The RISC eNews Blast is intended to provide relevant and timely news information from a number of sources to member pool staff. If you see articles in the journals, email and sources you subscribe to that may be of interest to the RISC membership, please feel free to forward them to Erin Rian for inclusion in the eNews Blast. The eNews Blast will be delivered weekly, and the RISC Report newsletter will be delivered every two months. In this week's edition of the RISC eNews Blast:
DATA SECURITY & CYBER RISK
Judge Dismisses Lawsuit in S.C. Tax Agency Hacking (Augusta Chronicle, 3/1/2013): A circuit court judge has dismissed a lawsuit against Governor Nikki Haley and other government officials in the hacking of the records of the South Carolina revenue department. The court held that the plaintiff, former state senator John Hawkins, failed to prove that the defendants had harmed the public by conspiring to keep the hacking secret. The court also held that the plaintiff did not prove an injury that the court could currently remedy.
The Near Impossible Battle Against Hackers Everywhere (Claims Journal, 2/25/2013): Hackers vary in national origin, motivation and techniques, but experts agree that they are becoming an increasing problem, and one that governments and organizations are not successfully combatting. In many cases, intrusions are not reported for fear of adverse publicity. Antivirus software does not protect against new or targeted attacks, and some experts are recommending tools that look for unusual activity on the network. Others are turning to limitation of computer users’ privileges, vigilant installation of software updates, and limitation of the programs that are permitted to run on the network.
Raising the Bar for Cybersecurity (Center for Strategic & International Studies, 2/12/2013): Australia’s Defense Signals Directorate finds that a combination of four risk reduction measures significantly reduces the chances of an organization’s system being successfully hacked. Those four measures are:
1. Use application whitelisting to prevent unapproved programs from running on the system.
2. Install patches provided by software companies for their applications.
3. Install patches for operating system vulnerabilities.
4. Minimize the number of users with administrative privileges.
Where to Find the Best Possible Cyber Coverage (Insurance Journal, 2/19//2013): Both cyber insurance policies and mainstream insurance commonly maintained by organizations can provide coverage in the event of a cyber event. This reviews the elements of commercial general liability, employment practices liability, fiduciary liability, crime coverage, errors and omissions coverage that may provide coverage. The overview may be useful to pools that are interested in how the language in their coverage documents might apply in cyber loss situations.
Drinker Biddle Announces HIPAA Webinar Series (Mondaq, 2/28/2013): Drinker Biddle's Government Relations and Health Care panel will host a three part webinar on the implications of the Health Insurance Portability and Accountability Act (HIPAA) Omnibus Final Rule. Click here to register for the upcoming events.
Where States Stand on Obamacare Exchange, Medicaid Expansion (Insurance Journal, 2/18/2013): This article gives an overview of where states stand on the Exchange option and Medicaid expansion, as well as the number of uninsured residents.
Workplace Bullying Emerging As Major Employment Liability Battleground (Insurance Journal, 3/4/2013): Twelve or more states have considered in the past year laws that would allow employees to pursue actions for damages from abusive work environments. Anti-bullying policies are already in place in many companies and in union contracts. One in five incidents is through social media.
N.Y. Fracking Health Study Draws Cheers, Jeers (Ithaca Journal, 3/3/2013): The New York ban on fracking, which has been in effect since 2008, will not be lifted any time soon, as Governor Cuomo is expected to wait for the results of a Pennsylvania health study before making a final decision. In the meantime, the industry is moving to other states and landowners are preparing a lawsuit against the state.
Fracking Debate Heating Up in States (Governing, 2/25/2013): Thirty-one states have significant shale oil deposits that may be accessible using hydraulic fracturing. Conflicting interests between environmentalists, state governments and those with an economic interest in drilling have led to the introduction of fracking-related legislation in at least 24 states. Potential rules and legislation in New York, Illinois, California and North Carolina are reviewed.
Industry, Environmentalists Agree Illinois 'Fracking' Bill Outlines Toughest Regulations in US (StarTribune, 2/21/2013): Industry and environmental groups have collaborated to develop the Hydraulic Fracturing Regulatory Act that would make requirements of oil and gas companies that are not yet required in other states. The bill is expected to pass because the industry, environmentalists, lawmakers, regulatory agencies and attorney general participated in the negotiations. Opponents seek a two year moratorium on drilling pending further study of the impact of fracking.
Minn. Lawmakers Start Silica Sand Mining Hearings (SFGate, 2/19/2013): The issue of state versus local regulation of silica sand mining is playing out in the Minnesota state legislature, where the Senate and House environmental committees held a joint hearing on February 19. Some concerned citizens are pushing for a greater state role, while corporate interests that are mining sand back local control. Among the environmental issues being pressed are increased truck traffic as well as the danger of exposure to silica dust for employees and members of the public.
PROPERTY & CASUALTY
Lawsuits Stemming from 2010 Nashville Flood Dismissed (Business Insurance, 3/1/2013): A federal judge has held that the U.S. Army Corps of Engineers and the National Weather Service are immune from liability in connection with damage to various private property interests during the 2010 Nashville floods.
Mississippi's $1M Noneconomic Damages Cap Affirmed (Business Insurance, 2/28/2013): The 5th U.S. Circuit Court of Appeals has upheld the $1,000,000 Mississippi cap on non-economic damages against a challenge that it violates the Mississippi Constitution’s jury trial guarantee. The Court held that the Mississippi Constitution’s Jury Trial Clause did not invalidate the statute limiting non-economic damages, and that the statute did not violate Mississippi’s constitutional separation of powers. A copy of the full decision is available here.
Will Wind/Hail Cosmetic Damage Exclusion Endorsements Become the Norm? (MyNewMarkets.com, 2/28/2013): The American Association of Insurance Services and ISO have filed cosmetic damage endorsements that would exclude damage from cosmetic wind and hail damage that affects the appearance but not the functionality of a property.
Court Finds ‘Single Occurrence’ Applies to Drywall Claims Arising From One Shipment (Claims Journal, 2/25/2013): A U.S. District Court in Pennsylvania has held that Cincinnati Insurance Company, which provided coverage to a drywall importer, was liable only for a “single occurrence” under its policy, even though the drywall was ultimately sold to and damaged multiple parties over a period of time. The court identified a common source for the harm: the importer’s single purchase and shipment of allegedly defective drywall from China. The court stated that if all claims stem from one proximate cause and the defendant had some control over that cause, there was a single occurrence.
6 Tips for At-the-Scene Photography by Auto Claimants (Property Casualty 360, 2/20/2013): The presence of camera phones at most auto accidents raises the need for guidelines to help drivers document the scene. These six guidelines give tips on how to thoroughly document the event.
ISO’s Commercial General Liability Filing – Part Two – Revised Endorsements (My New Markets, 2/19/2013): The second in a series summarizing 2013 changes in commercial general liability forms and endorsements.
ISO’s Commercial General Liability Filing – Get Ready (My New Markets, 2/14/2013): The first in a series summarizing 2013 changes in commercial general liability forms and endorsements.
Meteor Blast Impacts Russia: AIR Worldwide (Claims Journal, 2/17/2013): A large meteor disintegrated in the atmosphere over Russia on February 15, causing hundreds of injuries and damaging buildings in six cities. It is estimated that more than a million square feet of glass were shattered. Catastrophe modeling firm AIR Worldwide says that meteorite damage is generally covered in all risk policies. Incidents are infrequent, however, with such large meteors passing close to Earth every 40 years and striking the planet every 1,200 years.
Cat Modelers: Sandy Left ‘Treasure Trove’ of Data (The Royal Gazette Online, 2/17/2013): Issues raised by Sandy include the potential for larger storm radii than were previously contemplated, a low central pressure resulting in weaker onshore winds, the storm’s track from east to west, and the extension of the surge over several tidal cycles. It also highlighted some features not usually considered by models, such as power failure, transportation disruption and evacuations.
Will 2013 Tornado Season be as Subdued as Last Year? (Wichita Eagle, 2/17/2013): Tornado activity may be shifting to the north and east of the Great Plains, traditionally Tornado Alley. There may be more tornadoes in the winter months, as well as more strong non-tornado wind events like derechoes.
Employee's Facebook Fumble Dooms Her FMLA Claims (Mondaq, 2/25/2013): A federal district court in Michigan has held that an employer had the right to terminate an employee for misuse of leave under the Family Medical Leave Act. The employee took a pre-planned vacation to Mexico while on medical leave. The trip was discovered when co-workers who were her Facebook friends reported to the employer that she had posted photos of the trip on her Facebook page. The employee initially claimed that she had used a wheelchair to travel and that her activities were within her physical restrictions, but faced with the Facebook photos, she admitted to lying. The case demonstrates the potential usefulness of social media in employment issues, and the potential danger to employees of “friending” their co-workers. Employers must be cautious, however. Accessing an employee’s private social media by fraudulent means could expose the employer to a breach of privacy claims. A link to the decision is available in the article.
Connecticut Bill Applies Worker’s Comp to Mental Trauma (Insurance Journal, 3/2/3013): Connecticut lawmakers are scheduled to vote March 6 on a bill to create a special account funded by charitable donations that would help people who were part of the Sandy Hook Elementary School attack and are suffering from mental health problems. Lawmakers are also seeking to pass legislation that would provide workers’ compensation coverage for mental illnesses arising from workplace violence. Some lawmakers are expressing concern that the language is too broad.
Physician Dispensing: Even More Expensive Than You Think (Evidence Based, 2/28/2013): The California Workers’ Compensation Institute has issued a research brief titled Differences in Outcomes for Injured Workers Receiving Physician-Dispensed Repackaged Drugs in the California Workers’ Compensation System. A surprising finding was that despite the post-reform decrease in the percentage of claims involving physician-dispensed drugs, the difference in medical and indemnity costs between claims involving physician-dispensed drugs actually increased. A link to the full study is available.
Oklahoma State Senate Approves Workers’ Comp Overhaul (NewsOK, 2/28/2013): The Oklahoma state senate has approved a bill that would replace the workers’ compensation court with an administrative system and permit employers to opt out of the system if they develop their own replacement program. The bill also alters some benefits, but does not address medical costs.
Gov. Haslam’s Workers’ Comp Reform Plan Causes Concern (The Tennessean, 2/28/2013): The governor of Tennessee proposes to move workers’ compensation appeals from the court system into a new agency, where administrative judges appointed by the agency administrator would hear appeals. Grounds for appeal to the state supreme court after exhaustion of administrative appeals would be limited. Other proposed changes would narrow the definition of a workplace injury, establish broad categories for injuries, and make other changes designed to streamline the process.
US Workers' Compensation Reform Includes Opt-Outs, Medical Cost Containment (Advisen, 2/20/2013): Among the reform measures that have been proposed or are expected are:
• Employer opt-out in Oklahoma
• Medical cost containment initiatives based on treatment guidelines and fee schedules
• Reduction of reimbursement for physician dispensed drugs
• Restrictions on opioids
• Streamlining the administrative system and funding mechanisms
OTHER TOPICS OF INTEREST
State Officials Urge Insurers to Join Climate Change Debate (Governing, 2/20/2013): Some state officials and environmental groups want insurers to increase their calls for stricter building standards, advocate measures against global climate change, and reflect changing risk in their rates and risk modeling. Only one in eight U.S. insurers has a formal climate policy. Currently Washington, California and New York require large insurers to tell state officials how they are addressing climate risks.
Opinion Recap: Trust the Police Dog (SCOTUSblog, 2/19/2013): One of the two pending police dog cases before the U.S. Supreme Court has been decided. In a unanimous decision in Florida v. Harris the Court held that evidence that a dog has been trained or has a certificate from a training agency may be enough to give police permission to turn the dog’s “alert” into probable cause for search of a vehicle. The Court rejected the detailed proof that the Florida Supreme Court would have required from police to justify relying on the dog’s alert for probable cause, establishing instead a “reasonably prudent person” standard that would look at all the facts to determine whether the alert was reliable. The defendant is permitted to present evidence discrediting the dog’s training history and the specific alert.
Finding Bad Faith In Kentucky Requires Evidence Of Outrageous Conduct By Insurer (Mondaq, 2/19/2013): The U.S. District Court for the Western District of Kentucky held on January 24, 2013 that to pursue a third party lawsuit alleging bad faith failure to settle a personal injury claim, the claimant “must meet a high threshold standard that requires evidence of intentional misconduct or reckless disregard of the rights of the claimant by the insurance company that would support an award of punitive damages.” The court determined that the plaintiff did not meet this threshold, but if she had she would have then had to show that the insurer was obligated to pay the claim, lacked a reasonable basis in law or fact for denying the claim, and either knew there was no reasonable basis for denial or acted with reckless disregard for whether there was a basis for denial.
The full decision is available here.
Webinar: End-User Cyber Security Training Overview for NLC-RISC (Date and Time: Tuesday, March 19, 2013 2:00 pm, Eastern Standard Time): End user training has been recognized as one of the top ways in which an organization can prevent cyber security threats. NLC-RISC has arranged for a webinar to be presented by Kristin Judge, who will discuss how the SANS Securing the Human training program works to change user behavior. The SANS program is a series of short 3-5 minute video training tutorials that educates users on how to improve their cyber security posture. This presentation will illustrate how the SANS program can be customized to the needs of the organization, and explain how it can serve as the bedrock of a robust cyber security program. The SANS program will be available to local governments at a very significant discount in June-July 2013.
Join us on Tuesday, March 19th by accessing the webinar details, including registration, here.
NLC-RISC Marketing Workshop (May 15-16, 2013 in Denver, CO)
NLC-RISC Spring Trustees Conference (May 16-18, 2013 in Denver, CO)
Assistant Underwriting Manager, Texas Municipal League Intergovernmental Risk Pool
Finance Manager, Rhode Island Interlocal Risk Management Trust