Data Breach & Cyber Security
Cyber insurance policy pricing steadily declining
Advisen says that cyber liability premiums were down 7.25% in the second quarter of 2013. AIG and Willis are quoted as saying that quotes today may be “as much as 30% lower than they were five years ago”, and the coverage provided then was narrower. The price reductions are attributed to competition and new carriers entering the market.
Sumner residents getting letters because of data breach
A temporary municipal court clerk in Sumner, Washington is accused of emailing to her home city residents’ personal information, including name, address and date of birth. She worked only nine days because the Sumner Court for which she was hired meets infrequently. This is a good illustration for pool members of why it is important to train even temporary employees about privacy concerns and to consider how the organization may use technology to limit the outflow of information.
Statistics Indicate 1 in 14 Fell Prey to Identity Theft in 2012
Claims Journal, 12/14/2013
As an illustration of the scope of the growing identity theft problem, one out of every 14 Americans 16 or older were the targets or victims of identity theft in 2012, according to a national household survey by the Bureau of Justice Statistics. This includes victims where an individual credit card was misused, as well as those with more significant compromise, such as the opening of false accounts using their information.
Four in five top Android and iOS apps 'have been hacked'
The Telegraph, 1/8/2014
A study by a software security company concludes that 100% of the top 100 paid Android apps have been hacked, and 56% of the top iOS apps have also been victims. Free apps are also being breached at high rates. This study supports the need of pools to be sure mobile applications are being used within their own operations in a safe manner, and to educate their members about the need to do the same.
Ransomware creation kit 'sought by cyber-thieves'
Ransomware, software installed by a cyber criminal to encrypt data and prevent the owner from using it, may be a rising concern. Pools may want to consider making their members aware of this danger, and advising them to have back ups that will enable them to restore data without paying the ransom demanded by criminals.
The Six Trends of Cyber Risk in 2014
Property Casualty 360, 12/10/2013
Experian identifies the following trends:
- The cost per record will continue to drop as organizations become more adept at pre-planning and implementing response
- Data breaches are likely to become bigger and global in nature as there is increasing move to the Cloud and increasing accumulation of Big Data, response will remain complicated by differences in requirements among jurisdictions
- Health care breaches will increase
- More organizations will invest in cyber insurance to help finance breach related expenses and losses
- Consumers may experience “breach fatigue” and fail to take action to protect themselves after a breach
- State regulators and law enforcement will become more involved in helping organizations manage breaches
How Obamacare Could Hurt Fire Departments
Some volunteer fire departments may face a mandate in 2015 to provide health insurance to volunteers under the Affordable Care Act, even though most volunteers have employment and health care elsewhere. Two potential limiting factors for smaller pool members would be employer size (more than 50 workers) and hours worked per week to be deemed full time employment (30 hours). There is concern that to avoid the mandate, volunteer departments will cut the number of workers, the amount of time they work, or close altogether.
The Heavier the Employees, the Heftier the Health Care Costs
Duke Medicine researchers have concluded that medical and drug costs rise gradually with each unit increase in body mass index, suggesting that fat is detrimental even at lower levels, and providing more inventive for employers that fund employees’ health plans to provide wellness programs.
Employers can expect more wage-and-hour litigation in 2014: Report
Business Insurance, 1/8/2014
According to the 10th Annual Workplace Class Action Litigation Report by Seyfarth Shaw L.L.P., wage and hour claims represent the most predominant type of class action pursued against employers. This type of litigation activity is expected to continue, especially in the area of “off-the-clock” claims from non-exempt employees due in part to increased use technology and mobile devices. A copy of the report can be requested here.
Facebook Isn't Actually A Good Way To Judge Potential Employees, Say Researchers
Research conducted by several universities and a consulting firm has concluded that recruiter assessment of recent college graduates’ potential via Facebook postings does not correlate with their subsequent job performance. The research also showed that the recruiters tended to rate women higher than men and white applicants higher than minorities, and that these race and gender based predictions did not accurately reflect their subsequent job performance. The researchers’ recommendation is to avoid the use of Facebook in hiring. This may be difficult to sell in some public entity workplaces, however, especially those involving law enforcement and similarly sensitive positions.
Seventh Circuit Holds Failure To Conciliate Is Not A Defense Available To Employers In Litigation With The EEOC
The Seventh Federal Circuit Court of Appeals, which serves federal district courts in Illinois, Indiana and Wisconsin, is the first federal circuit to hold that an employer may not defend a Title VII lawsuit on the basis that EEOC failed to seek a conciliation agreement in good faith before suing. The Seventh Circuit is the first circuit to take this position, with other circuits having permitted employers to challenge the EEOC’s conciliation efforts in varying degrees. With the existing divergence of opinions among the appellate circuits it is possible that other circuits will migrate in this direction, or that the U.S. Supreme Court will be asked to resolve the difference.
Pennsylvania Supreme Court declares portions of shale-drilling law unconstitutional
Pittsburgh Post-Gazette, 12/20/2013
The Pennsylvania Supreme Court has declared unconstitutional portions of the state’s shale drilling law that allowed gas companies to drill anywhere without regard to local zoning laws. Act 13 A link to the lengthy full decision is available. The discussion of the interference with enforcement of local zoning ordinances begins on page 36 of the decision, and after extensive legal and factual foundation is laid, the merits are discussed beginning on page 119, with a holding that, as an exercise of the General Assembly’s police powers, the statutory provisions are incompatible with the Commonwealth’s duty as trustee of Pennsylvania natural resources, and are therefore unconstitutional.
Medicare Secondary Payer
CMS Issues Notice of Proposed Rulemaking Regarding an Appeals Process to be Utilized by Applicable Plans for Conditional Payment Disputes
In response to the requirements of the SMART Act, the Center for Medicare and Medicaid Services has published in the Federal Register a notice of proposed rulemaking intended to give formal appeal rights to Applicable Plans from which CMS is seeking recovery. Comments are due February 25, 2014. Beneficiaries already have appeal rights, and this rule would extend similar rights to Applicable Plans. This NPRM does not address Workers’ Compensation Medicare Set Aside agreements, but CMS notes its intent to propose such a rule separately.
PMSI, the host of MedicareInsights plans to submit comments, as does FrancoSignor, whose criticisms of the proposed rule are available here. In general, the commercial insurance industry and the Medicare Secondary Payer public policy interest groups are effectively advocating about these issues. If RISC member pools are interested in submitting comments as a group, however, please let Claire Reiss know as soon as possible and we will try to make arrangements.
Agencies collected data on Americans’ cellphone use in thousands of ‘tower dumps’
Washington Post, 12/8/2013
Local governments are among the agencies conducting warrantless collection of bulk cellphone use data on large numbers of citizens during investigations of a small number of subjects. However, the legal requirements for many local governments conducting these collections are less clear than the rules for the National Security Agency, and the practices of the carriers are inconsistent. Senator Edward Markey, who led a Congressional inquiry into this issue, is planning to introduce legislation. From the pool’s perspective, the hazards are that a member’s law enforcement agency will gather or use the data in a way that violates citizens’ privacy rights. If the agency retains the information without adequate security, it may be responsible if it is accessed inappropriately, and private information is exposed.
Property & Casualty
A Few Words of Caution in A.M. Best's Otherwise Positive 9-Month Industry Review
Property Casualty 360, 1/2/2014
The property casualty industry was profitable through the first three quarters of 2013. If the results are maintained, this could be the first year for an underwriting profit since 2009. Cautions in the report included a deterioration in commercial lines underwriting results for the third quarter, although they remained positive, and continuing concern about whether the industry’s loss-reserve position is sufficient to support future calendar year results.
Excess capacity leads to softening rates in P&C and most other lines of business, according to the Willis Re January 1 renewal report
Insurance Networking News, 1/2/2014
Willis reports that nearly all lines of business experienced price declines at the January 1 renewal.
Record High for Outstanding CAT Bonds; Demand to Continue
There is a record level of outstanding CAT bonds in 2013, slightly over $20 billion. The global CAT bond issuance in 2013 was $7.1 billion just short of the 2007 record of $7.6 billion. Fitch expects demand to remain strong, especially for geographically diversifying perils. The majority of issuance in 2013 was for US hurricane risk. Non-traditional sponsors are now entering the market, including 11 first time sponsors in 2013.
NCCI analysis suggests combined ratio going lower
Risk & Insurance, 1/6/2014
The National Council on Compensation Insurance estimates that we will see a second year of decline in the net combined ration for workers’ compensation, to 106. Actual data for 2012 indicates a 2012 combined ratio of 108.1. A link to the NCCI Financial Update Newsletter is accessible here.
S&P Report: U.S. Workers' Comp Industry Revenues Could Decline
Standard & Poor’s is pessimistic about the near-term profitability for the U.S. workers’ compensation market, due to continued high unemployment and economic uncertainty, potential adverse reserve development, higher health care costs and emerging risks like the expiration of the Terrorism Risk Insurance Program Reauthorization Act.
Study suggests chronic diseases may prompt occupational injuries
Risk & Insurance, 12/16/2013
A study by researchers published in the journal Occupational and Environmental Medicine concluded that four chronic conditions contribute to a greater likelihood of workplace injuries. Those conditions include heart disease, diabetes, depression and asthma. This information can be help employers design wellness programs that will help employees better manage their chronic illnesses while potentially reducing the employer’s workers’ compensation losses.
Pennsylvania Supreme Court Rules On Workers’
The Pennsylvania Supreme Court has ruled that the workers’ compensation act exclusivity provision does not bar common law claims for occupational disease that manifest more than 300 weeks after the last date of employment. The employer may be liable at common law even if it is no longer liable under the workers’ compensation law. Although mesothelioma from asbestos exposure was at issue in that case, the decision was not limited to asbestos exposure.
Other Topics of Interest
Roughed Up by an Orca? There’s a Code for That
New York Times, 12/29/2013
On October 1, 2014, the health care system is schedule to transition to a new set of computerized codes for medical diagnoses and billing. I.C.D.-10 will have more available codes and will permit physicians to record more data about the source of patient illnesses and injuries. The federal agency in charge of implementation is the Center for Medicare and Medicaid Services. Some are arguing for a delay of implementation in light of the significant difficulties encountered with Healthcare.gov, which was also implemented by CMS. It has already been postponed once, having been scheduled to go into effect October 1, 2013, the same date as Healthcare.gov. Issues to watch will be how the new and more detailed coding of the cause of the condition matches up with claims being made against pool members.
American Tort Reform Foundation, 12/18/2013
This report identifies problematic jurisdictions as well as specific court decisions and legislative enactments that have improved or harmed the judicial environment for defendants.
Government Job Growth Among Weakest of Any Industry
Local government job growth continued to be weak in 2013. Pools may want to continue considering how this affects the composition of members’ workforces, as well as members’ ability to safely and effectively deliver city services, both of which may affect member exposures.