The Reschini Blog - Page 2 of 15

Leaders Cite Major Cyber Concerns

While a majority of U.S. business executives rank cyber risk as their top organizational concern, fewer than half have adopted even basic preventive measures, according to results of an industry survey.

Cyber risk has risen to become the top concern in the U.S. and few risk experts believe governments are equipped to handle the threat. Among 1,200 executives who participated in the survey, 59% said they worry some or a great deal about cyber, and 25% said their company has been a cyber victim, up 150% since 2015.

The top three specific concerns cited by survey respondents included security breaches, system glitches, and unauthorized access to bank accounts.

Yet only 61% of these leaders said they felt extremely or very confident in their company’s cyber practices. The survey found that 43% said their company has a written business continuity plan in the event of a cyberattack, and 48% said their company has adopted multifactor authentication to mitigate the risk.

The need for heightened attention and action regarding cyber protection has only increased with the rise of employees working remotely. An easy way to begin would be to require simple preventative measures, such as requiring multifactor authentication – as in using a one-time dedicated passcode as a secondary verification of identity – to gain access to websites or files.

They say the first step in getting yourself out of a hole is to stop digging. The wise business leader acknowledges and addresses issues before they become problems. If the state of your cyber security preparation is troubling you, don’t wait to find out how problematic it can become. Invest the time and resources to fortify your protection now.

Contact the professionals at The Reschini Group for guidance on cyber security.

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.businessinsurance.com/article/20210929/NEWS06/912344857?template=printer

New Address, New Terms of Coverage?

As a business gains traction, achieves success and expands, it can outgrow its original location and facilities, making a move to a new, larger site necessary.

Don’t forget to consult with an insurance professional as part of researching that new location, however. The results can be either advantageous or detrimental to your ongoing financial health.

Any change in how a business operates – including where it positions its facilities, equipment, and personnel – requires an analysis of coverage. Physical location can be impacted – either positively or negatively – by factors including:

The likelihood of severe weather, like hurricanes, windstorms, tornadoes, or hail.
Does the property sit in a floodplain? Is flooding becoming more common due to the effects of climate change?
Whether the area shows a statistical trend regarding crime, vandalism, and theft.
The condition of existing infrastructure, such as plumbing, electrical wiring, and HVAC, as these help to determine the chances of causing fire or water damage.

Similarly, a new service or line of products pursued as part of a business’ expansion plans also introduce new variables in terms of number of employees, equipment needed, safety procedures, and much more – all of which need to be incorporated into a package providing the best insurance coverage possible.

“New” in the world of business should mean “better.” To safeguard your investment on the road to improving your overall performance, make sure you have the right insurance protections in place, as well.

Contact the professionals at The Reschini Group for more information.

SEC Watching Cyber Protections Closely

The U.S. Securities and Exchange Commission has begun to crack down on companies it deems to have breached securities laws by making inadequate cybersecurity disclosures, a policy that shows no sign of slowing down.

As a result, businesses have been advised to establish clear internal communications strategies on cybersecurity issues, and to also examine their directors and officers liability insurance and cyber liability policies to determine whether they have adequate coverage if the issue arises.

Some SEC cyber disclosure actions have resulted in penalties of up to $1 million. Industry experts attribute the increased attention on cyber intrusion preparation to the reality of cyberattacks in the economy today, and an alarming lack proper preparation on the part of organizations to fight it.

The agency will likely become even more aggressive in the future, as the SEC is expected to have less tolerance for organizations that don’t take the basic steps to protect sensitive data.

Companies should develop incident response plans that include how to deal with a vulnerability’s discovery before it becomes an intrusion, then make sure the infrastructure is in place to address that vulnerability. Organizations need to get a clear picture of their own cybersecurity environment and communicate regularly about roles and responsibilities. Also, a well-constructed D&O policy should cover investigation costs in the event of a breach.

It pays to invest in solid cyber security plans, whether or not the SEC or any other entity is looking for problems. It’s just good business these days. Contact the professionals at The Reschini Group for guidance on cyber security.

Source: https://www.businessinsurance.com/article/20210831/NEWS06/912344206?template=printart

Changes Afoot: Who Is Really Covered on Your Policy?

In life, as in business, education, and any large organization, the only thing that doesn’t change is that everything changes.

New operational subsidiaries are formed, people in key leadership positions leave and arrive, school districts see new clubs and sports teams rise and fall. Nothing wrong with any of this. It’s the natural ebb and flow. It’s how the world works.

The sticky part comes in, however, when you assume the insurance coverage in place extends to any or all of those modifications. Or worse, you don’t think of that question at all.

The old adage about why it’s dangerous to assume certainly applies. A policy is written at a moment in time, under specifications and structures that exist then. Unless provisions have been written into that policy to automatically include new elements to the entity being covered, they may not – and probably will not.

Always err on the side of caution and communication. Check with your insurance provider any time the terms, shape, size, or any other variable impacts your organization. When changes are afoot, make sure you know who and what is covered under your policy – so that any necessary adjustments can be made before costly surprises arise.

Contact the professionals at The Reschini Group for more information.

Benefits Blog: HSA 2022 Compliance Limits

A clear understanding of the rules up-front helps to avoid problems down the road. This can be especially true when it comes to government programs and the tax implications they represent. For example – Health Savings Accounts (HSA), a popular type of tax-advantaged medical savings account available to individuals enrolled in high deductible health plans (HDHPs).

Individuals can use HSAs to pay for expenses covered under the HDHP until their deductible has been met, or they can use their HSAs to pay for qualified medical expenses that are not covered under the HDHP, such as dental or vision expenses.

HSAs provide a triple tax advantage—contributions, interest and earnings, and amounts distributed for qualified medical expenses are all exempt from federal income tax, Social Security/Medicare tax and most state income taxes. But because of an HSA’s potential tax savings, federal tax law includes strict rules for HSAs, including limits on annual contributions and HDHP cost sharing. These limits, which can vary based on whether an individual has self- only or family coverage under an HDHP, include:

The maximum HSA contribution limit;
The minimum deductible amount for HDHPs; and
The maximum out-of-pocket expense limit for HDHPs.

Eligible individuals with self-only HDHP coverage will be able to contribute $3,650 to their HSAs for 2022, up from $3,600 for 2021. Eligible individuals with family HDHP coverage will be able to contribute $7,300 to their HSAs for 2022, up from $7,200 for 2021. Individuals who are age 55 or older are permitted to make an additional $1,000 “catch-up” contribution to their HSAs. The minimum deductible amount for HDHPs remains the same for 2022 plan years ($1,400 for self-only coverage and $2,800 for family coverage). However, the HDHP maximum out-of- pocket expense limit increases to $7,050 for self-only coverage and $14,100 for family coverage.

Employers that sponsor HDHPs should review their plan’s cost-sharing limits (minimum deductibles and maximum out-of-pocket expense limit) for 2022. Also, employers that allow employees to make pre-tax HSA contributions should update their plan communications for the increased contribution limits.

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

Benefits Blog: Health FSAs Feature Carry-Over Option

Sometimes, leftovers can be more satisfying than when the meal was first served. You somehow appreciate it more, when you can enjoy something that wasn’t used up the first time.

Now, that satisfying carry-over feeling extends to Health Flexible Spending Accounts (FSA).

A Health FSA is an employer-sponsored account that employees can use to pay for or reimburse their qualifying medical expenses on a tax-free basis, up to the amount contributed for the plan year. Typically, Health FSAs are subject to a “use-or-lose” rule that generally requires any unused funds at the end of the plan year (plus any applicable grace period) to be forfeited.

As an exception to this use-or-lose rule, however, employers may allow participants to carry over up to $500 in unused funds into the next year to pay or reimburse medical expenses incurred during the entire plan year to which it is carried over. Also, the carry-over amount does not count toward the Affordable Care Act’s (ACA) limit on employees’ salary reduction contributions to a health FSA.

For this purpose, the remaining unused amount as of the end of the plan year is the amount unused after medical expenses have been reimbursed at the end of the plan’s run-out period for the plan year. For plan years beginning on or after Jan. 1, 2022, the limit on Health FSA carryovers increases from $500 to $570.

The IRS has provided the following rules for Health FSA carryovers:

A Health FSA may:
- Specify a lower amount as the maximum (and has the option of not permitting any carryover at all);
- Permit carryovers only if it does not also incorporate the grace period rule. The carryover may be used to pay or reimburse medical expenses incurred during the entire plan year to which it is carried over;
- Limit the ability to carry over unused amounts to a maximum period (for example, a health FSA can limit the ability to carry over unused amounts to one year); and
A cafeteria plan is not permitted to allow unused amounts relating to a health FSA to be cashed out or converted to any other taxable or nontaxable benefit.

See how the Health FSA carry-over option can apply to your business and provide an added benefit for your employees. Contact the Benefits Team at The Reschini Group for more information.

Restricting the Flow: Cyber Attacks Impact Supply Chain

Cyber threats have the potential to impact all facets of the supply chain.

An attack against the Colonial Pipeline in the U.S. in May 2020 illustrated how vulnerable critical infrastructure can be as an attractive target for cybercriminals and even other nations hostile to the American economy. The attack – made possible through a single password breach, as disclosed later – shut key conduits delivering fuel from Gulf Coast refineries to major East Coast markets.

According to industry sources, shipping and logistics companies saw three times as many ransomware attacks in 2020 as in 2019. A spike in malware, ransomware, and phishing emails during the pandemic helped drive a 400% increase in attempted cyberattacks against shipping companies through the first months of 2020, as well.

While shipping represents a major element of overall supply chain operations, the looming threat of cyber attacks remains just as present and prevalent in every other link of that chain.

As the world economy continues to regain its footing in the wake of the coronavirus pandemic, supply chain issues have contributed to inflationary pressures and the less-than-rapid recovery many had hoped to see. Preventing malicious actors from further disrupting the supply chain remains a key priority.

Cybersecurity impacts every business, regardless of size or location or industry. Make sure your business deploys all preventative measures possible, and have regular reviews of your cybersecurity insurance coverage to protect against potential losses.

Contact the professionals at The Reschini Group for more information.

Waiver of Subrogation: Added Protection, Added Costs

Subrogation occurs when an insurer pays their insured for a loss caused by a third- party, and then attempts to recoup their payout by making a claim against the responsible third party.

For instance, if you’re in a car accident and it was the other party’s fault, your insurer pays for repairs to your vehicle and then pursues the other person’s insurance company for the loss. In your insurance policy, which is a contract between you and your insurance carrier, you agreed to allow the carrier to subrogate for any paid loss.

In a typical business contract, one business may ask another business to waive its rights of subrogation because the first business doesn’t want to be held responsible for a loss. When agreed to in such a contract, it prevents the business, and its insurer, who has agreed to waive their right, from seeking a share of the damages paid from the other party, even if they are at fault.

But be aware that when a business gives up its right to recover any losses, it increases the insurer’s risk and transfers responsibility to the insured and its insurer for sometimes uncontrollable losses. This can lead to unnecessary loss history and potentially increased insurance costs.

Conducting regular contractual reviews with your insurer agent can easily point out these exposures and help to you to understand and sometimes negotiate this requirement out of your risk profile.

Contact the professionals at The Reschini Group for more information.

Rates Held Ransom: Increased Breaches Impacting Coverage Terms

As instances and the scope of ransomware events, and losses associated with them, continue to increase, some insurers are tightening their standards in providing cybersecurity coverage.

According to industry experts, insurers are restricting capacity and implementing increases in premiums to accommodate for businesses not keeping pace with the threat of malware and other online attacks.

Ransomware events began to climb in 2019, leading to the continuing response by insurers. On average, insurance rates have doubled since the surge in attacks began, with rising reinsurance costs expected to drive those rates higher.

Insurers certainly are not abandoning cyber liability coverage, but recognize the underlying issue is that while coverage may be adequate today, the rapidly evolving risk means it may not be adequate tomorrow.

Business owners can help their own cause by implementing as many precautions against online attacks as they can, which can contribute to keeping their insurance costs manageable under the circumstances.

The digital universe has opened a world of opportunity for businesses to grow, expand, and succeed. But the flip side of all that openness poses a threat that continues to grow, expand, and succeed as well.

Managing that risk will be a challenge for business owners and their insurers for the foreseeable future. Eternal vigilance may be the price of liberty, but it’s also the price of keeping your data protected online.

Contact the professionals at The Reschini Group for more information.

Contractual Review: Ensuring that Your Coverage is Enough

Interesting how commitments can accumulate when you’re not looking, isn’t it?

You click on a subscription, you agree to get regular updates from a retailer, you cite a preference for a particular brand. And before you know it, funds have been deducted from your checking account, your email inbox gets choked with nuisance messages, and you can’t seem to escape online ads for something for which you are rapidly losing interest.

What began innocently can end up causing issues that can cost time, money, and patience. The same principle applies to insurance coverage, as a business enters into contracts with partners, suppliers, and vendors.

These agreements are recognized as necessary to conduct, expand, and protect a business’ interests. They make complete sense, and can serve a vital purpose. But caution must be taken when entering these arrangements, to make sure that the business’ insurance policies extend to the terms of any new contracts.

Terms and conditions of insurance coverages are written to specific situations – situations that may take on new wrinkles and specifics under new contractual agreements. The last thing any business owner needs or wants is to discover down the road that a partnership or other agreement under contract with another entity means an existing policy does not offer sufficient coverage.

Working with your insurance provider to conduct a contractual review represents an easy way to safeguard against getting caught in such a scenario.

Contracts and agreements accumulate over time. That’s smart business, typically. Benign, even. Just make sure that your insurance coverage keeps up with the terms of any new situation, to avoid costing you time, money, and patience.

Contact the professionals at The Reschini Group for more information.