unsure of how to access the world’s oldest insurance brand. The CHART Exchange can help. We were established for the sole purpose of growing the U.S./London marketplace by serving as the conduit between domestic producers and Lloyd’s Risk Takers. Our vast network of Vendor Partners can provide the support needed to help develop your program proposal. Available services include Actuarial, Claims Administration, Marketing, Legal, and Systems. We can even assist in expediting the implementation of your new program through our unique “Incubator” facility. Interested in learning more? Visit our website at www.chart-exchange.com. We are also available via e-mail (info@chart-exchange.com) or by phone at the number below.

855-716-3660 The CHART Exchange 3001 Philadelphia Pike Claymont, DE 19703 www.chart-exchange.com • Fax: (302) 334-0325

ANALYSIS -WILSON ELSER

CORONAVIRUS - FACTORS FOR THE INSURANCE INDUSTRY TO CONSIDER: BUSINESS INTERRUPTION By Paul S. White

outbreak may not peak until April 2020.

oronavirus, recently named “COVID-19” by the World Health Organization, presents like a Hollywood disaster

movie: • • •

•

It appears to be a mutated virus There is no available vaccination More than 50 million people in China have been quarantined, more than 60,000 people are infected and more than 1,700 people are dead Global businesses operating in affected zones in China have shut down or significantly restricted operations Health experts project this

Given the risk to life and the economic impact of coronavirus, policyholders and the insurance industry alike are watching and considering whether business interruption or event cancellation insurance benefits may be available while similarly assessing liability risks. This three-part series will cover specific aspects of insurance that all stakeholders – insured, insurers and brokers – should consider. CORONAVIRUS: STATUS AND IMPACT Coronavirus is believed to have originated at a market in Wuhan, China, that sold animals for human

consumption. Reports from China tell us that since its discovery in late December 2019, more than 70,000 people have been infected with the coronavirus, resulting in more than 2,400 deaths. Outside of China, there have been some 1,700 cases in 28 nations according to the World Health Organization, which has declared coronavirus a global health emergency. In the United States, the Centers for Disease Control and Prevention report at least 35 confirmed cases. (Editor’s Note: These are current numbers as we prepare for press but readers should be aware they are constantly change.)

See Covid-19 Business Interruption Pg 42

bout the author: Paul White focuses his practice on complex insurance coverage and bad faith litigation and represents defendants in commercial litigation. Paul’s insurance coverage practice includes advising and representing insurers in bad faith litigation and insurance policy disputes, including first-party property policies, general liability coverage, errors and omissions insurance, and media liability insurance. He also advises and represents insurers in subrogation actions on property losses. In addition, Paul has litigated and arbitrated disputes throughout the United States involving domestic and foreign insurance agents and brokers in all lines of coverage. He has broad experience in the business practices of all types of insurance intermediaries, including brokers at every level in the broking process, from producers to managing general agents to London Market brokers.

www.chart-exchange.com

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APRIL 2020

NEWS - VALUEMOMENTUM

VALUEMOMENTUM OPENS A NEW GLOBAL DELIVERY CENTER IN PUNE INDIA The new development center helps accommodate the company’s rapid expansion and ability to recruit top talent in the region

alueMomentum, a fast-growing IT services and software solutions company, has recently launched a new regional development center at Pune, India. The development center will accommodate around 500 team members, enabling them to collaborate globally to serve the company’s growing customer base. The new regional development center in Pune is located at the Embassy TechZone IT Park, easily accessible by visiting clients and team members from Mumbai and Pune airports. The facility will enable teams to deliver projects across the portfolio of digital, data and core transformation initiatives for ValueMomentum’s clientele in North America and Southeast Asia. Speaking on the occasion, Uma Gogineni – Chief People Officer & Board Member, ValueMomentum said, “We are pleased to announce

12 APRIL 2020

the launch of this regional development center in Pune. With this new facility, we are aiming to increase our access to talent.” She further stated, “We have been recruiting laterally and from the region’s premier educational institutions over the past few years, and have been pleased with the talent pool.” ABOUT VALUEMOMENTUM ValueMomentum provides IT services and software solutions

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to insurance, healthcare, and financial services firms. Customers choose ValueMomentum for its track record of delivering value and driving the momentum of customers’ business initiatives. ValueMomentum accomplishes this mission by applying a time-tested formula of combining strong technology expertise with deep industry experience. For more information, visit https://www. valuemomentum.com.

www.chart-exchange.com

“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

NEWS Merger & Acquisition Services

serving the insurance industry

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

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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

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

SPECIAL REPORT EMPLOYMENT LAW QUESTIONS RELATED TO THE COVID-19 PANDEMIC By Lisa Handler Ackerman, Christina A. Katt

along with an explanation of the various legal implications.

s the number of confirmed cases of Coronavirus Disease 2019 (COVID-19 or coronavirus) in the United States continues to increase, private employers need to continually evaluate the emerging risks.

Q. How should an employer communicate with its employees regarding COVID-19?

Following are recent questions to which our attorneys have responded,

It is critical that employers provide timely and fact-based information to their employees. Employers should not only ensure all reasonable measures are taken to minimize the risk of the coronavirus being spread

within their workspaces but also regularly communicate their efforts to their employees. To this end, it is recommended that employers let employees know they are closely monitoring information from the appropriate authorities, including the U.S. Centers for Disease Control and Prevention (CDC), the

See Employment Law CV questions Page 38

bout the co-author: Lisa Handler Ackerman is a dynamic litigator who focuses on employment defense as well as insurance coverage matters. Lisa’s innate ability to communicate and connect with others has earned her the respect of clients and colleagues as well as judges and adversaries. A significant portion of Lisa’s practice involves counseling employers on personnel issues and defending them in employment-related claims, including class actions and multiparty lawsuits. A number of her recent cases have centered on “hot button” employment issues such as invasion of privacy claims, including claims brought under the Biometric Information Privacy Act (BIPA), wage and hour laws, the Family and Medical Leave Act (FMLA), the Americans with Disabilities Act (ADA) as it relates to employees and equal access, and whistleblower claims.

bout the co-author: Christina Katt handles employment defense and insurance coverage matters. A significant portion of Christina’s practice involves counseling employers on personnel issues and defending them in employment-related claims. Christina is knowledgeable in federal and state employment discrimination laws, handling cases arising under Title VII, the Age Discrimination in Employment Act, the Americans with Disabilities Act (ADA), the Family and Medical Leave Act (FMLA), and the Employee Retirement Income Security Act. In the coverage area, Christina has substantial experience representing insurance carriers in matters arising from many different policy types, providing opinions on defenses and handling litigation nationwide.

www.chart-exchange.com

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APRIL 2020

YO U R PA RT N E R F O R A D M I T T E D M A R K E T C A PAC I T Y PROGRAM CARRIER WITH

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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.

NEWS - LLOYD’S OF LONDON

LLOYD’S LAUNCHES NEW CRYPTOCURRENCY WALLET INSURANCE SOLUTION FOR COINCOVER Lloyd’s has launched a new insurance olicy to protect cryptocurrency held in online wallets against theft or other malicious hacks.

he first of its kind liability policy, with flexible limits from as little as £1,000, was created by Lloyd’s syndicate Atrium in conjunction with Coincover to protect against losses arising from the theft of cryptocurrency held in online, hot wallets. It is a new type of liability insurance policy with a dynamic limit that increases or decreases in line with the price changes of crypto assets. This means that the insured will always be indemnified for the underlying value of their managed asset even if this fluctuates over the policy period. The policy is backed by a panel of other Lloyd’s insurers, which includes TMK and Markel, all of whom are members of Lloyd’s Product Innovation Facility (PIF). As part of the Future at Lloyd’s ambition to be the world’s most customer-centric digital insurance platform, the Facility is an important step towards building www.chart-exchange.com

a marketplace that offers better value for the changing and diverse needs of customers through highly-responsive, cutting-edge risk management products and services. This is the second new insurance product to be backed by PIF members in recent months. The first – a profit protection policy for hotels with an innovative event-based trigger – was launched in September.

David Janczewski, CEO, Coincover, commented, “We are delighted to have worked with Atrium and the Lloyd’s PIF members to bring such a unique and timely solution to the As the crypto asset market. As the crypto asset market crypto heats up again at the asset market start of 2020, a new heats up again wave of crypto-curious customers are standing at the start of by at the ready to jump 2020, a new in, having previously wave of cryptobeen put off by the curious customers lack of adequate protection against are standing by theft and loss. With this at the ready to innovative new policy, we can remove these jump in, having barriers and broaden previously been the appeal of crypto. It put off by the represents another step lack of adequate forward in enabling protection against cryptocurrency adoption.”

Matthew Greaves, Underwriter, Atrium, said. “There is a growing demand for insurance that can protect cryptocurrency as it becomes increasingly popular. theft and loss.” It is a testament to Lloyd’s that the market James Gadbury, has put together an innovative solution Senior Broker, Prospect, the insurance to mitigate these new risks and protect broker that worked with Atrium and against theft – from physical as well Coincover to create the policy, said, as online vaults – thereby providing customers with piece of mind that their assets are safe.” See Cryptocurrency Wallet Page 58 TABLE OF CONTENTS

APRIL 2020

NEWS - LLOYD’S OF LONDON

LLOYD’S LAUNCHES NEW REPORT ON THE RENEWABLE ENERGY SECTOR As energy systems change globally to incorporate renewable technologies, opportunities are arising for insurers to innovate products and to support this industry.

n 2018 China, US, Europe and India invested more than £230bn in new renewable energy (excluding hydropower). Since 2016, total investment in the power sector has outstripped investment in the oil and gas sector for the first time in decades. Consequentially, this has helped drive the rapid development of renewable technologies, through standardisation in wind and solar, and economies of scale. The three reports published in the Renewable energy: risk and reward series in collaboration with researchers from the Imperial College London Centre for Energy Policy and Technology (working independently through Imperial Consultants) delves into key trends & territories; key risks and technologies and integrating renewables into grids and the role

18 APRIL 2020

of energy storage. Each look at the implications of the exponential growth of renewable energy technologies and key emerging risks for insurers and risk managers. Lloyd’s is already a leader in the space providing cover for cyber, technology performance and (extreme) weather risks, accelerating the adoption of renewable energy at global scale. THE RESEARCH FOUND THAT: •

•

China is a key territory for renewable energy systems. With 334 Gigawatts of installed renewable technologies, China has the largest capacity for any one country and produce a significant percentage of renewable technologies; for example, China produces 45% of global solar photovoltaic panels. Solar photovoltaics dominates added technological growth with an estimated 575 Gigawatts to become operational in the next five years and new innovations allowing greater efficiencies.

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•

Lithium-ion batteries look to be the storage technology that will dominate future deployment of energy storage systems, with an 85% decrease in production price over the last decade; better production methods; and an increased understanding of the risks surrounding this technology.

In the future, renewable energy systems are likely to start to meet production demands that traditional energy systems do today. Due to the changing nature of risks in the sector and the fact that insurance is often a pre-requisite for securing project finance there is a growing need for insurance to support the rapid growth in the renewables industry, With energy capacity increasing, technologies maturing, and more data to analyse associated risks, the renewable energy market will open to further insurance business and product development. Read the reports here.

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 - COST FINANCIAL

E-MAIL MARKETING RULES YOUR AGENCY MUST FOLLOW

-mail can be an important tool for marketing your insurance business. But e-mail marketing can be tricky — federal law requires that anyone sending out e-mail for commercial purposes follow some specific rules or risk costly penalties. The CAN-SPAM Act covers businessto-consumer and business-to-business e-mails that advertise or promote a commercial product or service. (CAN-SPAM stands for ‘Controlling the Assault of Non-Solicited Pornography And Marketing) The penalties for violations of CAN-SPAM can add up: The Federal Trade Commission can seek civil penalties of up to $16,000 per non-compliant e-mail sent.

Luckily, the rules for sending out business e-mails are simple to understand and easy to follow if you’re familiar with them. For starters, the subject line of your e-mail must accurately reflect the content of your message. Your “From,” “To,” and “Reply-To,” information must accurately identify you or your agency as the person or business who initiated the message. You’ll also want to make sure that you disclose clearly that your e-mail is an advertisement. In the e-mail text, you need to disclose where you’re located. Your e-mail must contain the street address, post office box or private mailbox used by your business. You’ll also need

to include a way to easily opt out of getting future e-mails from you. There also must be no charge for someone to opt out of your e-mails. Opt-out requests also must be processed within 10 business days. And you may ask only for the recipient’s e-mail address to honor an opt-out request. The bottom line: Make sure all of your e-mails have an opt-out request and that it’s easy for someone to opt out of getting e-mails from you. The CAN-SPAM Act also addresses how you create and maintain your e-mail list. Don’t ever add people to your e-mail list without their permission. That’s a big no-no. For example, you wouldn’t want to add e-mail addresses from business cards you collect at a business conference unless you have permission from each individual whose card you collected to send them e-mails. In addition, you don’t want to share, sell or transfer any e-mail addresses you have collected to another e-mail list. Lastly, make sure that if you hire an outside company to handle your e-mail marketing that you hire a reputable one. You, along with your e-mail marketing company, may be held legally responsible for any violations of federal law. Want to learn more about CAN-SPAM? Go to this link.

20 APRIL 2020

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â&#x201E;¢

business efficiency amplified

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ANALYSIS -E.O.X.VANTAGE

DIGITAL TRANSFORMATION FOR THE INSURANCE INDUSTRY By Harsha Chaturvedi COO and cofounder at EOX Vantage

igital transformation and disruptive technologies continue to impact the insurance industry. Until just recently, the everyday tasks of the business primarily ran on manual-input processes. Now the industry is increasingly going paperless and embracing digital transmission for its distribution networks. Are you following suit with your own practices? If not, you might want to come up with a plan to pursue the efficiency opportunities afforded by digitization. The already slim margins of the industry will start to make the market more and more difficult to navigate for those who ignore the advantages of going digital. Many smart folks out there are saying

that the companies expected to have a leg up on “winning” the upcoming decade of the 2020s will be those that have a handle on providing a superior digital customer experience. Consumers in every industry are beginning to expect the same fast, easy and personalized digital user experience that they’re getting in transactions delivered by market leaders from Amazon to Zappos. Insurance policy holders are no different! You can start the journey by assessing and evaluating your current processes, defining objectives and goals, and then creating a roadmap to accomplishing each piece of your digitization puzzle. You might want to begin by brainstorming the obvious processes that are timeconsuming pain points for both customers and staff. At the simplest level, it’s possible to save much time and effort by digitizing paper processes such as

preparing underwriter submissions, processing claims…any number of workflows can be automated to boost an organization’s efficiency and improve client interaction. Identify any practice that’s accomplished mainly by hand, for example PDF forms that need to be printed, filled in, scanned and sent by the customer, and then received and inputted by your organization. It’s relatively easy to replace all these steps with a web form, allowing for online entry, submission and receipt. With the time saved, staff can transition to doing other, more important (and profitable!) tasks than routine bookkeeping and data entry required by paper-based functions. You will also find you’re cutting down on issues brought on by messy, error-prone transcriptions that are inevitable when paper data must be See Digital Transformation Page 30

bout the author: For over 25 years now, Harsha has been focused on bringing operational efficiencies to organizations through technology, enterprise social networking, business intelligence, operational excellence, consulting, and process improvement. He has provided value to several companies in his career including IBM, American Airlines, Fidelity Investments, and i2 Technologies before co-founding EOX Vantage 14 years ago.

www.chart-exchange.com

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ANALYSIS - KROLL Continued From Page 9

•

As mentioned earlier, attackers are looking for high-value targets for whom extensive and accessible data exists. Some of the data can simply be public knowledge (e.g., executives listed on a company’s website), but much is commonly shared by victims themselves (e.g., articles, interviews, or postings to various professional and personal social media platforms). Targets with unusual names make it that much easier for attackers to find applicable data faster and avoid false positive results from their research.

SIM SWAPPING – THE ACHILLES’ HEEL OF TWOFACTOR AUTHENTICATION quickly,” explains Pierson. He notes that beyond traditional financial accounts, any kind of desirable asset is attractive to these cybercriminals, such as cryptocurrency or customer loyalty rewards (e.g., credit card rewards or frequent flyer mileage). Pierson notes this efficiency is also reflected in the fact that attackers are generally looking to collect readily available public information in order to carry out the swap. Accordingly, people with an extensive public footprint whom an attacker assumes to potentially own assets worth pursuing are favored targets. C-suite executives, business leaders and board members, entrepreneurs, and individuals well known in their industry sector or community often fit the bill perfectly. Recent Kroll cases and federal indictments indicate a significant trend in targeting individuals involved with cryptocurrency investing and trading. These individuals are increasingly becoming victims because it is easier to leverage SMSbased two-factor verification (2FA) to transfer and launder cryptocurrency

24 APRIL 2020

accounts compared with traditional fiat currency. While attacks themselves are efficient, unfortunately it can take victims a day or more to figure out what has happened and remediate the damage. Some aspects of a SIM swap attack are out of a person’s control (e.g., a network provider employee who mistakenly permits the SIM swap), but Pierson says individuals can proactively take steps to forestall a swap and/or limit damage until they can sort things out with their service provider.

•

HOW DOES A SIM SWAP WORK?

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CONDUCT RECONNAISSANCE Pierson says the next step for cyberattackers is akin to a background intelligence workup. Drawing on a combination of publicly posted information and dark web sources, bad actors work to glean facts that help with not only the SIM swap, but also later when cracking accounts. For example, if a victim’s email addresses and passwords were compromised in a data breach, that information is for sale somewhere on the dark web. A cursory view of social media postings can often provide more than enough clues for guessing usernames and passwords, as well as answers for common account verification questions (mother’s maiden name, favorite vacation spot, pet’s name, first school, etc.).

These include cybersecurity basics such as avoiding credential reuse across online accounts and taking full advantage of all security features offered by a service provider. Pierson outlines these measures more fully in this newsletter’s Experts Corner.

According to Pierson, a SIM swapping attack is primarily a three-step process – identify the target; conduct reconnaissance; then make the swap and drain assets.

IDENTIFY THE TARGET

•

MAKE THE SWAP AND DRAIN ASSETS www.chart-exchange.com

Once a hacker has collected enough information on a target, they will then leverage either social engineering or an insider at the phone company to conduct the SIM swap operation whereby the victim’s mobile number is changed to point to the attacker’s phone. The attacker can then request one-time passcodes to reset the victim’s online accounts, facilitating access to email, social media, and asset-holding accounts. In cryptocurrency cases, at this point the attacker can transfer crypto assets to a crypto wallet under their control, and then launder cryptocurrencies via various methods available on the dark web.

SIM swapping. A response from another actor insinuates they can help with SIM swaps to bypass two-factor authentication for consumer banking institutions. This post reflects not only the global scope of many SIM swap hackers, but also how actors move to private communication channels after initial contact. Here in Example 2, we have an actor looking for a partnership with individuals who possess banking logs. They likely have the knowledge to perform SIM swaps, but not enough highvalue targets. Banking logs are a hot commodity on the dark web because of the information they contain, such as PII when consumers log in, which in turn can directly lead actors to targets. A response from another actor appears to indicate they have either numbers or bank logs that can swap.

Example 1 – Actors Looking to Expand Into New Geographies

SIM SWAPPING WITH INSIDERS ON THE DARK WEB Kroll’s analysis of dark web marketplaces indicates that there is a large volume of advertisement for SIM swapping services available on multiple forums. In most cases, actors are reluctant to talk about their intentions on the forums and prefer to move to peer-to-peer chat applications, such as Jabber or ICQ. However, based on Kroll’s experience, we can assess what these actors are planning or what type of assistance they are seeking. Following are some examples of recent global activity related to SIM swapping. www.chart-exchange.com

RECENT KROLL ENGAGEMENTS INVOLVING SIM SWAPPING

Example 2 – Actors Seeking High-Value Targets

Kroll assesses that in Example 1, the first actor has the capability to perform SIM swaps for Italian cell providers, but is now looking to expand both geographically and in the types of fraud possible with

TABLE OF CONTENTS

•

• A client was targeted with a high volume of spam at the same time the client’s phone service was cancelled via a SIM swap attack. On the same day the client’s SIM was swapped, an attacker gained access to the company’s corporate financial account and attempted to make a transfer. A SIM swap event targeted the

See SIM Swapping Page 29 APRIL 2020

CASE STUDY - VALUEMOMENTUM

CASE STUDY: APPALACHIAN UNDERWRITERS By Deepak Kannan

ppalachian underwriters slashes its rate/quote timeline by 85% and delivers a unified digital experience with ValueMomentum’s cloud-native BizDynamics platform. BUSINESS SITUATION Dedicated to agility in providing solutions for traditional and emerging exposures, Appalachian Underwriters, Inc. (AUI), offers commercial, personal, specialty and workers’ compensation coverages nationwide. This Tennesseebased MGA supplies risk transfer solutions to customers ranging from successful individuals and families to under-served rural populations via a network of over 34,000 appointed agencies.

Our retail partners are ecstatic about the new digital policy lifecycle management experience. It’s an exceptional differentiator for us.” RECOGNIZING THE CHALLENGES Having supplied online access to its retail partners for over two decades, AUI sought to continue innovating by transitioning from a portal with separate policy acquisition and servicing options to supplying agencies with a consolidated digital experience that provides full policy lifecycle management.

bout the author: Deepak Kannan is the Director of the Product Practice, Digital Insurance at ValueMomentum. He has over 15 years of experience in the P/C industry. Kannan specializes in digital insurance rate, quote, underwriting, and policy issuance technologies, and has helped dozens of firms implement a global delivery model.

26 APRIL 2020

With the introduction of a new product—AssetGuard, which insures valued collections and other assets of high-net-worth individuals—the firm sought a solution that went beyond intuitive agent dashboards. Instead, they hoped to design an innovative platform that would ultimately serve as a model for modernizing policy lifecycle management across each of the sister divisions operated by its parent, AUI Enterprise.

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To achieve this, Paul Kountz, Director of Reliance Risk Solutions, recognized the need for a “ strategic IT partner that could supply a comprehensive, sophisticated solution that reflected [AUI’s] company motto, which is ‘Business Made Easy.’” ADOPTING A SOLUTION After evaluating various options, AUI selected ValueMomentum’s vendoragnostic, cloud-native BizDynamics Digital Engagement Platform. AUI was attracted to BizDynamics as a purpose-built P/C solution for delivering uniform digital experiences, regardless of the underlying systems. Also key was seamless integration with AUI’s new data warehouse and its agency management solution, the Insurance See Case Study Page 43

www.chart-exchange.com

“WHEN YOU’RE FINISHED CHANGING,

YOU’RE FINISHED” - Benjamin Franklin

www.chart-exchange.com

The CHART Exchange, 3001 Philadelphia Pike Claymont, DE 19703

Phone: (855) 716-3660

•

Fax: (302) 334-0325

ANALYSIS - KROLL Continued From Page 25

SIM SWAPPING – THE ACHILLES’ HEEL OF TWOFACTOR AUTHENTICATION

In the unfortunate event you do become a victim of SIM swapping, here are five critical steps you should immediately take according to a recent FBI alert: • •

•

client’s phone just before the telephone company’s physical location closed for the evening. This forced the victim to try and report the incident over the phone and prolonged the remediation time period until the victim was able to go to the provider’s physical store location when it opened again the following morning. Demonstrating the persistence of SIM swap attackers, a client’s phone was SIM swapped and appeared to have been quickly remediated within a matter of hours, only to find that one of the victim’s email accounts was compromised over one month later (likely by the perpetrators of the original SIM swap attack).

KROLL EXPERTS CORNER – BEST PRACTICES FOR RESPONDING TO SIM SWAPPING Kroll Associate Managing Director Pierson Clair has a few recommendations that can forestall SIM swapping or lessen the overall severity of the attack: Take advantage of additional online www.chart-exchange.com

account security controls beyond SMS-based 2FA. Set up additional authentication methods or controls offered by not only your mobile phone service provider, but also the providers of all your other online accounts. These can include the use of PINs, out-of-band authentication, etc. Also, restrict the conditions under which any substantive changes to an account can occur, such as in-person only for mobile phone accounts. Other authentication options include the use of third-party applications (e.g., Google or Microsoft Authenticator). Review your overall online security posture. Are you a person who has tended to use the same username, password, and security questions across multiple online accounts? If that’s the case, Pierson says you have made it that much easier and faster for a SIM swapper to get into your accounts and drain valuable assets. By leveraging different credentials for different accounts, you can potentially slow down an attacker long enough to give yourself the chance to notify account providers and lock down your accounts. TABLE OF CONTENTS

• • •

Report the incident in-person to your mobile service provider. Access your online accounts as soon as possible from a secure location or connection and change your passwords. Call your bank(s) and place an alert on your accounts. Look for unusual activity over the following weeks and months. Report the incident to the FBI or your local police department.

EXAMINING ONLINE EXPOSURE FOR SIM SWAPPING VULNERABILITIES Successful SIM swapping schemes rely on the cybercriminal’s ability to pull together a wide variety of data points on their victims. One way people can gauge their risk (or the risk to leaders in their organization) is through an examination of their data’s exposure on both the surface web and the deep and dark web. Associate Managing Director Keith Wojcieszek explains, “Even people who believe they have been very careful sharing information online are often shocked to discover how criminals can connect disparate dots to get the information they need. For

See SIM Swapping Page 36 APRIL 2020

ANALYSIS - E.O.X.VANTAGE usually difficult to achieve, and in most cases impossible.

Continued From Page 23

DIGITAL TRANSFORMATION FOR THE INSURANCE INDUSTRY preparing underwriter submissions, for trackability. Data inputs deposited processing claims…any number along the way of the insurance lifecycle of workflows can be automated to ensure the creation of more visible, boost an organization’s efficiency actionable and valuable data. and improve client In fact, such data interaction. Identify A basic unlocks nearany practice that’s limitless avenues for tenet of accomplished mainly improvement. Once data science by hand, for example automation and that’s critical for PDF forms that need digitization are in to be printed, filled in, business leaders to place, the stage is set scanned and sent by understand is that to end the problem the customer, and then of data locked in the more data is received and inputted silos without the by your organization. visible, accessible capability to be integrated, shared or and sharable, It’s relatively easy to even seen between the more value it replace all these steps departments. possesses.” with a web form, allowing for online A basic tenet of entry, submission and receipt. With the data science that’s critical for business time saved, staff can transition to doing leaders to understand is that the more other, more important (and profitable!) data is visible, accessible and sharable, tasks than routine bookkeeping and the more value it possesses. It should data entry required by paper-based be obvious, but often we’re too close functions. to our own situation to see the big picture and how one group’s data can You will also find you’re cutting down benefit the entire organization. That’s on issues brought on by messy, errorwhere C-level execs and other leaders prone transcriptions that are inevitable come in. They’re supposed to be in when paper data must be manually position to assess the entire business, typed into spreadsheets and other but without actionable real-time data formats. Plus, digitization ensures that from across the enterprise supplied each step in the process is recorded by digitized processes, such a target is

30 APRIL 2020

TABLE OF CONTENTS

With timely and accurate data compiled from the whole organization, its leaders will be able to address crucial questions such as: Where is information missing, and how can the gap be filled? Which processes and actions take up the most time, and how can they be shortened? What can we do to smooth out employee productivity if there are many peaks and valleys? As well as countless others! How is enterprise-wide data best collected and displayed? One of the prime resources to gather such operational intelligence is by using actionable dashboards like the ones offered by the Enterprise Operating System from EOX Vantage. Such a tool brings together real-time data from across the entity, via each department and over the length of the entire insurance lifecycle, into one space to help executives spot trends, analyze holistically and provide insights into the business. Decision-making becomes better informed as a result, while leaders gain more time to devote to strategizing and innovating for their organization. Again, it all starts with assessing your current needs and making a roadmap. Then, you can move on to choose the appropriate tools and technologies, get buy-in from leaders and have them set up their people for success with these changes. Good luck with your transformation efforts–once you start to realize the benefits, you will be glad you did!

www.chart-exchange.com

INTERVIEW - PL COMMUNICATIONS

INTERVIEW: WHY “OLD SCHOOL” BUSINESS DEVELOPMENT STILL WORKS By Paul Lavenhar, PL Communications

YOU DON’T CALL WHAT YOU DO TELEMARKETING OR COLD CALLING – WHY IS THAT?

avid Silverman has had over 30 years of generating organic growth opportunities for insurance agencies ranging from midsize agencies to corporate level brokerages – all by telephone. In this interview, he explains why an “old school” marketing technique still works today.

www.chart-exchange.com

My title is Director of New Business Development. I am not a telemarketer with a script. I am a licensed producer that understands the products, why prospects need those products, and how to get in the door. My success is based on treating prospects as individuals, not potential policy numbers. If you use the word telemarketing, that’s somebody who calls you at home during dinner to extend the warranty on your car, or it is an automated robocall. That’s not what I do. ONE OF THE REASONS SOME PRODUCERS RESIST CALLING PROSPECTS IS REJECTION – HOW DO YOU HANDLE THAT? I agree most people that try to do this cannot handle the rejection. I am what I would call politely persistent. If I have to leave three voicemail messages and send a couple of emails, I keep trying. But, I am careful not to alienate the prospect. TABLE OF CONTENTS

The way I handle rejection is that I believe if somebody doesn’t want to talk to me, it is their loss, not mine. I know if they give us a chance, we can likely improve their current program and offer better pricing. If you’ve been with an agent for six years, and find out we can save you $10,000 in premium, that means we could have saved you $60,000. If a prospect doesn’t appreciate how we can help them, then I move on to the next person who does. HOW DOES YOUR TELEPHONE BUSINESS DEVELOPMENT INTEGRATE WITH OTHER MARKETING TOOLS LIKE EMAIL, SOCIAL MEDIA, OR DIRECT MAIL? I work as part of a team, and we coordinate our efforts based on whether the team is focused on a niche market or has a specific marketing message. My job is to reinforce the initiative on social media or direct marketing. I also follow-up with emails or letters with prospects, and I track responses, so the team

See Old School Business Dev Page 57 APRIL 2020

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.

ANALYSIS - WILSON ELSER

CORONAVIRUS FACTORS FOR THE INSURANCE INDUSTRY TO CONSIDER:

EVENT CANCELLATION AND CONTINGENCY NONAPPEARANCE INSURANCE By Mat Ross

percent lower on Thursday, February 27 and oil prices also fell. Many multinational companies, such as Anheuser-Busch InBev and Marriott, are forecasting drops in quarterly profits.

Governments around the world are iven the risk to life and taking action to contain the spread the economic impact of of the virus. Japan’s government coronavirus, policyholders closed all schools through March. and the insurance A typical Event Cancellation industry alike are watching and considering whether policy may contain business interruption exclusions for lack of interest or or event cancellation support for an event, a preexisting insurance benefits may be available while similarly condition, terrorism, breach of assessing liability risks. This contract, financial failure of a article will cover specific venture and even communicable aspects of insurance that diseases. One issue to be aware all stakeholders – insured, insurers and brokers – should of is the Communicable Disease consider.

In this article, we will review Event Cancellation and Contingency Nonappearance factors that insurance stakeholders should consider when claims under these policies are brought forward.

Event Cancellation/ Contingency and exclusion that excludes coverage Nonappearance Insurance Not surprisingly, coronavirus where a loss arises out of fear of CORONAVIRUS: STATUS is already impacting any world epidemic determined by scheduled events. For AND IMPACT example, the Dalai Lama the World Health Organization.” Since its discovery in late cancelled all current public December 2019, the virus engagements; some ports has swept the globe with In the United States, the Trump have rejected cruise ships altogether; more than 47 nations reporting Administration announced a some airlines have stopped flights to infections. According to the World coordinated government response parts or all of China; and 50 countries Health Organization, which has led by the vice president. Many have imposed travel restrictions declared coronavirus a global health companies are suspending business emergency, more than 75,000 people have been infected with the virus with travel. Global markets are trading lower. The U.S. stock market opened 2 See Coronavirus Page 34 nearly 3,000 resulting deaths. www.chart-exchange.com

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APRIL 2020

ANALYSIS - WILSON ELSER Continued From Page 33

EVENT CANCELLATION AND CONTINGENCY NONAPPEARANCE INSURANCE and visa requirements primarily on those who recently visited China or are Chinese nationals. Major events such as the Shanghai Grand Prix, the annual Goldman Sachs partnersâ&#x20AC;&#x2122; meeting in New York and the Mobile World Congress in Barcelona also were cancelled or curtailed. Insurance products specific to event cancellations or nonappearance of a key person generally provide coverage due to perils beyond the control of the insured, the organizer

of an event and the attendees when such perils result in cancellation, abandonment, postponement or enforced reduced attendance. Insureds, insurers and brokers now may find themselves evaluating such products to determine whether coverage under such policies may have been triggered. Under most policies, an insured has an obligation to mitigate its losses by reasonably seeking to postpone and/or reschedule an event to a

different time or location. Terms and conditions of each policy may vary. An event cancellation policy can protect an insured from financial losses such as lost ticket sales, outof-pocket expenses, contractual guarantees to others and sometimes even reimbursement to attendees for their purchased tickets. COVERED PERILS & LOSSES Covered perils in a typical Event Cancellation policy may include death, accident or illness; unavoidable travel delay; venue damage; and inclement weather. A covered claim may appear to be a claim for unavoidable travel delay in which event attendees could not make it to their destination due to travel arrangements that were delayed or cancelled, making it impossible to reach the event.

See Coronavirus Page 37

bout the author: Mat Ross is one of Wilson Elserâ&#x20AC;&#x2122;s senior New York trial partners who has extensive experience in state and federal courts and increasingly is brought in to serve as trial counsel on potentially highexposure cases previously handled by other firms for insureds, insurers and excess insurers. Mat has tried approximately 115 cases and taken more than 35 verdicts. He focuses on the defense of construction accident claims under New York Labor Law and other high-exposure premises liability claims. Mat has a growing coverage practice representing insurers in connection with a variety of specialty risk insurance policies. In addition, he has experience defending professional liability, premises liability, premises security, toxic tort, employment and police/municipal liability matters.

34 APRIL 2020

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www.chart-exchange.com

www.bluevoyant.com

••

For insureds that need forensics, incident response, or proactive security services

••

BlueVoyant is a pure play cybersecurity firm

••

WE GET IT – we do it faster and better

Austin Berglas | Global Head of Professional Services austin.berglas@bluevoyant.com Vincent D’Agostino | Head of Cyber Forensics & Incident Response vincent.dagostino@bluevoyant.com Jennifer Rothstein | Business Development Head, Insurance & Legal jennifer.rothstein@bluevoyant.com Breached: incident@bluevoyant.com | Info: contact@bluevoyant.com www.chart-exchange.com

TABLE OF CONTENTS

APRIL 2020

ANALYSIS - KROLL Continued From Page 29

SIM SWAPPING – THE ACHILLES’ HEEL OF TWOFACTOR AUTHENTICATION example, someone who has never shared their private telephone number online might find it has been listed in a booster club roster for their child’s school sports team that another parent posted on a social media site.”

•

• Kroll’s CyberDetectER® DarkWeb can help examine your organization’s and key executives’ digital data profile from an attacker’s perspective. More importantly, as part of a comprehensive cyber security risk assessment, it enables you to take actions to lessens an attacker’s ability to use your data against you.

•

Northern District of California, press release Man Sues AT&T After Fraudulent Sim Swap Led To $1.8m Cryptocurrency Theft – published 10/24/19, Ars Technica ‘SIM-Swap’ Scams Expose Risks Of Using Phones For Secondary I.D. – published 10/25/19, NPR SIM Swap Scams: How to Protect Yourself – published 10/23/19, Federal Trade Commission ‘Hacked’ My Accounts Using My Mobile Number: Here’s What I Learned - published 11/19/19, DarkReading

SOURCES: IN THE NEWS: SIM SWAPPING •

•

Nine Individuals Connected to a Hacking Group Charged With Online Identity Theft and Other Related Charges – published May 9, 2019, Department of Justice, U.S. Attorney’s Office, Eastern District of Michigan, press release Two Men Indicted In “SIM Swapping” Scheme To Steal Cryptocurrency – published February 4, 2019, Department of Justice, U.S. Attorney’s Office,

36 APRIL 2020

NEVER MISS AN ISSUE OF THE CHART EXCHANGE

SUBSCRIBE NOW!

A subscriber identity module (SIM) is a type of smart card that, among other purposes, authenticates the phone’s user to the mobile service provider. 2 “A one-time passcode or password (OTP) is a code that is valid for only one login session or transaction. An OTP is typically sent via SMS to a mobile phone, and they are frequently used as part of twofactor authentication (2FA).” Source: Idology, hxxps://www. idology.com 1

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www.chart-exchange.com

ANALYSIS - WILSON ELSER

Continued From Page 34

EVENT CANCELLATION INSURANCE A common misconception made by insureds, however, would be submitting a claim for an event cancellation due to the attendees’ or event organizers’ fear of traveling or spreading or catching the coronavirus, even though travel restrictions do not exist and the event is ready to go forward. The cancellation of an event while possibly in the best interest of the business may not necessarily be covered under such policies because the cancelation was not beyond the control of the event organizers or attendees. EXCLUSIONS A typical Event Cancellation policy may contain exclusions for lack of interest or support for an event, a preexisting condition, terrorism, breach of contract, financial failure of a venture and even communicable diseases. One issue to be aware of is the Communicable Disease exclusion that excludes coverage where a loss arises out of fear of any world epidemic determined by the World Health Organization. While this exclusion may exist in some Event Cancellation policies, www.chart-exchange.com

coverage still may be provided in some circumstances, such as if the venue where the event was to take place were closed under the order of a government or public or local authority due solely to a communicable disease that manifested within the venue. CONCLUSION To prepare for the potentially catastrophic impact of a global pandemic or similar health crisis, policyholders and insurers should review Event Cancellation/Contingency and Nonappearance Insurance policies to determine: •

•

• • •

What new exposures and risks are present given the unique nature of the coronavirus? Given the global scale, what are the events that are being cancelled? Which current policyholders are likely impacted most? Are there early inquiries and claims, and what do they indicate? Do we have a process to triage claims to ensure they are handled in the best interest of all stakeholders?

The risk of a global pandemic with catastrophic consequences seems to grow more prevalent every few years. To prepare for the catastrophic impact of a global pandemic, insureds, insurers and brokers must understand what is and is not covered under such policies, and should work together to minimize potential losses by evaluating potential claims as early as possible.

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.

APRIL 2020

SPECIAL REPORT - WILSON ELSER Continued From Page 15

work as planned and perhaps even longer than their accrued PTO benefits allow.

EMPLOYMENT LAW QUESTIONS RELATED TO THE COVID-19 PANDEMIC World Health Organization (WHO), state and local governments, and public health agencies. A lack of communication may lead to heightened fear and rumors. Communications also should be empathetic. Employers should assure their employees that the company’s highest priority is the health and wellbeing of their personnel. Q. May an employer lawfully prohibit employees from traveling to locations where the CDC has restricted nonessential travel? The CDC’s most current guidance provides that employees “may be asked to stay home for a period of 14 days from the time they left an area with a widespread or ongoing community spread …” Consistent with the CDC guidance existing as of the date this article is written, an employer would be justified instructing employees to work from home (where practicable) or otherwise not come to work for up to 14 days based on the employer’s determination that the employee

38 APRIL 2020

poses a direct threat based on the risk associated with where the employee traveled. As of the date of this article, in response to concerns related to the coronavirus, President Trump issued proclamations (the Proclamations) on January 31, 2020, February 29, 2020, March 11, 2020, and March 14, 2020, that suspended entry into the United States for most foreign nationals who have been in China, Iran and the Schengen Area – which consists of 26 European countries with the highest number of coronavirus cases outside of China, the Republic of Ireland and the United Kingdom – at any time within the 14 days prior to their attempted entry into the United States. Those permitted entry into the United States from countries identified in the Proclamations, including legal permanent U.S. residents and immediate family members of U.S. citizens, will be directed to a limited number of airports where screenings can take place. As a result, employees could be subject to travel delays that may prevent them from returning to TABLE OF CONTENTS

An employer cannot lawfully prohibit an employee from traveling for personal reasons to an area where there is a large community spread of the coronavirus. Indeed, many states prohibit an employer from discriminating against employees for their lawful, off-duty conduct, which would include travel to a location that is not prohibited by law. Employers should require employees to report to their employer where they are traveling and the dates of travel. Such a policy should caution employees that they may be subject to a quarantine or the inability to return to work for a period of time after returning from their travels based on guidance from the CDC, WHO, and state and local public health agencies. That being said, an employer can deny employees time off for such travel. An employer may cite objective concerns about the employee’s ability to return to work within a reasonable amount of time or before the employee’s accrued PTO expires. An employer also can cite costs incurred by the employer following an employee’s required 14day quarantine following such travel. Any practices restricting employees’ non-essential personal travel, and restrictions imposed on employees following their travel to high-risk areas, should be applied consistently based on the CDC’s travel advisories. www.chart-exchange.com

information, not on subjective perceptions … [or] irrational fears about a specific disability or disabilities.” (Internal quotations omitted.) The EEOC also recognizes that “during a pandemic, employers should rely on the latest CDC and state or local public health assessments, [and even though the] public health recommendations may change during a crisis and vary between states, [the EEOC instructs employers] to make their best efforts to obtain public health advice that is contemporaneous and appropriate for their location, and to make reasonable assessments of conditions in their workplace based on this information.” Employers also may request that employees advise when individuals with whom they have close contact travel to high-risk areas in order to determine if the exposure has resulted in the employee posing a direct threat to others in the workplace. The CDC’s Interim Guidance for Businesses and Employers advises that employees who are well but have sick family members at home notify their supervisor and refer to the Interim U.S. Guidance for Risk Assessment and Public Health Management of Healthcare Personnel with Potential Exposure in a Healthcare Setting to Patients with Coronavirus Disease (COVID-19). Q. Can an employer lawfully prohibit an employee from returning to work until 14 days has www.chart-exchange.com

passed since the employee was exposed to the virus, provided the employee remains symptom free? In the Equal Employment Opportunity Commission’s (EEOC’s) technical assistance, Pandemic Preparedness in the Workplace and the Americans with Disabilities Act, prepared in connection with the H1N1 influenza pandemic in 2009, the EEOC noted that an individual with a disability who poses a direct threat despite a reasonable accommodation is not protected by the nondiscrimination provisions of the Americans with Disabilities Act (ADA). The EEOC cautions that “[assessments] of whether an employee poses a direct threat in the workplace must be based on objective, factual TABLE OF CONTENTS

Irrespective of the legal parameters, it is understood that an employer may have compelling business reasons, such as addressing concerns of its personnel, clients or patients, to prefer an employee take time off or work remotely following an employee’s travel to an area with a widespread or ongoing community spread or exposure to the virus. Concerns such as these are particularly common for employers in the health care industry when employees have direct patient contact. An employer must approach these discussions with its employees carefully in order to avoid being seen

See Employment Law CV questions Page 44 APRIL 2020

FORESTRY WORLDWIDE FORESTRY (RE)INSURANCE FACILITY Pardus was established in 2013 by Keith Thompson, formally CEO of Advent capital Holdings Ltd and Darren Stockman Active Underwriter of Syndicate 780 and Director of Advent Underwriting Ltd. Pardus are an independent Managing General Underwriter, a Lloyd’s approved Coverholder, and an appointed representative of Capita Commercial Insurances Limited.

Cover

Maximum line of USD 8.5M any one risk, any one location. Capacity provided by Lloyd’s of London and “A-” rated company paper. Perils covered mainly Fire and Windstorm, but we can offer additional coverage for hail, ice, snow, frost. We cannot cover Pest and Disease, although we can offer cover under a small sublimit for Pest and Disease treatment costs. Sublimits available for fire-fighting costs, aerial photography, debris removal, claims preparation costs etc.

Frost

Hail

Snow & Ice Storm

Flood

PERILS COVERED Rainfall Deficiency

Fire

Malicious Damage

Windstorm

Business Interruption is offered when fruiting trees are destroyed by covered physical damage perils, leading to a loss of yield while the new trees develop •

We have specialist Pardus facilities in place to cover Public Liability (in Europe) and associated forestry Plant and Machinery risks

OUR TAILORED PRODUCTS

Full Value and Value at Risk

Full Value works in the traditional way with insurer retaining any salvageable value from the insured property. Value at Risk leaves an agreed salvage (based on salvage scales developed by Pardus using age and species data) in the ownership of the client. Pardus then only insure the non-salvage element meaning the final rate will be applied to a fraction of the TSI generating a lower overall cost to the client.

Target business: •

We are keen to see any enquiry for standing timber commercial planation forestry

• •

Information requirements for quote: •

Perils to be insured against

•

Schedule of forest locations by values, age, species

Forestry risks with accreditation from the Forestry Stewardship

Locational information needs to be provided in either

Council (or similar)

shape file format (.kmz) or the latitude/longitude

Forest Owners comprise:

coordinates of the centre point of each location

Individual investors

•

5-10-year ground-up loss experience by peril

Commercial Plantation Companies

•

Desired policy structure:

Individual Forest Owners

Timberland and Investment Management Organisations

(TIMO’s)

•

Additional features: -

Forest Management Organisations (FMO’s)

Real Estate Investment Trusts (REIT’s)

Banks loans made to forest owners or fruit tree owners

Forest Owner Associations

Deductibles, limit etc Firefighting costs, claims preparation, aerial photography, plantation infrastructure

To download our full forestry questionnaire, please visit our website https://pardusunderwriting.com/products/forestry/

Exclusions

Property

Buildings

Terrorism

Pest and Disease

Drought

Crop

Fruits, Nuts etc

Phil Cottle - Senior Agricultural Underwriter Direct +44 (0)203 735 1608 Mobile +44 (0)7769 895048 phil.cottle@pardusunderwriting.com Dan Longden Cert CII - Underwriting Assistant

Direct +44 (0)203 735 1610 Mobile +44 (0)7756 961500 daniel.longden@pardusunderwriting.com

Pardus Underwriting Ltd. 1st Floor, 3 Lloyd’s Avenue, London, EC3N 3DS www.pardusunderwriting.com

“We have access to a worldwide forestry binding authority covering the physical damage to commercial forestry. There is a maximum line of USD 8,500,000 any one risk, any one location and the covered perils can be found on this flyer. This is written 100% Lloyd’s/company market and Prospect are the Insurance broker”

ANALYSIS - WILSON ELSER Continued From Page 11

CORONAVIRUS FACTORS FOR THE INSURANCE INDUSTRY TO CONSIDER: BUSINESS INTERRUPTION

designed to assist policyholders that suffer financial losses in their operations, generally arising from a designated cause such as fire or earthquake. If the insurance policy requires a designated cause of loss, but the loss does not qualify, coverage for business interruption will generally not be available. DIRECT PHYSICAL LOSS

Commercial property policies also typically require “direct physical loss” to the property and proof of causation. International travel has been curtailed, it will not meet its quarterly guidance In the event of a claim for coronavirusnational borders have been closed based on supply chain disruptions. related business interruption, and millions have been quarantined. questions may arise as to whether Americans evacuated from this “physical loss” requirement Commercial property Wuhan, the epicenter of has been met. In particular, in policies also typically the virus, are being isolated circumstances where a business on military bases as a has been closed as part of a require “direct physical loss” precautionary measure. mandatory or voluntary closure to the property and proof of Americans boarded two − but is otherwise still habitable causation. In the event of a claim flights chartered by the State and uncontaminated − it has for coronavirus-related business Department and headed to probably not suffered a direct interruption, questions may arise physical loss since infectious the United States after the number of coronavirus cases as to whether this “physical loss” diseases arising from human-toaboard the Diamond Princess human transmission generally will requirement has been met.” cruise ship docked in Japan not qualify as property damage. grew to 690. In this first part of the three-part series, Broadly, “direct physical loss” does Of those Americans, 36 have so far we will review Business Interruption not include consequential or resulting tested positive for the virus and are factors that insurance stakeholders economic loss. in quarantine. Global businesses such should consider when claims under as Intercontinental Hotels Group, these policies are brought forward. In contrast, if a property has become Hilton, Starbucks and McDonald’s physically contaminated and have shuttered many locations. BUSINESS uninhabitable due to coronavirus, Disney may face a $280 million loss. INTERRUPTION INSURANCE there may be a basis for a policyholder The cessation of business operations to claim that a direct physical loss has Designated Peril Requirement is likely to affect China’s role in the occurred. For example, if a person Commercial businesses often procure global manufacturing supply chain. is infected via contact with tangible business interruption coverage as part For example, iPhone manufacturer of their commercial property coverage. Foxconn has stopped nearly all of its Business interruption coverage is See Covid-19 Business Interruption Pg 53 Chinese production and Apple has said

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CASE STUDY - VALUEMOMENTUM

Continued From Page 26

CASE STUDY: APPLACHIAN UNDERWRITERS Management System (IMS) framework by MGA Systems. AUI also adopted integrated rating with ValueMomentum’s iFoundry, which enabled the firm to mix its proprietary rates with out-of-the-box

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Adopting the combination of BizDynamics Digital Engagement Platform and iFoundry rating engine enables us to offer the nextgeneration real-time digital experiences that are critical to our ongoing competitive success.” ISO bureau rating. As a result, AUI can now launch new products, enter a new state, or engage via a new channel

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within days or even hours, rather than weeks or months. REALIZING THE BENEFITS Upon deployment, distributors immediately embraced the new system as being both intuitive and substantially easier than competing systems—a major competitive differentiator for AUI. Moreover, since AUI’s distributors could now run multiple “what-if” scenarios to present to clients, the firm’s underwriters were able to re-focus on supplying higher-value consultative services. In the end, this See Case Study Pg 52

APRIL 2020

SPECIAL REPORT - WILSON ELSER Continued From Page 39

EMPLOYMENT LAW QUESTIONS RELATED TO THE COVID-19 PANDEMIC as violating the ADA by “regarding” an employee as disabled. This becomes especially sensitive when an employee does not want to work from home or has a job where all or most of the essential duties cannot be performed from home.

be too busy during a pandemic to provide documentation, new approaches may be necessary, such as reliance on local clinics to provide a form, a stamp or an email.

Act (FLSA), employers are required to pay employees who are not exempt from overtime (e.g., employees paid hourly or otherwise entitled to overtime pay) only for hours they actually work. For employees exempt from the FLSA’s minimum wage or overtime pay requirements, an employer jeopardizes its ability to treat employees as exempt if it does not pay employees for a reason not otherwise permitted by the Department of Labor.

As related to the current pandemic, there are three permissible deductions an employer may take from an exempt employee’s Notwithstanding an employer’s wages without jeopardizing Q. Can an employer leave of absence policy or PTO the employee’s exempt require an employee to status: (1) if the employee is benefits, employees who are afraid submit a doctor’s note absent from work for one or to come to work out of concern that more full days for personal upon the employee’s return to work after reasons other than sickness they will contract the coronavirus exhibiting symptoms of are not entitled to leave under the or disability, (2) for absences the coronavirus? of one or more full days Family and Medical Leave Act (FMLA) due to sickness or disability In its Pandemic or any sort of accommodation (e.g., if the deduction is made Preparedness, the EEOC in accordance with a bona work from home) under the ADA.” states that an employer fide plan, policy or practice may require employees or providing compensation Q. Is an employer required to who were absent from work during for salary lost due to illness, and (3) pay wages to an employee who a pandemic to provide a doctor’s if the employee is absent for a full has not been diagnosed with the note certifying their fitness to return workweek. Therefore, if an employer coronavirus and who is not coming to work. The EEOC explains such sends employees home early or to work (e.g., pending test results, inquiries are permitted by the ADA decides to close for an entire day, the either because they are not disability- during a quarantine) and who employer is obligated to pay exempt cannot perform all or most of his/ related or if the pandemic was truly employees for the full day in order her job duties remotely because of severe, they would be justified under to maintain the employees’ exempt the nature of the work? the ADA. The EEOC recognizes, status. however, that because doctors and Under the federal Fair Labor Standards The only additional situations where other health care professionals may

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an employer does not jeopardize losing an employee’s exempt status by not paying the exempt employee his/her full salary is if the employer shuts down operations and the employee does not perform any work for at least one week, or the employee chooses to take a day or more off from work for personal reasons other than sickness or disability.

above, employers should note that many state and municipal paid sick leave laws permit employees to use paid sick leave when their place of business is closed by order of a public official due to a public health emergency, or they have a child who needs care because their school or place of care is closed due to a public health emergency.

Employers should consult their applicable state and local laws, which may be more restrictive and require employers to pay employees for a minimum number of hours if an employee is sent home early. Also, an employer should consult its own policies and applicable contracts or collective bargaining agreements.

Q. What obligations does an employer have if it decides to shut down its facility (even temporarily)?

Legal requirements aside, paying an employee his/her regular wages (at least until and unless the employee tests positive for the coronavirus or during a quarantine) or foregoing disciplinary action based on absenteeism caused by the coronavirus may incentivize employees who have been exposed or are symptomatic to stay home, thereby reducing the risk that the virus will spread in the workplace, which may improve morale and public relations. Q. Does an employer have to provide its employees time off from work as a result of their children’s schools closing? What are an employer’s obligations if the building in which its office is located is closed or a quarantine is in effect? In addition to the FLSA discussion www.chart-exchange.com

Under the federal Worker Adjustment Retraining Notification (WARN) Act, employers with 100 or more employees are required to provide 60 days’ advance notice of a temporary shutdown if the shutdown will (1) affect 50 or more employees at a single site of employment and (2) result in at least a 50 percent reduction in hours of work of individual employees during the month of the shutdown. Sixty days’ notice is not required if the shutdown is a result of a “natural disaster” or “unforeseeable business circumstances.” It is not clear whether the “natural disaster” or “unforeseeable business circumstances” exceptions will apply to the coronavirus pandemic. As such, employers should consult with an attorney experienced in the WARN Act to guide them when making such decisions. Even if it is determined these exceptions do apply, notice of a shut-down must be communicated as soon as practicable. Employers also should consult their TABLE OF CONTENTS

applicable state laws – many of which have “mini-WARN Acts” that apply to smaller employers and contain more rigorous notice requirements. For example, under New York law, private-sector employers who have (1) 50 employees located in the state of New York, not including part-time employees, or (2) 50 employees who work a total of 2,000 hours per week in the state of New York, including overtime hours earned by employees on a regular basis, must provide 90 days’ advance notice. Similarly, under California law if a facility employs 75 or more persons (or has done so within the preceding 12 months), 60 days’ notice is required, even for a temporary work stoppage, unless the stoppage is because of a “physical calamity or act of war.” Q. What should an employer consider if employees refuse to come to work because of fear of exposure to the coronavirus? Notwithstanding an employer’s leave of absence policy or PTO benefits, employees who are afraid to come to work out of concern that they will contract the coronavirus are not entitled to leave under the Family and Medical Leave Act (FMLA) or any sort of accommodation (e.g., work from home) under the ADA. Union and nonunion employees who refuse to work because of safety concerns in the workplace could be deemed to be engaging in concerted activity protected under the National

See Employment Law CV questions Page 46 APRIL 2020

SPECIAL REPORT - WILSON ELSER Continued From Page 45

EMPLOYMENT LAW QUESTIONS RELATED TO THE COVID-19 PANDEMIC

they tested positive for the coronavirus or because they have to care for a family member with the coronavirus? Now is a good time to review your obligations under the ADA and FMLA.

If an employee reports that he/she has tested positive for the coronavirus but believes that after some time the employee can perform the essential duties of the particular job from home in quarantine, an employer should Labor Relations Act (NLRA) so long as engage in an interactive process with they have a “good faith” belief that Because the exposure and risks the employee to determine whether their health and safety are at risk – associated with the coronavirus such accommodation could even if they are mistaken. The be made without causing Note that if an employee NLRA prohibits employers an undue burden on the from retaliating against is unable to return to employer or posing a direct employees who engage in work due to his/her own serious threat to others. An employer protected concerted activity. has the burden to prove that health condition related to the a reasonable accommodation Under the Occupational coronavirus or another serious poses an undue hardship. Safety and Health Act of health condition at the end of Such decisions should 1970 (OSHA), employees can the 12-week FMLA leave, the balance the fact that refuse to perform work if (1) modern technological and employee may be entitled to where possible, they asked communication platforms the employer to eliminate a limited amount of additional make telecommuting the danger and the employer time off as a reasonable “easier” against competing failed to do so; (2) they refused accommodation under the ADA.” considerations such as an to work in “good faith,” employer’s need to physically meaning that they genuinely supervise work, employees’ believed that an imminent danger pandemic are changing, an employer need to physically interact with each existed; (3) a reasonable person would should consult with a qualified agree that there is a real danger attorney in making the determination other or clients to do their job, and potential limitations on an employer’s of death or serious injury; and (4) that an employee’s fear is reasonable there is not enough time due to the in light of then-existing guidance from ability to allow sensitive data outside its offices or network systems. urgency of the hazard to get the the CDC and state and local public imminent danger corrected through regular enforcement channels, such as requesting an OSHA inspection. An employer cannot retaliate against an employee for expressing a safety concern.

46 APRIL 2020

health agencies. Q. What considerations should an employer take into account if employees report the need to be absent from work either because TABLE OF CONTENTS

Employers covered under the FMLA (e.g., a private employer with 50 or more employees) must comply with the Act’s requirements to provide eligible employees with up to 12 www.chart-exchange.com

weeks of job-protected unpaid leave (taken intermittently or at once) for inter alia (1) the employee’s serious health condition that makes the employee unable to perform the functions of his/her job, or (2) the need to care for the employee’s spouse, child or parent who has a serious health condition. An employee is eligible for FMLA benefits if he/she has worked for the employer for at least 12 months, has worked at least 1,250 hours of service for the employer during the 12-month period immediately preceding the leave, and works at a location with at least 50 employees within 75 miles. Under the FMLA, an employee is entitled to the continuation of the employer’s group health insurance coverage during the FMLA leave on the same terms as if the employee were continuing to work. The employer should continue to contribute to the employee’s premium in the same amount it did prior to the FMLA leave. An employee can be required to pay his/her share of the premium during the FMLA leave, either by deduction from his/ her wages during any time that the FMLA period is paid (e.g., when PTO is applied concurrently to the FMLA period) or by requiring the employee to make payments toward the premium during an unpaid FMLA leave. Note that if an employee is unable to return to work due to his/her own serious health condition related to www.chart-exchange.com

the coronavirus or another serious health condition at the end of the 12-week FMLA leave, the employee may be entitled to a limited amount of additional time off as a reasonable accommodation under the ADA. At the conclusion of the 12-week period, however, the employee would lose his/her FMLA benefits and job protection. A FEW ADDITIONAL CONSIDERATIONS TO NOTE: •

Certain states have their own FMLA requirements that are more generous than the federal Act.

•

Certain states and municipalities have paid sick leave requirements.

•

On March 14, 2020, the U.S. House of Representatives passed the “Families First Coronavirus Response Act” (H.R. 6201), which provides for paid family leave. It now heads to the Senate. Wilson Elser is tracking this legislation. and will write about it in detail in a separate alert.

•

Employers should be mindful if employees have companyprovided short-term or long-term disability insurance benefits.

Q. What can employers disclose about an employee’s health condition? When an employer receives medical information about an employee, that information must be kept confidential. TABLE OF CONTENTS

An employer may acquire confidential medical information about an employee (1) in response to the employer’s disability-related questions or directed medical examination based on the reasonable belief that the employee poses a direct threat, (2) during the course of the interactive process accommodation, (3) when an employee has exercised his/her rights under the FMLA or (4) when an employee voluntarily discloses such information. The ADA permits an employer to disclose confidential medical information about an employee only to supervisors and managers if it relates to (1) necessary restrictions on the work or duties of the employee and necessary accommodations, (2) first aid and safety personnel if an employee’s disability might require emergency treatment and (3) government officials investigating compliance with the ADA, if requested. The EEOC has instructed in its Pandemic Preparedness technical assistance that the general personnel files of employees should not contain any “medical-related material.” The EEOC differentiates between notice that an employee has taken sick leave or had a doctor’s appointment, which is not considered to be covered medical information, and information regarding an employee’s diagnosis or symptoms, which is considered covered medical information. The

See Employment Law CV questions Page 48 APRIL 2020

SPECIAL REPORT - WILSON ELSER objective evidence that an employee poses a direct threat to the employer or others.

Continued From Page 47

EMPLOYMENT LAW QUESTIONS RELATED TO THE COVID-19 PANDEMIC EEOC’s Technical Assistance Manual on the Employment Provisions of the ADA provides that an employer “should take steps to guarantee the security of [an employee’s] medical information,” including keeping the information “in a medical file in a separate, locked cabinet, apart from the location of the personnel files” and access should be restricted to specific persons. An employer’s obligations to maintain an employee’s medical information do not end when an individual is no longer an employee. The regulations interpreting the FMLA also require that records and documents relating to medical certifications of employees or their family members for purposes of the FMLA shall be maintained as confidential medical records kept separate from personnel files. Considering the above, if an employer learns that an employee has tested positive for the coronavirus, it should immediately advise its workforce and any impacted customers/ patients without disclosing any identifying information about the employee. In

48 APRIL 2020

addition, in the event the coronavirus impacts an employer’s workforce, the company should immediately contact its local public health agency to determine the appropriate course of action, including quarantines, a facility shut-down and appropriate remediation measures (e.g., cleaning of contaminated spaces). Q. May an employer ask an employee if the employee is experiencing symptoms of the coronavirus or require an employee to get tested for the coronavirus? The ADA prohibits employers from making disability-related inquiries or requiring medical examinations of current employees unless they are job-related or consistent with business necessity. A disability-related inquiry or medical examination of an employee is jobrelated and consistent with business necessity when (1) an employee’s ability to perform essential job functions will be impaired by a medical condition or (2) an employer has a reasonable belief based on TABLE OF CONTENTS

Generally, questions about where an employee has traveled and whether an employee potentially has been exposed to the coronavirus are generally not disability-related inquiries. However, an employer should ensure that questions regarding employees’ travel plans and exposure are asked consistently and without discrimination. For example, an employer should not direct questions about travel plans only to Chinese employees based on information that the coronavirus started in China. If an employee reports that he/she is going to be absent from work, the EEOC’s Pandemic Preparedness, provides that an employer is permitted to ask the reason for the absence, including if the employee is experiencing certain symptoms (e.g., cough, fever). According to the EEOC, during a pandemic such inquiries, even if disability-related, are justified by a reasonable belief based on objective evidence that the pandemic poses a direct threat. During a pandemic that is widespread in a community as determined by the CDC or local health authorities, an employer may be justified measuring employees’ body temperatures. Where an employer believes that an employee poses a direct threat because of his/her medical condition, the employer may require that the employee be examined by a qualified health care professional of the employer’s choice and at the www.chart-exchange.com

the coronavirus began in China. Similarly, a policy that excludes from the workplace only employees returning from certain countries but not others where there is a comparable coronavirus outbreak could give rise to a national origin discrimination claim.

employer’s expense. Unless an employer determines that an employee is a direct threat or will be absent for FMLA-qualifying reasons, the employer should not press further for details if an employee’s absence is for medical reasons. Based on information from the CDC or state or local public health agencies, an employer may have sufficient objective information to conclude that an employee who traveled to an area where there is a coronavirus outbreak or who was exposed to the coronavirus will pose a direct threat to him/ herself or others. In this circumstance, employers may make disabilityrelated inquiries, including asking the employee if he/she is experiencing coronavirus-like symptoms. Q. Are there other discrimination or harassment issues employers should consider? Title VII prohibits discrimination and unlawful harassment based on protected classes, including race, www.chart-exchange.com

color and national origin. The ADA contains similar prohibitions based on a person’s disability. Employers should make certain that their company’s culture is not adversely affected by the fear and stress associated with this pandemic. To this end, in its Interim Guidance for Businesses and Employers the CDC advised, “To prevent stigma and discrimination in the workplace, use only the guidance described below to determine risk of COVID-19. Do not make determinations of risk based on race or country of origin, and be sure to maintain confidentiality of people with confirmed COVID-19.” To avoid running afoul of Title VII or ADA, employers should be careful that they apply their policies consistently and based on reasonable, objective facts as they exist at the time employment decisions are made. For example, it would be unlawful to exclude or segregate Chinese employees who do not otherwise present a direct threat simply because

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In addition, employers should take immediate action to prevent statements or even jokes targeted at a person’s protected class, such as those targeted at Chinese or Italian employees because the coronavirus began in China or is particularly prevalent in Italy. Employers are encouraged to consult with the employment law attorneys at Wilson Elser before entering these discussions with employees. The foregoing is for informational purposes only and shall not be construed as legal advice. Please contact Wilson Elser’s national Employment & Labor practice for specific guidance. Our attorneys are available to help employers navigate the various developing issues and laws that impact the current coronavirus epidemic.World Health Organization (WHO), state and local governments, and public health agencies. A lack of communication may lead to heightened fear and rumors.

APRIL 2020

ANALYSIS - MCGOWAN PROGRAM ADMINISTRATORS

HOSPITAL ACTIVE SHOOTER WORKPLACE VIOLENCE THREATS WHAT YOU NEED TO KNOW:

By Paul Marshall

ospital shootings are on the rise over the last two decades. A 2012 Annals of Internal Medicine study identified 154 shootings between 2000 and 2011. There were a handful of incidents reported in 2000, but in 2015, more than 20 shootings occurred in hospital facilities. Unfortunately, active shooter events on hospital grounds are now nearly a monthly occurrence. One recent incident at Chicago's Mercy Hospital & Medical Center on November 19, 2018, left four people dead, including an emergency room physician, a first-year pharmacy

resident, a police officer, and the gunman. And late last year, on October 3, 2019, a woman was shot by her stepfather in the Elmhurst Memorial Hospital parking lot in Elmhurst, Illinois. WHY HOSPITALS STRUGGLE TO ADDRESS ACTIVE SHOOTER WORKPLACE VIOLENCE THREATS Because hospitals are places where the sick, injured, elderly, and immobile people go for care and to heal, hospital staff face massive challenges keeping patients safe and evacuating them when necessary. From a logistical standpoint, the size and complexity of hospital

environments make planning for an active shooter incident difficult. Hundreds or thousands of patients and visitors may enter and exit a healthcare facility every day. Many departments have several entrances and exit points. Effectively monitoring each department, recognizing potential threats, and responding to incidents in real-time requires a highly complex plan. Beyond logistical challenges, the origins of hospital shootings are not predictive. Even with police or security guard presence in

See Hospital Active Shooter Threats Page 52

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 programâ&#x20AC;&#x2122;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.

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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

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APRIL 2020

ANALYSIS -MCGOWAN PROGRAMS Continued From Page 50

HOSPITAL ACTIVE SHOOTER THREAT many departments, especially in emergency rooms, many active shooter events start within the hospital. Additionally, on several occasions, the firearm used in the incident was taken from an onsite officer or guard. A study conducted by Johns Hopkins researchers found many hospital shootings take place outside the building or near the hospital entrance, negating the use of metal detectors to prevent these incidents. The Hopkins research team concluded that specialized training for law enforcement and security personnel, such as proper securing of firearms, is a more effective deterrent to active shooter incidents than investing in expensive or intrusive technology like metal detectors and magnetometers. RESPONSIBILITIES OF HEALTHCARE EMPLOYERS Now that active shooter events have become more common,

52 APRIL 2020

healthcare executives, leaders, and staff must work toward limiting the damage, injuries, and deaths from these events. In 2016, OSHA updated its healthcare safety field Rule 3148, Guidelines for Preventing Workplace Violence for Healthcare and Social Service Workers, to include an active shooter incident plan for healthcare facilities. THE NEW OSHA ACTIVE SHOOTER STANDARDS INCLUDE: â&#x20AC;˘

â&#x20AC;˘

Educating and creating awareness among healthcare workers about the possibility of an active shooter event. Incorporate preventive measures based on past shooting events.

Hospitals that are not compliant with OSHA recommendations can be held liable for any injuries or deaths that occur during an active shooter incident. Already, several lawsuits have been filed in court against hospitals for negligence or inadequacies in security procedures. One example comes from the Mercy Hospital shooting referenced at the beginning of this article. The family of the pharmacist killed in the shooting filed a lawsuit arguing the hospital failed to take basic safety and security measures that could have saved the pharmacist's life.

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HOSPITAL ACTIVE SHOOTER SAFETY PLANS Hospitals nationwide are responding by upgrading staff training, technology, and security measures to prepare for a potential shooting. Some upgrades include entrance security upgrades like more expansive ID checks. Many facilities are installing badgeaccess checkpoints and metal detectors for specific units. Annual emergency-preparedness reviews are also helping hospital staff practice informed safety measures. YOUR ACTIVE SHOOTER SAFETY PROCEDURES SHOULD INCLUDE A RECOVERY PLAN McGowan Active Shooter/ Workplace Violence Programs address risks and establish a comprehensive policy to help healthcare organizations respond and recover from such incidents. McGowan's Active Shooter/ Workplace Violence Insurance covers liability and extra expenses tied to shootings, providing victim death benefits with additional medical expense benefits. The program covers a wide range of attacks, such as knife and vehicular attacks, rather than solely attacks committed with a firearm. Get Started Today!

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ANALYSIS - WILSON ELSER Continued From Page 42

CORONAVIRUS: FACTORS FOR THE INSURANCE INDUSTRY TO CONSIDER: BUSINESS INTERRUPTION property (such as while on board a cruise ship, visiting a doctor’s office or flying on an airplane), the contamination of physical property may qualify as direct physical loss to property. However, prophylactic measures to protect against future contamination, or shutdown due to fear of contamination, generally will not qualify as direct physical loss to property. A decision from the Eighth Circuit Court of Appeals explains the “direct physical loss” requirement. In Source Food Tech., Inc. v. U.S. Fidelity & Guar. Co., No. 06-1166 (8th Cir. Oct. 13, 2006), the insured argued that the closure of the U.S. / Canada border to its imported beef product due to “mad cow” disease concerns qualified as “direct physical loss” since it was unable to transport its product. The Eighth Circuit disagreed, finding that Source Food’s inability to transport its beef product across the border did not constitute product that was physically contaminated or damaged, and to hold otherwise would render the word “physical” meaningless. Given numerous health crises over the past few decades, insurers have added www.chart-exchange.com

various exclusions designed to preclude coverage. Some are virus-specific − such as exclusions for Ebola or Bird Flu − while others may apply generally to property damage arising from bacteria or viruses. It is unlikely that the coronavirus will allow for a one-rule-fits-all conclusion when it comes to a determination of whether an insured has suffered a direct physical loss. Rather, it is more likely that each claim will be investigated and evaluated based on the specific facts. CONTINGENT BUSINESS INTERRUPTION Other policies may provide contingent business interruption coverage arising from disruptions with a supplier or customer, while still requiring that the underlying cause fall within a designated cause of loss and arise from direct physical loss to property − similar to the policyholder’s own coverage for a first-party loss. For businesses dependent on supply chain production, contingent business interruption coverage often provides coverage when a supplier suffers a direct physical TABLE OF CONTENTS

loss to its property that impairs its ability to provide delivery of goods or materials. Insureds in the manufacturing, hospitality and health care businesses are some of the more common policyholders for this product line. Of note, many contingent business interruption insurers require that affected suppliers be identified or scheduled in the insured’s policy in order for coverage to exist. Contingent business interruption policies are also likely to include the same exclusions found in a standard form first-party policy. SPECIALIZED BUSINESS INTERRUPTION While traditional policies may not cover economic losses arising from the suspension of operations due to a health crisis or pandemic, the insurance industry has made various specialized products available. HOSPITALITY AND HEALTH CARE − FOR COMMUNICABLE AND INFECTIOUS DISEASES The insurance industry offers specialized coverage arising from the shutdown of operations, in some circumstances without requiring physical loss to property. These policies or policy endorsements primarily focus on insureds in the business of health care and hospitality and typically extend insurance coverage for business interruption losses caused by “communicable or infectious diseases.”

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APRIL 2020

ANALYSIS - WILSON ELSER Continued From Page 53

BUSINESS INTERRUPTION AND THE CORONAVIRUS

PANDEMIC-SPECIFIC COVERAGE OR EXCLUSIONS Pandemic “scares” have prompted the insurance industry to offer specialized coverage and exclusions for pandemic events.

In response to the Ebola crisis, several insurers expressly excluded coverage for Ebola-related claims. Other insurers, however, offered specific business interruption coverage to facilities such as hospitals, hotels, airports, shopping centers, restaurants, theaters and gyms or any other business that might be forced to shut its doors because of an Ebola outbreak.

CONCLUSION To prepare for the potentially catastrophic impact of a global pandemic or similar health crisis, policyholders and insurers should review Business Interruption and Specialized Business Interruption polices to determine: • •

CIVIL AUTHORITY COVERAGE In May 2018, for example, it was reported that Marsh, in collaboration with Munich Re and epidemic risk modeler Metabiota, had launched PathogenRX, a fully integrated pandemic coverage product: “Using triggers like Metabiota’s new Pathogen Sentiment Index, which provides extensive analytics into infectious disease outbreaks, businesses can model their potential financial loss from an outbreak and protect against the threat through an insurance policy underwritten by Munich Re. The policy is customizable and can be tailored to provide coverage for specific expenses, geographies, types of disease, or portions of a calendar year.” Insurance Journal (May 22, 2018).

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Other policies extend business interruption coverage for losses arising from “civil authority” orders that impair or prohibit access to an insured’s property. The scope and limitations of business interruption coverage under such endorsements vary and can be issued pursuant to an insurer’s standard form endorsement, and they can vary based on whether a “direct physical loss” will be required. Insurers also may issue Civil Authority Coverage on a manuscript basis (custom designed for a particular insured), addressing specific needs based on expenses, geography, disease, calendar year, voluntary or mandatory orders, direct physical loss, a designated risk or other criteria.

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• • •

If they are sufficient What new exposures and risks are present given the unique nature of the coronavirus Which current policyholders are likely impacted most The size, scope and nature of earlier claims and what they may indicate The process to triage claims to ensure they are handled in the best interest of all stakeholders.

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CASE STUDY - VALUEMOMENTUM Continued From Page 45

CASE STUDY: APPALACIAN UNDERWRITERS self-service capability has transformed AUI’s employees from simple quote generators to a sophisticated underwriting team—a transformation that has become critical to AUI’s continued success.

ValueMomentum is a very proactive and strategic IT partner with extensive industry expertise and problemsolving capabilities. It delivered solutions that provide us with the agility and scalability to meet new challenges and capture market opportunities as they arise.” By leveraging more complete and sophisticated analytics, AUI also benefitted from dramatic efficiency and pricing improvements, with binding time, for example, dropping from 35 minutes to less than 5. Moving forward, AUI is excited to www.chart-exchange.com

extend its new technology platform to streamline post-new business processes to further service AssetGuard policies. Working together with ValueMomentum, AUI intends to adapt the AssetGuard platform to business lines across all AUI Enterprise divisions. “Partnering with ValueMomentum provides our business unit and our parent company with tremendous scalability,” Kountz says. “Overall, we now have the robust solutions needed to maintain a strong competitive position during coming years.”

CHART DEFENDER COVERHOLDER E&O AVAILABLE NOW!

HIGHLIGHTS: •

• •

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Slashed policy rating and quoting by 85%, from 35 minutes to less than five. Improved premium pricing competitiveness. Delivered a robust digital policy lifecycle management experience to agents. Boosted agility and scalability, enabling fast product introductions and updates.

ABOUT VALUEMOMENTUM ValueMomentum provides IT services and software solutions to insurance, health care and financial services firms. Customers choose ValueMomentum due to the company’s track record of delivering value and driving the momentum of customers’ business initiatives. ValueMomentum accomplishes this by applying a time-tested formula of combining strong technology expertise with deep industry experience. For more information visit http://www. valuemomentum.com/. TABLE OF CONTENTS

Mark Lann Phone:

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

APRIL 2020

ANALYSIS -PL COMMUNICATIONS

FIVE TIPS FOR WORKING FROM HOME

By Paul Lavenhar

he coronavirus is changing the way we work and live. One of those changes is more people will be working from home. Going to work every day and interacting with your co-workers is very different from working at home. It is a different type of selfquarantine. HERE ARE SOME TIPS TO HELP YOU MAKE THE ADJUSTMENT.

1. Work has structure – defined roles, set schedules, and daily routines. To make working from home easier, create your own structure. Decide when you will start and end your workday. Set goals each day for what you want to accomplish – or what your boss wants accomplished. Lists are very helpful to keep on track. Find a quiet, comfortable place to get your work done. If your home or apartment has room for a home office, that is ideal. If not, set aside a space where you feel you can be productive. Identifying a space where “this is where I get my work done” helps. It gives you that sense of structure.

2. Work has its own set of distractions 56 APRIL 2020

– chatty co-workers, office noise, and the ring or ping of calls and emails. At home, there are different distractions - particularly if there are kids at home from school during this crisis. If your kids are older, a good start is to set boundaries as to when they can interrupt your work. This is especially true if you are on a work phone call. With younger children, it is more challenging. Set aside some family time breaks during the day. Your children will know you will give them attention. Plus, ask them to help – it’s like asking them to do chores and contribute to

tired of working from home, the TV and the refrigerator and Facebook are calling you. No matter how disciplined and focused you are, it is difficult not to be tempted. Try giving yourself some time for a quick news update, snack break, or social media check. It is better to manage your temptations than give in to them.

4. At work, you get up to go to the

copier, talk to co-workers, or head to a meeting. At home, it is a good idea to move every once in a while. It is better for your back and your mood. A walk to the refrigerator doesn’t count. bout the author: Paul Lavenhar’s firm PL Perhaps during Communications has provided marketing your family time communications services for 25 years to such break with your insurance clients Rockwood Programs, Capacity kids, you can take Coverage, MetLife, Selective, York Risk Services, and a short walk, or do Admiral Insurance, among others. He has has written something active for 500+ companies in various industries. Paul – that’s good for also leads a band called GoodWorks that provides them and you. music and marketing services to help nonprofits

raise money and awareness pro bono. Paul Lavenhar is the principal of the insurance marketing communications firm PL Communications.

the household. If they have school work to do, have them work when you do. If you live with a significant other, spouse, or parents, you can negotiate how to share responsibility when children are at home. 3. Work has a built-in discipline that keeps you on track to get things done. If you are bored or anxious or just TABLE OF CONTENTS

5. Work is social

– functioning together as a team. Stay in touch with co-workers. They are facing the same challenges that you are, and mutual support can make a tough situation less stressful. While you may think working at home is easier, for many people it is not. But, giving yourself a routine and a work structure at home can make it more manageable. www.chart-exchange.com

INTERVIEW - PL COMMUNICATIONS Continued From Page 31

OLD SCHOOL BUSINESS DEVELOPMENT STILL WORKS stays aware of my efforts. IN MOST CASES, YOU ARE TRYING TO UNSEAT AN INCUMBENT AGENCY – HOW DO YOU PERSUADE PROSPECTS TO MAKE A CHANGE? My role is to break barriers and get us into quality doors. It is about quality leads, not quantity. My calls allow us to qualify prospects and focus our sales effort. To get somebody to change more times than not, you have to come up with better pricing. But, it is also important to convey to them if they have a claim or a problem, they will not just be known by their policy number. I let them know how we’re going to take care of them and service their account. Many times prospects complain that they do not get answers to their emails and phone calls, so letting them know we provide responsive service is crucial to communicate to www.chart-exchange.com

them. I never use high-pressure tactics. I tell that when your current program is coming up for renewal, we’d love to take a look at it. What sometimes happens is that the incumbent agency is slow to provide information such as loss runs. That turns off the prospect and helps us because the incumbent is preventing their customer from a second opinion that they want. The prospect may be unhappy with their carrier, and their current agent does not have an alternative to offer. How do you get past gatekeepers? Research makes a big difference. I typically want to talk to a business owner, controller, CFO, or other key executives. Asking for a specific person is more effective than asking for someone by their job title. Once you get the person you want to reach on the phone, you can use the research you did about the company to show them you know about their business and their industry. WHAT IMPACT DO YOU THINK THE CORONAVIRUS PANDEMIC WILL HAVE ON INSURANCE SALES? These are times for insurance agencies to be responsive and available as possible to their customers. The reality is that almost every business is being hurt financially by what is happening right now. That means they are looking to reduce costs. If their TABLE OF CONTENTS

current agency has not been responsive, they may be open to another agency that provides better service. This goes back to my attitude about possible rejection – I am confident we offer a better customer experience. During tough times like we are experiencing now, customers what to know we are here to help you when you need it. WHAT IS YOUR FAVORITE WAR STORY OF HOW YOUR PERSISTENCE PAID OFF TO LAND A NEW CLIENT? I had a prospect that I called for seven years. That’s no exaggeration. When I called, he would always say he remembered me. For the first six years he said, “Not this year. We’re happy, everything’s good, but keep calling me.” After Superstorm Sandy in 2012, I reached out to him. He said, “This year we had some claims, and they were not handled properly. And, it turns out our policy was not written properly to protect my business.” Our team met with him, and we were named broker of record in 48 hours. He is still a client, and the account has grown in size over the years. It shows that staying in touch with prospects and persistence pays off. Interviewer Paul Lavenhar is the principal of the insurance marketing communications firm PL Communications. His bio appears on the opposite APRIL 2020

NEWS - LLOYD’S OF LONDON Continued From Page 17

LLOYD’S NEW CRYPTO CURRENCY WALLET INSURANCE “We are delighted to have provided Coincover with this new insurance cover, which demonstrates the innovative and entrepreneurial spirit of Lloyd’s. We believe Prospect and the wider insurance market should support this rapidly developing sector as it moves into the mainstream.”

LLOYD’S: MARKET IS IN A STRONG POSITION TO RESPOND TO THE IMPACTS OF COVID-19

n 2019, Lloyd’s net resources increased by 8.6% to £30.6bn, reflecting an exceptionally strong balance sheet and a central solvency ratio of 238%.

the market’s unrivalled ability to support people, businesses and countries around the world in response to the far-reaching impacts of COVID-19.

Although there has been a high degree of turbulence in the financial markets over recent weeks, as at 19 March Lloyd’s solvency ratio stood at 205%. The exceptional strength of the market’s balance sheet has been further bolstered by Lloyd’s return to a profit of £2.5bn (2018: loss of £1.0bn) in 2019, driven by the repair in investment markets in the first half of 2019.

As we focus on supporting our business partners and customers during this time, it has also never been more important to accelerate progress on our ambition to create the most advanced insurance marketplace through the Future at Lloyd’s. We have sharpened our focus for 2020, prioritising initiatives that will ensure around 80% of Lloyd’s business is digitally supported, together with fasttracking claims processing improvements and building the foundational data and technology infrastructure to support Lloyd’s future ecosystem.”

Trevor Maynard, Head of Innovation at Lloyd’s, added: “As more money flows into the crypto asset market, losses from hacks are on the rise. Nevertheless, cryptocurrency companies have found ways to protect their digital assets from theft and, by working closely with John Neal, Lloyd’s CEO, said: Lloyd’s underwriters, to insure losses that do slip through the net.” “Whilst we are pleased to be announcing Lloyd’s return to “Lloyd’s is the natural home for insurance profitability in 2019 and continued innovation because of the unique ability progress across our priorities, of syndicates to collaborate to insure our primary focus right now is on new things. I am delighted that our supporting our customers and Product Innovation Facility – now with business partners in their time of almost £150 million of capacity and 27 need. I am confident in Lloyd’s underwriters, is providing a fast route ability to meet the challenges before to increase insurance capacity for it, and in doing so demonstrate difficult and hard-to-insure risks.”

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Bruce Carnegie-Brown, Lloyd’s Chairman, added: “The beginning of 2020 has proved exceptionally difficult as COVID-19 spreads rapidly around the world www.chart-exchange.com

with devastating consequences for families, communities and the global economy. Now more than ever, our customers need us to be ready to support them through these challenging times. At Lloyd’s, we are laying the foundations to do this more effectively. By focusing on performance management, modernising the market and creating a market culture that will attract the best and brightest talent, we are making the market more resilient, more successful and better placed to meet our customers’ needs.” LLOYD’S 2019 ANNUAL RESULTS IN DETAIL Lloyd’s today announced a return to profit of £2.5bn (pretax) for 2019, representing an improvement of £3.5bn on the previous year (2018: a loss of

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£1.0bn) and an 8.8% return on capital (2018: (3.7%)). THE KEY FIGURES REPORTED IN LLOYD’S 2019 ANNUAL REPORT • •

• • • •

Net resources of £30.6bn (2018: £28.2bn) Central solvency and coverage ratio of 238% (2018: 249%; 19 March 2020: 205%) Gross claims paid of £23.0bn (2018: £19.7bn) Gross written premiums of £35.9bn (2018: £35.5bn) Combined ratio of 102.1% (2018: 104.5%) Aggregated market profit of £2.5bn (2018: loss of £1.0bn)

Lloyd’s return to profitability in 2019 is underpinned by strong performance across investments (2019: 4.8% return; 2018: 0.7% return), alongside sustained rate increases and improving

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underwriting discipline. Lloyd’s combined ratio saw an improvement of 2.4 percentage points to 102.1% (2018: 104.5%), with the underlying 2019 accident year ratio improving to 96.0% (2018: 96.8%), exclusive of major claims. These encouraging developments show Lloyd’s performance agenda is beginning to drive better underwriting discipline in the Lloyd’s market. Gross written premiums (GWP) for the period totalled £35.9bn, marginally up from £35.5bn in 2018. This equates to a reduction in GWP of 2.6% after eliminating positive foreign exchange rate movements and is underpinned by a risk adjusted rate increase of 5.4%, indicating continued underwriting discipline across the market. SEE CHART BELOW FOR RESULTS AT A GLANCE:

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LLOYDâ&#x20AC;&#x2122;S OF LONDON

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