National Risk Management and Associates

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Protecting Small Businesses from Cyberattack

Courtesy of iii.org
More than half of U.S. small- and medium-sized businesses (SMBs) experienced a cyberattack within the past year, yet only 14 percent of businesses felt prepared and protected, according to a recent white paper from the Insurance Information Institute (I.I.I.).

The white paper, Protecting Against #Cyberfail: Small Business and Cyber Insurance, examines how insurers are addressing the threat cyberattacks and data breaches pose to SMBs through a combination of innovative insurance products, risk management techniques and employee training.

“Insurers foresee substantial growth coming from the SMB segment, as these companies become aware of the possibilities of liability, especially a breach and resulting response costs arising out of the possession of private data,” said Sean Kevelighan, chief executive officer, I.I.I.

The vast majority of cyber insurance claims involved the loss, exposure, or misuse of sensitive personal data. About half (48 percent) of the data breaches of U.S. small businesses in 2016 were caused by either a negligent employee or contractor, according to the Ponemon Institute.
U.S. insurers reported collecting $1.35 billion in direct premiums written for cyber insurance in 2016, according to the National Association of Insurance Commissioners. Stand-alone cyber insurance policies accounted for $921 million of that total (68 percent), while the balance came primarily from endorsements on either a small commercial or businessowners policy (BOP).

Typical cyber-related policies cover the costs arising from either a cyberattack or a data breach, such as responding to lawsuits, repairing damaged infrastructure, and paying the ‘ransom’ demanded by cyber extortionists, among other potential exposures, such as business interruption expenses.

“Creating an affordable product that SMBs will be willing to buy is a key component in the insurance offering. Since different industry sectors represent different levels of exposure, pricing will vary depending on the type of SMB,” the white paper, co-authored by James Lynch, the I.I.I.’s chief actuary, and the I.I.I.’s Claire Wilkinson, a consultant, states.

The I.I.I. has a full library of educational videos on its YouTube Channel.

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How to Safeguard Valuable Jewelry

Courtesy of iii.org

A standard homeowners policy includes coverage for jewelry and other precious items such as watches and furs. These items are covered for losses caused by all the perils included in your policy such as fire, windstorm, theft and vandalism.

However, there are special limits of liability for certain valuable items, such as the theft of jewelry. To keep coverage affordable, because jewelry can be easily stolen, the standard policy has a relatively low limit of liability for theft—generally about $1,500. This means that the insurer will not pay more than the amount specified in the policy for any given piece of jewelry or other valuable item.

If you own valuable jewelry, furs, collectibles or other items that would be difficult to replace, there are two ways you can increase coverage:

  • Raise the limit of the liability. This is the less expensive option; however, the amounts are still limited for both individual pieces and overall losses. For example, limit to a claim for the loss of an individual piece could be $2,000, with the overall limit at $5,000.
  • Purchase a floater policy and “schedule” your individual valuables. While more costly, this option offers the broadest protection for valuables. Floaters cover losses of any type, including those your homeowners insurance policy will not cover, such as accidental losses—say, dropping your ring down the kitchen sink drain or leaving an expensive watch in a hotel room. Before purchasing a floater, the items covered must be professionally appraised; you can ask your insurance professional to recommend a reputable appraisal firm.

 

Next steps: Don’t know what you own? Here are good reasons to take a home inventory.

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Saving Money on Car Insurance

Courtesy of iii.org

The price you pay for your auto insurance can vary by hundreds of dollars, depending what type of car you have and the insurance company you buy your policy from. Here are some ways to save money.

1. Shop Around

Prices vary from company to company, so it pays to shop around. Get at least three price quotes. You can call companies directly or access information on the Internet. Your state insurance department may also provide comparisons of prices charged by major insurers. (State insurance department phone numbers and Web sites can be found on the back cover.)

You buy insurance to protect you financially and provide peace of mind. It’s important to pick a company that is financially stable. Check the financial health of insurance companies with rating companies such as A.M. Best (www.ambest.com) and Standard & Poor’s (www.standardandpoors.com/ratings) and consult consumer magazines.

Get quotes from different types of insurance companies. Some sell through their own agents. These agencies have the same name as the insurance company. Some sell through independent agents who offer policies from several insurance companies. Others do not use agents. They sell directly to consumers over the phone or via the Internet.

Don’t shop by price alone. Ask friends and relatives for their recommendations. Contact your state insurance department to find out whether they provide information on consumer complaints by company. Pick an agent or company representative that takes the time to answer your questions. You can use the checklist on the back of this brochure to help you compare quotes from insurers.

2. Before You Buy a Car, Compare Insurance Costs

Before you buy a new or used car, check into insurance costs. Car insurance premiums are based in part on the car’s price, the cost to repair it, its overall safety record and the likelihood of theft. Many insurers offer discounts for features that reduce the risk of injuries or theft. To help you decide what car to buy, you can get information from the Insurance Institute for Highway Safety (www.iihs.org).

3. Consider Higher Deductibles

Deductibles are what you pay before your insurance policy kicks in. By requesting higher deductibles, you can lower your costs substantially. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15 to 30 percent. Going to a $1,000 deductible can save you 40 percent or more. Before choosing a higher deductible, be sure you have enough money set aside to pay it if you have a claim.

4. Reduce Coverage on Older Cars

Consider dropping collision and/or comprehensive coverages on older cars. If your car is worth less than 10 times the premium, purchasing the coverage may not be cost effective. Auto dealers and banks can tell you the worth of cars. Or you can look it up online at Kelley’s Blue Book (www.kbb.com). Review your coverage at renewal time to make sure your insurance needs haven’t changed.

5. Buy Your Homeowners and Auto Insurance From the Same Company

Many insurers will give you a break if you buy two or more types of insurance. You may also get a reduction if you have more than one vehicle insured with the same company. Some insurers reduce the rates for long-time customers. But it still makes sense to shop around! You may save money buying from different insurance companies, compared with a multipolicy discount.

6. Maintain a Good Credit History

Establishing a solid credit history can cut your insurance costs. Most insurers use credit information to price auto insurance policies. Research shows that people who effectively manage their credit have fewer claims. To protect your credit standing, pay your bills on time, don’t obtain more credit than you need and keep your credit balances as low as possible. Check your credit record on a regular basis and have any errors corrected promptly so that your record remains accurate.

7. Take Advantage of Low Mileage Discounts

Some companies offer discounts to motorists who drive a lower than average number of miles per year. Low mileage discounts can also apply to drivers who car pool to work.

8. Ask About Group Insurance

Some companies offer reductions to drivers who get insurance through a group plan from their employers, through professional, business and alumni groups or from other associations. Ask your employer and inquire with groups or clubs you are a member of to see if this is possible.

9. Seek Out other Discounts

Companies offer discounts to policyholders who have not had any accidents or moving violations for a number of years. You may also get a discount if you take a defensive driving course. If there is a young driver on the policy who is a good student, has taken a drivers education course or is away at college without a car, you may also qualify for a lower rate.

When you comparison shop, inquire about discounts for the following:*

Antitheft Devices
Auto and Homeowners Coverage with the Same Company
College Students away from Home
Defensive Driving Courses
Drivers Ed Courses
Good Credit Record
Higher deductibles
Low Annual Mileage
Long-Time Customer
More than 1 car
No Accidents in 3 Years
No Moving Violations in 3 Years
Student Drivers with Good Grades

*The discounts listed may not be available in all states or from all insurance companies.

The key to savings is not the discounts, but the final price. A company that offers few discounts may still have a lower overall price.

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Identity Theft & Fraud 2018

Courtesy of iii.org

The scope of identity theft

The 2017 Identity Fraud Study, released by Javelin Strategy & Research, found that $16 billion was stolen from 15.4 million U.S. consumers in 2016, compared with $15.3 billion and 13.1 million victims a year earlier. In the past six years identity thieves have stolen over $107 billion.

Following the introduction of microchip equipped credit cards in 2015 in the United States, which make the cards difficult to counterfeit, criminals focused on new account fraud. New account fraud occurs when a thief opens a credit card or other financial account using a victim’s name and other stolen personal information.

Identity theft and fraud complaints

The Consumer Sentinel Network, maintained by the Federal Trade Commission (FTC), tracks consumer fraud and identity theft complaints that have been filed with federal, state and local law enforcement agencies and private organizations. Of the 3.1 million complaints received in 2016, 1.3 million were fraud-related, costing consumers over $744 million. The median amount consumers paid in these cases was $450. Within the fraud category, debt collection complaints were the most reported and ranked first among all 30 types of complaints identified by the FTC. They accounted for 28 percent of all the complaints reported to the FTC and 66 percent of all fraud complaints. In 2016 thirteen percent of all complaints were related to identity theft. Identity theft complaints were the third most reported to the FTC and had increased by more than 47 percent from 2013 to 2015 but fell about 19 percent from 2015 to 2016.

Identity Theft And Fraud Complaints, 2013-2016 (1)

Cybercrime

As businesses increasingly depend on electronic data and computer networks to conduct their daily operations, growing pools of personal and financial information are being transferred and stored online. This can leave individuals exposed to privacy violations, and financial institutions and other businesses exposed to potentially enormous liability if and when a breach in data security occurs.

Interest in cyber insurance and risk continues to grow as a result of high-profile data breaches and awareness of the almost endless range of exposure businesses face. A 2016 data leak, called the Panama Papers in the media, exposed millions of documents from the electronic files of Panamanian law firm Mossack Fonseka. In 2015, two health insurers, Anthem and Premera Blue Cross, were breached, exposing the data of 79 million and 11 million customers, respectively. The U.S. government has also been the target of hackers. Recent breaches at the Federal Deposit Insurance Corp. and the Internal Revenue Service follow multiple breaches in May 2015 of the Office of Personnel Management and the Department of the Interior where the records of 22 million current and former U.S. government employees were compromised.

Cyberattacks and breaches have grown in frequency, and losses are on the rise. Breaches hit a new record in 2016, soaring to 1,093, up from 780 on 2015, but the number of records exposed fell to about 37 million from 169 million in 2015. The majority of the data breaches in 2016 affected the business sector, with 494 breaches or 45.2 percent of the total number of breaches. Medical/healthcare organizations were affected by 377 breaches (34.5 percent of total breaches) while the education sector sustained 98 breaches (9.0 percent of all breaches) and government/military breaches totaled 72 (6.6 percent), according to the Identity Theft Resource Center.

The Center says there have been 1,339 breaches in 2017 so far (as of December 27), surpassing the 2016 record of 1,093 breaches. There were 174 million records exposed so far in 2017. The business sector accounted for 51 percent of the 2017 breaches and 91 percent of records exposed. These figures do not include the many attacks that go unreported. In addition, many attacks go undetected.

In 2014 McAfee and the Center for Strategic and International Studies (CSIS) estimated annual global losses from cybercrime fall between $375 billion and $575 billion. The costs of cybercrime are growing. An annual study of U.S. companies by the Ponemon Institute cites estimated average costs at $15 million in 2015, up 21 percent from $12.7 million in 2014. These costs ranged among the 58 organizations surveyed from a low of $1.9 million to a high of $65 million each year per company. Cyber insurance evolved as a product in the United States in the mid- to late-1990s as insurers have had to expand coverage for a risk that is rapidly shifting in scope and nature. More than 60 carriers offer stand-alone policies in a market encompassing $2.75 billion in gross written premiums in 2015. By mid-2016 gross premiums written was estimated at $3.25 billion.

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Insurance in Florida 2018, the Future of No-Fault

Courtesy of iii.org

The Florida Legislature is again looking at ending no-fault auto insurance in Florida. Sound familiar? Tweaking no-fault (also known as personal injury protection – PIP) is a frequent topic for legislative debate.

You may recall a fix to fight no-fault fraud came in 2012. Regulators issued a report in 2015 that said the fix appeared to be working. Regardless, it seems the desire to do something about rising auto insurance rates may be driving the desire to abolish no-fault. Florida is one of 12 states with a no-fault law. Proponents say it allows those injured in a car crash to recover costs for medical treatment under their own insurance policy, without needing to determine who is at fault for the accident. Among the proponents are hospitals, which say about one-third of the people they treat for auto injuries only have no-fault coverage. Critics discount that view, saying no-fault duplicates coverage that most people already have with medical insurance.

What will replace no-fault/PIP if the legislation becomes law? A requirement for bodily injury coverage, which applies to injuries you as a driver cause to someone else. This may cost more than no-fault coverage for some people. With this change, the Legislature is also considering raising the compulsory financial responsibility limits. Any time most people hear the word “raising” they think it might cost more money, and it might – but here’s the other side of that:

Florida has the lowest financial responsibility requirement of any U.S. state. That means we set the bar very low for the responsibility drivers have if they cause a car crash with injuries. And, the end result is that too many people are not fully compensated, so while they are trying to recover physically from injuries caused by another, they may also be suffering financially. Raising that bar is about accountability.

A reminder: Insurance of any type (auto, home, health, business) is about protecting your assets. Always, always (always!) make sure you have insurance equal to the total value of the assets you own.

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24 Hour Hotline: (407) 415-8528

National Risk Management & Associates
220 Magnolia Avenue
Sanford, FL 32771
Phone: (407) 767-2950