They Have Employees Mar 2012

What is the one thing that almost all companies and organizations, whether they are a Mom & Pop store or a multi-million dollar corporation, have in common? They have employees.

Employees are the backbones of most business and without the trusted people on the payroll nothing would run efficiently. Unfortunately, while you cannot live without your workforce, they do leave you open to several different kinds of liability exposures. According to the latest annual report from the U.S. Equal Employment Opportunity Commission (EEOC) e mployment discrimination charges peaked to an all-time high of 99,947 in the most recent fiscal year. The EEOC filed 300 lawsuits in 2011 which resulted in $91 million of relief to its claimants.

The mishandling of an employee related situation could prove crippling to your business if you are not properly insured. It is reflected in the statistics that Employment Practices Liability (EPL) is not an unnecessary coverage.  One rationalization we hear most often for why businesses aren’t buying EPL is that they have exceptional managers who have great relationships with their employees -they would never bring a claim against us - but even the greatest managers can’t guarantee they will never slip up.

Here is an example of a situation where the manager thought they were making a decision based on employee performance, but by not examining all aspects of the situation, opened the company up to a claim:

Wrongful Termination & Retaliation: A male fry cook filed a workers compensation claim after burning his hand while making a batch of French fries. Shortly after returning to work, the employee was fired because of his repeated tardiness prior to the incident. Upon investigation, the employer did not have any documentation proving he was ever late. The employee settled out of court for $10,000 after $12,000 was spent in defense. (Claims example provided by United States Liability Insurance Group.)

Even if the employer above felt justified in firing the cook because he was consistently tardy, they are still out $22,000 for a claim where there could have been coverage with EPL insurance. BSR has access to several A+ rated carriers who provide excellent EPL coverage including numerous limit options with flexible deductibles, Third party liability coverage, Fair Labor Standard Act (FLSA) coverage, and several defense cost options. 

You can find applications and additional claims examples by clicking these links.

Email Efficiency Mar 2012

Someone with a seasoned career in the insurance industry may remember the day when insurance agencies, brokers and carriers only had one centralized email address. Surprisingly enough that was only about 15 years ago. In 2010 the average corporate email user sent and received about 110 emails per day, according to the 2010 Radicati Group for technology market research.  Statistics like these prove that not only is email not going away, but it is in fact becoming the number one way we communicate in business.
Email is such a quick way to communicate that it is easy to fall into a casual, conversational form when sending them, but maintaining professionalism in email correspondence is crucial. Poorly scripted emails not only reflect a negative image on your company, but it also opens you and your business up to serious liability.

Sounding professional in emails is as simple as following basic rules of grammar. As busy as everyone is, taking a few short moments to follow these rules will increase understanding from the recipient and boost the positive image of your company.

1. Start with a greeting. Something simple such as, “Hi, name of recipient”, begins the conversation in good faith and makes it personal. One thing to watch out for is to be 100 percent sure you spell their name correctly.
2. Always type in full sentences. Fragments make your statement or request very difficult to understand, and you will save yourself having to explain further if you take the time to compile your thoughts and execute them in complete sentences the first time.
3. Remember basic grammar rules:  Capitalize only the first letter of the sentence or proper nouns. Capitalizing all the letters in a sentence infers to the reader that you are shouting at them, and while you may feel like it, the best choice is to appear calm in your email. Punctuate appropriately by ending questions with question marks, put periods where sentences end and always use exclamation marks cautiously. Overuse of the exclamation mark can make your message appear demanding, angry or sarcastic when that may not be your intention.

 Email also increases your agency’s E&O exposure in two ways, it is permanent (even when you hit delete), and it is so easily misinterpreted, according to John Hager and Alison Holman’s article “E is for Exhibit” in the winter edition of Today’s Insurance Professionals.

Telephone conversations can be forgotten once the phone is disconnected, but the written word is haunting and in a court room every sentence could be up for analysis. Tone and inflection are much more obvious over the phone, but one misplaced exclamation mark or the transposing of a few words could change the entire meaning of an email to make it appear more hostile than it was intended.

Part of your company’s risk management tools can be to proofread your emails. Always imagine being your reader to make sure your point is clear. Remember that any email sent with your company email address could be a liability. Never send emails while you are angry with a client. You are putting yourself at risk for writing something that is accusatory, belligerent or even false simply out of anger. If you feel like you need to vent, type what you would want to say in a blank document and read it over to yourself two or three times. After this you can delete the document and come back to the issue in a few hours after you have calmed down.           

Most importantly never give personal or confidential information about any of your clients in an email. No matter how ironclad your securities are, putting the information out into cyber space is taking the risk of someone else intercepting it.  

Following these simple tips when composing your business emails will not only make you and your company well respected for professionalism, but will also mitigate any exposures you could have had by haphazardly sending emails. 

Spring 2012 Continuing Education Jan 2012

We are excited to announce our Spring 2012 Continuing Education schedule.  Come join us for Employment Practices Liability Insurance - Exposures and Coverages and our engaging new class, The Importance of Data Privacy & Security.  Each class is worth two hours of continuing education credit.  A continental breakfast, coffee, water, and soda will be provided.

These classes are being offered free of charge in the following locations:

March 22, 2012
IIAM Facility         
124 Riverview Drive
Flowood, MS 39232

April 26, 2012
IIAOK facility
9417 North Kelley Avenue
Oklahoma City, OK 73114

May 17, 2012
Hyatt Place Lexington
2001 Bryant Road
Lexington, KY 40509

Pick the location that works best for you and send in your registration form.  We’ll see you there!

Spotlight on Prevention Jan 2012

Q1. What is encryption?

According to a recent report from the Privacy Rights Clearinghouse, 80 percent of small businesses that experience a data breach go bankrupt or have severe financial difficulties within two years of the event.

Q2. What should be encrypted?

Any computer that touches any confidential or potentially sensitive information -- including emails -- should be encrypted. This includes laptops and other handheld devices.

Small businesses often think that it can't happen to them, but the facts show they are at big risk. According to Verizon's 2011 data breach study, 63 percent of breaches in 2010 involved organizations with 100 or fewer employees.

Q3. How is encryption done and what does it cost?

It is as simple as downloading encryption software! Encryption software is available on the internet for free or can be purchased in inexpensive packages from a variety of vendors. A few providers in this space are Symantec, Entrust, and Securence. For a business that uses any confidential or sensitive data, encryption is not a luxury but a necessity. Costs for an encryption software package geared to small businesses can start as low as $35 per year.

Q4. What can it save you?

Most states require companies to notify customers if there is even the potential that data has been compromised. (See state-by-state information on security breach notification legislation by accessing Beazley's Data Breach Map.) That cost alone can be substantial. Then there is the cost of credit monitoring for those whose data is breached, lawyers to help a business wade through the regulations and respond to a breach, potentially lost customers and, of course, the specter of legal liability.

As a result, data breaches are quite costly. The Ponemon Institute prices the fallout for a business from just a single lost or stolen laptop at $49,246. If the data on that laptop is encrypted, however, in many cases the loss can be a "non-event."

Businesses that encrypt personal information can still have data breached, but when data is protected by encryption, it is less likely to be exposed -- so an incident is less likely to escalate into a full blown data breach incident which can cost a small business, on average, nearly $200,000.

2012 Holiday Schedule

Back row from left: Janet Smith, Maddie Hall, Carolyn Jones, Vickie Harmon, Jennifer Vaughn

Front row from left: Sandy Hall, Kimberly Snavely, Cheryl Milliman, Dwayne Woods

New Year's Resolutions Dec 2011

According to Wikipedia, a New Year’s resolution is “…a commitment that an individual makes to one or more personal goals, projects, or the reforming of a habit.  A key element to a New Year’s Resolution that sets it apart from other resolutions is that it is made in anticipation of the New Year, and new beginnings.”

Almost anything that can help you bring about a positive change in yourself, your family, or your community can be expressed, and worked towards, as a New Year’s Resolution.  Regardless of the specific Resolution, there are few generalized steps that will help you reach your goals.

Set attainable goals.  When forming your resolutions, be sure that you are resolving to accomplish things that are physically possible to do within the time frame you set. 

Plan how you will accomplish the goal.  Breaking your goal down into several smaller steps allows you to tackle a large goal without being overwhelmed.  Also, by creating small steps, you will feel a sense of accomplishment when you reach each step, which is a motivator to keep going!

Strive to stick to your plan, but don’t beat yourself up if/when you slip.  If at first you don’t succeed, try, try again.  Then try, try, and try until the new activities become a habit.

Don’t try to do too much at once.  Change is hard.  Don’t make it any harder than it needs to be by resolving to change several things at one time.  If you’ve resolved to learn to play piano, don’t also resolve to take up jogging, and to volunteer more, and to be more assertive, and to… and to… and to….

Finally, give yourself adequate time.  It takes at least a month to create a new, simple habit, such as drinking more water.  It takes longer to form more difficult habits, such as practicing the piano for 30 minutes every day.  Be sure you are prepared to apply an extra layer of self-discipline until the new activity truly is a habit.

Have a safe and happy New Year.  Good luck in all you resolve to do!

Premium Financing 101 Nov 2011

An insurance premium finance company is a company, which enters into an insurance premium finance agreement with an applicant for insurance (the insured). A premium finance agreement is defined as an agreement by which an insured promises to pay to a premium finance company the amount advanced in payment of premiums in an insurance contract together with a service charge.

The need for the services of such companies arose quite naturally in our credit oriented society. Casualty and liability insurance are necessities for the property owner and often involve very large premiums. An individual or business faced with such a payment may find it more desirable to pay the premium in installments to prevent using personal working capital or tying up bank credit lines.

Even though some insurance companies provide facilities for paying these premiums in installments, they are usually limited in scope and are not offered by every company. Banks and other lending institutions usually do not finance insurance premiums due to the specialized handling required or because the insured does not have an established relationship with the institution. In addition, the insured finds it convenient to finance his premium in the same place where he purchased the insurance; that is, from the agent. Thus, premium finance companies offer a service which is not available from other sources and for which demand is growing daily by a public accustomed to installment buying.

Generally, state laws require licensing of premium finance companies, regulation of the finance charges and specific procedures for cancellation of insurance policies. Typically, state laws also require special disclosures in the finance agreement-some states going so far as to incorporate by reference, the disclosures required by the Truth in Lending Act.

Basically, an insurance premium financing transaction begins when a business (or individual) contacts their insurance agent about buying insurance. Often he will inquire about paying the premium in installments. If the insurance company has such a plan, the insured may make use of it. If not, the agent or broker will probably suggest that the insured finance his premium with an insurance premium finance company.

The insurance agent will prepare the finance agreement at the same time that he prepares the insurance contract. By the terms of the agreement, the premium finance company obtains a security interest in the unearned premiums payable under the insurance contract. In addition, the premium finance company obtains a power of attorney from the insured permitting it to effect cancellation of the financed insurance in the event the insured defaults in his installment payments.

After the customer signs the premium finance agreement the insurance agent sends the agreement to the premium finance company. The premium finance company will usually confirm with the insuring company that a policy has been or will be issued. The finance company then remits the full premium either directly to the insurance company or to the agent, who in turn sends it to the insurance company after deducting his commission. Once the finance agreement has been accepted by the premium finance company, the insured is notified of this fact and is sent a payment book or a monthly invoice.

If the insured fails to make payment, the premium finance company will send him a notice of default. This notice will state that if payment is not made within a certain period of time, the insurance contract will be cancelled. If this notice is not addressed, the finance company will, pursuant to its power of attorney direct the insurance company to cancel the policy. Any unearned premium on the policy will be sent to the finance company, which will apply this amount to the balance of the loan. The excess of any unearned premium over the loan balance will be returned to the insured. The insured however remains liable to the premium finance company for any deficiency in his loan balance in the event the unearned premium in insufficient to satisfy the outstanding debt.

Advantages of Premium Financing for Agency and Insured include:

AGENCY:

1. Enhances the insured's ability to pay their premiums
2. Reduces agency's accounts receivable
3. Non-recourse to agency
4. Agency receives l00% of their commission "up-front" since premiums are paid in full by the premium finance company.
   

INSURED:

1. Frees up funds and allows for better cash management
2. Premium payments are spread over time rather than in one lump sum
3. Provides an additional line of credit that doesn't impact business' original line of credit
4. Preserves working capital that can be used for other purposes.
5. Additional collateral is not required; the policies are the collateral
6. Attractive interest rates
7. Interest paid may be tax deductible
8. Non-reporting source of credit

'Tis the Season Nov 2011

We hope everyone had a wonderful Thanksgiving holiday!  Now that T-Day has passed, we begin our headlong dash into December and your holiday of choice, which includes the added bonus for each of us – Holiday Stress.
Most of us overcommit our time, money, and energy during the holiday season.  There’s always one more person to buy for, one more event to attend, one more charity to support.  Cutting back on the personal commitments can help reign in holiday stress.  Some additional tips include:

1. Have a positive attitude – a little optimism goes a long way toward keeping you feeling good and energized about the holiday events.
2. Try not to worry about things you can’t control – it doesn’t do you any good, and it doesn’t change anything, other than add to your stress.
3. Ask those around you for help – when friends and family ask if there’s anything they can do to help, say yes!  Sharing and caring are two themes of this season.  They apply not only to gifts and fun, but also to cleaning, decorating, cooking, and shopping.  Sharing the work required for the holiday gathering allows everyone to feel included.  Asking folks to help with one small part of the event makes it easier for everyone.
4. Exercise – even a little will help alleviate stress.  Don’t worry about interrupting your normal routine.  It will still be there for you in January.
5. Eat nutritious foods – this will help boost your energy to keep you going.  Enjoy the treats of the season, but moderate with selections from the crudité plate.
6. Avoid excessive caffeinated/alcoholic beverages – moderation in all things!
7. Rest – try to get at least 8 hours of sleep a night to recharge your body and mind.
8. Get a massage – taking an hour out for personal relaxation will help energize you to meet the tasks to come.

Stress is a part of life and will never be completely eliminated.  However, we hope these tips help you find ways to relax and enjoy the upcoming holidays.  After all… ‘Tis the Season!

Selling Your Company to Potential Hires Oct 2011

During the hiring process as you zero in on a prospective hire, it's vital that you are able to turn up the flame to bring the candidate's interest in your company to a boiling point. You know your company is a great place to work, but this has to be communicated to a candidate. Recognizing this process as a two-way street means putting on your sales hat and selling the virtues of your business to someone who you've determined would be a good fit. The object is to present your organization as an attractive destination and to convince people that they want to get onboard. Here are three methods for making potential employees want to work for you.

Push the Culture
To define your company culture, think about how workers interact and relate to each other in and outside of work. Your business culture can loosely be defined as more formal or laid back and the best way to sell it is to give concrete examples that define what you're all about. Go deeper than telling someone you have dress down Fridays and pizza parties. "Our company has a play hard mentality and we have fantastic end of the year theme parties," says HR Manager Rich Donaldson. "We've done an elaborate casino and even had a circus theme one year." If you are meeting with a potential employee who values more formal interactions, let them know that you participate in exclusive activities designed to enhance your company's reputation and image. These include local community business engagements, prestigious awards gatherings, and mentoring programs. Another distinction is whether you have more of a team mentality or promote a star individual-centric system.

Hidden Benefits
Keep in mind that a potential hire is thinking "What's in it for me?" Even after you've gone over your benefits package including medical, vacation, or a 401(k) program, there are hidden benefits. These can include flex time and work from home opportunities, maternity and childcare options, and continuing education opportunities. Many companies have programs in place that will fund all or part of job-related classes and workshops. Professionals prize job growth and bonuses, and the best way to present these opportunities is to give specific examples of individuals who climbed your company ladder with details on how they achieved it. The freedom to transfer to another department is another hidden benefit that may be thriving at your business. Let people in on the positives.

Be Candid
Although it seems to fly in the face of being upbeat, most prospective employees appreciate being briefed on challenges your company faces and how they would fit in. "When I was interviewing, the manager told me that they recognized their HR Department could be improved on and that whoever they hired would be a big part of that solution," says Donaldson. "It made me want to prove that I could help them." The idea is to paint an accurate picture of your company and then to move on to your vision of what you eventually want to be. Letting someone know that there's already a niche carved out for them with appealing and exciting responsibilities makes them feel respected and wanted.

After a Data Breach: Navigating the Road to Recovery Oct 2011

Each year, millions of records containing personally identifiable information are put in jeopardy by malicious and inadvertent data breaches.1 Given the volume of credit card and other "personally identifiable information" that passes through the hands of businesses, the question is most certainly not if, but when they will suffer a data security breach.

While businesses continue to beef up computer security, hackers continue to find ways to circumvent even the most sophisticated cyber-blockades. And the threat is not only hackers or rogue employees maliciously liberating private information: Data breaches occur when sensitive information is improperly disposed of and tossed in the trash or lost when a laptop or other portable electronic device is mislaid by or stolen from a well-meaning employee. This not only impacts customers, but can damage a company's reputation and bottom line.

Consequently, while tightening physical computer security and procedures to ensure a sound defense against potential security breaches, businesses must also focus on preparing to mount a sure and strategic offence when a breach occurs. The right response can go a long way to mitigating the damage an incident can cause to both a company's bottom line and brand reputation.

Where to begin?
Before a breach occurs, a company should be prepared with a plan that lays out the key steps and resources to deploy immediately when a breach is detected. Three steps are critical.

Step I
Pinpoint the problem. As soon as a breach is known or suspected, a business may be bombarded with questions and possibly adverse publicity. What actually happened? Almost universally, they will need to call on third-party forensic and technical experts to help determine the root cause of the breach and the extent of the damage.

Step II
Identify regulatory requirements. Almost every US state now has a statute outlining what a company must do in the event of a data breach, including specific requirements for notifying those impacted by the incident. (Check current notification laws by state at www.beazley.com/databreachmap.) The costs associated with these notifications can stack up fast when you consider that thousands - even tens of thousands - of customers need to be alerted. Outside of notifications, additional regulations are constantly being enacted, and place ever greater burdens on businesses handling personal information.

Negotiating the maze of applicable laws can be complicated. Business owners are wise to engage legal counsel to help them through the process and to ensure compliance with all applicable laws and regulations.

Step III
Nurture customer relationships. After individuals are notified that their data has been lost or stolen, they will understandably be concerned about the potential consequences of the breach. Putting their minds at ease is critical to maintain customer confidence and protect a businesses' reputation. According to a recent study, customer turnover in direct response to breaches is the main driver of data breach costs. 2 If a customer is really dissatisfied, they may sue.

Consequently, providing credit monitoring and other "recovery" assistance to mitigate the impact on a breach victim is critical. And it can be an expensive proposition. Studies by the Ponemon Institute show ex-post response cost - costs of credit monitoring, legal defense, identity restoration and other assistance to victims following has increased at double-digit pace in the past five years, reaching $51 per record in 2010.

Of course, the real key to an effective response is planning and preparation before a breach occurs. Insurance is a critical part of this preparation. Businesses may be surprised to learn that their current property and casualty policies do not cover costs and liabilities arising from data breach issues. These traditional policies are likely to extend to a small portion of the costs and liabilities at best. However, insurance expressly for legal liability and costs associated with a data breach has been available for some time.

The newest products on the market cover not only legal liability and response costs, they make comprehensive, strategic breach response essentially turnkey. Look for insurance that couples an insurance contract with services from best-in-class experts such as:

• forensic specialists to uncover exactly what happened
• privacy lawyers to assist in addressing the legal requirements of a breach
• notification service providers to print and mail letters to affected individuals
• credit monitoring and fraud response service providers

Legal liability insurance is just one part of the multi-faceted data security exposure. To be truly effective, any data breach insurance solution should address the broad spectrum of costs associated with an incident, help to rapidly mitigate the reputational damage caused by an incident - and relieve businesses of the administrative burdens of a breach. Fortunately, today's best-of-breed solutions do all that and more.

Make sure your business investments are better protected by initiating a solid data breach plan. A quick and thorough response to a security breach will protect your customer relationships - and your reputation.

Nick Economidis is an underwriter in the Technology, Media and Business Services Group at Beazley Group, and is based in Philadelphia, PA

Support Local Board Fundraiser for Agent (reprint from the TENNESSEE INSUROR) Jun 2011

The Insurors of Chattanooga local board has stepped up to raise funds for one of its longtime members. Andrew Stephens, formerly of Insurance Xchange in Chattanooga, was diagnosed with Focal Segmental Glomerular Sclerosis in 1996.  The disease causes scarring of the kidney until it no longer functions properly, and eventually fails completely.

He has been on kidney dialysis for seven years and on the transplant list for over five years. Two years ago, Andrew was forced to resign from his job to continue with more intensive treatments. He is close to being approved for a non-living donor kidney, but due to loss of his insurance he needs funds to ensure his acceptance. The amount needed is in the $10,000 to $15,000 range.

He has a donor who is matching up to $5,000 in donations, and the local board is asking Insurors members to help. If you would like to support this cause, please download and submit the form found at http://www.insurors.org/Content/NavigationMenu/PDF7/stephens_donor.pdf along with your donation.

The Need for Cyber Liability Education Jun 2011

The need for Cyber Liability coverage has steadily increased over the past few years.  However, understanding the coverage and nature of the exposure can be a bit difficult for insurance agents.  Because running most businesses efficiently requires technology, most business owners will always have some level of cyber exposures.  Insurance agents that learn this coverage and exposure will set themselves apart from their competition, and it can help them retain accounts as well as capture new business.

BSR offers continuing education classes for cyber liability and a sales- oriented class to help insurance professionals have a better understanding of the exposure.  The following article, written by Amy O’Conner and recently published in the Insurance Journal, highlights the fact that agent education is key to selling these policies.

Awareness of Cyber Liabilities Increasing but Agent Education is Key to Selling Policies

You can find applications and information on our Cyber Liability/Data Breach page.

EEOC Investigations - What every employer should know... Apr 2011

Private employers must abide by federal and state laws to protect their employees and potential employees from discrimination on many bases.  Race, color, religion, sex, and national origin are just a few.  Other discrimination issues can include, disability, age, genetics, retaliation, and Fair Labor Standards Act Violations. 

Current and former employees or even job applicants that feel they have been discriminated against on the aforementioned bases can file a complaint with either the EEOC (Equal Employment Opportunity Commission) or their state’s Human Rights Commission.  These government entities enforce federal and state laws that apply to businesses that have as few as 1 employee depending on the law. 

EEOC investigations generally requiring the employer to provide the following:

• Submit a statement of position
• Respond to requests for information
• Permit an on site visit
• Provide contact information for or have employees available for witness interviews

This process typically averages 10 months and insurance carrier on average pay $17,000 in attorney fees.

After the investigation is completed one or more of the following will be determined by the agency:

1. Letter of Determination stating the reasons the discrimination is believed to have occurred
2. Invite both parties to join the agency to resolve the matter through conciliation
3. Notice of Right to Sue if conciliation fails, the EEOC or HRC can file a lawsuit in federal court or allow the plaintiff to file their own suit within 90 days from the date of receipt
4. Dismissal and Notice of Rights Letter is given to the plaintiff who then has the right to file a lawsuit in federal court within 90 days

Statistics show that 55% of discrimination jury verdicts favor the plaintiffs! 

Purchasing an EPL policy with broad coverage can help assist and defend employers during this process.

Red Flag Rules: What does it mean for commercial businesses? Apr 2011

Effective Jan. 1st, 2011, the Red Flag Rules will be enforced by the Federal Trade Commission.  These rules require businesses and organizations that are deemed or described as “creditors” to develop and adhere to written programs to help detect, identify, and respond to warning signs (Red Flags) related to identity theft.  The purpose of these rules is to help prevent and combat the ever increasing problem of identity theft.  However, a new burden will be placed on small business owners. 

The program will help to flag situations where a person requesting credit could be using someone else’s identity that could potentially make a consumer a victim of identity theft.  Identity theft rules traditionally apply to situations where information has been hacked or stolen from a place of business.  The Red Flag Rules are intended to prevent imposters from using stolen data or information. 

Understanding the definition of a “creditor” can be challenging and recent changes by Congress have helped to clarify the definition.  According to The Clarification Act, “creditor” will apply to businesses that obtain or use consumer reports, directly or indirectly, in connection with a credit transaction, as well as other defined entities.

Cyber liability policies can be helpful to these types of businesses and industries.  For more information concerning the Red Flag Rule and cyber liability coverage visit our product page and listen to the podcast on Red Flag Rules courtesy of Beazley Insurance Company.

MIscellaneous Professional Liability - Many Classes and Exposures Mar 2011

Businesses today are looking for opportunities to survive and grow in the current economy; the result being that they often expand into areas that are not their expertise.  With these new opportunities, many additional exposures are created. These changes often result in the need for Professional Liability insurance where no exposure existed before.  Additionally, Professional Liability/Errors & Omissions coverage is frequently required in order to secure a contract with a larger corporation or government entities. 

Known and unknown changes in your insured’s operations can create liability for you as their insurance professional.  Many of the pitfalls of Misc. E&O insurance coverage lie in the definition of professional services.  The Miscellaneous Professional Liability policy will be triggered based upon the definition provided on the policy declarations page.  Miscellaneous Liability policies are designed to respond for errors or omissions as the result of Professional services provided to others for a fee. Additionally, with Miscellaneous Professional policies it is imperative to include all professional services the client provides in the definition.  Policy coverage will only be triggered by circumstances arising from the stated professional liability. These policies are designed to respond to financial loss incurred by the insured to a third party.  It is important that if your client also has professional exposure to bodily injury, the policy be tailored to meet those needs.

Title agencies, insurance agents, real estate professionals, architects and engineers are common classes that seek E&O coverage.  However, there are some not so common classes now in need of the coverage as well: auto repossession companies, property preservationists, party coordinators, wine consultants.  These “not so common” classes are often being required to purchase this coverage by financial institutions and government regulation.

As you can see there are many concerns in writing Misc. E&O coverage.  Please let us help you avoid these and many other pitfalls associated with professional liability.

For more information on this please contact one of our account managers.

Fair Labor Standards Act - What does it mean to a business today? Mar 2011

The Fair Labor Standards Act (FLSA) has been a part of U.S. legislation since 1938, however, business owners today still struggle with understanding the intent of this legislation.  Making sure employees are compensated hourly and classified correctly has continued to be a challenge for employers. 

Given our current economic environment and the unemployment rate, it is no surprise that employment discrimination class action settlements increased significantly in 2010 over previous years.  Wage and hour cases have yet to slow down and in many cases it is the main area of exposure for many companies, especially white collar businesses. The U.S. Department of Labor has recently increased the number of investigators under the Wage and Hour division to review businesses that may not be in compliance with FLSA.  In addition, they are considering measures to provide greater transparency to workers on the wages they are owed, especially in key areas such as minimum wage and overtime requirements. 

How does a business deal with these issues?  Small businesses can be at a real disadvantage with few resources to manage employment related issues. Employment Practice Liability Insurance coverage can help your insured manage as well as insure these risks.  Many EPLI carriers provide Risk Management tools to their insureds.  These services vary by carrier but most include a hotline and web-based tools.  We have found that many insured’s are unaware that they even have access to this help. 

The HR Risk Management tools can provide your clients with the information that they need to avoid FLSA claims by being in compliance with federal and state wage and hour laws.  Additionally, they can provide assistance should they be facing an audit with the labor department or a claim that arises despite their best efforts to avoid them.  There is no reason for your clients to weather this storm alone! 

Most businesses can obtain EPL insurance that will respond to Wage and Hour claims.  However, not all EPL insurance includes coverage for these type claims.  Many carriers will offer defense coverage but will exclude any payment of damages.  Many others absolutely exclude claims alleging violations of the Fair Labor Standards Act.  As an insurance professional this great variance in the coverage available can create an E&O liability for your agency.  We have access to markets that provide both indemnity and defense of FLSA claims and we can help you protect your insured’s assets while protecting yourself from E&O claims as well.

The Challenge of Selling Privacy & Security Coverage Feb 2011

Computer technology terms can be a foreign language to many of us.  We haven’t spent our time creating, building or working with the computer experts in the industry.  Most of us are just starting to be familiar with our PDA’s, laptops and desktop computers.  Don’t let that prevent you from selling this coverage to your commercial clients.

Many commercial businesses are aware of their exposures but have no idea that an insurance policy is available to assist them through the midst of a privacy breach.  Educating your customer regarding the exposure and how the insurance coverage can respond can be a fairly easy experience. 

These questions for your client may get them thinking about their exposure and the potential losses they could face:

• Do you collect personally identifiable information? (ie: credit card, driver’s license, social security number, health information)
• Do you have written information security and acceptable use policies?
• Do you have a data breach incident response plan?
• Did you know that 48 states (and the Federal government) have laws stating that in the event of a breach, businesses such as yours must notify any individuals whose information might have been compromised or released due to a data breach incident?

You can find additional information to assist you in educating your client on our website.  We offer a variety of brochures and claims examples.  Be sure to check out our newly added podcast, courtesy of Beazley Insurance, “From Zero to Covered: Accelerating the Sale of Information Security Insurance".

HR Tools are an Important Part of an Employment Practices Liability Policy Feb2011

Employment Practices Liability insurance has been available to commercial clients now for more than a decade.  Insurance professionals still find that it is a hard coverage to sell.  Are you and your commercial accounts aware that Human Resource Tools can be included at no additional charge when a mono-line employment practices liability policy is purchased?

Each mono-line EPL policy has different HR Tools and each carrier has different enhancements. Below are some highlights of helpful tools for managing employment related issues:

• Monthly newsletters highlighting current litigation and laws
• On-line training regarding sexual harassment
• Employee termination training
• Discrimination prevention
• Employee handbook guides
• Employment forms
• HR recommendations
• Hotline phone number: to assist with employment issues as they arise

It’s important to note which HR tools are included with the mono-line EPL policy you are quoting.  Making sure your client is aware that this is included at no additional cost can help sell the policy.  Employment practices liability policies have become more affordable today and by highlighting this important risk management tool your client may find this coverage an asset to their business.

Click here for an HR tools brochure.

Top 5 Things Affecting Excess & Surplus Market in 2011 Jan 2011

It has been a challenging few years for those in the excess and surplus (E&S) lines insurance market. An endless soft market, extreme competition from the standard markets, and a bad economy left wholesale and retail agents scrambling to retain business. Established wholesalers have also been facing competition from several new players.

New business has been even harder to come by, but for the brokers and agents who work hard enough there are plenty of opportunities out there, say underwriters.

E&S experts agree the market may not harden in 2011, but some stabilization is beginning to occur in terms of rates and capacity.

"The biggest surprise of 2010 in the wholesale world was the addition of new wholesalers in the business," says Maureen Caviston, president of Partners Specialty Group, a nationwide wholesaler. "I find that a reason to be optimistic about our business because they wouldn't be entering our business if they didn't think it was a great opportunity. Last year this time, I don't think we were predicting new players or the consolidation that occurred this year."

Based on events that happened in 2010 or are expected to occur next year, the top five areas for opportunity and difficulty in 2011 are:

1.) Network Security/Cyber Liability

Data breach and privacy liability cases are popping up all over the place for businesses of all kind, and insurers agree that there are plenty of opportunities for agents that become knowledgeable in this business now.

"Agents need to get comfortable selling cyber liability and data breach products," says Caviston. "I think every business needs it and it's a great door opener to understand that coverage or find a wholesaler that understands it and can help you sell it."

Janet Smith, president of Bailey Special Risks in Hendersonville, Tenn., says cyber liability and data breach insurance is the top product her office is seeing interest in. She says it can be difficult to sell this coverage during the tough economic climate, but not doing so can hurt agents later on.

"The biggest concern if you aren't talking about this is your E&O is exposed," says Smith. "If a small company has a security breach incident they cannot afford, they could come after you."

2.) Healthcare

There is uncertainty in the healthcare arena for 2011 and beyond, in light of healthcare reform and the legal challenges around it, according to Matt Anderson, senior vice president of Ryan Specialty Group.

However, agents and brokers who specialize in this area can be a great resource for consumers and medical professionals.

"With healthcare reform and medical professional liability, you are looking at implementing 40 to 50 million new patients into the system who were previously uninsured," says Anderson. "Whether it will ultimately pass is the question and only will time will tell, but with these new patients, there are many bad outcomes possible."

Anderson says there will be a need for more medical professionals to treat these people adequately. Technology will also become even more important to this sector because of the increase in patients and the use of web consultations and electronic storage of medical records.

In addition, there are issues around tort reform and the reimbursements of Medicare and Medicaid that will make a big impact on the market in 2011.

"Medical professional specific- agents must be tuned into what is going on and how the potential uncertainties with medical reform, tort reform and technology are going to affect and impact their insureds," says Anderson.

3.) Competition from Standard Markets

The standard markets have been a thorn in the side of the E&S industry the last few years. Because the standard market has been so soft and admitted carriers are desperate for business, they have been going after the E&S business. E&S experts expect that to ease somewhat next year, but not as much as everyone would like.

"I certainly expect competition and perhaps more competition from standard markets," says Anderson. "I think the standard markets have been doing a good job of underwriting in a disciplined fashion so they are underwriting profitably, so they can stay in the game. I expect they will be a competitor of mine."

"What I find is a lot of the standard carriers are willing to take on more difficult accounts," says Smith. "This has been going on for awhile, but we are seeing it more and more."

However, some lines of business have begun to see less competition from the standard markets, such as real estate, apartments on both the property and casualty side and some construction business, according to Caviston.

"There are more people analyzing their books of business and saying 'I won't write that business anymore' than there are people going after it," she says. "We are also seeing some non-renewals come out of the standard carriers, which is also a good sign because we haven't seen that in a few years."

David Miller, vice president of underwriting for W.A. Shickendanz Insurance Agency, Inc., agrees that they have begun to see less competition from the standard markets as well, particularly for manufacturing risks.

4.) Federal Legislation

In 2010, the Nonadmitted and Reinsurance Reform Act (ACT) was passed, which creates uniform surplus lines insurer eligibility standards and simplifies the ability to obtain and sell surplus lines insurance nationwide.

The National Association of Professional Surplus Lines Organizations (NAPSLO) was instrumental in the passing of the legislation and plans to spend a lot of time in 2011 educating people about the act.

"The challenge for us is that it appears the states are not sufficiently aware of what that change means for them and what they will need to do to change locally to comply with the legislation," says Letha Heaton, president of NAPSLO. "That means we have a lot of education to do and we need to be a resource for our members that need education."

5.) Economy

The E&S experts agree that an economic recovery is in full swing, and they expect 2011 will be a strong year for many of the E&S classes, as long as consumer confidence continues to improve.

"I'm optimistic. I think the worst is behind us," says Miller. "It was a soft market and a horrible economic market the last two years and we made it through and I think we came through stronger."

The economic recovery also opens up opportunities.

"Small business will begin to grow again and those [agents] who are experts in cyber liability, environmental and technology, and can deal with those exposures will be able to distinguish themselves," says Heaton.

Architects and Engineers Jan 2011

Design professionals are held to a higher standard and must show care when providing services for their clients.  It is crucial to take the same care when dealing with claims or potential claims.   By taking necessary steps during the initial discovery, design firms can help to mitigate impact on their finances and reputation.1

1. Reach out for guidance.  Contact your insurance broker immediately, when a claim is made or expected.  Including your insurance carrier’s legal counsel in the early stages can mitigate damages and help diffuse the situation.

2. Identify potential witnesses.  Consider all who have been involved or “touched” the project and could one day serve as witnesses. 

3. Marshall documents.  Documentation and project files should be in order and effectively tell the design firms story.  Formal document retention policies should be in place which will enable the firm to be fully prepared in this area

4. Preserve physical evidence.  Since projects move forward despite claims, collection of physical evidence by use of photographs or other means is crucial.

5. Impose a litigation “hold”.  Suspend your regular data destruction policies when litigation or legal document request is pending.

It is most important that a design firm is covered by a reputable insurance carrier with strong risk management assistance.   Pre-project contract assessments, contract resources, webinars and reference guides should be the standard when selecting professional coverage.

Data Breach - Is Your Business Covered? Dec 2010

Many businesses take the necessary steps to ensure the safety of their customers and staff by providing a safe and secure environment to operate their business.  Are you taking similar steps to protect your data?  The below bullets offer ways to not only keep your data safe, but also talking points to discuss with your clients about their current coverage, and their data loss exposures.

• Keep track of the laptops you use in your business and create best practices to keep them safe.   According to DataLossDB.org, stolen laptops constitute 20% of the total number of data breach incidents.  Use locks or restraints on laptops, and refresh password and encryption protocols.

• Ensure your data storage system has appropriate safeguards.  Using backup tapes/third party vendors/servers are common business practices to keep data safe.   Ensure any vendor in charge of storing your customer data has a tightly-buttoned security program in place.

• Be aware that customer information in your care could leave your small business vulnerable.  Credit card/Social Security numbers/personal health information/trade secrets/business information of others – all leave your business vulnerable.  Make sure your network security software is updated with the latest available patches.  Ensure your insurance will respond following a breach with credit file monitoring and other “post event” services.

• Stay up to date on state and federal data breach notification laws.  Make sure your insurance covers legal issues arising from failure to comply with state or federal breach notification laws or privacy policies.  It should also respond to  government mandated identity theft prevention programs (“Red Flag Rules”)

• Safeguard against insider negligence.  Usually not intentional, insider negligence accounts for a large portion of data breach incidents.  Ensure employees do not transfer sensitive information to work from their home computers, and that they properly dispose of paper records and computer equipment.  Implement data privacy policies and training for all employees to ensure they know how to properly handle your sensitive information.

This brief checklist can be helpful when discussing the need for Privacy and Security Insurance coverage with your clients.  Providing pricing for privacy and security insurance coverage is fairly easy and quick.  For more information on this exposure and coverage visit our website at www.bsrins.com or contact an account manager.

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Tough Times for Real Estate Dec 2010

Given the continued downturn in the Real Estate market, brokers are forced to trim expenses.  Even the most meticulous broker can make mistakes on transactions.

Errors that can trigger an E&O claim can include failure to notify of a needed inspection in a timely manner, incomplete or incorrect closing documents and misrepresentation.  Real Estate clients can be upset about decreasing values of property and can file suit against any professional involved in the transaction.  Many claims can take three to five years to develop, so mistakes on current transactions will not appear today.  Suits generally start with the real estate broker, regardless of how thoroughly and professionally the transaction was handled.

The cost to defend a typical case starts at $10,000 and has been known to reach as high as $30,000 excluding settlement. 

Liability Pitfalls for Real Estate Professionals*

• Misrepresentation
• Undetected pest damage, sewage, or septic problem
• Error in home inspection;foundation, ceilings, roof, leaky pool, etc.
• Legal error
• Failure to detect intentional misrepresentation by seller
• Error in zoning interpretation
• Error in comparative market research report
• Undetected pollution (in soil, in well water, etc.)
• Inaccurate appraisal
• Inadvertently offered bad advice
• Bank mortgage error
• Overlooked property easement
• Breach of confidentiality

Pricing for real estate brokers E&O and other real estate classes has become more competitive in recent years.  Providing comprehensive coverage along with prior acts is a priority for this class of business.

BSR offers real estate E&O coverage for entities through multiple markets.  For more information on this coverage, contact an account manager today.

Click here to go to the E&O page.

Are Your Non-Profit D&O Clients Aware of the New IRS Filing Requirement? Oct. 2010

A law passed in 2006 went into effect this year and can have serious consequences for the Directors and Officers of Non-Profit organizations.  Small non-profits with annual revenues of under $25,000 must now file forms or information postcards (Form 990-N or e-postcard) with the IRS.  Failure to comply with the requirement can lead to the revoking of tax-exempt status.  The loss of said status means that the organization will be forced to pay income taxes and contributors will no longer be able to deduct their donations. 

While no one knows exactly how many non-profits are likely to lose their tax exempt status due to this change in tax law, you can make sure your clients are not included.  This is a great opportunity to give some value added service to your client and help them protect themselves from potential claims.

For additional information regarding the tax requirements for your non-profit risks, check the IRS website at www.irs.gov/charities.  As always if we can be of assistance with this or any other matter, please contact one of our Account Managers.

Rising EPLI Exposures in These Tough Times Oct. 2010

Given the challenging economic times, businesses are faced with tough decisions in order to maintain their operations.  As represented by a Federal Unemployment Rate hovering at 9%, many American businesses have included employees in their cost cutting measures.  While these staff reductions may be necessary and often imperative, they open those businesses to increased Employment Liability.

With the obvious rise in unemployment, it should be no surprise that Employment Practice claims are on the rise.  In addition to the frequency of EPLI claims, 2009 saw the highest Discrimination Compensatory Awards ever with Median Damages coming in at $317,032 (as reported by EPLI: Jury Award Trends and Statistics 2010 Edition).

Compounding the liability exposure for businesses are recent activities of both Federal and State governments.  The Labor Department recently hired 250 new investigators with the sole function to enforce wage and hour laws.  Also, Tennessee’s Supreme Court recently issued two rulings, the effects of which will likely make it more difficult to have a case dismissed with a summary judgment (Kinsler v. Berkline and Gossett v. Tractor Supply Co).

Given the exposures faced by employers today, it is hard to imagine going without EPLI coverage.  When you combine the protection provided by an EPLI policy with the benefit of the HR Tools that most carriers provide it should make for a much easier sell to your clients.  Having access to web-based and hotline services will help your insured’s minimize their exposure to loss while providing the comfort of knowing that they are protected should a loss occur.

BSR, Inc has multiple carriers that can provide coverage on both a monoline basis and packaged with D&O and Fiduciary coverage based on the needs of your client.  Additionally, we have an online rating portal with four different markets to provide you instant access to monoline EPLI quotes.

For more information on this or any of our other products, please contact one of our Account Managers.

Cyber Liability: Protect Your E&O and Offer the Coverage Sept. 2010

Computers, electronic data and the internet are not going away.  Businesses today are embracing technology in order to run their operations more efficiently but most are unaware that insurance can be purchased to protect them from various claims.

Federal and local governments have multiple laws now that require businesses to protect personal and financial data that is obtained during their normal operations. Businesses have large amounts of this data stored on their servers - just waiting for hackers to steal.   Additionally, portable electronic devices, which may contain large amounts of data, leave places of business everyday and can be lost or stolen.  Web sites provide more information which can expose a business to copyright infringement or intellectual property laws. 

So you think only large corporations have real exposure to Cyber losses, right? Many cyber attacks today are targeting smaller businesses because they lack expensive security systems and in-house IT departments.   The hacker community has sophisticated technology which is easily obtained and makes hacking easier and less dangerous than other types of crimes.

If your insured experienced a cyber attack or data breach, would they know what to do? Would your client expect coverage from their GL Policy?  Are you concerned now that you haven’t offered cyber liability coverage?

Cyber liability is very affordable today.  Minimum premiums start around $1,500 for a $1,000,000 limit depending on the class and revenues of the business.

Policies are typically written on a packaging approach which can include:

Network Liability - can cover transmission of malicious code to other networks, use of your network to harm other third parties, cost to reissue credit & debit cards and coverage to third parties when their confidential information is compromised as a result of a breach of your network.

First Party - restoration to the insured’s system, extra expense to remain functional, computer forensic consultants to retrieve data lost or damaged as a result of a network security breach.

Web site Liability - coverage for defamatory content on insured’s site and copyright infringement.

Supplemental Payments - can cover notification costs, credit monitoring, and costs of a Public Relations professional.

Still need more information to offer this coverage?  Recent studies indicated the cost per record of a data breach averages $204 each.  Ask your insured how many records they are receiving.  One thousand records could add up to $204,000 in a hurry.  Given the low cost of the premium in relation to the exposure, the decision to purchase the coverage should be an easy one.

At the very least, have your client complete the appropriate application.  The questions will require information on how data is used and stored, as well as how your client keeps this data secured.  It may help them assess their exposure and decide if they are taking the necessary steps to prevent a cyber disaster.

Need an application? Click Here

For more information on this coverage, feel free to contact an account manager today.

800-768-7475
Kerri Shaw x15
Victoria Stead x20
Cheryl Milliman x12

Healthcare Industry Investigated by Labor Department Sept. 2010

If you are not offering Employment Practices Liability coverage with FLSA coverage, think again.  The Labor Department has recently hired an additional 250 wage-and-hour investigators.  These investigators are specifically targeting the health care industry, however, don’t be surprised if your industry is targeted next.

EPL coverage can vary by carrier so it is important to make sure the coverage you offer includes defense and indemnity for the Fair Labor Standards Act.  This coverage is offered on a sub limit basis starting at $100,000.   One of our carriers will offer higher limits on a surplus lines policy depending on class and employee size.

Another important service that is included with EPL coverage is HR tools or hotline.  This provides a risk management tool for the insured to refer to when employment related issues develop.  Having the ability to speak with an experienced professional in the Human Resources field can reduce potential claims and assist the insured with general questions regarding employment relations and operations.  Some carriers provide only one hour free and then charge for additional minutes; others include unlimited time within the policy premium. 

Today it’s easy to offer pricing prior to completing an application.  BSR has four markets that you can access through our web site to obtain an indication.  All that is required is number of employees, class of business and location of operations.  Minimum premiums start at $975 for $1,000,000 limit.

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Prefer to submit an application? Click Here