 Insurance is a grudge purchase; you know you need it, so you buy it. But chances are you've never read your policy.
This webinar will help to cure that problem. We'll explain four basic insurance coverages: commercial general liability, property, employment claims, and cyber liability. At the end, you'll have a high-level understanding of what each policy covers. You can sign up at this link. Traditional insurers have their place as part of a risk financing plan. They have the financial size to absorb massive catastrophic losses (like hurricanes) and extensive claims services, while providing insureds with predictable expenses. All in all, these are clear benefits. But that doesn't mean that your claim will be paid. From the Tampa Bay Times: Nearly one out of every three people who have put in a damage claim from the two hurricanes that hit Florida this year won't receive a nickel to cover the cost, state data shows. The Florida Office of Insurance Regulation released new statistics Tuesday that show hurricanes Hermine and Matthew caused a combined $824 million in insured losses. More than 120,000 claims have been submitted for the two storms combined, but about 42,000 have been resolved with no payments to the property owners. Another 33,000 claims have yet to be resolved. State regulators say the payment rate, so far, isn't unusual. Florida's new insurance commissioner, David Altmaier, told Gov. Rick Scott and the Florida Cabinet on Tuesday that officials are closely watching insurers for trends showing companies are slow to respond to claims or engage in conduct that would prompt a reaction from his agency. This is one of the drawbacks of dealing with large insurance companies. It's also a prime reason why companies often look at establishing and maintaining a risk financing facility.
0 Comments
 Insurance is a grudge purchase; you know you need it, so you buy it. But chances are you've never read your policy. This webinar will help to cure that problem. We'll explain four basic insurance coverages: commercial general liability, property, employment claims, and cyber liability. At the end, you'll have a high-level understanding of what each policy covers. You can sign up at this link. It's easy to fall into the trap of thinking that executives won't embezzle from the company. After all, they're highly compensated individuals whose concern about their reputation should keep them in check, right?
No. According to the Association of American Fraud Examiners: Angela Morelock, CPA, CFE, CFF, ABV brings issues of fraud and embezzlement to the forefront. With over twenty years’ experience, she brings a wealth of knowledge and insight to identify and mitigate risk as well as remediation after an incident has occurred. The Association of Certified Fraud Examiners recently put out the 2018 Report to the Nations. In it they identified over 2,600 real cases of occupational fraud across industries, amounting to a median loss of $130,000 per case. In over 20% of those cases, there was a loss of $1 million or more. Because these individuals know intimate details about the company's inner-financial workings, they are able to not only steal money but make it difficult for the company to detect their activities. This explains why it usually takes at least 18 months to uncover complex theft. It also explains why the amount of the loss can be so high -- the length of detection time allows the embezzler to steal a lot. And if you think this can't happen to a fortune 500 company, think again. From the NY Times: Mr. Saikawa, speaking at a 90-minute news conference at Nissan headquarters in Yokohama, described Mr. Ghosn and Greg Kelly, a director who was also arrested Monday, as “masterminds” of a long-running scheme to mislead financial authorities. He offered few details, citing the prosecutors’ continuing investigation. “I feel a big disappointment,” said Mr. Saikawa, who did not bow in deep apology before television cameras, as is customary in Japan. “And I feel frustration and despair, and indignation or resentment.” Mr. Kelly was Nissan’s first American director, appointed in 2012, but had a much lower profile than Mr. Ghosn. Neither of the men could be reached for comment. So -- you're thinking about adding a risk financing facility to your corporate operations. Great! What does that mean? Glad you asked! Please join us on Friday, November 16th at noon for, "What Every Captive Owner Should Know." You can sign up at this link. The following is from the closing remarks by Mr François Villeroy de Galhau, Governor of the Bank of France and Chairman of the Autorité de contrôle prudentiel et de resolution (ACPR), at the 10th international conference on insurance, Paris, 26 October 2018.
In the short term, Brexit is, alas, the issue that will keep us busiest. The ACPR is working actively to ensure a smooth transition, but the time has come for insurers to set their contingency plans in motion. That means talking with supervisors in the UK and Europe. It will also mean getting new authorisations, transferring portfolios, relocating European companies and setting up third-country branches. Even if we hope to avoid it, we must be ready for a no-deal scenario. In this respect, it would be preferable to have European legislation in place to ensure that every relevant issue is dealt with in a harmonised manner; however, if need be, and as a backstop, the enabling legislation presented to the Council of Ministers on 3 October will allow us to take legal steps in France to manage - for those individuals insured in France - situations where UK firms have not already transferred their contract portfolios. I would like to mention that joint work by the European Central Bank and the Bank of England to assess financial risks looked specifically at insurance contracts, and we believe the risks in this area to be manageable, provided we can properly guarantee the protection of policyholders. In the medium term, against the backdrop of the digital revolution, cyber-security is a growing concern for all businesses. Insurers are of course among the main ones affected because they hold sensitive data. Your industry would certainly be well advised to draw on your experience with cyber-risk to build up your own cyber-insurance offering. I come last to climate risk, which occupies the longest time horizon of all, but which nevertheless requires tangible action to be taken right now. As today's discussions have shown, the natural disaster insurance regime needs an overhaul and I know that reforms are coming in 2019. But this is also a very important area of investigation for supervisors because, over the long run, climate stability is a determining factor in financial stability. In June of this year, the ACPR published a study revealing that an estimated 10-20% of all securities held by French insurers are exposed to risk in relation to the transition to a low-carbon economy. The Banque de France and the ACPR have set up and are actively coordinating the Network of Central Banks and Supervisors for Greening the Financial System (NGFS). Launched in Paris last December, the NGFS started out with eight trailblazing supervisors but has since grown to include 19 members and five observers, including the Sustainable Insurance Forum (SIF). We are working hard on two subjects where insurers are in the vanguard: disclosure of current climate risks and the projection of dynamic stress tests based on future risks. A report detailing the network's first year of work and making recommendations will be presented at a conference in Paris on 17 April next year. So -- you're thinking about adding a risk financing facility to your corporate operations. Great! What does that mean? Glad you asked! Please join us on Friday, November 16th at noon for, "What Every Captive Owner Should Know." You can sign up at this link. This is a great info-graphic on how fraud impacts small business. This was originally posted by Dan Ramey on Linkedin.   So -- you're thinking about adding a risk financing facility to your corporate operations. Great! What does that mean? Glad you asked! Please join us on Friday, November 16th at noon for, "What Every Captive Owner Should Know."
You can sign up at this link. A recent blog post from the GLE Associates blog highlights two construction risks that a risk financing facility can underwrite for contractors: It’s a nightmare no property owner wants to deal with. We had a call a few weeks ago from an owner whose construction project hit a major roadblock due to the discovery of mold growth. The construction company had failed to dry-in the project before hanging drywall, and the drywall had gotten wet. Where there’s organic matter, water, and heat, mold will grow. In this case, a lot of it. The project will have to be delayed while the mold is abated, and it is likely to add hundreds of thousands, if not millions of dollars to the cost of the project. The contractor, meanwhile, has disappeared, so the cost will come out of the owner’s pocket. There are two insurable events in the above fact pattern: Mold: in the late 1990s and early 2000s several mold related cases created headaches for property insurers, which led to the mold exclusion -- now standard for property policies. With the exception of macroeconomic employment benefits, there is nothing good that comes from mold remediation. It's expensive, time consuming, and makes properties money pits for months or years. However, it is a very real risk faced by contractors and real estate companies. Subcontractor default: everybody in the construction business has seen this happen. After a project is completed, a problem with work performed by a subcontractor develops. However, the responsible party has either folded-up shop or declared bankruptcy. Either way, the primary subcontractor now has to foot the bill for the repairs. Risk financing facilities (RFFs) excel at hard to underwrite risks, filling gaps in coverage. Both of the above fact patterns are tailor-made for RFFs. The underwriting process involves the identification, analysis, and treatment of risks, which will include mold remediation and subcontractor default. Please call us at 832.330.4101 if you'd like to learn more. So -- you're thinking about adding a risk financing facility to your corporate operations. Great! What does that mean? Glad you asked! Please join us on Friday, November 16th at noon for, "What Every Captive Owner Should Know." You can sign up at this link. Here are a few commonplace -- and FREE -- ways to protect your system from malware and viruses.
We're giving a webinar on Friday, November 9 titled, "The Stand-Alone Captive Solution." You can sign up at this link. I was born and raised in Cincinnati, Ohio, a city which started and which continues to thrive thanks to the Ohio River. In fact, the last time that I visited my family there, I drove up Columbia Parkway and observed several barges moving up and down the river. While it may seem quaint to still utilize river transportation, there is no denying that it is an effective and cost-efficient method of moving goods from point A to point B. River transportation remains a key component of supply chains across the globe. For example, Germany has the Rhine which moves northwest to southeast across the western part of the country:  Notice how the Rhine connects major German cities (in fact, these cities came into existence as trading posts along the Rhine, and then grew into their modern incarnation as major cities of as commerce). A story in today’s New York Times explains that the Rhine is experiencing a very serious drought which is negatively impacting supply chains in Western Germany:
“It’s simply the most important river in Germany,” said Martin Mauermann, head of the hydrology and water management section of the federal body responsible for waterways. “It’s like the thick branch in the middle of the tree.” Roughly 80 percent of the 223 million tons of cargo transported by ship in Germany each year travels the Rhine, which links the country’s industrial heartland to Belgium, the Netherlands and the North Sea. An exact tally of how much is being diverted to rail and road is not yet available, but “it is a significant number,” said Martyn Douglas of the German Federal Environment Agency. Supply chain disruption obviously affects manufacturers who not only rely on supply chains to deliver raw materials but also to send finished products to customers. But other businesses also rely on supply chains such as retail outlets, auto dealerships, and farmers. In fact, one could argue that this drought is hurting the entire western region of Germany in one form or another. We're giving a webinar on Friday, November 9 titled, "The Stand-Alone Captive Solution." You can sign up at this link.
It’s easy to “pigeonhole” or compartmentalize risk management. In fact, this is the traditional method of dealing with risk where the insurance department only deals with insurance risks, operations only handles operational risk, and the financial apartment only manages financial risk. This “siloing” of risk does not take into account the correlation or potential interconnection between risks. Modern risk management theory argues for a holistic approach that acknowledges an interconnected web of cause and effect between risks. A recent article in the Financial Times highlights this modern approach. It notes that few firms have a political risk officer whose job focuses on how geopolitical events could negatively or positively affect the company. This observation is especially prescient in the current political environment where the old-world order of global trade liberalization (as codified by GATT) and regional trading agreements (such as NAFTA) are being replaced by nationalistic and anti-globalization forces. A shrewd political risk officer would note that the rise of nationalism appears to be a global phenomenon, with such leaders being elected in Brazil, the United States, the Philippines, Hungary, Italy, and Poland. This trend is leading to a re-working of trade agreements. As a result, global supply chains may no longer be in vogue, forcing companies to re-source production within specific countries as opposed to shipping products to the same locations. This would, in turn, force companies to build new factories in new locations. While it’s doubtful that political risk officers will suddenly become the new hot job, this does show how risk managers must consider a variety of risks and their respective inter-connections. If you'd like to move your Puerto Rico captive to a more economically sound jurisdiction, please call us at 832.330.4101. Because labor costs are the largest short-term cost for most businesses, labor market indicators remain the most important coincidental economic indicator used by economists to determine the current condition of an economy. The following table show total establishment jobs for Puerto Rico:  There are two key points in this data. First, after the Global Financial Crisis (GFC) the Puerto Rico jobs market has done nothing by lose jobs; the island has lost about 200,000 jobs since the GFC. Just as importantly, the economy has not recovered from Hurricane Maria; in fact, it appears PR has only created about 1/3 of the jobs lost as a result of the hurricane.
The above data indicates there is a structural problem with Puerto Rico's economy; it simply isn't creating any jobs despite the near decade-long rebound in global growth. Put another way, Puerto Rico's economy is unsound. My favorite product recall story involves Bluebell Ice Cream. In the summer of 2016, Bluebell had to recall their product due to contamination at their Brenham, Texas plant. It was big news in Texas because in occurred during the hottest part of the notoriously warm Texas summer. I have no idea if Bluebell had product liability and product recall insurance coverage before the incident, but rest assured they have it now.
Any manufacturer that places a product into the “stream of commerce” faces these two risks: product liability and product recall. The former is derived from tort law, which places a duty of care on all economic actors to provide safe products . The second happens when a manufacturer has to remove its product because it is somehow unsafe. Both risks are very expensive. Product liability may involve wrongful death costs and can also be pursued through a class action suit. Product recall involves pulling the product from shelves, transporting it back to a warehouse, sending new product to retailers, regaining lost income caused by the inevitable decline in sales, and rehabilitating the company’s public image. This recent story about ground beef contamination got me thinking about this risk, which happens more often than you think. |
RSS Feed