Monthly Archives: July 2014

Does My Business Need Terrorism Coverage?

terrorismOnce again, the Terrorism Risk Insurance Act (TRIA) is due to expire at the end of this year. Those who want the coverage renewed argue that the government should protect its citizenry from attack, and when they aren’t successful in this endeavor that they finance any necessary recovery. After all, TRIA a direct response to 9/11 impacted multiple lines of insurance coverage. As a result, today’s Workers’ Compensation policies are automatically surcharged without a choice on the part of the purchaser.

Those against the renewal of TRIA argue that this coverage is just another means of increasing revenue for the insurance companies and in all the years since its inception it has never had to pay off! So what is so terrible about having money in the bank? Such a loss doesn’t cost very much until the day it occurs and at that point the losses are incalculable.

I guess that as a resident of New York City, I totally support the renewal of this coverage because I saw first-hand just how devastating the losses were to both individuals as well as our business community. A non-renewal of this coverage in the current economic climate seems irresponsible on the part of the government as well as the insurance industry. The exposure to loss is catastrophic and, therefore, it makes sense for the public and the private sector to have a safety measure in place without having to wait for authorities to declare a state of emergency. Students of history recognize and accept the fact that often “ history does repeat itself”. I believe that TRIA is the best investment our industry can make in support of individuals and groups alike. If you have an opinion, we’d like to hear it. Feel free to comment, we’d love to hear from you.

By Karen Skoler, CPCU

How Can We Communicate More Effectively With People Who Want To Purchase Life Insurance?

secrets-to-life-insuranceRecently, I read an insurance periodical that stated that over 15 million people in the United States are really interested in purchasing life insurance. They understand the value of having it and what it could mean to their families if they were to become disabled or die.

However, believe it or not, they can’t make it all the way through the purchasing process.

Why?

People are confused by the terms and may be too embarrassed to constantly stop their agent and ask for an explanation of what a specific term means. Apparently, this is not only in the case of life insurance, but other financial products as well as, for example, long term disability. I, personally, can certainly understand not buying something I don’t understand!

When consumers were polled as to why they never made the decision to buy the product(s) under discussion , they used words like unclear, puzzling, mystifying, complicated and frustrating—-in other words, not a positive experience! Furthermore, the subject matter itself deals with subjects most people shy away from discussing to begin with. Death and illness, under the best of circumstances, can be tough subjects to explore. However, using conversation that is easy to understand, explaining the who, what, where, when and the how of the coverage, might help to put a more positive spin on it.

Using terms like “whole life vs. term life, cash value, dividends, universal life, accidental death benefit, accelerated death benefit, contingent beneficiary, waiver of premium, preferred risk, sub-standard risk, and conversion privilege” only serve to complicate matters. Many people would rather just forget about the whole thing and move on to a more pleasant subject. That won’t help them when the time comes to face the eventualities of life.

My husband sold life insurance for some fifty years before he became too old and too sick to continue his career. I distinctly remember accompanying him to the homes of potential clients who had invited us over for a social evening during which the conversation segued into a discussion of the need for life insurance. One of the great gifts my husband possessed was the ability to tell stories. He didn’t hesitate to use this when illustrating what could happen to a family with no life insurance. By the time he was finished even I wanted to purchase the product!

So if you appreciate the value of life insurance, find yourself an agent who is willing to explain, in detail, the types of coverage available given your budget, health, age, family expenses and make sure that you find out everything you need to know on the subject. Heaven forbid that the worst case scenario occurs and you need the coverage, you will have prepared yourself with something to help you over the rough time that is bound to ensue.

By Karen Skoler, CPCU

Can Paying Your Bills On Time Actually Get You Lower Premiums On Your Insurance?

paying-bills1Everyone wants to save money on their personal insurance premiums. Many consumers ask, what is the connection between my credit history and the cost of my auto and homeowners coverage?

It is true that some insurance companies rely much more on such information than others. However, besides age, gender, marital status and driving history, age of a home, age of a roof, construction of a house and prior claims history, a credit report tends to provide a snapshot of someone’s sense of responsibility, restraint, and temperance. Of course, this is all subjective and that is primarily what the continuing argument over using credit report data is all about.

Nobody ever said that the use of credit scores wasn’t controversial, because it most certainly is! Keep in mind that insurers are not looking for prosperity in these reports, but want to know how long you’ve been managing your credit and just how well you have done over a specific period of time.

Incidentally, someone with a less than perfect driving record and a pristine credit report could wind up paying less for their auto insurance than someone with a pristine driving record, but a blemished credit report.
The reason?

The insurance industry, over time, has developed a sense of how credit scores and insurance risks effect one another and they utilize this relationship to determine whether or not they want to take someone on as an insured.

So, buyer beware, if you are in the midst of having some credit issues, now is probably not the best time to shop your insurance. Concentrate on improving your credit and then go shopping. Undoubtedly, you will be glad that you did!

By Karen Skoker, CPCU

Does Your D&O Policy Cover You For Workplace Violence

typesofworkplaceviolenceLately, we have been hearing a lot about violence throughout every strata of our society. One of the places we try not to think about encountering violence is in the workplace. Statistics show that the average loss associated with workplace violence is $65,000. In these days of non-profits having to struggle for every penny to make their programs work, such a cost could be devastating.

To help non-profits deal with the possibility of such a loss, coverage for just such an occurrence is now being included in many Not-For Profit Directors & Officers Liability policies. One such carrier provides $100,000 worth of coverage as an enhancement on their policies and they even include an option to increase this sublimit to $250,000. Make no mistake, this is most certainly a growing concern to the industry.

Why bother to obtain this coverage? Because it can help pay for expenses such as these following a claim:
• Lost income and extra expenses suffered by the non-profit entity;
• Lost wages of employees, counseling of staff and security so that your employees can go on with the business they were hired for;
• Expenses paid to a public relations firm to help defray the cost to assist in restoring a tarnished public image.

We sincerely hope that you never, ever have to use such coverage, but it is comforting to know that it is there should you need it.

– Karen Skoler, CPCU

Does My Business Need Management Liability?

GenLiability_dt_21134708Whether you are a public company or a private corporation, management liability is an important policy to have in place as part of your overall insurance program.

So, what constitutes management liability?
This is a policy which protects an entity, “the company”, its directors and its officers, its shareholders, if publicly held, and its assets from a variety of claims. The company is protected against claims alleging mismanagement and the directors and officers are protected against claims resulting from decisions they make. More importantly, the assets of the company as well as the board members, personally, are protected in cases of civil suits brought about by potential litigants.

Another component of Management Liability is Fiduciary liability which protects against claims alleging mismanagement of employee benefit plans.

Other inclusions which are often found in management policies include employment practices liability. This covers suits brought about by employees, independent contractors and/or third parties alleging wrongful acts, such as discrimination, mental anguish, harassment, and an assortment of workplace difficulties which can, in some cases, even include “bullying.”

Most important, however, is the defense provided by such policies, since we all know that even if allegations are proven to be false or fraudulent, the cost of defense can impact heavily upon a company’s bottom line. Some carriers include defense costs within the limits of liability and some provide for defense costs outside the limit. Given the choice, you would probably want to opt for the latter.

Deductibles can range from $5,000 to $50,000 and the higher the deductible, the less costly the policy.

If you have any doubt about the necessity of having such coverage in place, just take a look at some of the claims resulting from lay-offs, unlawful termination, sexual harassment, whistle-blowing, etc.

When asked to join a Board of Directors, the first question you should ask is what type of insurance does the company have in place to protect your interests? You are sure to be glad you did should a claim be brought during your tenure on the board.

– Karen Skoler, CPCU

Should I Report A Claim Or Pay Out Of Pocket?

tree-branch-pierced-roof-after-killer-storm-ripped-through-evansville-boonville-areaDear Sherri, A tree on my property fell and damaged my roof. The estimate to repair the roof is approximately $2,900. Since I have a $2,500 deductible, should I report this claim to the company? – Timberrrr in Park Slope

Dear Timberrrr,
Well, now we have confirmation that “A Tree Grows in Brooklyn”. Or at least it did! That being the case, I wouldn’t submit a claim. Now, before you say, “that’s why I have insurance!”, let me explain. You have insurance for MAJOR property and liability claims. This small claim of only $400 after the deductible would be on your record for the next 5 years. If, God forbid, you have another claim in that same year due to a severe storm, your insurance company may non-renew your policy. Now you have to buy a more expensive policy and that will quickly eat in to those $400 you saved on your roof due to the claim. The point is, call your insurance agent to discuss it before you take any action and determine what is in your best long-range interest.

Are Non-Profits At Risk For Cyber Liability Claims?

cyber_liabilityAs more and more information about Cyber Liability becomes available, it is apparent that any non-profit entity or social service organization may be at risk for data breach claims. Especially if the organization has:

• A computer network that links several offices
• Handles confidential information belonging to its members
• Collects and transmits personal identifiable information for any reasons
Why now than ever before?
• Because of our highly technological society
• AND traditional insurance policies (such as General Liability, Crime, and Management Liability) typically DO NOT provide protection against the risk of data breach. This is a huge problem!

The Solution
Purchasing a Cyber Liability policy is a solution which provides coverage for both third parties (those whose personal information is hacked) and first parties (those whose systems are compromised by hackers).
Cyber policies can cover:
• Defense costs
• Coverage for fines or penalties levied in violation of HIPPA Laws
• Customer notification expense
• Customer support and credit monitoring
• Public relations, advertising and forensic expenses.

As for the organization who suffers the actual breach, they can purchase multi-media coverage, business interruption coverage, and coverage for extortion expenses. Additionally, risk management services are included to educate the purchaser regarding current privacy state and federal laws, compliance material, training tools and procedures all of which act to reduce the exposure to data breach and their resulting third party lawsuits.

Interestingly, coverage under Cyber Liability is not limited to a breach of an organizations computer files. Coverage is often extended to include paper files as well as portable devices such as blackberries, lap tops, Ipads as well as data that are in the custody of vendors, outsourcers or independent contractors.

What types of claims have been reported to date?
• An organization providing medical care and support services to people living with Cancer and related illnesses suffered a burglary at their office. An employee’s laptop was taken and contained client data such as names, dates of birth, client status, and other sensitive information;
• A public advocacy group’s website was hacked. As a result, the hackers actually published a data base consisting of the names, addresses, telephone numbers, email addresses, medical conditions, reports and other personal details gathered by the organization;
• An employee of a charity left an encrypted tape in his backpack. The backpack was stolen at gun point and personal information identifying the largest 100 donors over the past decade was confiscated along with their personal information;
• An employee of a “YMCA” was arrested for trying to sell names, addresses and social security numbers of residents to furnish information for the purposes of applying for phony credit cards under assumed names;
• An employee at a women’s shelter for victims of domestic violence was caught with a list of women seeking services through various agencies connected with the shelter. The employee was trying to post the current whereabouts of many of these women to an online site. Had she been successful, she would have compromised the safety of the shelter’s former inhabitants and their children.
……And the list goes on and on.

It just goes to show that you don’t have to be a major retailer to become the victim of a cyber attack. So it follows that you don’t have to be a major retailer to consider purchasing the coverage.

By Karen Skoler, CPCU