Cliff Rudolph's Insurance Blog

Twitter user being sued for tweet! Will your insurance policy respond?

As reported byUnited Press International

On July 28th a suit was filed by Horizon Group Management over a twitter post by one of its residents who tweets: "Who said sleeping in a moldy apartment was bad for you? Horizon realty thinks it's okay."

The suit claims that Bonnen "maliciously and wrongfully published the false and defamatory Tweet on Twitter, thereby allowing the Tweet to be distributed throughout the world,". 

With so many organizations looking at utilizing social networking, blogging, and tweeting it is important to understand the risks involved.  Possible Personal and Advertising injury as well as Intellectual Property Infringement can easily occur by employees tweeting and blogging on behalf of your organization.  

Furthermore, most commercial insurance policies will exclude Personal and Advertising injury "arising out of an electronic chat room or bulletin board the insured hosts, owns, or over which the insured exercise control" (ISO CG00 01 12 07).  As well as Personal and Advertising injury "arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights" (ISO CG00 01 12 07).

Insurance companies are well aware of this exposure and have developed innovative products to assist in covering this potential gap.  Professional, Communications, & Media Liability policies, in many forms are available as endorsements or stand alone products and will compliment your enterprise wide risk management program.  In many cases, coverage is relatively inexpensive with minimum premiums as low as $2,000. 

Don't be caught by surprise! Twitter, Blogs, Facebook and other social media exposures are soon becoming just another part of an organizations daily operations, and should be carefully considered in your risk management program. 

There is a great article from the financial post on the personal liability of tweeting that you can find here:

Cliff Rudolph

How does the Medicare, Medicaid and SCHIP Extension Act of 2007 affect your organization? If you are an RRE, have you registered yet?

The Medicare and Medicaid and SCHIP Extension Act of 2007 comes into effect in 2010.

The new act imposes mandatory reporting requirements for liability insurance (including self insured’s), no fault insurance and workers’ compensation and will impact many organizations.

Simply put; section 111 of this new Act imposes an obligation on the primary payers to identify claimants entitled to Medicare or Medicaid and report these claims to Medicare electronically.

For more information (180 pages) visit the Centers for Medicare & Medicaid Service (CMS) website.

http://www.cms.hhs.gov/MandatoryInsRep/Downloads/NGHPUserGuide031609.pdf

Who needs to report?

The key is to define if your client is likely to meet the definition of a Responsible Reporting Entity (RRE).

The best rule of thumb is:

If you pay a claimant who is Medicare or Medicaid eligible they are the RRE.

The best way to identify the RRE to answer the following:

If you are fully insured on an auto liability policy, with no deductible – The insurance company is the RRE.
If you decide not to report the claim for any reason (Concerns with increased premiums, etc.) – You are the RRE.
If you are self-insured for workers’ compensation up to $500,000, with an excess policy for claims above $500,000. You are the RRE, until the excess policy is triggered.
If you are with the State Fund for Washington Workers’ Compensation – We believe L&I is the RRE.

If you have a protection & indemnity policy for marine exposures, and it is written on a duty to indemnify basis (the insurer reimburses what the client has paid) – Some attorneys are saying you are the RRE; Marine insurers are saying that you are the RRE. This issue has not yet been addressed by the CMS. –

As you can see, there are “gray” areas. But what is certain, if you are or could be an RRE, you will need to register with the CMS during the registration period , beginning July 1 through September 30, 2009.

For more information about registration visit:

http://www.cms.hhs.gov/mandatoryInsRep/05_Computer_Based_Training.asp

A self insured organization with a Third Party Administrator (TPA) can designate the TPA to be the Reporting Agent (RA). However you are still responsible for registering and will remain responsible for the results of that reporting.

What are the consequences of not reporting if you are the RRE?

The penalty for non-compliance is $1000 per day, per claim. So it is important that you register and comply with this new law.

Some quick tips when it comes to D&O Renewals

Here are some quick tips when it comes to renewal proposals on D&O policies:

1. Make sure you have a copy (from the policy) of the definition of claim and the policy wording regarding incident and claim reporting.  Understand claim reporting and be sure to share the information on timing and responsibility with internal managers and staff.

2. The renewal meeting is a perfect opportunity to ask about whether or not there are any incidents or claims that should be reported. Document your file accordingly.

3. If you are moving coverage to a new Insurance Carrier:

· Be sure to review the renewal application. Check to see if there are any potential claims disclosed on the application to the new carrier that were not reported to the prior carrier.

· Be absolutely sure there is no change in the retroactive date such that would restrict prior acts coverage or any other change in terms that would preclude coverage for a claim that would have been covered under the expiring policy.

· Recommend to the client (in writing) that they report all actual claims and possible incidents to the expiring carrier within the prescribed period of time.

· If at all possible, have the new carrier except the “old carriers” application – in order to back date and utilize the same prior and pending litigation date. DO NOT have your client re-warrant the new insurance carrier’s application.

4. If you are renewing coverage, make sure you utilize the carrier’s renewal application and not a new business application. Why? The renewal application should NOT contain a claim/notice warranty question.

Will injuries due to employee wellness programs "fall" to workers compensation?

Julie Ferguson blogs about Injuries at the gym and whether they would fall under workers compensation as a result of employee compensability, incentives, and wellness. http://www.workerscompinsider.com/archives/001082.html.

She was following Roberto Ceniceros blog on a New York appeals court ruling which awarded workers compensation benefits for an injury that occured at a clients gym, whom the claimant performed contract work.  While the employer had not been compensated or required participation at the gym, it was found that the employer had encouraged the claimant to participate. http://www.businessinsurance.com/article/20090710/BLOGS02/907109997

While wellness programs have been around for decades, they continue to build steam as employers look to find ways to control employee benefit costs.  However, Julie and Roberto bring up interesting points. 

If an employer encourages, provides incentives, or in some way an employee feels they have been intimidated or coerced to participate, and an injury occurs, would workers compensation benefits be paid? If so, will underwriters rate for this? Will Workers Compensation costs go up?

Consider for a moment the opportunity for fraud... At our firm, our wellness team has organized many events including a walk-a-thon, yoga, boot camp, and many other fun activities.  But what if an employee, after work, while walking and tracking his/her miles for the walk-a-thon fell and broke his/her leg and was out for two weeks? How would anyone be certain that this was a work related injury due to the wellness program, and not just an injury he/she sustained doing general chores around the house?

Tough questions that are sure to be tested in court.  We'll have to wait and see. 

Regulation Z- Truth & Lending Act

Yesterday I spoke at the Northwest Card Association members meeting on Data Privacy/Cyber Liability Insurance.  Just before my presentation, Mary Sroufe, Director of Regulatory Affairs
with the Washington Credit Union League, discussed some of the issues facing financial institutions that are issuing credit cards.  You can find the Truth in Lending Act here: http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20090715a1.pdf

Considering the amount of changes, the time frame to implement the changes, and the fines & penalties associated it will be critical that financial institutions have coverage for regulatory compliance.  Recently some insurance carriers have excluded this line of coverage.  With a minimum penalty of $500.00 per credit card issued, this can result in a significant financial loss.

Corporate Governance and Risk Management for Financial Institutions: The Broker’s Role

The FDIC expects more bank failures as the financial crisis continues. On May 27th the FDIC released the Quarterly Banking Profile that represents a report card of the industry status and performance. It concluded that FDIC insured institutions reported a net income of $7.6 Billion in the first quarter of 2009, representing a significant recovery from the $32.1 Billion loss in the fourth quarter of 2008. However, this is 60.8% lower than the first quarter of 2008, a year in which we saw a decline of $32.7 Billion. The fourth quarter of 2008 represented the first quarterly loss since 1990. One third of all insured institutions were not profitable in the fourth quarter of 2008, and overall earnings were outweighed by sizeable losses at a number of large banks. Furthermore, during the first quarter of 2009, twenty-one financial institutions failed; the highest quarterly total since 1992.

Directors and Officers insurance is a critical piece of your overall risk management platform, both for your directors and officers, and the organizations they serve. Remember, when you have the right blend of a knowledgeable broker and a client that is taking the necessary precautions to “weather the storm”, underwriters will look at the strengths of your program instead of assuming the worst. In the end, choosing the right broker will increase the effectiveness of your risk management solution while lowering overall insurance costs.

Here is an article I wrote on the subject:

http://www.psfinc.com/press/corporate-governance-and-risk-management-for-financial-institutions-the-brokers-role

Trade Credit Insurance - An Old Product Renewed

Euler Hermes recently forecasted an increase of 35% in corporate worldwide insolvencies for 2009, after an increase of more than 27% in 2008. With the continued economic downturn organizations are increasingly inquiring about Trade Credit Insurance, sometimes referred to as Accounts Receivables Insurance. Lenders are quickly beginning to require Trade Credit Insurance placements when using accounts receivables as collateral and organizations are left scrambling to find coverage. And as the market for Trade Credit Insurance constricts, it is more important than ever to make sure you understand what a Trade Credit policy insures and how it works.

As the economic downturn continues and businesses continue to consolidate, an organization’s revenue streams are at increased risk. Furthermore, the constriction of credit availability and organizations’ need to find new revenue streams globally have dramatically increased the demand for Trade Credit Insurance/Accounts Receivables Insurance.

You can an article I wrote on Trade Credit here:

http://www.psfinc.com/press/trade-credit-insurance-an-old-product-renewed

Risk Management for Employees Traveling Abroad

In many of the world’s leading danger zones -- Mexico, Ecuador, Venezuela, Brazil and Colombia -- the kidnapping of North American executives for ransom has long been a growth industry. Today, as the age of corporate globalization collides with international terrorism, U.S. companies are expanding their risks as rapidly as they broaden their reach. 

Unfortunately, while North American executives and their families are popular kidnapping targets, U.S. business has been slow to manage kidnap and ransom risks effectively. What’s the best way for employers to prepare for and mitigate losses associated with kidnappings? The international risk management experts at Parker, Smith & Feek, Inc, an Assurex Global Partner and the area’s leading commercial insurance brokerage, recommends any employer sending employees into high-risk countries purchase kidnap and ransom (K&R) insurance coverage.

You can find the rest of this article here:

http://www.psfinc.com/press/risk-management-for-employees-traveling-abroad

Is Your Firm’s Private Data Susceptible to Breach?

In today’s data age, almost all organizations store some form of private or confidential information, whether it is employees, customers, or information obtained from vendors. Since 2005 more than 200 million records containing sensitive personal information have been reported in a security breach in the United States.

The costs associated with notification and the liability that is arising out of privacy and security matters is costing millions of dollars to organizations of all sizes and types. One insurance carrier recently produced a data loss calculator that estimates that on average the costs associated with data loss are about $166 per record. It also provides information on pending class action lawsuits where plaintiffs are requesting $1 million to $21 million per person for damages due to data loss.

Here is an article that I wrote on the subject:

http://www.psfinc.com/press/is-your-firm%E2%80%99s-private-data-susceptible-to-breach

Biodiesel fuel belongs on the construction site

An often overlooked part of "green building" is the impact of construction on human health and the environment during the course of a project.

Today, land developers, property owners and construction companies are increasingly realizing the health, environmental and energy-security benefits of using cleaner-burning biodiesel in construction equipment.

You can find my article published in the Puget Sound Business Journal here:

http://seattle.bizjournals.com/seattle/stories/2007/12/17/focus12.html