Wanna Cry Creates Huge Business Losses

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A wave of cyber attacks hit targets in 150 countries on Friday, May 12–and this number is expected to grow, according to law enforcement authorities. This fast-spreading hack is unprecedented in how it spreads ransomware via a “worm.” The white paper, “Cyberrisk: Threat and Opportunity” examines how insurers contend with these evolving hazards to networks and data.

  • Interest in cyber insurance and risk continues to grow beyond expectations in 2016 in part due to high profile data breaches, but also due to awareness of the almost endless range of exposures businesses face.
  • Attacks and breaches have grown in frequency, and loss costs are on the rise.
  • Insurers are issuing an increasing number of cyber insurance policies and becoming more skilled and experienced at underwriting and pricing this rapidly evolving risk. More than 60 carriers now offer stand-alone cyber insurance policies, and it is estimated the U.S. market is worth over $3.25 billion in gross written premiums in 2016, with some estimates suggesting it has the potential to grow to $7.5 billion.

Some observers believe that exposure is greater than the insurance industry?s ability to adequately underwrite the risk. Attacks have the potential to be massive and wide-ranging due to the interconnected nature of this risk, which can make it difficult for insurers to assess their likely severity. The under reporting of attacks means that accurately evaluating exposures is challenging. Several insurers have warned that the scope of the exposures is too broad to be covered by the private sector alone, and a few observers see a need for government cover akin to the terrorism risk insurance programs in place in several countries.

Insurance in Florida, the Future of No-Fault

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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.

Motorcycle Safety Statistics

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  • In 2015, 4,976 people died in motorcycle crashes, up 8.3 percent from 4,594 in 2014, according to a National Highway Traffic Safety Administration (NHTSA) report.
  • In In 2015, 88,000 motorcyclists were injured, down 4.3 percent from 92,000 in 2014.
  • In 2015, motorcyclists were 29 times more likely than passenger car occupants to die in a crash per vehicle mile traveled, and almost five times more likely to be injured.
  • Motorcyclists accounted for 14 percent of all traffic fatalities, 4 percent of all people injured, 17 percent of all occupant (driver and passenger) fatalities, and 4 percent of all occupants injured.
  • There were 8.6 million motorcycles on the road in 2015.

In 2015, 4,976 people died in motorcycle crashes, up 8.3 percent from 4,594 in 2014, according to the National Highway Traffic Safety Administration (NHTSA). In 2015, motorcyclists were 29 times more likely than passenger car occupants to die in a crash per vehicle mile traveled, and almost five times more likely to be injured.

(Note: statistics on fatal motorcycle crashes are also available from the Insurance Institute for Highway Safety.)

KEY FACTS

  • According to the latest data available from the Federal Highway Administration, there were 8.6 million private and commercial motorcycles on U.S. roads in 2015, compared with 8.0 million in 2009.
  • 2015 Crash Data: According to the U.S. Department of Transportation?s National Highway Traffic Safety Administration (NHTSA), 4,976 people died in motorcycle crashes in 2015, up 8.3 percent from 4,594 in 2014. In 2015, 88,000 motorcyclists were injured, down 4.3 percent from 92,000 in 2014.
  • In 2015, 40 percent of motorcyclists killed in motor vehicle traffic crashes were not wearing a helmet.
  • The fatality rate per registered vehicle for motorcyclists in 2015 was six times the fatality rate for passenger car occupants, according to NHTSA.
  • Motorcycle Theft: The National Insurance Crime Bureau (NICB) reported that motorcycle thefts rose 6 percent in 2015 to 45,555 from 42,856 a year earlier, based on data from the National Crime Information Center of the FBI. However, motorcycle thefts are down 32 percent from 2006 when they totaled 66,774, according to the NICB.
  • The NICB?s report also details the seasonal nature of motorcycle thefts. More motorcycles are stolen during warm months?July and August had the most motorcycle thefts in 2015 while January and February had the fewest. The top five makes stolen in 2015, from highest to lowest, were American Honda Motor Co., Yamaha Motor Corporation, American Suzuki Motor Corporation, Kawasaki Motors Corp. and Harley-Davidson Inc. California had the most motorcycle thefts in 2015, followed by Florida and Texas. By city, New York, New York, had the most thefts, followed by Las Vegas, Nevada, and San Francisco, California.

FATALITIES AND INJURIES

According to the U.S. Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) the following terms are used to define motorcycle occupants: a motorcycle rider is the operator only; a passenger is any person seated on the motorcycle but not in control of the motorcycle; and any combined reference to the motorcycle rider (operator) as well as the passenger will be referred to as motorcyclists.

According to NHTSA, in 2015, 4,976 people died in motorcycle crashes, up 8 percent from 4,594 in 2014. In addition, 88,000 motorcyclists were injured, down 3 percent from 92,000 in 2014. In 2015, 40 percent of the motorcyclists killed were not wearing helmets.

By Age: Older motorcyclists account for more than half of all motorcyclist fatalities. NHTSA data show that in 2015, 54 percent of motorcyclists killed in crashes were age 40 or over, compared with 47 percent in 2005. The number of motorcyclists age 40 and over killed in crashes increased by 17 percent from 2006 to 2015. In contrast, fatalities among all motorcyclists rose 3 percent. NHTSA says that the average age of motorcycle riders killed in crashes was 42 in 2015, compared with 39 in 2006.

Older riders appear to sustain more serious injuries than younger riders. Researchers from Brown University cited declines in vision and reaction time, along with the larger-sized bikes that older riders favor, which tend to roll over more often, and the increased fragility among older people as the causes. The study used data on riders age 20 and over who needed emergency medical care following motorcycle crashes from 2001 to 2008. The riders were put in three groups by age: 20 to 39, 40 to 59, and 60 and over. The data showed that while injury rates were rising for all age groups, the steepest rise occurred in the 60 and over group, who were two and a half times more likely to have serious injuries than the youngest group. They were three times more likely to be admitted to the hospital. The middle and older groups were also more likely to sustain fractures, dislocations and other injuries, such as brain damage, than the youngest group. The authors published findings in the journal Injury Prevention in February 2013. The study is entitled Injury patterns and severity among motorcyclists treated in US emergency departments, 2001?2008: a comparison of younger and older riders.

By Driver Behavior

Alcohol use: According to NHTSA, in 2015, 27 percent of motorcycle riders who were involved in fatal crashes had a blood alcohol concentration (BAC) of 0.08 percent or over (the national definition of drunk driving). This compares with 21 percent of passenger car drivers, 20 percent for light truck drivers involved in fatal crashes, and with 2 percent of large truck drivers.

In 2015, fatally-injured motorcycle riders between the ages of 35 to 39 had the highest rate of alcohol involvement (37 percent), followed by the 45 to 49 age group (36 percent).

In 2015 motorcycle riders killed in traffic crashes at night were almost three times more likely to have BAC levels of 0.08 percent or higher (42 percent) than those killed during the day (13 percent).

The reported helmet use rate for motorcycle riders with BACs at or over 0.08 percent who were killed in traffic crashes was 51 percent in 2015, compared with 65 percent for those who did not have any measurable blood alcohol.

Speeding: In 2015, 33 percent of all motorcycle riders involved in fatal crashes were speeding, compared with 19 percent for drivers of passenger cars, 15 percent for light truck drivers and 7 percent for large truck drivers, according to NHTSA.

Licensing: Twenty-seven percent of motorcycle riders who were involved in fatal crashes in 2015 were riding without a valid license, compared with 13 percent of passenger car drivers.

By Type of Motorcycle: According to a 2007 report from the Insurance Institute for Highway Safety (IIHS), riders of “super sports” motorcycles have driver death rates per 10,000 registered vehicles nearly four times higher than those for drivers of other types of motorcycles. Super sports can reach speeds of up to 190 mph. The light-weight bikes, built for racing, are modified for street use and are popular with riders under the age of 30. In 2005 these bikes registered 22.5 driver deaths per 10,000 registered vehicles, compared with 10.7 deaths for other sport models. Standards and cruisers, and touring bikes (with upright handlebars) have rates of 5.7 and 6.5, respectively, per 10,000 vehicles. In 2005 super sports accounted for 9 percent of registrations, and standards and cruisers made up 51 percent of registrations. Among fatally injured drivers, the IIHS says that drivers of super sports were the youngest?with an average age of 27. Touring motorcycle drivers were the oldest, 51 years old. Fatally injured drivers of other sports models were 34, on average; standard and cruiser drivers were 44 years old. Speeding and driver error were bigger factors in super sport and sport fatal crashes. Speed was cited in 57 percent of super sport fatal crashes in 2005 and in 46 percent for sport model riders. Speed was a factor in 27 percent of fatal crashes of cruisers and standards and 22 percent of touring models.

Hurricane Checklist for Renters

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RENTERS INSURANCE

If you rent, rather than own, your home, have you bought renters insurance?

While your landlord may provide insurance coverage for the structure of your home, as a renter you are responsible for your own belongings. Renters insurance covers the loss or destruction of your possessions if they are damaged by a hurricane or other disaster listed in the policy. A standard renters insurance policy also includes ALE coverage if you are unable to live in your house or apartment due to damage caused by a hurricane.

Flood insurance is also available for renters. However, as for homeowners, the NFIP flood insurance policies for renters do not include ALE coverage.

Don’t wait to review and update your insurance until after you have a loss?here are few things worse than finding out you did not have the right kind of coverage when you are already filing a claim. So before hurricane season kicks off, make sure you’ve reviewed home or renters insurance policy with this Hurricane Season Insurance Checklist. Call your Insurance Professional if you have any questions. They can provide guidance on how to get the insurance protection that’s best for your needs and budget.

For information on how to make your home more disaster resistant, go to the Insurance Institute for Business & Home Safety (IBHS). For information on evacuation, go to the Federal Alliance for Safe Homes (FLASH).

Water Damage Claims & Insurance

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The Wall Street Journal frequently appears fascinated by some of the goings on in Florida. The publication has often written about anomalies that seem unique (or some other not-so-favorable adjective) to the Sunshine State. We have “issues” here that just don’t seem to occur in many other places. Living here, in the midst of it all, can cause a loss of perspective. So, without any editorializing in this space, you might find this editorial on the demise of a bill to stop insurance claim abuse interesting reading. Click the link and read it through.

The challenges with assignment of benefits and water damage claims has been documented on this blog several times. Insurers have been calling attention to this problem for at least three years. The reality of allowing the abuse to continue became ever more apparent last week when Citizens Property Insurance announced its first net loss since 2005 ? of $27.1 million. Assignment of benefits is the clear cause. The clear solution now that there won’t be a legislative fix? Higher insurance premiums for Citizens’ customers, particularly in South Florida. That’s where assignment of benefits became a “unique” practice, allowing lawyers and contractors to take over a homeowner’s insurance claim and inflate the costs.

Ah, the high costs of being unique.

Tax Time & Insurance

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At tax time people are looking to find every possible deduction they can?so what about writing off your home or auto insurance premiums? The answer mostly comes down to one easy question: personal or business?

If you’re buying personal coverage for your home, car or another purpose, the Internal Revenue Service considers it a regular living expense, which isn’t any more deductible than buying toothpaste or kitty litter.

If you’re in business for yourself?even if it’s just moonlighting?the answer may be different. And if you participate in the “gig economy” (e.g. renting your home on Airbnb or driving for Uber) you also can deduct some part of those costs against your business income?as long as you’re also willing to declare the money you’re earning as income.

Deducting Your Premiums

It takes some extra effort to directly deduct either your auto or home insurance payments on your taxes. First, you’ll have to itemize and fill out an entire Form 1040, not the abbreviated 1040 A or the quickie 1040 EZ. If you typically only take the standard deduction on your taxes, you may not have enough other items to write off in order to make this worthwhile. You’ll also have to file Schedule C Profit or Loss From Business. Second, to maximize your deductions you’ll need to calculate how you’re going to claim your insurance premiums?for both auto and home deductions you have the option of using a simplified method or calculating your actual insurance expenditure.

Auto

The IRS allows for a simplified method of deducting the business use of your car or other vehicles, at 54 cents per mile. That’s designed to cover payments, fuel, repairs, depreciation, maintenance and insurance costs. To take your actual expenses, you must calculate the percentage of total car costs for the year based on the number of total miles driven vs. miles driven for business.

Home

For homeowners, the simplified home office deduction is $5 per square foot for the space that’s dedicated only to office use, up to a maximum of 300 square feet, or $1,500.

The more complicated method is to add up all your home-related expenses?mortgage payments, maintenance, property tax, insurance, utilities and so on?and then deduct the percentage of total space in the home occupied by the home office space. So, if all your home expenses for the year totaled $8,000, that 96-square-foot office in a 2,000-square-foot home would allow you to deduct $384. Of course, you’ll need to have good records of all the expenses.

Are Insurance Payments Taxable?

Insurance payouts you receive after damage to your home or an accident involving your car are generally not taxable unless you’ve come out way ahead financially. Generally, a payment to reimburse you for repairs or replacement isn’t going to be taxable unless the payment exceeds what you originally paid for the property, an unlikely situation since most things lose value over time rather than gaining it. And, if you receive dividends from a mutual insurance company, those aren’t taxable unless they total more than the insurance premiums you paid to that company during the year.

On the other hand, if there is a really big gap between what your insurer paid out and your actual financial damage, you might be able to take a deduction for the loss. Deductions on the Casualties and Thefts schedule can be written off only to the extent that they exceed 10 percent of your adjusted gross income, minus $100 and any insurance payments. Your adjusted gross income, or AGI, is your taxable income after tax credits, exemptions and deductions?the amount of money you actually pay tax on. If your household made $80,000 in 2016, and your AGI was $60,000, you’d need a loss of more than $6,100 before you could deduct a single dime. Even then, the amount is limited to the part of the loss that’s more than $6,100 so you would need to have a significant loss to be able to write anything off..

These are both fairly rare and complex situations that should be reviewed with a financial professional.

Insurance Fraud and You

Courtesy of iii.org

The cost of insurance fraud is a cost all policyholders wind up paying. Consider that fraud adds about $34 billion each year to the property/casualty insurance sector?s incurred losses in the U.S. That equates to about 10 percent of the cost of insurance. The victims of this fraud are?..everyone.

Florida CFO Jeff Atwater heads the state?s Bureau of Insurance Fraud, which consists of 117 sworn officers plus support staff. He?s been championing fraud awareness and recently published a newsletter with a story about an Orange County man who paid someone to torch his car. This person filed an insurance claim, got paid, got found out ? and got jail time. The newsletter said the arson claim cost the insurance company $10,000, and it may cost the perpetrator up to 20 years in jail.

The state has a fraud tip line: 1-800-378-0445. There is also an online form for reporting fraud. We?re in this fight against fraud together.

How to FInd a Lost Life Insurance Policy

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Locating life insurance documents for a deceased relative can be a daunting task?for one thing, as of this moment there are no national databases of all life insurance policies. However, with a little sleuthing, you can successfully navigate the paper trail.

Here are some strategies to help simplify your search:

1. Look for Insurance Related Documents

Search through files, bank safe deposit boxes and other storage places to see if there are any insurance related documents. Also, check address books for the names of any insurance professionals or companies?an agent or company who sold the deceased their auto or home insurance may know about the existence of a life insurance policy.

2. Contact Financial Advisors

Present or prior attorneys, accountants, investment advisors, bankers, business insurance agents/brokers and other financial professionals might have information about the deceased’s life insurance policies.

3. Review Life Insurance Applications

The application for each policy is attached to that policy. So if you can find any of the deceased’s life insurance policies, look at the application?will have a list of any other life insurance policies owned at the time of the application.

4. Contact Previous Employers

Former employers maintain records of past group policies.

5. Check Bank Books, Statements and Canceled Checks

See if any checks have been made out to life insurance companies over the years.

6. Check the Mail for a Year Following the Death of the Policyholder

Look for premium notices or dividend notices. If a policy has been paid up, there will no notice of premium payments due; however, the company may still send an annual notice regarding the status of the policy or notice of a dividend.

7. Review the Deceased’s Income Tax Returns for the Past Two Years

Look for interest income from and interest expenses paid to life insurance companies. Life insurance companies pay interest on accumulations on permanent policies and charge interest on policy loans.

8. Contact State Insurance Departments

Twenty-nine state insurance departments offer free search services to residents looking for lost policies. The National Association of Insurance Commissioners (NAIC) has a “Life Insurance Company Location System” to help you find state insurance department officials who can help to identify companies that might have written life insurance on the deceased. To access that service, go to the NAIC’s Life Insurance Company Location System.

9. Check with the State’s Unclaimed Property Office

If a life insurance company knows that an insured client has died but can’t find the beneficiary, it must turn the death benefit over to the state in which the policy was purchased as “unclaimed property.” If you know (or can guess) where the policy was bought, you can contact the state comptroller’s department to see if it has any unclaimed money from life insurance policies belonging to the deceased. A good place to start is the National Association of Unclaimed Property Administration.

10. Contact a Private Service That Will Search for “Lost Life Insurance”

Several private companies will, for a fee, contact insurance companies on your behalf to find out if the deceased was insured. This service is often provided through their websites.

11. Do You Think the Policy Might Have Been Bought in Canada?

If so, you try contacting the Canadian Life and Health Insurance Association for information.

12. Search the MIB database

As we had said, there’s no database of policy documents, but there is a database of all applications for individual life insurance processed since January 1, 1996. (nb: There is a fee for each search and many searches are not successful; a random sample of searches found only one match in every four attempts.) For more information, go to MIB’s Consumer Protection page.

Insurance Providers Given High Satisfaction Rating

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About one of every 15 U.S. homeowners insurance policyholders files a claim each year and these claimants are now giving insurers their highest ever satisfaction ratings, according to the Insurance Information Institute (I.I.I.).

The J.D. Power 2017 U.S. Property Claims Satisfaction Study gives U.S. home insurers a record score of 859 (on a 1,000-point scale). The industry’s cumulative score stood at 846 in 2016. Five factors are considered when assessing policyholder satisfaction: settlement; first notice of loss; estimation process; service interaction; and repair process.

“Insurers are the nation’s economic first responders and, as such, are continually working to improve how they help Americans recover their lives and businesses in the wake of tragedy and catastrophe,” said Sean Kevelighan, president and chief executive officer (CEO) of the Insurance Information Institute (I.I.I.). “This year’s J.D. Power and Associates survey results are a clear reflection that the industry’s hard work and dedication are delivering the intended results.”

These all-time high claims satisfaction scores are even more remarkable given that incurred losses and loss-adjustment expenses for U.S. property/casualty (P/C) insurers grew by 7.6 percent year-over-year when comparing the first nine months of 2016 to the first nine months of 2015, according to an analysis developed by Dr. Steven Weisbart, the I.I.I.’s chief economist.

Incurred losses reflect the dollar amount of a home insurer’s claim payout whereas a loss adjustment expense is the sum an insurer pays for investigating and settling claims, including the cost of defending a lawsuit in court.

Moreover, Dr. Weisbart noted, catastrophe-related claims through the first nine months of 2016 were already at their highest level since 2012?the year of Superstorm Sandy?and the fourth quarter of 2016 pushed those numbers even higher after insured claim payouts from October 2016’s Hurricane Matthew.

The federal government agreed that 2016 was a volatile, and costly one, estimating 15 separate weather and climate events last year caused more than $1 billion in economic losses, not all of them insured, according to the National Oceanic and Atmospheric Administration (NOAA).

“Property and casualty insurers have redoubled their efforts to improve the settlement process and fine-tune their customer interactions, efforts that have been clearly recognized and appreciated by homeowners who experienced significant losses this past year,” J.D. Power said.

The study also noted opportunities for improvement, most notably in water-related and other complex claims that take a long time to settle and that cause significant lifestyle disruption. J.D. Power noted, “Insurers that manage to get the settlement process and customer interaction equation right in these types of disruptive and often catastrophic scenarios are those that raise the bar for the industry.”

The study is based on more than 6,600 responses from homeowner’s insurance customers, and was fielded between January and November 2016.

A New Career in Insurance

Courtesy of iii.org There are more than a half-million professionals employed within the U.S. property/casualty insurance market. And, if you ask many of them how they got into the industry, most will call it a lucky break. My such stroke of luck occurred decades ago. I was working for a real estate developer, the housing market took a(nother) crash, so I needed to find work. A survey of the marketplace introduced the tremendous opportunities in the insurance field and brought me a wonderful, rewarding career. I highly recommend it!

The insurance field brings a meaningful job. This is an industry that helps protect people and their finances. Insurance makes things happen. You need it to drive a car, build a home (or rebuild one after a disaster), to leave loved ones financially secure, to borrow money to build a business ? and so on. Check out InsureMyPath for insight into the profession and a review of the types of career roles.

For a student considering a college curriculum, there are universities with a risk management and insurance curriculum throughout the U.S. Among them is the insurance program at Florida State University.

What do young professionals think of the insurance field? The view themselves as “secret saviors” because they help people rebuild after disaster. There are a lot of jobs, and room for self-development and advancement. Join us!