Property & Casualty Blog: Covid-19’s Impact on D&O Coverage

Among its many other ripple effects, the Covid-19 pandemic may impact Directors and Officers (D&O) liability insurance, as public and private companies fight to stay afloat amid calamitous economic conditions.  There is no assurance that shareholders, employees and customers will let companies – or their offices – off the hook, even for a worldwide health disaster.

Coronavirus-related “event-driven” litigation and shareholder derivative suits have begun to arise, alleging “a series of false and misleading statements and concealed material information” about its health and safety protocols and its alleged “role in facilitating the transmission of the virus” against cruise line provider Carnival Corporation.  Also, Sorrento Therapeutics and its officials have been accused of making misleading comments about a COVID-19 “cure” that led to a near-tripling of its share price, before the company recanted and modified its claims.

As a result, according to industry experts, both public and private companies will need to pay close attention to their D&O insurance.  Said one such expert, “Many small businesses have had to close their doors temporarily because of the coronavirus, and they lack the surplus of capital needed to sustain their operations through those mandatory closures.

“We’re seeing a lot of smaller retail businesses and restaurants suffering from economic hardships, which can lead to possible D&O lawsuits down the line. The larger publicly traded companies will likely weather this storm a bit better because they have a higher surplus of capital to see them through. However, if they fail to weather the storm and they end up closing some of their operations, we anticipate that there could be an uptick in D&O lawsuits related to mismanagement.”

Terms of D&O coverage may need to be adjusted, as well, with the proviso that – given the radical economic shifts that Covid-19 has introduced – companies may have to contend with higher premiums for similar coverage, or lower coverage at the same premiums.  The variables continue to multiply.

Yet regardless of how all of this plays out, companies still need to provide the best D&O coverage possible to protect their officers and top managers.  The professionals at The Reschini Group can expertly guide any public or private company through the forest of potential pitfalls and existing or new opportunities to meet this critical objective.  Contact us today to learn more.


Copyright 2021 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

Benefits Blog: Dealing with Identify Theft

The very act of conducting business in the modern world by necessity includes collecting and holding personally identifying information such as Social Security numbers, credit card numbers, bank account numbers, and the like about customers, employees and business partners.

Should this information fall into the wrong hands, it could put these individuals at risk for identity theft.

Medical identity theft is a growing concern for individuals and employers, as well, with more than 2.3 million Americans becoming victims annually.  This represents an average loss of more than $22,000 per incident in terms of lost employee productivity and through the fraudulent overuse of health plan benefits.

The financial impact of medical identity theft can include lost money, unpaid bills, collection agency letters, and tarnished credit reports. Finding and correcting records can be a lengthy process, often taking as long as a year to complete.

The messy consequences of inaccurate medical records and insurance claims can be both a time-consuming nuisance as well as a threat to the victim’s health. The medical repercussions for medical identity theft victims can include misdiagnosis, conflicting prescriptions, missed symptoms and other harmful consequences.

If personal information – whether of a medical nature or not – becomes comprised, it can easily and quickly result in meaningful harm to a person or business.  If identity theft is suspected, call your local police department immediately.  If your local police department is not familiar with investigating information compromises, contact the local office of the Federal Bureau of Investigation (FBI) or the U.S. Secret Service. For incidents involving mail theft, contact the U.S. Postal Inspection Service.

If account access information (credit card or bank account numbers) has been stolen and you do not maintain the accounts, notify the institutions that do so that they can monitor these accounts for fraudulent activity.  If you collect or store personal information for other businesses, notify them of any information compromises immediately.  If the information involved the improper posting of personal information on your website, immediately remove the information and contact the appropriate search engines to ensure that they do not archive personal information that was posted in error.

If names and Social Security numbers have been stolen, contact the three major credit bureaus for additional information and advice. When calling, advise the credit bureau that you will also be alerting the affected parties to place a fraud alert on their files.

For more information on how to protect your business from potential security breaches, contact The Reschini Group.  We have additional risk management tools to assist you in handling identity theft.


Copyright 2021 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

The Reschini Blog: The Scope of Cybercrime

“Cybercriminals and certain foreign nations are not only at the door; they are inside our walls, and often have been for quite some time.  Defending our most valuable information should be of paramount importance for our citizens, businesses, and academic institutions.”  – Matt LaVigna, President and CEO, National Cyber Forensics Training Alliance (NCFTA).

While the fact of cybercrime can hardly be news, the scope of it recently made worldwide news, as multiple departments across the federal government were discovered to have been infiltrated by foreign actors, sometimes for months before being detected.  In that time, untold volumes of sensitive documents impacting U.S. homeland security, relations with countries around the world, financial and diplomatic secrets, and much more may have been compromised, perhaps permanently.

The same dynamic impacts businesses of all sizes, across all industries and locations.  Malicious actors with an abundance of skill and lack of ethics can many times forge their way into an organization’s cyber presence.  Their ability to monetize information can be just as shocking in its effectiveness as the way they break codes and seize data.

The NCFTA reports that, while cybercrime is a relatively underreported event, consider that over the last five years, the Internet Crime Complaint Center received more than 1.7 million complaints and, in 2019 alone, reported losses exceeding $3.5 billion.

The coronavirus pandemic’s impact on cybersecurity may be that, as pressure increases on budgets as companies recover, resources dedicated to cyber protection get reduced.  Sharing information among peers about cybersecurity best practices helps, as do specific tactics to protect software, hardware, employee activities, regular backups and encryptions.

But not to be forgotten in this collection of cybercrime defense is having adequate and appropriate insurance coverage.  As the types and levels of potential damage from cybercrime can vary, so do the insurance options available to organizations.

The professionals at The Reschini Group can assist you in evaluating your exposure to cybercrime, and in fashioning a coverage package that keeps you and your organization safe.  Because the threat is everywhere, and growing.


Copyright 2021 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

The Reschini Blog: Preparing for Covid Claims

Covid-19 has placed a spotlight on insurers, who have been preparing for the waves of inquiries and claims across multiple categories of coverage.

Many insurers, following the 2003 SARS outbreak, introduced exclusion clauses for communicable diseases and epidemics/pandemics into most non-life products such as business interruption and travel insurance.

Because business interruption policies usually pay out only if physical damage occurs to an organization’s assets or operations, coronavirus-related claims may not be covered.  Claims and related litigation have already begun and the marketplace is reacting.

Travel insurance may offer cover if a customer is diagnosed with the virus before or during a trip, but not for travel cancelled because of the pandemic.  The lone exception would be if the policyholder has taken out premium “any cause” cover, but very few do.  The pandemic may actually spur increased interest in such premium policies.

Two major areas to watch are trade credit insurance and workers compensation.

Trade credit insurance covers businesses against debts that can’t be paid by customers or suppliers.  Small-to-medium sized businesses could be hit hard due to supply chain disruption and a crunch in business levels. The cost may hinge on the extent of the pandemic and government restrictions on non-essential businesses.  Claim activity in this sector could spiral quickly.

Regarding workers’ compensation, claims could rise from employees asserting they were not adequately protected by their employers against exposure to the virus brought about by their normal working duties.  Insurers offering this type of coverage to employers should prepare for this level of increased activity.

The professionals at The Reschini Group can guide you in determining how best to safeguard your organization against exposure in the wake of Covid-19.

Source: https://home.kpmg/xx/en/home/insights/2020/03/do-insurers-have-covid-19-covered.html


Copyright 2021 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

Sidelined: Loss-of-Use Coverage for Vehicles

We come to rely on our machines – so much so, that we take them for granted, and when they wear out, malfunction, or just plain quit, our reaction can be surprise, anger, or even despair.

Imagine having a vehicle – a truck or car – serving as your business’ sole lifeline to your enterprise.  Making customer deliveries, transporting products as part of the manufacturing process, making sales calls.  Everything depends on that vehicle working reliably and safely, every day.  Then, suddenly, it’s out of service.

Whether for days, weeks, months, or permanently, the loss of that vehicle means loss of your income.  That’s where loss-of-use coverage comes into play.

Loss-of-use coverage essentially provides reimbursement if a vehicle is out of commission while undergoing repairs after an incident. This coverage is not included in policies by default, such as liability coverage.  A loss-of-use claim follows the original accident claim, meaning that your policy would pay for substitute transportation costs. Insurers usually set their own coverage limits by either capping the number of days or providing a per-diem amount for reimbursements.

The terms of a loss-of-use policy can be tricky.  It’s one thing to recover the cost of renting a replacement vehicle.  It’s another to recover lost income.  If your vehicle is your lifeline to making a living, it’s worth checking into what a loss-of-use policy can do for your business.

The professionals at The Reschini Group can help.  Contact them today.


Copyright 2021 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

 

Source: https://www.thezebra.com/auto-insurance/insurance-guide/what-is-loss-of-use-coverage/

Benefits Blog: Are you an ALE?

The definition of what constitutes an “applicable large employer,” or ALE, can have a significant impact on how that enterprise must arrange for and cover the cost of health care coverage.  Be sure you know whether your organization qualifies as an ALE in the eyes of the federal government, especially the Internal Revenue Service.

The Affordable Care Act (ACA) requires ALEs to offer affordable, minimum value health coverage to their fulltime employees or pay a penalty. This employer mandate is also known as the “employer shared responsibility” or “pay or play” rules.

To qualify as an ALE, an employer must employ, on average, at least 50 full-time employees, including full-time equivalent employees (FTEs), on business days during the preceding calendar year. All employers that employ at least 50 full-time employees, including FTEs, are subject to the ACA’s employer shared responsibility rules, including for-profit, nonprofit and government employers.

A Full-Time Employee is an individual that works, on average, 30 or more hours of service each week. For this purpose, 130 hours in a calendar month is treated as the monthly equivalent of 30 hours of service per week.

Equivalent Full Time Employee counts are determined by looking at part-time employees. Hours worked by employees with fewer than 30 hours per week must be counted—and then divided by 120 per month—to determine the number of FTEs. The number of FTEs is then added to the actual full-time employee count

As you might expect, the definitions surrounding what constitutes affordable, minimum value health coverage can become intricate and technical, as well.  But if you’re an ALE, it’s your responsibility to know the rules and abide by them.

Contact the Benefits Team at The Reschini Group for more information and guidance.


Copyright 2020 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

Testing Cyber Security Systems

Cybercrime is set to cost companies more than $6 trillion per year by 2021.  That’s trillion, with a T.  Nobody wants to be in that pile.  That’s why testing your systems for cyber security makes a lot of sense.

Three main tests are used to safeguard businesses against cyber attacks:

Vulnerability scannersThis approach assesses the computers in your business network for weaknesses: entry points that can be exploited by cybercriminals hoping to gain access to your data.  Vulnerability scanners act like hackers to investigate these potential vulnerabilities. The aim of a vulnerability scan is to build a strong sense of the state of your cybersecurity setup from an internal and external perspective, identify weaknesses, and improve your security to better protect against these risks.

Penetration testingHere, cybersecurity experts purposefully ‘attack’ a network to review how secure it is. It simulates a real attack, but in a controlled way. As such, the term ‘ethical hacking’ is sometimes applied to penetration testing. While vulnerability scans highlight any weaknesses in your business network, penetration tests take this a step further by determining what kind of malicious activity is possible if those weaknesses are exploited.

Program update checksThese are important because software that is not regularly updated gives attackers more chances of infiltrating your system and your business.  Some program settings may allow automatic software updates, and others will ask your permission. All users should regularly check to ensure that all available updates are accepted (or scheduled for a convenient time) on every device they are responsible for.

The continuously and rapidly evolving cyber world offers tremendous competitive advantages and cost efficiencies.  The dark side of cyber operations moves just as swiftly, though.  Check the status of your cybersecurity insurance by contacting the professionals at The Reschini Group.


Copyright 2020 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

Excerpted from: https://blog.avast.com/cybersecurity-tests

How to Recover from a Cyber Attack

Recovering from a cybersecurity incident can be a daunting undertaking, especially if you’ve lost information that’s critical to running your business. But you can limit the damage to your company and your reputation by developing a solid recovery plan in advance.

Conduct a full, encrypted backup of your data on each computer and mobile device at least once a month, shortly after a complete malware scan. Store these backups at a protected, off-site location. Save your encryption password or key in a secure location separate from where your backups are stored. Many software applications will allow you to encrypt your backups.  With your backups in place, if a computer breaks, an employee makes a mistake, or a malicious program infects your system, you’ll be able to restore your data. Without backups, you’ll have to manually recreate your business information from paper records and employee memory.

It’s essential to back up data such as:

  • Word processing documents and electronic spreadsheets
  • Databases, especially customer relationship management (CRM), financial, human resource (HR), and accounts receivable (AR)/payable (AP) files
  • Product design and manufacturing data
  • Other operational technology (OT) data such as machine and process condition monitoring and analysis
  • System logs and other information technology (IT) information

Don’t worry about the software applications; just focus on the data. Store your backups on an external USB hard drive, other removable media, or a separate server. Use caution when selecting a partner if you decide to store your data online and encrypt all data prior to storing it in the cloud.

Hard-drive backups should be large enough to hold all your monthly backups for one year. Create separate folders for each computer so you can copy your data into the appropriate folder on the external drive. After your backups are complete, test them immediately to ensure your efforts were successful.

Like flood or fire insurance, you can purchase cyber insurance for your facility. These services can help you recover from an information security incident more quickly and effectively and may cover the cost of:

  • Cybersecurity expertise to assist in identifying the extent of damage caused
  • Consultation to help investigate the incident and report it to the appropriate authorities
  • Loss of revenue due to downtime
  • Legal fees, fines, and penalties incurred

The Reschini Group can help you navigate the ever changing world of cybersecurity. Contact us today to discuss your situation.


Copyright 2020 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

Excerpted from: https://www.nist.gov/blogs/manufacturing-innovation-blog/how-recover-cyber-attack

You’re Liable: Trends in EPLI Claims for 2020

Available either on its own or as part of a package policy, employment practices liability insurance (EPLI) protects against employee lawsuits alleging inappropriate or unfair acts – any one of which can bring a business to its financial knees.

Any employee – whether former, current or potential – can file suit if he or she asserts that the employer has violated any of an assortment of legal rights.  Examples include:

  • Sexual harassment. Those accused can be senior managers, supervisors, co-workers or even non-employees.
  • Discrimination. Defined as unfair treatment based on religion, age, ethnicity, gender, disability, skin color, sexual orientation or race.
  • Wrongful termination. According to the Equal Employment Opportunity Commission (EEOC), this is the most common claim brought against employers.

Most EPLI policies will reimburse a company for the costs of defending a lawsuit in court, as well as for judgments and settlements. The policy usually covers legal fees, regardless of the suit’s outcome.  With respect to Wage and Hour coverage, most coverage endorsements provide “Defense only” at a sublimit between $100,000 and $500,000.  Damages usually consist of back wages, overtime pay etc., which fall to the employer to pay, not the insurance company.

Some of the most prevalent EPLI-related claims seen in 2020 include:

Retaliation Claims on the Rise – More than half of EEOC claims filed in recent years have involved claims of employer retaliation against an employee.

The #MeToo Movement Leads to Increases in Sexual Harassment Claims – These types of cases represent roughly one-third of all EEOC claims files, including a steady rise in LGBT-based charges.

The Gig Economy Leads to More Wage and Hour Litigation – Fair Labor Standards Act lawsuits have risen dramatically, mostly involving worker classification disputes.

The Gender Pay Gap Remains – The U.S. Bureau of Labor Statistics states that women working at full-time salaried jobs earn 81% of what men earn.

Marijuana Legalization Having an Increased Impact – At least 11 states permit recreational marijuana, with more allowing medical marijuana, as of January 2020.

It’s vital to know that EPLI policies are not all-encompassing. The costs of an employee lawsuit can be emotionally and financially devastating, with the average cost to defend and settle a case averaging $160,000.

Understand your EPLI coverage.  Get advice on steps to avoid some of the trends identified here.  The professionals at The Reschini Group can help.  Contact them today.


Copyright 2020 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

Source: https://amtrustfinancial.com/blog/insurance-products/top-trends-employment-practices-liability-claims

Benefits Blog: Technology-Based Enrollment

Open Enrollment generates enormous work for companies and some confusion and stress for workers hoping that their benefits choices for the coming year are the best ones for them and their families.

Technology-based enrollment, however, can alleviate a sizeable portion of those issues, saving employers time and money, while making the process more efficient and user-friendly for HR departments and employees.  Here’s how:

  • Every step of the benefits management process is automated, eliminating the need for paper-based processes and improving efficiency and accuracy.
  • Online enrollment lowers the overall cost of providing services to employees by eliminating the costs of distributing and collecting paper enrollment packets. It also shortens the enrollment cycle.
  • Online enrollment enables employees to self-enroll in benefit programs, review their benefit data and report life-event changes.
  • Employees can choose plans based on eligibility criteria and can compare costs and coverage of previous elections against new offerings.
  • Elections can be automatically applied to employee records.
  • Employees receive written confirmations detailing their elections, and can easily view and update their records and plans.
  • Human Resources can check the status of enrollment in real time and may be able to generate detailed reports regarding the cost of employee benefits.

At the same time, some employees may be intimidated by an online option, preferring more one-to-one assistance.  Also, some employees may not make informed benefit decisions if they are only advised via the computer and are not provided personalized recommendations.

To encourage as much online enrollment as possible:

  • Introduce new software and train employees before Open Enrollment begins.
  • Use existing resources (company’s intranet, bulletin board postings or newsletter) to promote technology-based enrollment.
  • Encourage management to promote the use of technology-based enrollment to increase employee buy-in.
  • Establish online communities or blogs where employees can discuss successes and problems they are having while enrolling.

Technology is a tool that can offer impressive advantages, but people must feel comfortable and safe for an employer to make the most of the opportunity.  Talk with the Benefits Team at The Reschini Group for help in fashioning an Open Enrollment program for your particular situation.


Copyright 2020 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.