Is the Cyber Insurance Market Stabilizing?

I just wrapped up a sizable Cyber insurance policy renewal and based on the results of our marketing efforts, I think it’s a good indication that the market is beginning to stabilize.

The cyber insurance market has been in a hard market for the past several years.

This particular cyber insurance renewal is for a middle market company that works with Fortune 500 companies. They’re required to carry $50,000,000 in coverage by contract.

The insured’s services are viewed as a higher risk for the cyber market. It is a technology-based business that holds a lot of third-party sensitive data. They do about $75M – $80M in annual revenues. Cyber liability and data breach are definitely their primary risk exposures.

This policy renewal took 10 carriers to quota share the risk and the year-over-year premium is down in 2023 by 4-5%.

I had a feeling the renewal premium wouldn’t spike as hard as it did last year, but I was pleasantly surprised there was actually a slight DECREASE for this renewal.

The cyber insurance market is a lot like the mortgage industry prior to 2008.

Up until a few years ago, you could buy cyber insurance by providing very little information and carriers practically gave away quotes. And not very expensive ones relative to the risk.

Then hackers decimated the cyber insurance market with ransomware and social engineering attacks. Millions upon millions of claims dollars were being paid by carriers as a result.

Underwriting ultimately tightened and those looking to secure cyber insurance coverage must now show preventative measures are in place for their organizations such as data encryption, multi-factor authentication (MFA), data backups, etc.

Underwriters won’t even think twice about insuring a business if these types of measures are not in place.

Cyber insurance pricing and trends vary by company. However, in this particular case where we have a sizable middle market company with above-average cyber risk, a decrease in premium this year is a positive sign.

Let’s hope the cyber insurance market continues trending in this direction.

Each and every company/policyholder will see different outcomes with their cyber coverage and rates based on their own unique makeup. However, if you can show that your organization takes preventative measures to help mitigate cyber risk up front, you’re in a favorable spot.

-JK

It Takes Twice as Long to Close California Workers’ Comp Claims Compared to Other States

File this under the “I’m not surprised” file, it takes seven years to close most workers’ compensation claims in California, more than double the time in the median state.

The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) released a report detailing duration drivers for California workers’ compensation claims.

The report, Drivers of California Claim Duration, describes duration drivers for California workers’ comp claims, including how claim duration differs regionally across the state.

Here’s the report:

Highlights of the report include:

  • It takes seven years to close 90% of claims in California compared to three years for the median state.
  • Longer California claim duration is driven by four “duration drivers,” including a higher share of permanent partial disability and cumulative trauma claims in California, greater utilization of medical-legal services in California and regional differences within the state.
  • Claim closing rates rose steadily following the reforms of Senate Bill 863, particularly for PPD claims of lower-wage workers.
  • Claim closing rates declined during the pandemic in 2020 and were relatively flat in 2021.

California, why do you have to make everything so complicated? [banging head on desk]

Source: Insurance Journal

-JK

Legal Requirements to Fulfill Before Hiring Employees

Are you planning on hiring an employee for your business for the first time? I know, I know, we’re basically heading into a recession right now, if not already in one, but I am finding that most of my clients still seem to be thriving at the moment.

What’s weird about the current state of the economy is that there are still record job openings. I hope that your company is one of them that needs employees. I take it that’s a sign that things are favorable with your business.

But have you taken all the necessary steps to set yourself up as a lawful employer?

There are several steps required by the federal and state government that must be taken before you can hire someone.

I’m not an attorney, nor a Human Resources consultant, but here is a list 10 legal requirements every employer must do before taking on a new hire:

  1. Apply for an EIN
  2. Register with your state’s unemployment insurance office
  3. Verify each prospective hire’s eligibility to work
  4. Look into your state’s workers’ compensation insurance rules—and get coverage
  5. Report new employees to state registry
  6. Set up a payroll and tax withholding system
  7. Have all employees fill out form W-4
  8. Get and post employee notices
  9. Comply with OSHA rules
  10. Establish any necessary employee benefits

For more specifics, please visit this link from The Hartford.

Though these are the main steps employers must take that are required by federal or state law, there are other smart things to do before you start employing people.

These include creating an employee handbook, so there are no questions about your rules and protocols for employees (even your first hire), and creating a personnel file for every employee.

But I encourage you to not try to tackle this on your own. Consider the help of a Business Transactional Attorney, a Human Resources Consultant, a legitimate payroll provider, etc.

I can help if you need connections to any of these professionals through my large network of seasoned professionals that I know, like, and trust.

The cost to get this initiated will be less than if you try to do it on your own and end up running into roadblocks, getting dinged for penalties and fees, etc.

Yes, the economy is in a funky place at the moment, but if you’re planning on hiring, that’s a good sign that things are going well for your business.

To keep things going on a positive trajectory, make sure to use trusted professionals to get you going on the right foot and keep your focus on your passion, your business.

-JK

Heightened Action in Cal/OSHA’s Task Force Enforcement

Southern California businesses have recently experienced a noticeable escalation of inspections and enforcement by Cal/OSHA’s Labor Enforcement Task Force Unit based in Santa Ana.

Unprecedented Hotel and Motel Labor Enforcement Task Force inspections are diligently being processed to verify whether these companies have a current:

  • Housekeeper Ergonomic Written Plan (MIPP)
  • Illness & Injury Prevention Plan (IIPP)
  • Hazard Communication Plan/Checkup (Dealing with Chemicals & Toxic Materials)

Many small and mid-sized Southern California employers have overlooked these compliance requirements during the past several years but now must consider the strong possibility that their company will be visited soon.

So, Here’s The Big Question: ARE YOU READY?

A safety review and compliance check can save thousands of dollars in fines and citations.

If you would like help with this, contact me. I have trusted partners that provide large or small companies with comprehensive inspections – efficiently, quickly, and with total expertise. They can assist you in reviewing existing practices and then help you design policies and training that are compliant with 2022 new and evolving laws.

-JK

Be Observant When You’re Buying Insurance or Any Product or Service For That Matter

I’m working on some Worker’s Compensation insurance options for a referral which is a physician’s office. Very black and white with no question the proper classification is 8834 – Physician Practices and Outpatient Clinics.

This prospect received a “much less expensive” quote from one of the many carriers you see on every TV commercial break with their comedic ads. This quote was classified as a jewelry store with about a third of the total annual payroll. Of course, it is cheaper.

Folks, be observant when you’re buying insurance or any product or service for that matter. It’s only going to cost more in the long run if you don’t do your due diligence in reviewing and understanding what you’re buying. And most of that cost is YOUR time lost in trying to resolve the issue.

OSHA’s Updated COVID-19 Guidelines: What Businesses Should Do Now to Avoid Penalties and Legal Pitfalls

As businesses wait to see whether OSHA will issue emergency temporary standards and OSHA State Plans renew and consider their own standards, find out what your business can do now to get ready.

Hear from an OSHA 30 Certified legal specialist on the highlights of OSHA’s January 29, 2021 Guidance on Mitigating and Preventing of COVID-19 in the Workplace, how both management and employees play a role in developing and implementing the revised safety requirements, and how to minimize related legal risks.

In this pre-recorded webinar, AmTrust’s Kelley Barnett, VP Corporate Counsel – Labor and Employment and OSHA 30 Certified and Jeff Corder, VP of Loss Control shared:

  • Why should businesses care about the updates, and what are the consequences of NOT caring?
  • What do businesses need to know to implement OSHA’s guidelines?
  • What changes should businesses implement to avoid compliance landmines and legal pitfalls and get ready for increased OSHA enforcement?

California DMV Employer Pull Notice (EPN) Program

Any business with job positions that require employees to operate company owned, leased or personal vehicles for business use faces a heightened liability risk.

One small distraction behind the wheel can lead to a serious accident causing injury or death to others. Or, a not so serious accident with someone who sees “deep pockets” because they were hit by a vehicle operated by a business can lead to a large defense claim.

Think about it, you constantly hear personal injury attorney advertisements on the airwaves encouraging people who have been hit by commercial vehicles to call them because “big money can be at stake.”

What this means is your business must have a Motor Vehicle Record (MVR) Program in its driver qualification and selection process.

Without going into full scale detail about MVR programs in this post, businesses should, at a minimum, require applicants for driving positions, to submit a copy of their driving record as part of the application process. Additionally, require drivers to provide updated MVRs on an annual basis to evaluate driving performance and qualify them for continued operation of company owned and/or leased vehicles.

Drivers that received violations and/or were involved in preventable vehicle incidents may need training, counseling or other appropriate actions to correct poor driving behaviors.

This is where the the California DMV Employer Pull Notice (EPN) program comes in to play.

The California DMV Employer Pull Notice (EPN) program enables commercial organizations to monitor the driving records of employees who drive for them. By monitoring their employees’ driving records, organizations can:

  • Ensure that each driver has a valid driver license.
  • Recognize problem drivers or driving behavior.
  • Improve public safety.
  • Minimize liability.

How it Works:

Each employer enrolled in the EPN program is assigned a requester code. The requester code is added to applicable employees’ driver license records. When an employee’s driver license record is updated due to an action or activity, the DMV makes an electronic check to determine if a pull notice is on file. If the action or activity is one that must be reported under the EPN program, a driver record is generated and mailed to the employer.

Every year on the enrollment date, the EPN program automatically generates and mails a driver record when any of the following actions or activities occurs:

  • The driver is enrolled in the EPN program.
  • When a driver has any of the following actions or activities added to their driver record:
    • Convictions.
    • Failures to appear (FTAs).
    • Accidents.
    • Driver license suspensions or revocations.
    • Any other actions taken against their driving privilege.

With the potential risk your business faces by having owned, leased or personal vehicles on the road, now is the time to put any and all risk management practices into place to to help lessen the likelihood of a loss. And the California DMV Employer Pull Notice (EPN) program is a great starting point. Check it out for yourself and contact me if you need any help with this.

-JK

My Interview with Candy Messer on The Different Types of Insurance To Protect Your Business

Thank you to Candy Messer from Affordable Bookkeeping and Payroll Services for interviewing me on the topic of “The Different Types of Insurance To Protect Your Business” Some of the key items we discussed are:

  • Tailoring Insurance Coverage for each unique business
  • Commercial General Liability Insurance
  • Workers Compensation Insurance
  • Errors & Omissions (Professional Liability) Insurance
  • Do home based businesses need a business insurance policy?
  • Is business insurance required by law?
  • Insurance for contractual requirements and lease agreements
  • Employment Practices Liability Insurance
  • The difference between Commercial General Liability and Errors & Omissions Insurance
  • Cyber Liability / Data Breach Insurance
  • How much does business insurance cost?
  • Ways you can keep your insurance costs down
  • Negotiating premiums with Carrier underwriters

Check out our interview together here:

Thanks for watching

-JK

Cal/OSHA COVID-19 Emergency Temporary Standards – What Employers Need to Know

California approved emergency temporary Cal/OSHA standards on COVID-19 infection prevention on
November 30, 2020. These new temporary standards apply to most workers in California not covered by
Cal/OSHA’s Aerosol Transmissible Diseases standard.

With some exceptions, all employers and places of employment are required to establish and implement an effective written COVID-19 Prevention Program (CPP) pursuant to an Emergency Temporary Standard in place for COVID-19 (California Code of Regulations (CCR), Title 8, section 3205(c)).

Cal/OSHA has developed this model program to assist employers with creating their own unique CPP tailored to their workplace. Here is information on the regulation and a sample program for your use:

Also a link to a FAQ page about the regulation HERE

This is the link to the COVID-19 resources from Cal-OSHA. There are 5 good sections here, there is guidance by industry, FAQ’s page, training and educational materials, webinars and an online training section. All of the sections have good resources that have been helpful to me and others. I think you will find them useful as well.

Stay safe and healthy out there…

-JCK

If You Want Quality Commercial Insurance Coverage, it Starts With You

Several months ago, a client of mine lost their commercial building to a fire. A total loss. It was a really unfortunate situation.

There’s been a lot going on since then, but I’ll fast forward to the claims process today.

In speaking with the claims adjustor, my client was told he should feel really good about his policy coverage. That you “should be thankful that your broker put together a nice comprehensive policy for you” with all the bells and whistles.

My client called me to share the news of this conversation. In a time of difficulty, it was refreshing to hear such a strong statement from the carrier side.

As their agent/broker, this made me happy to hear. It’s NEVER fun when you get a call from a client sharing they sustained a property insurance loss. These are really technical policies with so many coverage types, endorsements, and exclusions that vary from carrier to carrier. In fact, I would argue that commercial property insurance is the most complicated line of insurance to deal with after sustaining a loss.

The thing is, you can’t just get a “Cadillac” policy for just any old subject of insurance. Whether it’s for Commercial Property, Liability, Workers Compensation, or any other form of insurance, the subject of insurance needs to be well maintained in order to get quality coverage from an insurance policy.

It’s like having good credit. When you do, you get better interest rates, better loans, better terms. You have banks lining up wanting to lend you money.

The same goes for insurance policies. You see, my insured’s commercial building was totally renovated within the past 10 years. Roof, plumbing, electrical, and heat were totally updated to modern standards. Carrier underwriters LOVE to see this. This allowed me as their agent/broker to build a quality policy that ultimately came through in a big way during my insured’s greatest time of need.

This doesn’t just apply to commercial property insurance either. Take Workers Compensation insurance for example. Your company has a sound safety program/culture with favorable claims/loss history. As a business owner, you conduct employee screenings, background checks, physicals, etc., etc. When all these details align, you will have carriers fighting to insure your business knowing you take the necessary measures to try to prevent claims from happening in the first place.

Or let’s talk about Commercial General Liability. You can get better terms and pricing if you have proper contracts in place with vendors and other interested parties. Sound quality assurance procedures for your products or operations. These things and so many more will help not only mitigate claims, but it’ll help swoon underwriters like you’re a contestant on The Bachelor (ABC).

The list goes on with all types of business insurance policies.

It’s then up to your insurance agent or broker to put together a quality policy to protect your business. This too is extremely important because, like all industries or professions, there are a lot of good insurance professionals out there but bad ones too.

At the end of the day, you have to give in order to receive it. You make sound business decisions and have proactive risk management procedures in place, you can get exceptional insurance coverage at a reasonable price. But if you don’t really care about the important details and don’t put much TLC into what you do, don’t expect the world from your insurance policy. You don’t give a crap? Well, you will only get crap in return.

As for my client who lost their building, the carrier has already paid out $180,000 of almost $500,000 in losses. They have superior coverage because they have a superior broker of course ;). But more importantly, superior coverage because they had a superior building which was well maintained with love. In return, this allowed me to build the “Cadillac” insurance policy that will ultimately keep their asset protected and give rest at night knowing they will be made whole again by the carrier in response to this unfortunate loss.

-JK

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