TABLE OF CONTENTS
6 Glenn W. Clark, CPCU, Publisher CHART Exchange Earliest Adopter
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CHART’S Client-Centric Approach Launches Programs And Products
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Kroll Announces The Launch Of Its Legal Settlement Administration Practice
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Lloyd’s Report On Risk Of Cyber-Attack To The Industrial Sector
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Wilson Elser Assists NCRMA With Cannabis Insurance Captive
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If Delegated Authority Is The Answer, What is The Question?
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Your Organization’s Diversity Management
17
Managing Risk Associated With The Mobile Ridesharing Industry
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ROCKWOOD REPORT: A Road Map To Careers In Insurance
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Lloyd’s Lab Announces Its Sixth Cohort With A Focus On Product Simplification And Climate
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An Interview With Insurance Network Expert John Tiene
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Simple, Fast, Accurate - Why Wouldn’t You Automate?
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Lloyd’s Appoints New Rating Agency - Receives AA- Financial Strength Rating
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SPECIAL REPORT: The Insurance Industry Can Reposition To Appeal To Digitally Savvy Youth
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How Can The Defense Industrial Sector Protect Against Cybersecurity Threats In Supply Chain?
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Lloyd’s Reports 2020 Full Year Results
Front Cover Image: Photo by Jerome Dominici from Pexels Back Cover: By Lloyd's of London - http://www.lloyds.com/Lloyds/About-Lloyds/Explore-Lloyds/TheLloyds-Building/Images-of-the-Lloyds-building/Interior-images, CC BY 2.5, https://commons.wikimedia.org/w/ index.php?curid=15086341
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New Lloyd’s Report Highlights Importance Of Insurance To Safeguard Employee Value
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STUDENT REPORT: Compromising The Principles Of Cyber Security One Tap At A Time
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Five Ways To Improve Your Cannabis Business Security
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Lloyd’s Consults On The 1st Iteration Of Its Core Data Record Under Blueprint Two
SPECIAL REPORT AMID A CRISIS OF TALENT, THE INSURANCE INDUSTRY CAN REPOSITION TO APPEAL TO DIGITALLY SAVVY YOUTH - PG 28
STUDENT REPORT OMNY: COMPROMISING THE PRINCIPLES OF CYBER SECURITY ONE TAP AT A TIME Page 44
PREFER TO READ IN PDF FORMAT? DOWNLOAD THE PDF VERSION HERE
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JULY 2021 VOLUME 6 - ISSUE 2 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.
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MESSAGE FROM THE EARLIEST ADOPTER
CHART’S CLIENTCENTRIC APPROACH CAN LAUNCH NEW PROGRAMS & PRODUCTS IN THE U.S./LONDON
MARKET PLACE The CHART Exchange can serve as a resource for helping specialist insurance agencies launch new programs or products within the U.S./London marketplace. CHART’s clientcentric approach puts us in the position to advocate for the business submissions seeking placement through Lloyd’s.”
6 JULY 2021
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hroughout its 334-year tenure, the London market has repeatedly demonstrated fresh approaches for dealing with emerging risk trends. Many of the products Lloyd’s pioneered are commonplace today. It is a worthwhile exercise to revisit some of these coverages in a historical context to fully appreciate just how innovative they were at the time. PERSONAL LINES INSURANCE. The first gas-powered automobile was introduced to the world in 1886. The concept of a “horseless carriage” was slow to catch on; by the dawn of the twentieth century, there were only 4,192 vehicles produced in the United States (with 40% propelled by steam). In 1904 Lloyd’s was asked
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Glenn W. Clark, CPCU Publisher & Earliest Adopter
to insure a motorcar. Risk evaluation was handled by the market’s marine underwriters; it is hardly surprising that the insurance documents described the car as a “ship navigating on land.” Today there are over 203 million cars insured in the United State alone. DIRECTORS & OFFICERS INSURANCE. The 1930’s was a time of significant economic upheaval in the United States. A number of regulations were put in place by the Securities and Exchange Commission to protect investors who were willing to buy public securities after the stock market crash. For the first time, directors and officers of the companies could be held personally liable for the decisions they were making.
www.chart-exchange.com
Lloyd’s introduced an insurance policy to address this new exposure. It is widely believed that Federated Department Stores Inc (known now as Macy’s) was the first buyer of the coverage. Over the course of the last 85 years, Directors and Officers insurance has grown from a specialty offering to a commodity product purchased by practically every publicly traded company. It is estimated that about $15 billion of premiums are collected annually for the coverage. AEROSPACE INSURANCE. As any Trekkie can tell you, space is the final frontier. Yet it was up to Lloyd’s to boldly go where no man (or insurance carrier) has gone before. The first policy was written through the London market in 1965. It was written to cover physical damage during the pre-launch of Intelsat 1the first commercial communications satellite to be placed in orbit. This was a milestone event in itself, as space vehicle enabled direct and nearly instantaneous contact between the United States and Europe via television, telephone, and fax transmissions.
Over time, space has become increasingly commercialized. Insurance providers have kept pace by expanding coverage to include launch and in-orbit exposures. Lloyd’s continues to be a player in the aerospace-related marketplace. CYBER LIABILITY INSURANCE. Cyber Liability covers financial losses that result from data breaches and other IT-related events. Most policies available today include coverage for both first-party and third-party exposures. One of the first policies to cover this exposure was issued through Lloyd’s in 2000. Recent reports issued by the NAIC indicate that the cybersecurity insurance market is generating upwards of $2.03 billion in direct written premiums. Lloyd’s of London has been an insurance leader for over three centuries. We’ve demonstrated how the market’s innovative approach to risk evaluation has had a real impact on the course of our entire industry.
The CHART Exchange can serve as a resource for helping specialist insurance agencies launch new programs or products within the U.S./London marketplace. CHART’s client-centric approach puts us in the position to advocate for the business submissions seeking placement through Lloyd’s. We have a few tools at our disposal, including brokerage capabilities, and an extensive vendor network representing various disciplines. For more information, view the CHART website (www.chart-exchange.com) or submit any questions to info@chartexchange.com.
Glenn W. Clark , CPCU CHART’S Earliest Adopter
www.chart-exchange.com
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Protect data, people, reputation and the bottom line with end-to-end cyber security solutions from Kroll. CY B E R R I S K A N D B R E AC H R E S P O N S E Incident Response
Deep & Dark Web Monitoring
Managed Detection and Response
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Cyber Risk Assessments
CISO and Data Protection Advisory
PFI / QSA Services for PCI
Table Top Exercises
kroll.com
NEWS - DUFF & PHELPS
KROLL ANNOUNCES THE LAUNCH OF ITS LEGAL SETTLEMENT ADMINISTRATION PRACTICE
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ew York – Kroll, the world’s settlement administration business premier provider of services practice and report to Shai Waisman, and digital products related Global Head of Kroll Business Services. to governance, risk, and Ferrante, a lawyer with over 15 years transparency, today announced the of experience in class action and launch of Kroll bankruptcy Settlement administration, This is a pivotal Administration. will oversee moment for our As a part of Kroll business settlement administration Business Services, operations and team. By leveraging the the settlement client services. expertise across Kroll administration Burkholder and Business Services’ spectrum Ferrante will join practice provides of global offerings, along industry-leading industry veteran solutions for class Edward Radetich with our proprietary action notice and administration platform and as part of Kroll administration, experienced team of subject Settlement’s mass tort matter experts, we are able leadership administration, committee. to create better outcomes regulatory for our clients from preremediation and Waisman settlement and noticing government commented, through claims processing claims “Kroll Settlement and distribution.” administration. Administration is positioned Kroll Settlement Administration has to be a national leader in the notice also expanded its leadership team and administration of complex legal with the addition of two industry matters. We’ve combined over 50 experts, Randall Burkholder and years of industry experience with Angela Ferrante, to help drive growth Kroll’s world-renown expertise and expand operations. Burkholder, in cyber security, best-in-class with over 15 years of legal process technology and a truly global outsourcing experience, will lead the footprint to offer industry leading www.chart-exchange.com
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solutions for class action, mass tort, regulatory and government claims administrations.” Burkholder added, “This is a pivotal moment for our settlement administration team. By leveraging the expertise across Kroll Business Services’ spectrum of global offerings, along with our proprietary administration platform and experienced team of subject matter experts, we are able to create better outcomes for our clients from presettlement and noticing through claims processing and distribution.” ABOUT KROLL Kroll is the world’s premier provider of services and digital products related to governance, risk, and transparency. We work with clients across diverse sectors in the areas of valuation, expert services, investigations, cyber security, corporate finance, restructuring, legal and business solutions, data analytics and regulatory compliance. Our firm has nearly 5,000 professionals in 30 countries and territories around the world. For more information, visit www.krollbusinessservices.com.
JULY 2021
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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
NEWS - LLOYD’S OF LONDON
NEW LLOYD’S REPORT HIGHLIGHTS THE INCREASING RISK OF CYBER-ATTACK TO THE INDUSTRIAL SECTOR
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s cyber threats continue to evolve and become more sophisticated, it is crucial for insurers to understand these emerging risks in order to keep pace with their clients’ exposures. The new report: The Emerging Cyber Threat to Industrial Control Systems, considers potential realworld scenarios which visualise a range of cyber-attacks causing physical damage to major industrial and manufacturing organisations. Cyber-attack risks have previously been considered unlikely to materially impact the physical market, with cyber perils traditionally emerging in the form of non-physical losses. However, the report looks at how physical risks have become a rapidly growing concern for industrial businesses as shown by recent high-profile breaches. As bridges are increasingly being built between information technology www.chart-exchange.com
Lloyd’s, in partnership with cyber analytics specialist CyberCube and reinsurance broker Guy Carpenter, has today launched a new report which examines how ‘Internet of Things’ devices are posing an increasingly high risk of cyberattack to industrial and manufacturing businesses.”
most plausible routes by which a cyber-attack against industrial control systems (ICS) could generate major insured losses. The report considers four key industries dependent upon ICS (Manufacturing, Shipping, Energy, and Transportation) and assesses precedent and potential impact on each.
(IT) and operational technology (OT), along with increases in automation and sophistication of threat actors, it is paramount that (re)insurers carefully consider where major losses may occur.
• A targeted supply-chain malware attack, in which malicious actors breach a device manufacturer and compromise that manufacturer’s products before distribution
Lloyd’s, CyberCube and Guy Carpenter have conducted an analysis detailing three scenarios which represent the TABLE OF CONTENTS
Designed to aid individual syndicates’ understanding of the impact of emerging cyber risks on their portfolios of business, the report focuses on three potential routes of attack by organised hackers:
See Lloyd’s Report Pg 42 JULY 2021
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NEWS - WILSON ELSER
WILSON ELSER ASSISTS THE NATIONAL CANNABIS RISK MANAGEMENT ASSOCIATION WITH FIRST-OF-ITS-KIND CANNABIS INSURANCE CAPTIVE
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os Angeles National law firm Wilson Elser announced in April that the firm assisted the National Cannabis Risk Management Association in its rollout of a first-of-its-kind cannabis insurance captive. Ian Stewart, co-chair of Wilson Elser’s national Cannabis Law Practice, said the firm provided NCRMA with cannabis-related regulatory advice and counsel, and prepared consulting reports used to answer questions on cannabis-related underwriting and claim risks.
In announcing the captive insurance products, NCRMA said they will be available through Trichome,
product liability coverage to cannabis retail and cultivation facilities. “The launch of Trichome is a direct response to our members’ expressed need for fairly priced and risk management based insurance coverage for a rapidly emerging and evolving industry,” said NCRMA Chairman Rocco Petrilli.
The launch of Trichome is a direct response to our members’ expressed need for fairly priced and risk management based insurance coverage for a rapidly emerging and evolving industry.” - NCRMA Chairman Rocco Petrilli
“The groundbreaking launch of this product line marks a substantial step forward in the availability of cannabis-centric alternative insurance solutions,” said Mr. Stewart. Ross Ellick, an essential member of the firm’s leadership and a skilled practitioner in handling legal matters for self-insureds and captive
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insurance companies, agrees. “The captive model provides benefits that are ideal for well-managed cannabis companies interested in retaining risk,” said Mr. Ellick.
an insurance brand that is part of the association captive owned by NCRMA. That entity will initially offer property, general premises liability and TABLE OF CONTENTS
Because insurance is only one part of any company’s effective risk management strategy, the captive model provides financial and operational advantages by also delivering effective risk management services to its members.
The NCRMA is a not-for-profit that provides its members with risk management and insurance solutions through its service partners and offerings.
www.chart-exchange.com
ACTUARIAL SERVICES FOR LLOYD’S COVERHOLDERS LOSS RATIO PROJECTIONS CREATING AND UPDATING RATING MODELS PORTFOLIO OPTIMIZATION
Asad Khalil, FIA - Managing Director Mobile: +44(0)7399 025 851 Email: asad.khalil@perrenial.co.uk
www.perrenial.co.uk
ANALYSIS - MOTOSI CONSULTING
IF DELEGATED AUTHORITY IS THE ANSWER, WHAT IS THE QUESTION? By Paul Rich – MOTOSI Consulting
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elegated Authority (DA) business makes up nearly 40% of all premium inflows to Lloyd’s and is transacted by a network of over 4,000 registered coverholders and more than 350 service companies and thousands of brokers worldwide. It has also been estimated (by the International Underwriting Association) that the ‘Company Market’ writes close to US$6BN of DA business and has been steadily growing in recent years. This would suggest that writing DA business is indeed the answer
to many a company’s question around where growth exists in an ever changing and increasingly challenging global insurance market; whether that is to front up to the challenges presented in a post – pandemic world or to deliver new and innovative products in the area of evolving and new covers provided for cyber and parametric insurance risks. Business delivered by this capacity distribution model
is increasingly popular and strategic in the thinking of London Market companies as they look to create the value required in an efficient and strategic DA proposition. The simple fact is though that at present it is expensive, inefficient and a somewhat aged and challenging business model to
See Delegated Authority Page 40
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bout the author: Paul Rich has an in-depth understanding of global (re)insurance markets, particularly the Lloyd’s and London Market. MOTOSI Consulting works with clients including Brokers, Managing Agents, and Coverholders in the Company and Lloyd’s markets to assist in the delivery of operational best practice and outcome excellence, always striving to improve business processes and delivering efficiencies utilising a blend of forward, pragmatic and focused thinking and where appropriate ‘best in breed’ tech, aiming to drive costs down and margins up. With extensive strategic engagement experience and being commercially adept at managing multitiered, complex business relationships and operating models; delivery is focused, strategic and measurable.
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www.chart-exchange.com
ANALYSIS - LAURDAN ASSOCIATES
YOUR ORGANIZATION’S DIVERSITY MANAGEMENT By Ronald Adler, CEO, Laudrdan Associates, Inc.
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s organizations begin to recall their employees and recommit to creating a non-discriminatory workplace environment, a number of key issues need to be considered. Your assessment of your organization’s commitment to equal employment opportunity should include: 1) ALIGNMENT. Your EEO, diversity, and inclusion objectives, policies, and practices should be aligned with your
organization’s strategic, business, and talent management goals and objectives. Without your organizational commitment, little effort and few resources will be expended by managers, supervisors, and employees in achieving a discrimination-free workplace. Research has found that alignment is a much stronger motivator of achieving EEO, diversity, and inclusion success than is the requirement for legal compliance. In assessing your EEO, diversity, and inclusion activities, you should assess the alignment with your organization’s strategic
and business objectives and business imperatives. As noted, alignment with your business objectives and policies is critical for success. 2) CONGRUENCE. Your organization’s culture, core values, and ethics provide your employees with a barometer against which their behavior, conduct, and activities can be compared. If your culture, core values, and ethics do not act
See Diversity Managment Page 32
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bout the author: Ronald Adler is the president-CEO of Laurdan Associates, Inc., a veteran owned, human resources management consulting. Ronald Adler is the president-CEO of Laurdan Associates, Inc., a veteran owned, human resources management consulting firm specializing in HR audits, employment practices liability risk management, HR metrics and benchmarking, strategic HR, and unemployment insurance cost management. Mr. Adler has more than 45 years of HR consulting experience working with U.S. and international firms, small businesses and non-profits, insurance companies and brokers, and employer organizations. Mr. Adler is the developer the Employment-Labor Law Audit™ (ELLA®), the nation’s leading HR auditing and employment practices liability risk assessment tool — now in the tenth edition. g firm specializing in HR audits, employment practices liability risk management, HR metrics and benchmarking, strategic HR, and unemployment insurance cost management. Mr. Adler has more than 45 years of HR consulting experience working with U.S. and international firms, small businesses and non-profits, insurance companies and brokers, and employer organizations. Mr. Adler is the developer the Employment-Labor Law Audit™ (ELLA®), the nation’s leading HR auditing and employment practices liability risk assessment tool — now in the tenth edition. www.chart-exchange.com
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Bringing U.S. Entrepreneurship to the London Market The CHART/Wilson Elser strategic partnership combines the innovative underwriting philosophy of the world’s oldest insurance brand with the entrepreneurial mindset of U.S. agencies. For close to 40 years, Wilson Elser has helped organizations to better navigate challenging markets and realize improved combined ratios. We provide London- and Europe-based insurers with ready access to more than 60 discrete legal services delivered by nearly 800 attorneys in 34 strategic locations throughout the United States. Guided by a proprietary, systematic legal project management program, we help clients define strategies and achieve outcomes that align with agreed business requirements. We also implement dedicated Program Claim/Litigation Management services, creating value and driving efficiencies with respect to legal spend and indemnity. Wilson Elser is especially proud of its strategic partnership with CHART Exchange and our shared commitment to strengthening relationships between cover holders and risk takers on either side of the Atlantic.
wilsonelser.com © 2017 Wilson Elser. All rights reserved. 567-17
ANALYSIS - WILSON ELSER
MANAGING RISK ASSOCIATED WITH THE MOBILE RIDESHARING INDUSTRY From The Wilson Elser Webinar Series
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ichael Manfredi (Associate-Atlanta, GA) and Nicholas R. Castricone IV (Associate-Atlanta, GA) will co-present “Managing Risk Associated with the Mobile Ridesharing Industry,” a Wilson Elser webinar, on December 17, 2020. They will discuss the litigation associated with the proliferation of electric scooters and bikes in cities throughout the United States. Topics will include the unprecedented growth and secure future of the industry; legislation, litigation and the role of insurance in an industry that serves the needs of consumers and benefits the environment. Click on image below to join webinar.
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or the presentation materials click here.
www.chart-exchange.com
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ROCKWOOD - REPORT
A ROAD MAP TO CAREERS IN INSURANCE
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by Rachel Nick
hoosing a career path can be likened to hiking through the woods. Upon coming to a fork in the road, you must decide which path to take to complete your journey. Each turn in the path leads to new sceneries and surroundings. As you continue through the woods, you probably have an end goal in mind as to where you want to end up. Similarly, the sequence of decisions we make regarding our employment makes up our career path. Our goal, or our “final destination”, is to advance our careers to end up with a job that we enjoy and that we do well. College students approaching graduation are tasked to figure out which career path they will take. My undergraduate studies have led me to an interest in the insurance industry. With so many career paths
and opportunities ahead of me, there are many career options in insurance that I never considered until a few months ago. The many sectors of the insurance industry, such as home and auto insurance, life insurance, private health insurance, and business insurance, all provide a variety of career opportunities for students looking to begin their career path. According to the Bureau of Labor Statistics, many sectors of the insurance industry are predicted to grow faster than the industry averages over the next ten years. The two fastest growing jobs in the industry are actuaries and market research analysts, both with a predicted employment rate increase of 18% over the next ten years. The role of an actuary is to assess risk and assign appropriate annual premiums to each risk level. Actuaries play a very important role in the insurance industry because they are responsible for the profitability of the
company, ensuring that the company does not take on too much risk, and for analyzing market data. Market data is provided by the research analysts who compile data about the varying insurance markets. The accuracy of this data is crucial to how actuaries can interpret it. Underwriters and insurance sales agents work together to sell appropriate policies to customers. Underwriters are responsible for looking generally at whether a customer will be worth insuring. While actuaries look at the quantitative side of risk, underwriters can see the qualitative side and assess specific risk factors, such as when a property insurance underwriter evaluates an applicant living in a flood zone or when a professional liability insurance underwriter assesses an applicant whose business has very high revenues and many clients. See Careers In Insurance Page 59
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achel Nick is a recent graduate from West Chester University of Pennsylvania, with a B.S. in Finance and Economics. Rachel interned at Rockwood Programs during her final semester of college, where she conducted market research surrounding Rockwood’s new insurance program for moonlighting police officers. She is currently working for Fox Point Programs (Rockwood’s sister company) as an Underwriting Assistant
www.chart-exchange.com
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NEWS - LLOYD’S OF LONDON
LLOYD’S LAB ANNOUNCES ITS SIXTH COHORT WITH A FOCUS ON PRODUCT SIMPLIFICATION AND CLIMATE
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loyd’s has today announced the next eleven InsurTech start-ups joining the sixth cohort of the Lloyd’s Lab innovation accelerator programme, which will be focused on creating simpler products for customers, including building solutions related to climate risks. This follows Lloyd’s commitments to reducing complexity and enhancing coverage clarity outlined in its key report released last year, alongside Futureset’s focus on climate change resilience initiatives. The global programme received 177 applications, from which eleven successful teams have been selected to form the next cohort of the Lloyd’s Lab, beginning on 26 April 2021. Each of the teams chosen impressed an expert panel of Lloyd’s and market stakeholders during a competitive pitch process, where they presented their innovative insurance product ideas for the market. The cohort will begin in a virtual
20 JULY 2021
capacity but will be able to return to the physical Lloyd’s Lab workspace in London from 21 June*.
Lloyd’s has announced the next eleven InsurTech start-ups joining the sixth cohort of the Lloyd’s Lab innovation accelerator programme, which will be focused on creating simpler products for customers, including building solutions related to climate risks.” For the sixth cohort, the InsurTech start-ups have been selected based on solutions geared towards four key themes: climate change and decarbonisation; geopolitics; data and models; and claims support services. The teams will explore how they can support Lloyd’s TABLE OF CONTENTS
customers around the world by creating simpler products capable of responding quickly in the aftermath of a disaster. Ed Gaze, Lloyd’s Lab Senior Manager, said: ‘We’re excited to welcome the new teams to the Lloyd’s Lab for our sixth cohort. Product simplification is a critical issue for the industry following the COVID-19 pandemic and Lloyd’s is committed to providing our customers with clarity in their policies so that valid claims are paid. We’re delighted that we’ve been able to secure the most innovative and cutting edge InsurTech’s across the world to work with the Lloyd’s Lab and we look forward to collaborating on these critical market issues.” The eleven teams selected for Lloyd’s Lab cohort six are:
See Lloyd’s Annouces 6th Cohort Pg 31 www.chart-exchange.com
www.chart-exchange.com
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PL COMMUNICATIONS - INTERVIEW
AN INTERVIEW WITH INSURANCE NETWORK EXPERT JOHN TIENE
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n this interview, John Tiene discusses how to build effective relationships between insurance networks and carriers.
HOW ARE CARRIERS AND NETWORKS AFFECTED BY CHANGES IN TECHNOLOGY?
On both sides of the equation, technology's driving change. Part of the challenge for carriers is pressure to meet emerging expectations of policyholders for the services they want. For example, carriers are developing new risk management technology such as sensors to better protect homes or detect possible business equipment failures before they occur. Networks can help carriers deploy new risk management or customer
service technology more efficiently than a carrier dealing with one agent at a time. When an agency is part of a network, the network has the resources to evaluate new technology. It can help their member agents become much more engaged by aligning them with the right technology. A network has more scale than any individual agency will ever have on its own. That scale allows the network to develop deeper carrier relationships at much higher levels than any individual agency could do. Carriers need to understand that professionally focused agent networks operating with best-practice standards are leveraging data from
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bout the author: Paul Lavenhar’s firm PL Communications has provided marketing communications services for 25 years to such insurance clients Rockwood Programs, Capacity Coverage, MetLife, Selective, York Risk Services, and Admiral Insurance, among others. He has has written for 500+ companies in various industries. Paul also leads a band called GoodWorks that provides music and marketing services to help nonprofits raise money and awareness pro bono. Paul Lavenhar is the principal of the insurance marketing communications firm PL Communications.
their member agents of value to carriers. The insurance business will continue to evolve as technology harnesses data that drives product development as well as how the insurance company underwrites and provides products. As insureds demand carriers provide more technology to mitigate potential risks, networks help agents integrate that technology and provide carriers customer data to make strategic decisions. HOW DO NETWORKS GIVE CARRIERS A COMPETITIVE ADVANTAGE? As agency networks become sophisticated in using their data, they bring significant benefits to their carriers. Insurance companies have a great deal of their own data to analyze. They can acquire thirdparty, trend, and experience data. But, they don't have access to any other insurance company's data. When an insurance network harnesses information about all of the carriers they're working with, it puts them in a significantly stronger position. They can put each carrier's data into context with their competitors. Carriers and networks can gain significantly from a dialogue about
22 JULY 2021
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www.chart-exchange.com
RELATIONSHIPS? Part of the challenge is we all get lost in the daily grind of what we do. Some insurance carriers want to evolve as the distribution channel changes, while others want to continue as they always have operated. Some agency groups can forget that there is no endless amount of compensation available. Compensation is based on profitability. Carriers have the expense of paying claims, supporting their infrastructure, and delivering products. If there's profitability left over, it's rather easy to discuss enhanced compensation.
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bout JOHN K. TIENE - As a former insurance company executive, former CEO of one of the nation’s largest agency networks, and the former chief spokesman and lobbyist for New Jersey’s property/casualty insurance industry, John K. Tiene, is a recognized leader in the property/casualty insurance industry. Today, John is president of Argonne Associates, a management consulting company. He is currently working with several insurance entities including Strategic Agency Partners, an agency network operating in NJ/PA as Executive Consultant. In this role, he is using his more than thirty years of executive and management experience to help Strategic Agency Partners’ affiliated agencies grow and increase agency revenue.
that information. Working together with shared mutual objectives by each organization to get better is the cornerstone of a good reciprocal www.chart-exchange.com
The discussion agency networks and carrier should have is, how do we improve the profitability of this book? Understanding data with both sides working together can improve profitability. Everybody makes more money at that point. It's easy to have conversations about compensation when you're talking about a profitable book. Agency networks have a good sense of the competitive landscape, so carriers benefit from learning from them. I think carriers and networks need to communicate more, including gaining a better understanding of cost structures. In a robust business relationship where you have mutual objectives,
relationship. HOW CAN CARRIERS AND NETWORKS IMPROVE WORKING TABLE OF CONTENTS
See John K. Tiene Interview Pg 39 JULY 2021
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How Are You Helping Your Clients Manage Their Risk? With the Enterprise Operating System (EOX) clients gain visibility into real-time data, to help them determine and mitigate risk. Risk Identification & Education
EOX
Risk Level
Risk Control
Gain control. Learn more. info.eoxvantage.com/mitigate-risk 24 JULY 2021
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www.chart-exchange.com
ANALYSIS - E.O.X. VANTAGE
SIMPLE, FAST, ACCURATE – WHY WOULDN’T YOU AUTOMATE? By Mike Fieseler
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ike any other business, insurance entities improve operations, efficiency and profitability by reducing costs, improving quality of their offerings, achieving higher speed to market and finding ever better ways to attract and keep customers. Those of you who have read my previous articles probably will not be surprised to hear that I advocate workflow automation to realize all these benefits and advantages. Automation methods and tools are available to simplify and speed up every step of the policy lifecycle. Some of the most time-consuming tasks are routinely done by hand, when they can and should be performed by computing power. At the start of the cycle, for instance, processing applications by potential
policyholders eats up a lot of the company’s productivity bandwidth when handled manually. If you have people deciphering entries as soon as applications come in and transcribing them into a system, you are sacrificing hours of time and likely suffering through a great deal of human error.
care of much of the ponderous, timehungry pre-policy needs:
The straight-through processing method removes the messy human element from this starting point. Instead of many hands having to touch the material along the way, the data pretty much just goes straight through the application system and comes out the other side in an actionable format for underwriters or other reviewers and decision makers.
To expand on a couple of these points, an automated process can scan incoming entries and conduct an OCR-style data extraction of the text. There are products out right now that perform with admirably high (98-99%) accuracy rates.
Straight-through processing is noted for its capabilities of simple, fast, complete data gathering, input and validation. Straight-through processing and similar automation tools can quickly and accurately take
• • • • •
Gather data Validate and qualify data Pre-populate data fields Enter data into systems Do quality check reports
They leave only the messiest chickenscratch scribbling for some eagleeyed team member to figure out! By the way, that individual will also be automatically notified when there is a field to review. Changing to this way
See Why Wouldn’t You Automate? Pg 38
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bout the author, Mike Fieseler: Mike’s focus is on helping clients achieve operational efficiencies and cost savings. His career has spanned IBM, ARC, DataTrak, and for the past 10 years EOX Vantage. Last year he achieved the CPL - Certified Program Leader designation through Target University of the Target Markets Program Administrators Association (TMPAA).
www.chart-exchange.com
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NEWS - LLOYD’S OF LONDON
LLOYD’S APPOINTS NEW RATING AGENCY AND RECEIVES AAFINANCIAL STRENGTH RATING “At Lloyd’s we highly value our ratings as they are vital indicators to our customers, our market, and our investors of our exceptional financial position.”
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loyd’s, the world’s leading insurance and reinsurance marketplace, today announced that it has appointed Kroll Bond Rating Agency (KBRA) to provide an additional independent opinion of Lloyd’s financial strength and further demonstrate the market’s exceptionally strong financial position to investors and customers. KBRA has assigned an AAinsurance financial strength rating (IFSR) to Lloyd’s with a stable outlook. The rating reflects Lloyd’s sound riskadjusted capitalisation, unique capital structure, conservative underwriting leverage, sound technical reserves, strong liquidity profile, diversified earnings sources, broad distribution channels and comprehensive risk management programme. The new rating considers Lloyd’s capital growth at a compound
26 JULY 2021
Burkhard Keese, CFO, Lloyd’s said: “We are delighted to appoint Kroll Bond Rating Agency and add an AAstable outlook rating to sit alongside our financial strength ratings from our existing agencies.
Burkhard Keese, Lloyd’s CFO
annual growth rate of 6.5% since end-2014 despite elevated catastrophe and attritional losses since 2016. Lloyd’s maintains strong capital and solvency positions, with net resources increasing to £33.9bn in 2020 and a central and market wide solvency ratios of 209% and 147% respectively*.
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At Lloyd’s we highly value our ratings as they are vital indicators to our customers, our market, and our investors of our exceptional financial position. As shown in our 2020 fullyear results, our capital and solvency positions are strong and resilient, which is reflected in our current ratings. “We believe it is important to have a diversity of views in the ratings market and welcome KBRA as a new entrant that will provide a fresh perspective on Lloyd’s.” Lloyd’s financial strength ratings are (Strong) stable outlook with Standard & Poor’s, A (Excellent) stable outlook with A.M. Best, AA- (Very Strong) with Fitch Ratings, AA- (strong) stable outlook with Kroll Bond Rating Agency (KBRA). www.chart-exchange.com
SPECIAL REPORT AMID A CRISIS OF TALENT, THE INSURANCE INDUSTRY CAN REPOSITION TO APPEAL TO DIGITALLY SAVVY YOUTH In order to meet the work aspirations of a younger, more digitally savvy workforce in an era in which work itself is more digital and agile than ever, companies will have to make overhauls to workplace culture, hiring and talent deployment strategies, external partnerships, and internal leadership. The changing nature of the industry is not just a challenge, it’s also an opportunity.”
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By John Rodgers, Rajeev Aggarwal, and Brian Nordyke
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s massive shifts to workplace operation and culture continue beyond the pandemic, the insurance industry finds itself facing a crisis of talent. While some carriers are evolving to meet today’s myriad challenges – a workforce that’s shifted to online, a talent market that favors “cool” factors and startup culture, and disruptive new sources of market competition—many other companies find themselves struggling to catch the tailwinds of a movement that’s well underway. Indeed, a self-assessment designed to appraise companies’ digital maturity showed 42 insurance companies lagging behind 700 other cross-sector survey participants on metrics related to culture, agility, testing and learning, collaboration, and external orientation. Across all industries but notably in the insurance sector, technology and digital enablement are rapidly shifting both internal processes and customer interaction models and experience, changing the fundamental types of people required to run a leading carrier. This has led to the need for a realignment of resources, governance, and infrastructure to accommodate employees in these new working environments—and strongly affects talent acquisition, from recruiting to managing that talent. Historically, competition for talent in the industry has been focused on traditional insurers and brokers; now, however, a new type of talent, one that’s more digitally savvy and speaking ‘omnichannel’ as a second language, is required. The good news is that some carriers have discovered they can address
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www.chart-exchange.com
Rajeev Aggarwal, VP
John Rodgers, COO
Brian Nordyke, Senior Dir.
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bout the Authors: John Rodgers is COO & Managing Partner, Rajeev Aggarwal is Vice President, Head of Financial Services, UK, and Brian Nordyke is a Senior Director at SSA & Company, a global management consulting firm. They can be reached respectively at jrodgers@ssaandco.com, raggarwal@ssaandco.com, and bnordyke@ssaandco.com.
these new needs by tapping into non-traditional talent pools and re-branding to attract millennials, digital natives, and undergraduates. The not-so-good news is that, as the skills needed in insurance increasingly shift toward digital and analytical capabilities, the real competition vying for those needed recruits is actually coming from tech companies such as Amazon or Google, or supercool Insurtech startups. Competition for talent in the industry has historically been confined to traditional insurers, but it’s now coming from disruptors “out there.” So how can insurance companies diversify their own DNA, bringing in candidates with new views and skills even as big tech and InsurTech entrants are challenging existing business and hiring models? They’ll need to draw from a non-traditional pool of applicants in order to attain the diversified talent they need. They also need to make themselves attractive to that talent, an ever younger and more digitally native group of workers whose demands and desires are different from those www.chart-exchange.com
of their parents. This task will require, for many companies, a new take on diversity, inclusion, and core culture qualities. One atypical but highly useful area carriers should explore in their talent search is data science. Both technology firms and insurers need more data analysts who can forecast consumers’ behaviors, anticipate their needs, or predict their risk profiles. Forward-thinking insurers will position themselves as attractive places for data scientists to work, emphasizing the opportunity to expand individual impact and serve millions of existing policyholders. A startup would be hard-pressed to offer the same opportunity horizon that a mature, legacy business such as a large insurer could. The insurance industry’s historic conservatism now needs to stretch to present itself as a fertile environment for young data scientists to sharpen their skills. To address these new requirements, carriers first need to look toward the future and plan for the skills needed tomorrow by building, borrowing, TABLE OF CONTENTS
and buying talent, identifying pivotal digital roles, and investing time and resources in them. At the same time, they will be addressing current gaps in their talent, structuring their workforce to focus on core differentiated capabilities, and managing partners and SLAs. All of this requires a broadened focus and approach to core culture, including diversity and inclusion, empowerment and collaboration, growth opportunities, and modern digital solutions… all while supporting a more flexible, agile workforce. It’s a big, transformational task. One promising approach to talent acquisition can be loosely mapped to a ‘borrow, build, buy’ model. As organizations evaluate their current skills gaps, by looking at least five years out they will begin to see which gaps to fill. The most straightforward part of the acquisition plan is to borrow or buy by bringing in external talent. If talent is readily available in the market, and that talent is capable
See Digitally Savy Youth Page 30 JULY 2021
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REPORT - SSA & CO. Continued From Page 29
INSURANCE INDUSTRY CAN REPOSITION TO APPEAL TO DIGITALLY SAVVY YOUTH of doing the job, carriers shouldn’t hesitate to hire them. Situations that match the requirements for ‘borrow’ and ‘buy’ would be low-skill jobs or jobs where education can serve as training, jobs where performance is tied to skills that are transferrable between organizations, or where those skills are plentiful, easy to develop, and are not part of the firm’s core strengths. But when should companies build aptitude themselves? Bringing in new talent simply might not be an option when the demand for talent exceeds its supply in the labor market, or when the skills being sought are scarce or difficult to acquire. Likewise, it might be more efficient to build skills when doing a job successfully requires firmspecific knowledge or skills that aren’t transferrable between organizations, or when the work is highly dynamic and changes frequently. A new, more agile and digital
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workforce will likely function in a making, something less than half of new, more agile and digital way as companies—across all sectors—get well. Cross-functional teams will make right today. Insurance companies will up new agile product development need to dig deep for a holistic sense squads that maximize employee of purpose and fairness to better engagement while also requiring engage their employees. heightened communication and collaboration skills. New modes of In order to meet the work aspirations collaboration will (and have already of a younger, more digitally savvy begun to) proliferate across some workforce in an era in which work companies’ ecosystems, echoing the itself is more digital and agile than flexible and agile cultures high-tech ever, companies will have to make firms have emphasized for years. overhauls to workplace culture, hiring Teamwork is the new norm, with and talent deployment strategies, insurers now more often reaching external partnerships, and internal out to access capabilities across the leadership. The changing nature value chain, from of the industry a new network of is not just a Successful potential partners challenge, it’s also firms will learn including direct an opportunity. to deploy teams partnerships and Successful firms to serve their customers joint ventures with will learn to deploy in more nimble and venture-capital teams to serve agile ways, staffed by funds, to external their customers in millennial workers who are more nimble and knowledge increasingly interested in agile ways, staffed sourcing and staying digitally connected by millennial technology with their co-workers and workers who investments. prospective employees. are increasingly In order to remain Leadership must interested in competitive, insurance play a central role staying digitally firms must embrace this in setting the tone connected with culture shift to attract, for this new type of their co-workers nurture, and keep the talent company culture, and prospective they need to sustain their which is a major employees. In business, while keeping determinant to order to remain their eye on the long view.” competitive, overall success. Leaders who insurance firms manage with must embrace this empathy tend to have a more culture shift to attract, nurture, and engaged, empowered staff. Thriving keep the talent they need to sustain employees are twice as likely to work their business, while keeping their eye for an organization that effectively on the long view. balances EQ and IQ in decision-
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www.chart-exchange.com
NEWS - LLOYD’S OF LONDON for a more reliable presentation
Continued From Page 20
of risk to reinsurers.
LLOYD’S LAB ANNOUNCES ITS SIXTH COHORT WITH A FOCUS ON PRODUCT SIMPLIFICATION AND CLIMATE
•
Safekeep – an AI subrogation solution that increases the number of recoverable claims
CHART DEFENDER
by 37%, increases dollar net recoveries by 21%, and reduces effort by 90%. •
SettleIndex – a litigation risk platform that cuts the time and
COVERHOLDER E&O AVAILABLE NOW!
cost of resolving disputes. •
DistriBind – uses AI to deliver efficiencies in delegated authority through automation.
•
Moonshot – an analytics firm
•
automate the accounting of their
that builds technology to map
carbon emissions.
extremism, disinformation and organised crime. •
•
perils, in spatial resolutions from
combination of risk analytics
portfolio to asset level, globally
and expert analysis to help
and across flexible time horizons
companies manage risks that can undermine commercial and disrupt global operations,
•
Supercede Technology – helps cedents and brokers automate the creation of submission packs, www.chart-exchange.com
305-248-9495
Tesselo – a geospatial
Email: chart.eo@rockwoodinsurance.com
resources (trees, soils, crop) & reduce climatic risks.
automating the repetitive task of
•
Phone:
solutions to monitor natural
Scrub AI – specialises in data cleansing or ‘scrubbing’.
Mark Lann
and climate scenarios.
intelligence firm delivering
investments and supply chains. •
Jupiter Intelligence – provides climate risk analysis of multiple
Verisk Maplecroft – uses a
value, damage brand reputation
CarbonChain – helps companies
•
Gaia** – creators of an insurance product to make IVF treatments more accessible, affordable and personal.
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REPORT: LAURDAN ASSOCIATES, INC. Continued From Page 15
YOUR COMPANY’S DIVERSITY MANAGEMENT as a positive influence on your employees’ commitment to EEO, diversity, and inclusion, your policies, practices, and procedures by themselves are unlikely to produce positive results. Legal compliance is what your organization does when someone — a governmental agency, a plaintiff’s attorney, or a union — is looking; your ethical code of conduct is what your organization does when no one is looking. Importantly, you should assess the impact of your organization’s culture and values on creating a culture of EEO compliance and achieving its ethical standards. 3) BUDGETS. An important measure of organizational commitment to a project or policy is the amount of resources allocated for its achievement. This is a barometer used by managers and employees alike. If your organization does not budget adequate resources for policy implementation, training, and other EEO activities, your employees will get the message: This is NOT important and its value
32 JULY 2021
questionable. Your assessment activities should assess the adequacy of resources committed by your organization to achieving its EEO, diversity, and inclusion goals.
their performance in meeting sales, production, and profitability goals, it should also hold them accountable for their performance in achieving your EEO, diversity, and inclusion goals.
4) MEASUREMENT.
In addition to making your managers and supervisors aware of the purpose and details of your organization’s EEO, diversity, and inclusion policies, you should also require that they take action whenever discrimination or harassment is brought to their attention. Your organization should include the advancement of your organization’s EEO policy as an essential function of managers’ and supervisors’ job description, and they should be measured, evaluated, rewarded, and — when necessary — disciplined based on their performance in assuring your EEO policy is achieved. The EEOC in its Enforcement Guidance: Vicarious Employer Liability for Unlawful Harassment by Supervisors stated that the rules regarding vicarious liability apply to harassment by supervisors based on race, color, sex (whether or not of a sexual nature), religion, national origin, protected activity, age, or disability. As a result, your organization should reestablish its anti-harassment policies and complaint procedures and ensure that it covers ALL forms of unlawful discrimination and harassment. It should also ensure that all managers and supervisors understand their role and responsibilities in achieving
Organizations measure what they treasure. If your organization is not measuring the achievement of its EEO, diversity, and inclusion goals, then EEO is NOT important. Additionally, organizations — and their employees — treasure what gets measured. If you want to create a workplace that complies with the EEO laws, promotes diversity, and produces the desired outcomes, your organization must measure performance against quantitative and qualitative goals. Your assessment activities should assess your organization’s use of quantitative and qualitative measurements to measure the achievement of its EEO, diversity, and inclusion goals. 5) ACCOUNTABILITY. Measurement and comparison provide the foundation for holding managers, supervisors, and employees accountable for their conduct and their performance in helping your organization achieve its EEO, diversity, and inclusion goals. Their diversity efforts and performance, like their performance in other areas, should be used to determine pay, perks, and career advancement. In other words, if your organization holds managers and supervisors accountable for TABLE OF CONTENTS
www.chart-exchange.com
your organization’s EEO goals and objectives. Importantly, your organization will be held strictly liable for discrimination and harassment by a manager or supervisor against a protected class member that culminates in an adverse tangible employment action. In such cases, no affirmative defense is available. The Supreme Court recognized that this result is appropriate because an employer acts through its supervisors. As a result, your supervisor’s participation in or abetment of a tangible employment action constitutes an act by your organization. Thus, an adverse tangible employment
action that results in an employee suffering an adverse action, e.g., demotion, suspension, termination, reduction in pay or hours, a transfer to a less prestigious, less desirable, or lower paying position or shift, can create strict liability for your organization. As you assess your organization, your activities should review your organization’s job descriptions and training programs to ensure managers and supervisors have been made aware of their responsibilities in helping your organization achieve its workplace discrimination and diversity policies. Note: a record of no complaints against a manager or
supervisor does not mean there are no problems. Your assessment activities should independently survey or interview employees and review social media to determine if a manager or a supervisor has participated in — or allowed — incidents of workplace discrimination, harassment, or the lack of diversity. Your assessment activities should provide reasonable assurance that the actions of managers and supervisors have not created exposure to discrimination or lack of diversity claims.
See Diversity Management Pg 38
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www.chart-exchange.com
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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
REPORT - BLUEVOYANT
HOW CAN THE DEFENSE INDUSTRIAL BASE BETTER PROTECT AGAINST CYBERSECURITY WEAKNESSES IN THE SUPPLY CHAIN? by Thomas Lind, Co-Head of Strategic Intelligence, BlueVoyant
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ecuring the Defense Industrial Base (DIB) is a key national security objective of the United States. Recent analysis by BlueVoyant shows that cybersecurity weaknesses in the supply chain are abundant, with known critical vulnerabilities affecting over half of the supply chain. Securing the DIB is not only a pressing and critical issue for greater national
security: it is also eminently possible, and with the right combination of CMMC regulations, cybersecurity monitoring, and support from government, the DIB can be made much stronger and resilient than it is now. This issue is critical. Businesses in the DIB are high-value targets for nation-state adversaries and other cybercriminals. Today, the news is awash with examples of how these third-party attack strategies have been
devastatingly effective: in the last year alone, cyber attacks exploiting Microsoft Exchange, F5, Pulse Secure, and, of course, SolarWinds have had catastrophic impacts on U.S. defense networks. At the same time, opportunistic ransomware attacks have also risen in frequency and impact, and just last year we reported attacks on US contractors who had been hit by the Babuk, Ryuk, maze and DoppelPaymer ransomware groups. See Defense Cybersecurity Page 52
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om Lind is Co-Head of Strategic Intelligence at BlueVoyant. Tom founded the company's strategic intelligence and reporting team and now leads a firm-wide function focused on threat analysis and research. Prior to joining BlueVoyant, Tom was the Cybersecurity Fellow at Columbia University's Saltzman Institute for War and Peace, where he carried out research on behalf of the U.S. DoD, DoE, and other bodies on cybersecurity threats and policy. Before that he spent 8 years as a consultant based in Europe, working with governments in Europe, Africa, and the Middle East on issues related to energy and security. He is a member of the New York Cyber Task Force, a policy association created as part of the Congressional Solarium Commission. He is the author of numerous reports and frequently speaks on issues related to cybersecurity and national defense policy. He holds a BA (Hons) from Oxford University and two masters: one from Columbia SIPA and one from Sciences Po in Paris.
www.chart-exchange.com
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“WHEN YOU’RE FINISHED CHANGING,
YOU’RE FINISHED” - Benjamin Franklin
Benjamin Franklin: Scientist, philosopher, Founding Father … and business strategist? Mr. Franklin’s advice about adapting to thrive is especially appropriate in the highly fluid insurance industry. The CHART Exchange began with a good idea back in 2015: become the catalyst for growth in the U.S./London marketplace by facilitating interaction between domestic wholesalers/agency specialists and Syndicate underwriters. Large-scale networking events were held annually in elegant venues. While this approach produced results, feedback from the meeting participants indicated we could do much more to achieve our goal. As a direct result of this feedback, CHART 2.0 adopted a more proactive operating model intended to provide advocacy-level support to U.S.-based agencies seeking to place business within the London market. The expertise of our various Vendor Partners — when combined with new brokerage placement capabilities — gives CHART 2.0 clients access to a broad array of services they need to be successful. Interested in learning more? Visit our website at www.chart-exchange.com. We are also available via e-mail (info@chart-exchange.com) or by phone at the number below.
www.chart-exchange.com
The CHART Exchange, 3001 Philadelphia Pike Claymont, DE 19703
Phone: (855) 716-3660 36 JULY 2021
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Fax: (302) 334-0325 www.chart-exchange.com
NEWS - LLOYD’S OF LONDON
LLOYD’S REPORTS 2020 FULL YEAR RESULTS Lloyd’s today announced an aggregated market loss of £0.9bn for 2020 (2019: £2.5bn profit), including net incurred COVID-19 losses of £3.4bn after reinsurance recoveries.
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hroughout 2020, Lloyd’s provided significant support to its customers around the world impacted by the COVID-19 pandemic, with customer pay outs forecast to reach £6.2bn on a gross basis*. COVID-19 claims added 13.3% to the market’s combined ratio of 110.3%. Over the last three years, Lloyd’s sustained performance improvement measures contributed to an improved underwriting result of £1.9bn and a 7.5% improvement in the combined ratio, excluding COVID-19, to 97.0% (2018: 104.5%). 2020 saw premium rate increases of 10.8% with positive rate momentum continuing in the first quarter of 2021. Lloyd’s maintains strong capital and solvency positions, with net resources increasing to £33.9bn in 2020 and a central and market wide solvency ratios of 209% and 147% respectively. John Neal, Lloyd’s CEO, said: “Following an extremely challenging www.chart-exchange.com
Excluding COVID-19 losses, the market delivered an underwriting profit of £0.8bn, demonstrating a significant improvement in Lloyd’s underlying performance. This is supported by 7.8 percentage point improvement of the underlying combined ratio (attritional loss ratio, expense ratio and prior year releases) which has dropped to 87.3%.” year marked by a global health crisis of a scale never seen before, Lloyd’s continued to support its customers with pay outs expected to total £6.2bn in COVID19 claims. The year was also marked by a high frequency of natural catastrophe claims and the UK’s formal exit from the EU, driving further losses and uncertainty. TABLE OF CONTENTS
“Against this unprecedented backdrop we have made good progress across our performance, digitalisation, and culture transformation plans. Our disciplined underwriting approach and determination to become the world’s most advanced insurance marketplace have set us up for real success this year alongside the continued positive rate momentum that will see the market supporting growth for the first time in four years.” LLOYD’S 2020 FULL YEAR RESULTS IN DETAIL: Lloyd’s announced a loss of £0.9bn (pre-tax) for 2020, driven by £3.4bn net incurred COVID-19 losses, which contributed 13.3% to the market’s combined ratio of 110.3%. Excluding COVID-19 claims, the market’s combined ratio has shown substantial improvement at 97.0%, down from 102.1% in 2019. See LLoyd’s 2020 Results Page 45 JULY 2021
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ANALYSIS - LAURDAN ASSOCIATES Continued From Page 33
YOUR COMPANY’S DIVERSITY MANAGEMENT
WHY WOULDN’T YOU AUTOMATE? of doing things will convert hours of data entry to minutes of data review, and in the long run save potentially hundreds of thousands to the bottom line. Not to mention, pre-population can take away a lot of the effort from prospects and your own team members. Based on just a few lines of inputted data, many additional lines can be auto-filled by activating pulls to external data sources. A typical policy application might need 80 data
inputs to be complete and ready for an underwriter to review. This heavy volume of data, its quality and its completeness/incompleteness have been a major pain point for both insurers and insureds for a long time. But with straight-through processing and its ability to retrieve information from outside sources, getting applicants to supply just six basic pieces of information can then allow the system to find all the remaining data on its own. The results can be extraordinary. Some of our clients have seen processing times go from several days to less than 15 minutes. That kind of speed and responsiveness allows insurers to close more business and gain higher retention/renewal rates. How does this all work together in the real world? Let’s take a quick look. I have been working with a See Why Wouldn’t You Automate? Page 58
Also note: to respond to the needs of non-English speaking applicants and employees, the EEOC and many states publish employment posters in Spanish and other languages, and to respond to individuals with visual impairments, the EEOC makes available, upon request, a recorded version of the EEO poster.
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www.chart-exchange.com
https://www.thebluediamondgallery.com/tablet/c/crm.html
Additional note: the various federal, state, and local employment laws require that your organization properly and conspicuously display certain employment posters and notices. These posters and notices must be visible and accessible and provided to both employees and applicants, including those that work off-site. Thus, if your organization’s employment posters are displayed in areas not frequented by applicants, your organization has not technically met its posting obligations. Ideally your organization should maintain a separate area or bulletin board for official organizational notices and employment posters and employees should be required to review postings on the bulletin board periodically.
Continued From Page 25
PL COMMUNICATIONS - INTERVIEW Continued From Page 23
INTERVIEW: JOHN K. TIENE both sides must understand how the other operates. Being open and honest is vital to understand what each side wants to achieve. The other challenge is that we operate in a highly regulated industry with antitrust rules that must be obeyed. But, within those limits, both carriers and networks can learn from each other. I've seen some carriers commit to put together groups of people to learn more about these distribution models. And, I'd like to see the agency networks do the same. INSURANCE NETWORKS ALLIANCE HAS ITS ANNUAL MEETING ON AUGUST 11-13. WHAT IMPACT DO YOU FEEL INA IS HAVING ON CARRIER AND NETWORK RELATIONSHIPS? The Insurance Networks Alliance (INA) has been a huge enhancement to the independent insurance agency network world. It's created a forum where the executives and leadership of agency networks can gather and have conversations about best practices, what's going on in the industry, and www.chart-exchange.com
the challenges of managing large groups of insurance agencies. It also creates an excellent forum for insurance companies to learn about insurance agency networks, develop those relationships, and exchange information to foster better business partnerships. INA represents the beginning of a new era in the distribution channel where agency networks share information and learn from each other. As each agency network improves and becomes better, that's better for their independent agent members. It will also enable insurance companies to engage with agency networks that are investing in improving themselves. By sharing and analyzing data, networks can identify trends and the best product classes for their members.
WOULD YOU LIKE TO HAVE YOUR MESSAGE DELIVERED TO 100,000+ FOCUSED INSURANCE INDUSTRY EMAIL ADDRESSES EVERY MONTH?
The more data that both parties have, the more they will be able to put together programs and initiatives to increase their book of business. The power is in the data that these agency groups have. And as the agency groups harness that data, they can become significant resources for the insurance companies. That is to the mutual benefit of the agents and the insurance companies, but most importantly it will benefit clients with better pricing, service, risk management, and products.
Paul Lavenhar is the principal of the insurance marketing communications firm PL Communications.
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I’m Kate Boyle Managing Editor. I handle CHART Exchange Advertising. Call me at 302 765-6056 and let’s have a conversation.
JULY 2021
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ANALYSIS - MOTOSI CONSULTING Continued From Page 14
CHART IF DEFENDER DELEGATED AUTHORITY COVERHOLDER IS THE E&O ANSWER, AVAILABLE NOW! WHAT IS THE QUESTION?
Mark Lann Phone:
302-765-6070 Email: chart.eo@rockwoodinsurance.com
execute successfully and it is this at the most basic level that the Future at Lloyd’s (FAL) programme is looking to address in order to protect, enhance and develop this revenue stream to the market but market directives and mandated technologies will not by themselves make DA more relevant and commercially viable as there are so many other measures by which companies will benchmark their relative success in delivery of an efficient DA business model. As readers of this journal will be aware, the FAL programme is working at providing platforms that make it better, faster, and cheaper to do DA business, focussing on the capture of accurate and reliable data, which enables the
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simplification of downstream processes but what does this really mean and how realistic are these ambitions? Technology is part of the answer and so it is welcomed that market systems and portals are being built in which to accommodate the digitisation of this marketplace but let’s not forget that this is about being digital where we can be and applying the human touch as and when required. It should be about providing choice, particularly to coverholders who have varying degrees of experience and skills within their business to engage with the market in the manner in which they choose. Brokers of course play an important role in the market and will continue to do so but really must adapt and evolve their business models to be more accommodating to the requirements of coverholders and the capacity providers with which they work. The model needs to move to an options-based model where clients are offered the choice of direct dealing with a digital marketplace for all or part of their risk portfolio or in fact utilising the services of a broker on a more transactional, traditional basis. Again, the word here is ‘choice’ and it is at the moment missing and therefore a blocker to opening up new distribution channels and territories in which to trade. The ongoing relevance and commercial viability of writing www.chart-exchange.com
people to look it up (www.lmadare. DA business in London is under com) and to review the findings of scrutiny like never before, given this consultation with the market the huge volumes of business and to understand the outputs that transacted in this manner. The market should be looking to deliver have been generated as it points to the future direction of DA business capacity into new channels of distribution by using platforms that written from London and what is required to make the process more automate the DA process through engaging, customer centric and innovative use of technology efficient. services and We will see products that will facilitate the increasing The LMA will be straight through use of the using this output from the project processing of this market platforms to constructively type of business. in place and being engage with To this end and as well as the FAL delivered currently Lloyd’s to programme of which of course will influence the FAL change works underway, assist at the macro agenda relating The Lloyd’s Market or market level, to DA, which will Association (LMA) hopefully offer in January of this but companies some counter year engaged will also have to balanced views the global DA carefully consider on the future community of their own micro direction and coverholders, level engagement state of where managing agents, brokers and other and what they will we are now and where we need to stakeholders need in order to be in the future. It involved in the deliver successful will be interesting management outcomes in their to see how this of DA business, looking for and own DA portfolios.“ plays out and what can and will encouraging be accommodated participants in within the roadmap for delivery of the work to be bold and brave and the DA workstream under the FAL to ‘think outside the box’ when it comes to writing and administering in the coming months and I will of course be keeping a close eye on DA business in the London Market. this and reporting back in these pages accordingly in the months The initiative labelled ‘DAre’ (DA ahead. Re-imagined) has now reported its findings and I would encourage www.chart-exchange.com
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The challenges of writing business in the London Market are well known, with the unique way in which risk is syndicated through the subscription model being both a blessing and a curse in many ways, adding levels of complexity and challenge to an already laboured and archaic process. What is clear though is there needs to be a better and more forensic understanding of the insurance value chain if we are to see improved capacity management and distribution within the DA market, in simple and stark terms it needs to be more streamlined and customer focussed, with participants using the best in breed technologies and services to support (not solve) their own business propositions. We will see increasing use of the market platforms in place and being delivered currently which of course will assist at the macro or market level, but companies will also have to carefully consider their own micro level engagement and what they will need in order to deliver successful outcomes in their own DA portfolios. We must also ensure there are concerted efforts to align governance, contractual and commercial outcomes to ensure that the environment in which DA business is conducted can be done so in the most efficient and commercial way possible. JULY 2021
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NEWS - LLOYD’S OF LONDON Continued From Page 11
LLOYD’S REPORT ON CYBERATTACK ON INDUSTRY •
•
A targeted attack, in which attackers exploit a vulnerability in widely used Internet of Things (IoT) devices found in industrial settings The infiltration of industrial IT networks to cross the OT “airgap”.
In one scenario, malware is introduced into the industrial site via malicious software updates and/ or installation of new (infected) devices. A logic bomb in the malware delays the activation with specified conditions that can be programmed for maximal impact. Other scenarios could, for example, lead to attackers gaining control of water pumps or temperature regulation systems. Kirsten Mitchell-Wallace, Lloyd’s Head of Portfolio Risk Management, said: “The Lloyd’s market is advanced when it comes to insuring cyber risks and it is therefore vital Lloyd’s syndicates underwriting this class of business have the ability to analyse their portfolios
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against the most sophisticated and technologically advanced risk scenarios. “We know that the risk of ICS-based cyber-physical events is increasing. Because of this, we’ve partnered with CyberCube and Guy Carpenter to create these illustrative scenario pathways based on highly realistic threats and modes of attack.”
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Pascal Millaire, CyberCube’s CEO, said: “Working alongside Lloyd’s and Guy Carpenter to design these scenarios was an important development for the insurance market in this increasingly important new risk. The potential for a major ICS attack is all too real today given several realworld examples of such attacks. As we roll out hundreds of billions of additional IoT devices, it will become even more important in the future and could eventually become a systemic risk for the global economy.” Jamie Pocock, Guy Carpenter’s Head of GC Cyber Analytics – International said: “A major ICS attack could impact a broad range of industrial businesses and classes of insurance. As these attacks cross the divide between information technology and operational technology, they could conceivably involve significant property damage and loss of human life. The key is continued research, surveillance, and risk selection to help improve underwriting standards and portfolio management.” TABLE OF CONTENTS
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NEWS - LLOYD’S OF LONDON
NEW LLOYD’S REPORT HIGHLIGHTS IMPORTANCE OF INSURANCE TO SAFEGUARD EMPLOYEE VALUE
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he new report, ‘Safeguarding human capital: How to protect and enhance the value of human capital’ is the last in a series of joint reports from Lloyd’s and KPMG which focus on the increasing risk intangible assets pose to organisations, and the importance of protecting them. The report identifies ways in which the insurance industry could help organisations to manage and mitigate against the varying and far-reaching implications of human capital events, such as a pandemic. While there are existing insurance solutions already available in the Lloyd’s market, the report highlights the need for a further continued effort at product development in this area. By protecting the value associated with teams rather than just key individuals, human capital insurance solutions could be key to workforce management in the wake of the pandemic and future systemic risks.
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The report focuses on how insurers can support organisations following an adverse event by not only addressing the wider damage caused, but also by playing
Lloyd’s, the world’s leading marketplace for commercial, corporate and speciality risk solutions, today published a new report in collaboration with KPMG, which looks at how human capital, or the collective abilities and skills of employees, is a key driver of organisational value and a potential blind spot for firms failing to invest in their workforce in the wake of the pandemic. a preventative role. As well as considering how different metrics and indices can be used to quantify and measure the damage of human capital events, insurers could TABLE OF CONTENTS
track and analyse workforce data to project risk triggers and their potential impact on value. COVID-19 has exacerbated many of the risks involving human capital value. With the pandemic impacting the entire workforce globally, and many organisations still operating under a remote working model, the value of employees in achieving productivity is vital for business continuity. It is becoming increasingly apparent that talent attraction and retention, and employee wellbeing are not just intrinsically linked, they also have a direct impact on business performance. Though most firms recognise this, many are failing to fully understand the value of their people. This means that their skills and knowledge – and corresponding value as human capital – depart when employees do, leaving firms exposed. By
See New Lloyd’s Report Page 50 JULY 2021
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STUDENT REPORT OMNY: COMPROMISING THE PRINCIPLES OF CYBER SECURITY ONE TAP AT A TIME By Starasia Wright
M
etroCards were initially released in 1993 to replace subway tokens. At the time, MetroCards were considered the most technological enhancement of the transit system. In early 2021, the current payment system: “tap and go” replaced MetroCards. “Tap and go” is also known as contactless payment, which means that they have a chip inside them that emits radio waves. This system is called OMNY: One Metro New York. Riders can tap their debit card, credit card, smartphone, or smartwatch on an electronic (RFID) reader at the turnstile instead of swiping
their MetroCard. When I initially heard about OMNY, I was intrigued, yet, alarmed. As a native New Yorker and frequent commuter, I have witnessed the uprising of the war on fare evasion. The war on fare evasion increased video surveillance and police presence in train stations like my hub, Jamaica Center, and other high-poverty neighborhoods that are predominately Black and Latinx in an attempt to prohibit and discourage riders from not paying their fare. Is OMNY, combined with increased surveillance and police presence, reinforcement to criminalize poverty and perpetuate racial and ethnic bias?
Is OMNY another tracking device that helps advertisers make data collection more convenient? While contactless payments are marketed as convenient, OMNY pay raises privacy concerns; it collects location and payment data, thereby contributing to digital profiling’s pervasiveness and perpetuating racial and ethnic bias. OMNY compromises the principles of cyber security one tap at a time. One of the reasons OMNY raises privacy concerns is the lack of opacity in its data
See OMNY Security Issues Pg 56
S
tarasia Wright is a multi-disciplinary, recent undergraduate from CUNY Hunter College. She graduated with a double Bachelor of Arts degree in Computer Science and English with a Linguistics and Rhetoric concentration, English Departmental Honors and multiple awards for her writing. As a double major in Computer Science, Starasia developed a love for Data Science because it allows her to apply her keen attention to detail, strong communication style, and passion for communicating high-level, abstract, ambiguous concepts, like data, with clarity. For the duration of the Summer, she will be working as a Civic Innovation Corps Data Science Intern for the Utah Governor's Office of Planning and Budget. During her undergraduate studies, Starasia also gained an interest in cyber security after taking a course on the ethic challenges of IT (Information Technology). She enjoys cyber security because it is not just about computing but involves human psychology, too. As a critical essayist, she specializes in works that demand change in the world especially at the intersections of technology and morality.
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NEWS - LLOYD’S OF LONDON Continued From Page 37
LLOYD’S REPORTS 2020 FULL YEAR RESULTS THE KEY FIGURES REPORTED IN LLOYD’S 2020 FULL YEAR RESULTS ARE: •
Gross written premiums of £35.5bn (2019: £35.9bn)
•
Combined ratio of 110.3 % (2019: 102.1%)
•
Attritional loss ratio of 51.9% (2019: 57.3%)
•
Net investment income of £2.3bn, 2.9% return (2019: £3.5bn, 4.8% return)
•
Net resources of £33.9bn (2019: £30.6bn)
•
Central solvency ratio of 209% (December 2019: 238%)
Excluding COVID-19 losses, the market delivered an underwriting profit of £0.8bn, demonstrating a significant improvement in Lloyd’s underlying performance. This is www.chart-exchange.com
supported by 7.8 percentage point improvement of the underlying combined ratio (attritional loss ratio, expense ratio and prior year releases) which has dropped to 87.3%. Gross written premiums of £35.5bn represent a 1.2% reduction over the same period in 2019. Exceptional market conditions driven by an acceleration in positive rate momentum throughout 2020 saw the market achieve average risk adjusted rate increases on renewal business of 10.8%.
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This was offset by a 12.0% reduction in GWP due to the remediation of underperforming business in 2020, reflecting the market’s continued focus on the quality of the business it renews and underwrites. The 2020 expense ratio saw a 1.5% improvement dropping to 37.2% (2019: 38.7%), and this remains a key area of focus, with the Future at Lloyd’s Blueprint Two solutions and delivery programme central to tackling total acquisition costs and administration expenses. In 2020, the market’s net resources increased by 10.8% to £33.9bn as at 30 December 2020 (2019: £30.6bn), reinforcing the exceptional strength of Lloyd’s balance sheet with a central solvency ratio of 209% (December 2019: 238%).
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ANALYSIS - KROLL
FIVE WAYS TO IMPROVE YOUR CANNABIS BUSINESS SECURITY By Daniel Linskey
W
ith the legalization of cannabis expanding across multiple states, a growing number of entrepreneurs are finding new and lucrative opportunities. Without federal approval, the cannabis business is not without risk. Whether their focus is on medical or recreational—cultivation, extraction, testing and calibration, manufacturing, transport/delivery or dispensary—facility owners and operators should prioritize compliance and security to stay on the right side of the law and protect their investments. The following best practices can help you keep
regulators happy and protect staff, customers and inventory. FOCUS ON PHYSICAL SAFETY AND SECURITY It might seem obvious, but safeguarding customers and employees from harm is a must. To ensure security is both visible and engaging, companies in the industry should take the following measures:
• Posting an obvious security professional by the front door and any other entryways. • Making it obvious that cameras, intrusion detection
and door access control systems are in place. • Ensuring covert security measures (e.g., hold-up buttons) are effectively placed and readily accessible. • Physically hardening critical areas against penetration by reinforcing walls, ceilings or roofs, floors, doors and so on as required. • Implementing layered measures to enhance security. For example, entries should include attack-resistant building materials, secure
A
bout the author: Daniel Linskey is a managing director in Kroll’s Security Risk Management practice, head of the Boston office, and a fellow at the Kroll Institute. As the former Superintendent-in-Chief of the Boston Police Department (BPD) and a 27-year veteran of the force, Dan provided strong leadership through some of the most tragic and contentious events in the city’s history, including the Boston Marathon bombings and the Occupy Movement. Dan serves clients in diverse industries with uncommon experience in investigations, crisis response, and risk management, as well as personal, physical, and operational security strategies. Widely respected for his knowledge of the complexities inherent in law enforcement and homeland security, Dan has also consulted with numerous national and international government agencies on a broad range of challenges, including large-scale event management, crisis leadership, and preparedness and community engagement strategies.
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iMAGE CREDIT: https://commons.wikimedia.org/wiki/File:Cannabis_01_bgiu.jpg
cameras with clear lines of sight, automated locking mechanisms and professional security personnel. • Conducting regular testing and inspection of security measures and practices for effectiveness and regulatory compliance. • Developing and executing robust security policies and practices for product receipt/ delivery, storage, handling, processing, packaging, www.chart-exchange.com
fulfillment and cash management. Technological security systems are an important tool, but they can provide a false sense of security if not properly applied. For example, cannabis regulations typically require cameras in all spaces where cannabis is cultivated, processed, packaged, handled, circulated or sold. But optimal placement, image resolution and quality are much more important than installing several cameras. In addition, no one person can (or TABLE OF CONTENTS
will) monitor dozens of camera feeds. The best approach is to consult with security experts to determine the proper system equipment, placement, operation and management to ensure compliance with regulatory requirements and best practices. Staff training is another important aspect of physical safety and security. Adequate training enables staff to deal with any crises that might come up, including:
See Cannabis Business Security Pg 51 JULY 2021
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NEWS - LLOYD’S OF LONDON -
LLOYD’S CONSULTS ON THE FIRST ITERATION OF ITS CORE DATA RECORD UNDER BLUEPRINT TWO Lloyd’s today published the first version of its Core Data Record (CDR), which will ultimately enable standardised, quality data to flow through the Lloyd’s market with the aim of significantly improving operations, reducing the cost and effort of doing business, and delivering a better service to customers.
T
his represents a key milestone for Lloyd’s Blueprint Two programme, which is the second phase of Lloyd’s Future at Lloyd’s strategy to shift the market to a digital ecosystem, powered by data and technology. Key to this progress and accelerating to a digital future, Lloyd’s is collaborating with ACORD to adopt the global standards already used in the London market and internationally. Lloyd’s will continue to explore opportunities for collaboration to simplify access and provide better solutions in the placement, claims and settlement journeys. Lloyd’s is conducting a marketwide consultation to seek input and feedback on the first iteration of the CDR. This includes working with a Beta group of brokers, insurers, market associations and placement providers to advance and refine the CDR.
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This input will assist the development of the CDR through the validation of data inputs and the testing of the technology process and data enrichment. The initial scope for the simulation is Open Market North American Property, followed by other classes of business and subsequently Delegated Authority business. John Neal, CEO of Lloyd’s said: “The Future at Lloyd’s is underpinned by advanced data collection and management methods, and our focus is on creating solutions that will enable brokers, underwriters and partners to operate in a much more streamlined way. The CDR is central to this strategy and will enable us to deliver efficiencies and real value and benefits to our market and customers. We are excited to be able to share a first iteration that TABLE OF CONTENTS
shows how we are moving from concept to practice, and by working together with the market we can continue to shape the model and ways of working that will enable us all to move into a digital future”. Bill Pieroni, President and CEO of ACORD said: “ACORD is committed to enabling digitisation at Lloyd’s and throughout the global insurance ecosystem. The development of the Core Data Record, based on ACORD Standards, will ensure that market participants are able to leverage their existing systems and taxonomies to provide data in a consistent and coherent way. This will enable Lloyd’s stakeholders to maximise the value derived from their data, increase flexibility and adaptability, and capture efficiencies made possible only by digital transformation.”
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within the insurance industry by assisting firms with their corporate development and acquisition/divestiture objectives. M&A Services is
NEWS - LLOYD’S OF LONDON Continued From Page 43
NEW LLOYD’S REPORT HIGHLIGHTS IMPORTANCE OF INSURANCE TO SAFEGUARD EMPLOYEE VALUE investing in employees through upskilling, better engagement and proactive culture management, firms can ensure they are attracting and retaining the best talent. The report identifies four key actions that risk owners in organisations need to think about to advance their preparedness to safeguard their organisations’ human capital. These include: •
• •
•
Ensure leadership champions a culture that truly empowers employees in remote working conditions Use data to hire and manage your employees Prioritise the needs of employees but also reduce the reliance on any one individual Horizon scan and be prepared to continuously adapt to change
Dr. Trevor Maynard, head of Innovation at Lloyd’s said: “Human capital is key to company value, and whilst insurance solutions already
50 JULY 2021
exist to protect this intangible asset, the past two years has highlighted the need for insurers to work with risk owners to manage the new risks that have emerged as work practices change and evolve. Lloyd’s is a great place for such collaboration to happen and we hope to see new innovative solutions and products that will help protect companies’ human capital. Paul Merrey, partner at KPMG UK, said: “Technology will need to play a key role in future human capital insurance solutions. Currently most organisations have limited capabilities in gathering and analysing in-depth employee data. There is significant scope for insurance solutions that provide organisations with the required tools, knowledge and financial capital to overcome challenges whilst minimising business interruption and any adverse impact on their competitive position.”
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ANALYSIS - KROLL Continued From Page 47
FIVE WAYS TO IMPROVE YOUR CANNABIS BUSINESS • Robbery • Medical emergencies • Fires • Natural disasters/community emergencies • Power outages • Protests • Chemical spills State regulations might mandate a certain number of training hours, but more is always better when it comes to crisis management. Many turnkey, online retail security training programs are available. In addition, a professional security company can help you customize training to your facility, product, services and brand. COMMIT TO DUE DILIGENCE AND STRONG OPERATIONAL SECURITY www.chart-exchange.com
Regulations typically stipulate strict the consequences of measures for accessing, handling noncompliance. and disposing of inventory. To comply, you need clear procedures • Dedicate staff or outside for entering and working in areas of independent professional restricted access services to (e.g., via access secure and If you decide to card), disposing monitor these engage security locations; of waste (e.g., services, choose a for example, rendering waste “unusable and firm with experience in conduct unrecognizable” the cannabis industry random video and placing it in assessments and the expertise secured waste of important to help you bolster receptacles) and areas to observe physical, technical and other processes. if activity is But human nature regulatory protection. compliant with often leads to regulations. Ask how they can shortcuts. Why help you analyze your take the time and • Follow current security and effort to swipe your through with compliance stances card or key in an repercussions for access code every and develop a robust noncompliance. time when you can and comprehensive simply prop open a program, and then use Due diligence door? is the most these best practices important as a measuring stick Business owners action cannabis not only need to entrepreneurs can to evaluate potential develop, document commit to if they security experts.” and implement want to protect processes that their investment. meet regulatory standards—they Security lapses can easily result in loss also need systems in place to enforce of product. For example, we know those processes and deal with of one facility in which workers were violations. found to be smuggling out product in improperly disposed of personal • Begin by evaluating where protective equipment (PPE).
such areas exist and documenting clear procedures Security and legal experts with for expected behavior. experience in the cannabis industry
• Educate staff about these procedures and TABLE OF CONTENTS
See Cannabis Business Security Pg 54 JULY 2021
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REPORT - BLUE VOYANT Continued From Page 35
DEFENSE CYBERSECURITY IN THE SUPPLY CHAIN
ADVERSARIES PIVOT TO TARGET SMBS Defense contractors face the same opportunistic threats as any business; however, the DIB’s biggest problem is the complexity of securing such an enormous ecosystem. Since the first cyber intrusions in the late 1990s and early 2000s, prime contractors and other large companies have developed more robust security defenses against cyberattacks. As a result, adversaries have pivoted towards targeting small to medium-sized businesses (SMBs) that are subcontractors within the same supply chain. This attack strategy is based on the expectation that SMBs will have fewer and less sophisticated defenses and will thus provide an easier entry point to all entities within the entire supply chain. Cybersecurity weaknesses are abundant: just under half (48%) of all companies analyzed had critical cybersecurity vulnerabilities, 20% (one-fifth) had critical vulnerabilities and evidence of significant, intentional
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Closer co-operation between the DoD and the private sector is required to support a more vibrant, diverse, and secure defense sector. Just as threats are evolving, so too are the conditions that shape the US defense industry, and the sector is increasingly introducing commercial technologies and acquisition practices that have the potential to disrupt and change the traditional defense contractor business model for the better.” threat targeting, and 7% showed critical vulnerabilities, evidence of significant, intentional threat targeting, and also had evidence of potential compromise. We found that industry type was a stronger predictor of risk than company size alone: manufacturing and R&D companies had the highest risk profiles when assessing email security, IT hygiene, malicious activity and vulnerabilities. A staggering 100% of the large R&D companies assessed displayed network vulnerabilities, with 66% of these companies also showing evidence of targeting. ESPIONAGE AND INTELLECTUAL PROPERTY THREATS ARE ALSO INCREASING This comes at a time of significant pressure on defense companies. Persistent sophisticated foreign actors have targeted the DIB for years for the
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purposes of espionage and intellectual property threats; in the last year, they have achieved significant success, and in the public eye. In October 2020, the NSA issued an advisory noting that Chinese APT groups were exploiting vulnerabilities in Pulse Secure VP and F5 Networks’ cybersecurity software to target defense contractors, and in April this year these groups were reportedly exploiting another software vulnerability to attack defense contractors with vulnerabilities in Microsoft Exchange services. To this point, just under half of the companies that we examined had ports vulnerable to ransomware, as well as other severe vulnerabilities. This included unsecured data storage ports, out-of-date software and OS, and other vulnerabilities rated severe to NIST frameworks. Furthermore, 7% of the companies analyzed showed critical vulnerabilities and evidence of targeted threat www.chart-exchange.com
https://commons.wikimedia.org/wiki/File:Cybersecurity.png
activity, and evidence of compromise. Additionally, more than six months after the F5 and Microsoft Exchange vulnerabilities were announced, several companies were still observed with these vulnerabilities on their networks. CMMC AND OTHER REGULATIONS ARE BEING IMPLEMENTED In order to address these issues, a series of government regulations have set standards designed to raise the baseline of cybersecurity requirements. Most recently, in 2019 the DoD announced that they were launching the Cybersecurity Maturity Model Certification (CMMC) as an expansion of, and improvement upon, the National Institute of www.chart-exchange.com
Standards and Technology (NIST). CMMC is designed to help apportion compliance and responsibility in appropriate measures throughout a complex ecosystem and to also ensure third party verification and controls are in place. However, our research found that more than a quarter (28%) of companies analyzed showed evidence indicating they would fail to meet the most basic, tier-1 CMMC requirement. PERPETUAL MONITORING AND MANAGEMENT IS REQUIRED Regulations will certainly help to reduce the attack surface, but compliance with regulations is typically measured at points in time and is therefore not necessarily
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synonymous with ongoing effective cybersecurity. Without a doubt, compliance is a key first step towards baseline security – but more is needed. How can organizations create a secure environment for defense companies while also supporting the development of a large and diverse ecosystem? How can they close the gap that exists with these periodic point-in-time assessments and deliver more ongoing monitoring and management of the systems security throughout an entire supply chain? Often smaller firms do not have the resources and budgets to deal with
See Defense Cybersecurity Pg 54 JULY 2021
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REPORT - BLUEVOYANT Continued From Page 51
Continued From Page 53
DEFENSE CYBERSECURITY IN THE SUPPLY CHAIN increasing, targeted cyberattacks. based on those findings. Going forward, continuous cybersecurity monitoring should be a key component for defense companies to secure their supply chain. Here prime contractors can reduce their risk exposure by focusing on the most high-risk segments of their supply chain. Our research highlighted that R&D companies are particularly vulnerable targets for malicious insertion in the supply chain and focusing on them can reduce risk to all segments. Additionally, predictive analysis is possible based on quantitative measures, and can provide the DoD and prime contractors with findings to help them identify and more effectively manage risk. BlueVoyant is undertaking more advanced research, in cooperation with Michigan State University’s top-rated supply chain management program, to see if more reliable predictive measures are possible. FOCUSING ON SUPPLY CHAIN HEALTH
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For an industry with such an expansive, interconnected digital ecosystem, supply chain security should be a fundamental consideration. Prime contractors are under enormous pressure to reduce the attack surface of the entire supply chain, but are partly blind to the vulnerabilities that exist. Smaller companies need to put more attention and resources into identifying ongoing risks and understanding overall supply chain health in order to combat the growing threat landscape. The good news is that the two recent Executive Orders –- one on American Supply Chains, and the other on Improving the Nation’s Cybersecurity – direct much-needed attention and funding to cybersecurity in the defense supply chain, but they are only the start. Closer co-operation between the DoD and the private sector is required to support a more vibrant, diverse, and secure defense sector. Just as threats are evolving, so too are the conditions that shape the US defense industry, and the sector is increasingly introducing commercial technologies and acquisition practices that have the potential to disrupt and change the traditional defense contractor business model for the better. Organizations need to put in place accessible compliance frameworks, robust and proactive risk tracking, continuous external monitoring – all of these steps will support a more secure defense sector and are absolutely achievable with closer co-operation between the DoD and the public sector. TABLE OF CONTENTS
FIVE WAYS TO IMPROVE YOUR CANNABIS BUSINESS can help you understand compliance and regulatory requirements, which vary from state to state and sometimes across counties or cities. Don’t underestimate this necessity. Some shortcuts—whether malicious or not—can threaten your entire business. Serve an underage patron with a fake ID at a bar, and you risk a fine and license suspension. Do the same at a dispensary, and you risk permanent closure—or worse. DON’T SLACK ON CYBER SECURITY Without digital financial transactions, cyber security might not seem like a priority for those in the cannabis industry, but cyberattacks threaten much more than customer credit accounts. Cyberattacks against local area networks or security systems, as well as phishing emails and other strategies, can enable hackers to gain access to computers, automated cultivation systems, customer databases and more. The results can be frightening: www.chart-exchange.com
ANALYSIS - KROLL
• Hacker access to medical customer IDs and personally identifiable information (PII) can put you in violation of HIPAA regulations. • Attackers who gain access to automated systems (e.g., lights, irrigation) can threaten crops to demand payment. • Malicious access to customer PII can be used in extortion schemes. • Sabotage security systems. No business is too small to be at risk. A local business might not produce big profits for a hacker, but could be the perfect crash-test dummy, enabling them to try out their strategies before targeting bigger fish. A cyber security professional can help you develop programs, policy, training and endpoint monitoring to help protect your business and customers. From adequate data backup to system security to penetration testing, such services aren’t just smart—they’re vital. Remember, the question is never “will you be breached?” It is always, “when will you be breached—and are you prepared to respond quickly?” COMMUNITY SUPPORT – BE A GOOD NEIGHBOR Community support, or lack of it, can make or break cannabis businesses. When it comes to fighting the “not in my backyard” mindset, education and public outreach are key. www.chart-exchange.com
• As cannabis businesses flourish, states and communities that have passed legalization measures are finally beginning to gather data on important issues like crime rates, tax revenue, real estate values and impacts on local economies and public health. In many cases, these data shine a positive light on the industry. Business owners can, and should, utilize such data, along with proof of their own due diligence to educate the public and develop good relationships within their local communities.
• Make sure you understand all state and local laws and regulations and develop the procedures needed to comply with them. • Consistently and diligently train all employees to follow those procedures. • Share statistics and your commitment to community safety with community stakeholders, licensing boards and law enforcement. Rebuff negative studies with evidence-based medical and legal data. • Consider engaging public relations or crisis communications services to help you relay such information in a positive way.
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Clearly post educational materials about your policies for consumers. Posters, pamphlets, product inserts, discounts in exchange for signing up for customer communications— find creative and effective ways to make sure customers know that you will enforce those policies, up to and including a lifetime ban.
Worried that enforcing consequences might be bad for business? In reality, such measures protect both your standing in the community and your clientele as well. Many customers aren’t aware of the potential risk of running afoul of consumption laws, which can be severe. If federal authorities decide to crack down, they’re likely to start with businesses that show the least commitment to rigorous compliance or that have the most community complaints. KNOW WHEN TO ASK FOR HELP Last but not least, if you decide to engage security services, choose a firm with experience in the cannabis industry and the expertise to help you bolster physical, technical and regulatory protection. Ask how they can help you analyze your current security and compliance stances and develop a robust and comprehensive program, and then use these best practices as a measuring stick to evaluate potential security experts. The cannabis industry is growing; it’s an exciting time for entrepreneurs. Use these tips to minimize risk and make your business venture even more rewarding.
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STUDENT REPORT Continued From Page 44
OMNY: PRIVACY & SECURITY ISSUES collection methodology and privacy policy. When a rider taps their card on the OMNY fare payment system, no prompt asks the rider to consent to the terms and conditions. Thus, riders do not know that their data is being stored and shared. Also, the privacy policy is only available online. For a resource being marketed as “convenient,” having the privacy policy only available online is not convenient nor intuitive. A “tap and go” fare payment system is fittingly associated with New York City: the City that never sleeps. New Yorkers are known for living fast-paced, hurried lives. Therefore, it is counterintuitive to read the privacy policy before entering the train station. OMNY was designed to reduce crowding at turnstiles caused by people who do not know how to swipe their card and incorrectly swipe their card at a turnstile. Contactless payments are not marketed as “tap, read the privacy policy and go;” they are simply and cleverly branded as “tap and go.” Thus, it is easier and less tedious when compared to cash payments and payments requiring users to insert their
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card and enter their pin or zip code. Even if riders read the privacy policy, the ambiguous jargon makes it harder for riders to understand how their information is tracked and repurposed. The privacy policy on omny.info uses many phrases like “we may” and “may be,” which does not provide riders with a definitive, reassuring explanation of how their data is being collected. According to OMNY’s Privacy Policy, “If you register for an OMNY Account, your transaction and travel history can be tracked through your OMNY Account, and you can access this information for a period of up to 90 days by logging into your OMNY Account.” Yet, riders do not know what will happen to their data after the 90 days is over. While the travel history is no longer accessible to the rider, since data is nonrivalrous, meaning it cannot expire or be worn out, it may still be accessible and useful to OMNY. The policy furthers, “We may collect other information about you that is not specifically listed here and will use it in accordance with this Privacy Policy.” In other words, OMNY can access any bit of information even though the kind is not specified and justify its retrieval as being relevant to or following their privacy policy. Again, riders do not know exactly what they agree to when using OMNY. After a rider taps a card, smartphone, or smartwatch at an OMNY electronic reader, OMNY now has access to location data, payment data, transportation data, and smartphone identifiers. These lifestyle TABLE OF CONTENTS
choices, including what device was used, at which train station, when the rider made the payment, and how many fares were collected during this commute (spending history), can be used as a proxy for other insights. Thus, OMNY will be able to curate digital profiles of riders by incorporating riders’ daily habits. Additionally, various OMNY users have made complaints about the hypersensitivity of the scanners. Riders have reported that OMNY scanners accidentally charged their cards even though they 1) paid their fare using a MetroCard and 2) carried their cellphone in their jacket or pants pocket. Since the rider’s device is within the reader’s range, their card is scanned. As a result, riders end up double-paying for a single ride. Some riders are also unaware that the transaction occurred until they review their transaction history on their device or their bank statement. The hypersensitive scanners violate the integrity of rider data! One of the pillars of cyber security is integrity, which advocates against the unauthorized modification and fraudulent use of data. Hypersensitive scanners and failure to modify them suggests that OMNY prioritized financial gain instead of cyber security, and the protection of customer’s data. Accidentally charging riders means that their data is unintentionally collected and without consent. Riders have submitted complaints to OMNY, and OMNY or their bank reimbursed their fare. However, riders are unable to receive refunds for their data! Since www.chart-exchange.com
https://www.flickr.com/photos/mtaphotos/47973879811/
riders are being charged without their knowledge and are unaware of the privacy policy, their data is subsequently tracked and stored unbeknownst to them. While riders call their bank to dispute these unauthorized charges, the more significant privacy conundrum is left underserved and unresolved. Some people may be wondering: What can we do to protect our data? The MTA has predicted that OMNY will completely replace MetroCards by 2023. Until then, riders can obfuscate their data, mitigating or preventing them from being subject to pervasive www.chart-exchange.com
digital surveillance, manipulation, and analysis. Riders can obfuscate their data by using both OMNY and MetroCards. Obfuscation will create an incomplete and inconsistent digital profile of the rider, location data, payment data, transportation data. Living a digital life isn’t voluntary, given the pervasiveness of data collection and analysis. However, maintaining a digital life does not mean that our data should be monitored without our knowledge. Therefore, obfuscation is a defensible option that can be justified. “Tap and go” technologies are TABLE OF CONTENTS
becoming more popular and preferred because they are more convenient, however with greater convenience comes greater privacy concerns, especially when companies do not prioritize security and do not reduce the sensitivity of card readers to prevent unauthorized transactions. Whether the fraudulent transaction is for $2.75 (USD), the MTA fare, or hundreds to thousands of dollars, companies that use “tap and go” technologies should centralize and resolve the privacy concerns associated with these systems to protect customer’s data. JULY 2021
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ANALYSIS - EOXVANTAGE Continued From Page 38
WHY WOULDN’T YOU AUTOMATE? client this year who wanted a way to quickly return a quote for multi-carrier packaged insurance. In the past, package policies have been mainly targeted to businesses, especially small businesses. It allows great customization options, since every company has different needs, as well as cost savings on premiums. In recent years it also has become a bigger part of the pie for individual policy holders. Home and car owners can combine auto with home insurance, or different components like liability, personal injury, collision into one policy – or at least conveniently get multiple coverages at the same time/transaction while getting what amounts to a volume discount. It has proven to be a lucrative approach since every consumer loves the feeling of getting good value for their money. Now, this particular client sells auto insurance and wanted a method to incorporate other forms of insurance
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into a policy quote. In the past, this would involve sending entered information out to multiple carriers and receiving back a response to be used in a quote. Normally this process (done the old, manual way) would take around five hours. With the automated/straightthrough processing route, the time is reduced to five minutes or so. Take a moment to consider what could be done with all that time. Automation makes it possible to retrain the team members who were doing all that slogging and redirect their efforts to do much more vital work. Those who are able to give a more or less instant quote should find that consumers are more likely to purchase the policy, as well as retain it when it’s time to renew because they know dealing with the supplier is a no-fuss process. The concept is simple: Don’t give prospects a chance to shop around! When they push the button and a reply comes moments later, that’s a great incentive and a natural reaction to just go ahead and buy the policy. It plays into the immediate gratification expectations that have grown greatly during the pandemic, as more and more of us got used to fast interactions while shopping online. Insurance is becoming a speed game. The days are over when customers would have to wait around weeks for a quote – nowadays their business will be long gone by then, and chances are they won’t even remember asking for it!
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CHART DEFENDER COVERHOLDER E&O AVAILABLE NOW!
Mark Lann Phone:
302-765-6070 Email: chart.eo@rockwoodinsurance.com
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ROCKWOOD - REPORT Continued From Page 19
ROAD MAP TO CAREERS IN INSURANCE Underwriters also play a role in providing service to clients by explaining policy wording to customers who may not be familiar with insurance terms or procedures. While the demand for underwriters has been on the decline in recent years, they still play a crucial role in ensuring profitability for a company. Insurance sales agents are responsible for bringing in new business and finding new markets to sell policies to. Insurance agents may work for an insurance carrier or for a brokerage firm who works to unite business between a carrier and an end buyer. They can also shop multiple insurance markets to find the most competitive price for their client. The job outlook for sales agents is predicted to rise by 5% over the next ten years to offer new job opportunities for sales growth and development within the industry. As such with any growing industry, marketing departments are very important in insurance. The new and www.chart-exchange.com
inexpensive way to market to potential clients is to take advantage of social media and related platforms that simply require a little time and effort to create content and engage potential new clients and agents. Another important division of the insurance industry is accounting side. Accountants play a role in running the numbers and keeping track of the cash flow to gauge how profitable the company is, and the demand for such employees is predicted to rise over the next ten years.
It is very important that we have people to review these forms to ensure that all companies and agents are working in harmony with state laws and guidelines. Job growth in this area is predicted to rise 7% over the next ten years, providing plenty of opportunity for recent graduates who are concerned with the compliance side of insurance.
As of 2020, there were 2.9 million workers employed in insurance Claims adjusters are also important to related fields, with the insurance resolve issues that can result from a industry bringing in approximately claim by looking at how much insurance $5.3 trillion USD of gross premiums companies should pay out when a worldwide. Especially surrounding loss occurs. These jobs are crucial to the Covid-19 pandemic, people rely on insurance to ease the financial uncertainties of what tomorrow As of 2020, there may bring. So, no matter what path we choose in our trek were 2.9 million through our careers, we can rest workers employed in assured that no matter what insurance related fields, direction we may go into, the with the insurance industry insurance industry presents many bringing in approximately opportunities to be explored.
$5.3 trillion USD of gross premiums worldwide.”
help negotiate disputes between the insurers and the insured when claims are filed. Another key component to the industry is legal and compliance officers. From working in the industry for a few months, I’ve learned about the importance of making sure all state forms are correctly filed when insurance coverage is placed with a non-admitted carrier in that state.
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REFERENCES Facts and Statistics: Industry overview. Insurance Information Industry. (2021). https://www.iii. org/fact-statistic/facts-statisticsindustry-overview#:~:text=The%20 U.S.%20insurance%20industry%20 employed,and%20reinsurers%20 (27%2C300%20workers). Statista Research Department. (n.d.). Topic: Insurance industry in the U.S. https://www.statista.com/ topics/3140/insurance-industry-inthe-us/.
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