20160801NEWS---0001-NAT -CCI-BI_-- 7/29/2016 6:13 PM Page 1

BUSINESS INSURANCE® AUGUST 1, 2016 www.businessinsurance.com $10

$1 BILLION HEALTH INSURERS

The amount a class action settlement in April could cost the National Football League for allegedly failing to protect HEALTH INSURER MERGERS IN JEOPARDY players from health risks associated with head injuries RISK MANAGEMENT AFTER SUIT CITES COMPETITIVE CONCERNS Athletes play Justice Department slams Anthem-Cigna, Aetna-Humana deals hardball over BY SHELBY LIVINGSTON MERGER The U.S. Justice Depart- BATTLE concussions ment’s strong objections to merging Anthem Inc. with U.S. Justice Department Cigna Corp. and Aetna Inc. litigation seeks to block the Increased litigation may $54 billion merger of Anthem with Humana Inc., outlined in Inc. and Cigna Corp. and the lead to cuts in coverage federal litigation filed last $37 billion merger of Aetna Inc. month, have left significant and Humana Inc. on anti- BY STEPHANIE GOLDBERG doubt about either deal being competitive grounds. It alleges that: completed. Increased awareness about the Many analysts hold that the ■ Allowing the mergers would hurt employers, consumers, long-term effects of concussions $37 billion Aetna-Humana tie- doctors and hospitals. could lead some insurers to up has a stronger chance of ■ The Anthem-Cigna deal exclude head trauma from policies winning approval than the $54 would likely harm for professional athletes, experts billion Anthem-Cigna union. competition and raise prices say. “We believe that a settle- in the employer market. Additionally, as a fresh wave of ment including divestitures is ■ The Aetna-Humana deal concussion-related litigation hit still probable, and in fact, we would reduce competition in several professional sports think that Aetna has a rela- the Medicare Advantage leagues last month, pricing for pro- tively strong case should this market. fessional athletes’ insurance could eventually make it to court,” ■ The deals would reduce rise, they say. competition for those seeking health insurance in While the 3rd U.S. Circuit Court See LITIGATION page 28 the public exchanges. of Appeals in Philadelphia approved a class action settlement in April that could cost the Nation- al Football League $1 billion for allegedly failing to protect players from health risks associated with Insurers’ counteroffensive touts lower costs, sufficient choice head injuries, retired NFL players in mid-July also sued Riddell Inc. BY SHELBY LIVINGSTON and Humana Inc., the insurers enrollees — with better-quality Advantage and traditional Medi- for allegedly failing to warn them launched a counterattack. and lower-cost health insurance. care do compete despite the Jus- that company’s helmets wouldn’t Immediately following the U.S. In a joint statement, Aetna and Aetna and Humana also took tice Department’s assertion oth- prevent brain injuries. Justice Department’s July deci- Humana vowed to “vigorously aim at the Justice Department’s erwise, and that divestitures Former professional wrestlers sion to fight the billion-dollar defend” their union, which they analysis, arguing there is enough would solve any competition mergers of Anthem Inc. and hold would benefit consumers — competition in Medicare to sup- See CONCUSSIONS page 27 Cigna Corp., as well as Aetna Inc. particularly Medicare Advantage port the merger, that Medicare See REACTION page 28 Q&A: FRANCIE STARNES COMMENTARY NEWS IN BRIEF New CEO of Worldwide Broker Companies must update risk EEOC files pregnancy Network discusses her plans for management approach to discrimination lawsuit against the organization reflect new global exposures Brown & Brown

PAGE 12 PAGE 14 PAGE 8

Entire contents copyright © 2016 by Crain Communications Inc. All rights reserved. MARINE, AVIATION & SPECIAL TRANSPORTATION RISKS Buyers find ample capacity and REPORT favorable prices in the marine hull and cargo insurance market; drone regulations better define NEWSPAPER opportunities for insurers; truck telematics drive major changes and improved safety on the open road; and a boatload of data PAGE 18 Supporting Those Who Support Others.TM Sound coverage, powerful risk management, and exceptional claims handling for social service providers. Together with Irwin Siegel Agency.

1-800-622-8272

16bi0179.pdf RunDate: 08/01/16 Brown full Page Color: 4/C 20160801NEWS---0003-NAT -CCI-BI_-- 7/29/2016 5:54 PM Page 1

www.businessinsurance.com NEWS 8/1/16 CONTENTS RISK MANAGEMENT INTERNATIONAL FEATURES Truth suffers INTERNATIONAL POKÉMON GO DISTRACTIONS collateral CAN CAUSE ALL KINDS OF HAVOC damage Insurer must pay up From liability to comp, gaming risks are on the rise despite lies in the claim BY MARK A. HOFMANN BY JUDY GREENWALD Profile: Italy Legal experts are divided over Businesses should review and the impact of a ruling by the Unit- The Italian peninsula is mostly reaffirm provisions of their cyber ed Kingdom’s highest court that mountainous, and flooding and insurance to avoid potential liabil- insurers must pay a claim despite earthquakes are the main natural ity from a series of issues raised by a policyholder’s false statement threats. 10 the Pokémon Go craze. supporting that claim. While the popularity of the aug- While they agree that the U.K. mented reality smartphone game, Supreme Court’s 4-1 ruling in Ver- PERSPECTIVES developed by San Francisco-based sloot Dredging BV et al. v HDI Ger- Niantic Inc. in partnership with ling Industrie Versicherung A.G. et Kyoto, Japan-based Nintendo Co. al. came as a surprise and is good Look before leaping into cloud Ltd. and introduced in July, will news for policyholders, there’s dis- inevitably fade, experts say it agreement over how widely it will “Cloud almost certainly will be followed be applied. The decision is, howev- computing” by other games that may raise er, another step in liberalizing became even greater risks. English law on handling claims. AP PHOTO increasingly News reports have described The case addressed the question widespread over many cases of often-unwelcome A sign at the National Weather Service in Anchorage, Alaska, warns of what constitutes a fraudulent the past decade. crowds gathering to play the game Pokémon Go players. claim and how what the court Edgar Germer of on or near private prop- described as “collateral lies” affect OneBeacon Technology Insurance erty, with distracted POKÉMON GO Washington, who rec- tions of interest, including “gyms” a justified claim. The court found discusses the risks of operating in users often wandering RISKS ommends that firms that let players battle train their that the lie by the policyholder was the cloud. 15 into company-owned Issues employers may examine their insur- Pokémon and challenge rival irrelevant “in the sense that the property. face due to the ance policies to be sure teams, which could be on business- claim would have been equally Experts say the smartphone-based they have appropriate es’ property. recoverable whether it was true or game’s potential risks Pokémon Go craze coverage in the event of Experts say the game is particu- false.” OFF BEAT include malware, loss Malware that claims. Companies can larly problematic for many firms The case involved damage to a of private data, proper- infects company take other steps to min- that have bring-your-own-device- ship, the DC Merwestone, when its systems ty damage, personal imize potential liabili- to-work policies. Some apps that engine room flooded in January injury and workers Exposure of ties (see box, page 26). purport to help to players contain 2010 as it left the Klaipeda, Lithua- individual or compensation claims. corporate data The game, available malware, said Alan Brill, senior nian, bound for Bilbao, Spain. At this early stage, free to smartphone managing director at Kroll Associ- According to the ruling, the engine Property damage “no one really knows users, encourages par- ates Inc. in Secaucus, New Jersey. room was damaged beyond repair. for sure what types of Individual and ticipants to capture “If people are using these same During an investigation, a com- employee injuries liability will arise from images of “monsters.” devices they use for their corpo- pany official “developed a theory” it, if any,” said James S. Carter, of It displays the monsters’ locations that a bilge alarm had gone off but counsel at Blank Rome L.L.P. in on maps that become in-game loca- See POKÉMON page 26 weather conditions kept the crew Comp denial really bites from investigating. However, the story turned out to be false. A Virginia worker was bitten by a WORKERS COMPENSATION The official’s reason for the lie poisonous snake, then learned her “was that he was frustrated by the workers comp provider was denying insurers’ delay” in paying the her coverage for her treatment. 30 Opioid law provides limited relief to big problem claim and “he believed that it would fortify the claim and accel- erate payment if the casualty BY DONNA MAHONEY none,” Mr. Obama said in a state- could be blamed on the crew’s fail- ment. “I am deeply disappointed ure to respond to the activation of SECTIONS A federal law aimed at cutting that Republicans failed to provide the bilge alarm,” according to the opioid addiction lacks sufficient any real resources for those seek- ruling. INTERNATIONAL 10 funding and scope, but observers ing addiction treatment to get the While a lower court held the say it still could ease a problem care that they need.” ship’s owners had a valid 3.24 mil- that is a major issue for the work- The president had requested lion ($3.6 million) claim, it also held PEOPLE 12 ers compensation sector. more than $1.1 billion be allocated that the “claim was lost as a result In particular, by increasing edu- raise awareness of the risks of opi- for the program. The law, howev- of the collateral lie about it.” The OPINIONS 14 cation efforts and introducing pre- oid addiction and provide practical er, allows only $181 million a year. U.K. Court of Appeals agreed. scription reporting at the national solutions to curtail addiction and “One hundred and eighty million However, the high court level, the measure will help overdoses. dollars is nothing, but now politi- reversed the lower courts. It noted PERSPECTIVES 15 employers and insurers curb some He expressed disappointment, cians can claim they are doing that the Insurance Act of 2015, abuse of the addictive drugs, they however, regarding the limited something about the opioid crisis which takes effect this month, does MARKET PULSE 22 say. scope of the law. without actually doing anything,” not resolve what constitutes a Late last month, President “This legislation includes some said Joe Paduda, Skaneateles, fraudulent claim. The whole claim Barack Obama signed the Compre- modest steps to address the opioid New York-based president of could have been fabricated or a OFF BEAT 30 hensive Addiction and Recovery epidemic. Given the scope of this Act into law as part of an effort to crisis, some action is better than See OPIOIDS page 27 See COLLATERAL page 26

BUSINESS INSURANCE August 1, 2016 3 20160801NEWS---0004-NAT -CCI-BI_-- 7/29/2016 3:52 PM Page 1

www.businessinsurance.com NEWS 8/1/16 ONLINE RISK MANAGEMENT HEALTH CARE REFORM FEATURES Political parties GALLERY TERROR ATTACKS, HIGHER RISKS differ widely Week in pictures on health care A visual tour of recent big stories. PUT FOCUS ON TRAVEL SECURITY www.BusinessInsurance.com/ WeekInPictures But neither has clout Good planning helps minimize trouble abroad to secure big changes

VIDEO BY MARK A. HOFMANN BY JERRY GEISEL

A safe international business trip According to their election plat- begins long before a jet’s wheels forms, the Democrats and Repub- touch down at the travelers’ des- licans agree that they would like to tination. change the system established by A series of recent terrorist the Affordable Care Act, but nei- attacks as well as questions sur- ther party looks to have enough rounding safety at this month’s clout to make their changes no Summer Olympics in Rio de matter who wins the presidency. Janeiro have underscored the Those platforms “are more of a importance of the Boy Scout motto wish list than a to-do list,” said “be prepared” as far as business Geoff Manville, a principal at Mer- travel is concerned. From consult- cer L.L.C. in Washington. They In Focus: ing public and private sources of will, however, help “frame the Reducing police liability information to prepping travelers debate on health care issues next on what to expect and what to do year.” AP PHOTO Insurers are honing best practices when they arrive, risk managers The Democratic Party platform, for police departments. and security experts face a com- Questions surrounding safety at the Summer Olympics in Rio de Janeiro approved at last week’s conven- www.BusinessInsurance.com/ plex task. have underscored the importance of preparedness. tion in Philadelphia, heaped praise InFocus The first question that must be on President Barack Obama and answered is simple: Is the trip nec- website. malized travel program, including congressional essary? If it is, what framework “The first thing you would do in an intake of the information of Democrats for has been put in place to respond to a corporate setting is the same where the employee is going, why, taking “a critical- MULTIMEDIA any emergency? Finally, what can thing that government security some review process based on the ly important step the employee do to minimize officials would do, which is to ask location,” said Tim Horner, man- toward the uni- Podcasts chances that an emergency might yourself how much do you know aging director and practice leader versal health arise? about the domain in which you’re of security risk management at care” by approv- Hear perspectives from insurance Knowledge of local conditions is operating or sending your employ- Kroll Inc. in New York. President ing the ACA, and risk management experts. key. Those responsible for corpo- ees?” said Tom R. Blank, a former Security professionals and corpo- Obama “which has cov- www.BusinessInsurance.com/ rate travel can tap government deputy administrator at the Trans- rate managers should decide ered 20 million Podcasts resources such as registering in portation Security Administration whether the travel has an appro- more Americans and ensured mil- the U.S. State Department’s online and now Washington-based exec- priate business need and risk lions more never will be denied Smart Traveler Enrollment Pro- utive vice president at Gephardt level, he said. coverage because of a pre-existing gram. They also can stay informed Government Affairs. “Security They also should ask if the condition.” RESEARCH by checking for travel advisories specialists call that domain aware- business could be conducted at Not surprisingly, the GOP plat- and warnings and consular infor- ness.” form has a different view. Agents & Brokers Directory mation sheets on the department’s Companies should have a “for- See TRAVEL page 25 ACA “has imposed a euro-style bureaucracy to manage its Data on the top 100 unworkable budget-busting con- U.S. brokers and 10 DISABILITY flicting provisions,” according to largest global the GOP platform. “A Republican brokers has been president, on the first day in office, updated for 2016. Cultural change needed to tackle mental health care will use legitimate waiver author- Get this must-have ity to halt its advance and then, directory today. with the unanimous support of BY GLORIA GONZALEZ ing a 2012 incident in which a co- congressional Republicans, will www.BusinessInsurance.com/ pilot locked Capt. Clayton Osbon sign its repeal.” AgentsAndBrokers NEW ORLEANS — The crash of out of the cockpit because of his Those differences are “signifi- Germanwings Flight 9525 is a erratic behavior and a 2010 case in cant,” said Allison Klausner, a prime example of why employers which flight attendant Stephen principal and government rela- must directly address workers’ Slater exited a jet via an emergen- tions leader at Xerox HR Solutions BUSINESS INSURANCE (ISSN 0007-6864) Vol. 50, No. 16, is published biweekly by Crain mental health conditions and cy slide because he was irritated in Washington. “The GOP plat- Communications Inc., 150 N. Michigan Ave., absence management profession- with passengers, form backs complete repeal of Chicago, IL 60601-7620. Periodicals postage is paid als must make their case straight “For me, the business case is ACA, while the Democrats say at Chicago and at additional mailing offices. AP PHOTO to the C-suite. clear, it’s obvious, it’s evident,” Mr. they will improve and build upon POSTMASTER: Email address change to Co-pilot Andreas Lubitz, who The crash of Germanwings Flight Spencer said during the Disability it.” [email protected] or mail to was suffering from a mental illness 9525 is an example of why Management Employer Coalition’s For example, the Democratic Business Insurance Circulation Department, 1155 employers must address workers’ Gratiot Ave. Detroit, MI 48207-2912. $10 a copy and that he hid from his employer, mid-July conference in New platform says the federal govern- $149 a year in the U.S. $169 in Canada and Mexico crashed the plane into the French mental health conditions. Orleans. “There’s stresses in our ment should provide coverage in (includes GST). All other countries, $249 a year (includes expedited air delivery). Canadian Post Alps in March 2015, killing 150 pas- business. There’s stresses in every the public exchanges, a proposal International Publications Mail Product (Canadian sengers and crew members. Blue Airways Corp. in New York, business. What can we do as an that likely responds to decisions Distribution) Sales Agreement No. 40012850. GST No. 136760444. Canadian return address: 4960-2 Harry Spencer, vice president of also discussed nonfatal incidents employer?” by UnitedHealth Group Inc. and Walker Road, Windsor, ON N9A6J3. Printed in USA. compensation, benefits and corpo- involving JetBlue employees hav- Copyright © 2016 by Crain Communications Inc. rate social responsibility at Jet- ing mental breakdowns, includ- See DMEC page 27 See PLATFORMS page 25

4 August 1, 2016 BUSINESS INSURANCE

Whis the A+o rated insurer with a Alternative Risk Transfer Aviation growing appetite Cargo Energy Engineering & that writes Construction Entertainment Farm & Ranch Financial Lines more than 1,001 Highly Protected Risk Hull & Marine Liabilities International Solutions different classes Liability Marine Middle Market Package & Small of business? Business Property Programs

We have an appetite for Allianz that’s who. working with you to deliver expert solutions to the variety of risks your clients face. With expanded capabilities that range from coverages for micro breweries to international Directors & Officers Liability programs for Fortune 1000 companies, the value of a partnership with Allianz has never been greater. Allianz, we’re more than you know. www.agcs.allianz.com

© 2015 Allianz Global Corporate & Specialty

16bi0044.pdf RunDate:4/11/16 BI full Page Color: 4/C 20160801NEWS---0006-NAT -CCI-BI_-- 7/29/2016 3:53 PM Page 1 NEWS

RISK MANAGEMENT

18-wheeler next to you and there’s either no driver or the driver is Internet of things clearly not paying any attention?” “We can’t talk about technology and any changes in how we do business without potential set to revolutionize changes in liability,” he said. While autonomous vehicles hold great promise for reducing traffic accidents, Mr. Murdock wondered insurance world if they would be programmed to protect the occupants above all else, or would they be pro- BY ROB LENIHAN is important to consider “how you grammed to minimize property manage those scary and uncertain damage. NAPLES, Fla. — The internet of times.” “How is the liability going to things promises to be the next In an AIG study titled “The Inter- change due to regulations (and) industrial revolution, an issue for net of Things: Evolution or Revo- “It’s an exciting time. It might be a little scary, but we’re going legislation?” he asked “You know which risk managers and others lution?” that was made available to see, I believe, the world change in significant ways the federal government is going to must prepare, according to an at the presentation, Shawn have some say in this … Each state insurance executive. DuBravac, chief economist at the as a result of this technology.” can have its own set of laws and Brian Murdock, Atlanta-based Arlington, Virginia-based Con- probably will depending upon a managing director of Georgia, sumer Electronics Association, Brian Murdock, American International Group Inc. variety of factors. There is going to Alabama and Tennessee at Amer- said that the internet of things be a shift from elation to fear over ican International Group Inc., “will rival past technological mar- tion through the internet to anoth- “Innovate or become extinct new technology, and how will reg- termed the rapidly developing vels such as the printing press, the er device and that occurs without sounds rather severe,” Mr. Mur- ulators and legislators respond. technology as “scary.” steam engine and electricity.” any human intervention. That’s dock said. “When was the last time That’s something that companies David Haas, Miami-based man- Mr. Murdock said society has not the internet of things. you rented a video from Block- have to take into consideration aging director of Florida for AIG, experienced an industrial revolu- This kind of connectivity is buster? And how often are you and be aware of.” described it as a “revolution.” tion since the personal computer spurring the growth of drones, now going out and developing Mr. Murdock also discussed the Mr. Haas noted that the internet came to the workplace in the 1980s. telematics and autonomous vehi- your Kodak film? There’s a couple dangers of hacking autonomous of things is something “that for “I really believe that we’re at the cles while creating new opportuni- of different companies that failed vehicles and played a video show- most of us here is completely new beginning of not an evolution, but ties and concerns for the insurance to innovate and were left behind.” ing how so-called “white hat hack- or something we know very little really a revolution,” Mr. Murdock industry, the AIG executives said “We’ve got to take a look at what ers” remotely took control of a about.” said. “Our industry, specifically, is during last week’s annual confer- this technology is going to do to Jeep Cherokee. While the current environment going to be right in the middle of ence held in Naples, Florida, by the insurance,” Mr. Murdock said. Last year, Sens. Edward J. of rapidly changing technology this. It’s an exciting time. It might Florida chapter of the Risk & “Rates are certainly going to drop Markey, D-Mass., and Richard Blu- can make for uncertain times, it is be a little scary, but we’re going Insurance Management Society with less people getting hurt, less menthal, D-Conn., introduced leg- important to consider “how you to see, I believe, the world change Inc. property damage, but it’s some- islation that would require officials manage those scary and uncertain in significant ways as a result of A decade ago, about 500 million thing to anticipate.” from the National Highway Trans- times,” Mr. Haas said. “What is the this technology.” devices were connected to the Autonomous tractor-trailers portation Safety Administration best way to extract the risk?” A simple definition of the inter- internet, Mr. Murdock said. Today, might be safer than human-driven and the Federal Trade Commis- He said the current environment net of things, he said is “when you 10 billion to 20 billion devices are vehicles, Mr. Murdock said, citing sion to develop standards for of rapidly changing technology take one device — it could be a connected, a number he said could rising global auto fatality statis- securing vehicles and protecting can make for some scary and smartphone, PC, laptop — and that grow to 40 billion to 50 billion in tics, but “how do you feel going consumers’ privacy. The measure uncertain times, but added that it device is able to transmit informa- five years. down the road and looking at the was sent to committee.

CYBER RISK Trump’s apparent call for foreign cyber hack of Clinton sparks security concerns

BY JUDY GREENWALD make it generic, the true message here is hack into private citizens’ emails, or even a that everyone in your audience, every law public citizen’s, you’re essentially inviting Republican presidential nominee Donald firm, every business has a competitor who them to commit a crime,” said Matthew J. Trump’s call for Russia to find and expose would like to see what is going on in your Siegel, a member of Cozen O’Connor in thousands of emails from Democratic pres- business and to use that against you if they Philadelphia. idential rival Hillary Clinton’s days as sec- can,” Mr. Alleman said. “Sarcastic or not, it’s a breach of national retary of state could be viewed as encourag- “I’m sure he intended it facetiously, as security potentially, but it’s also a breach of ing the violation of national security and many things he says are, but it’s an invita- an individual’s private security, both of individual privacy laws, and is comparable tion to basically violate applicable laws,” which could be considered criminal activi- to inviting attacks on business competitors. said Michael R. Overly, a partner at Foley ty,” Mr. Siegel said. As part of an investigation into her usage & Lardner L.L.P. in Los Angeles. “Cyber security is clearly one of our of a private email server while secretary of “One of the greatest threats, in all honesty, nation’s top priorities,” said Roberta Ander- state, Ms. Clinton revealed that while she AP PHOTO of hacking in today’s world is this problem son, a partner at K&L Gates L.L.P. in Pitts- had handed over 30,000 emails to the State Donald Trump’s call for Russia to find and of state-sponsored hacking, where you have burgh. Department, she deleted a similar number expose emails from rival Hillary Clinton’s days China, you have Russia, you have other “Cyber war, through breaches of cyber that she said were unrelated to her work. as secretary of state was roundly criticized countries,” including the United States, security, is likely to be a large part of any “Russia, if you’re listening, I hope you’re last week. engaged in the practice, Mr. Overly said. war that we would be involved in as a able to find the 30,000 emails that are miss- “With the concerns of state-sponsored hack- nation, and so inviting a nation state to hack ing,” Mr. Trump said last week. “I think you Thomas B. Alleman, a member of law firm ing, one does not want to go down the path us, to breach cyber security for any purpose, will be rewarded mightily by our press.” Dykema Gossett P.L.L.C. in Dallas, said Mr. of any government,” including ours, engag- is at a minimum irresponsible,” Ms. Ander- After a storm of controversy, however, Mr. Trump’s comment is akin to “inviting the ing in such hacking. son said. Breaching our cyber security “can Trump the next day said: “Of course, I’m thief to steal from a competitor’s store.” “From a cyber security perspective, any- cause widespread harm and potentially crip- being sarcastic.” “If you take Mr. Trump’s name off of it and time you’re inviting an outside entity to ple us as a nation.”

6 August 1, 2016 BUSINESS INSURANCE 10th Anniversary Entrepreneurial Insurance Symposium September 7-8 | Dallas, TX | Hilton Anatole

Join us in Dallas at the 10th annual Entrepreneurial Insurance Symposium and stay up to date with trends, issues and changes in the insurance industry. Over 300 insurance professionals will come together to share new ideas and concepts related to insurance distribution, underwriting and automation. The Symposium provides an excellent speaker OLQHXSSUR¿ OLQJWKHPRVWSURGXFWLYHDQGLQQRYDWLYHH[HFXWLYHVLQWKHLQVXUDQFHLQGXVWU\

Expand your network and take advantage of the opportunity to recieve CIC/CRM and CE update credit in just 2 days! Register today at www.eInsuranceSymposium.com

NETWORK. LEARN. BE INSPIRED.

2016 SPEAKER PREVIEW

Gordy Bunch Je Chesky Peter Eastwood Dr. Susan Fiorito Rod Fox Evan Hecht Chairman, President & CEO President & CEO President & CEO Jim Moran School of CEO & Managing Partner CEO  e Woodlands Financial Group Insuritas Berkshire Hathaway Specialty Entrepreneurship TigerRisk Partners  e Flood Insurance Agency Florida State University

John Howard Jeremy D. Johnson James Keating Richard Kerr Kathleen Zortman Chairman & CEO President - U.S. Commercial Founder, Chairman & CEO CEO & Chairman President - Property & Casualty BB&T Insurance Holdings AIG tKg Wholesale Brokerage MarketScout QBE North America

FOUNDER INNOVATION PARTNERS

www.eInsuranceSymposium.com | 972-934-4264 Contact  e National Alliance for details regarding update credit quali“ cations at 800-633-2165.

16bi0180.pdf RunDate: 08/01/16 Brown full Page Color: 4/C 20160801NEWS---0008-NAT -CCI-BI_-- 7/29/2016 6:00 PM Page 1

IN BRIEF

case on which the state Supreme Court declined coverage with “modest” out-of-pocket costs. EEOC sues Brown & Brown to rule. Miami attorney Mark Zientz petitioned Those with seven to nine years of NBA service Publisher: Frank Quigley (Chicago) the U.S. Supreme Court seeking a writ of cer- will be offered the same coverage with lower for pregnancy discrimination tiorari in Daniel Stahl v. Hialeah Hospital. The out-of-pocket costs. Those who played at least Editor: Gavin Souter (Chicago) case questions whether Florida’s workers comp 10 years in the NBA will be offered that lower- Editor-at-Large: ■ The U.S. Equal Employment Opportunity system is an adequate exclusive remedy for expense plan and will be eligible for family cov- Jerry Geisel (Washington) Managing Editor: Commission has filed a pregnancy discrimina- injured workers following changes that elimi- erage. Medicare-eligible retirees who played in Mary Jane Grandinetti (Chicago) tion lawsuit against Brown & Brown Inc. The nated permanent partial disability benefits. One the league three to nine years will be eligible Assistant Managing Editors: Charmain Benton (Chicago); EEOC said in a statement that the Daytona question in the petition asks if Florida’s work- for a health plan with no deductible or copay- Sheena Harrison (Chicago); Beach, Florida-based broker made a written ers comp law violates the 14th Amendment of ment and a low-cost prescription drug plan. For Art Editor: employment offer to an applicant and sent her the U.S. Constitution “in a case where no bene- Medicare-eligible players who played more William Murphy (Chicago) Senior Editors: an employment agreement for a personal lines fits can be awarded to an injured worker to than 10 years, that coverage will be extended to Gloria Gonzalez (Washington); technical assistant position at its Daytona cover … partial loss of future wage earning spouses. Judy Greenwald (San Jose); Mark A. Hofmann (Washington); Beach location. The company proposed start- capacity.” Mr. Stahl injured his lower back Sarah Veysey (London) ing dates of either March 30 or April 6, 2015. The while working as a nurse in December 2003, two Associate Editors: Stephanie Goldberg (Chicago); applicant emailed the department leader months after workers comp reforms took effect, XL Catlin names Rob Lenihan (New York) affirming her interest. About two hours later, court records show. The U.S. Supreme Court Staff Reporters: Shelby Livingston (Chicago); she spoke with the department leader’s assis- took no immediate action on the petition. execs for U.S. West Donna Mahoney (Chicago) tant and inquired about maternity benefits Copy Desk Chief: because she was pregnant. “The assistant ■ Mike Soper has joined XL Catlin as U.S. Katherine Downing (Chicago) Copy Editor: immediately advised the department leader Marsh & McLennan posts Western regional leader. Mr. Soper, who was Dave Roknic (Chicago) and minutes later, the applicant received an most recently Zurich North America’s region- Copy Editor/Video Producer: email rescinding the job offer,” said the EEOC. higher revenue, profit al vice president of distribution for the compa- Jewell C. Washington (Chicago) Editorial Assistant: The lawsuit charges the brokerage with violat- ny’s Western region, is based in San Francisco, Joyce Famakinwa (Chicago) ing Title VII of the Civil Rights Act of 1964, as ■ Marsh & McLennan Cos. Inc. reported $3.38 XL Catlin said in a statement. He succeeds Research Director: Andy Toh (Chicago) amended by the Pregnancy Discrimination Act. billion in revenue in the second quarter of this Frank Soldano, who retired, according to a com- Editorial Cartoonist: year, a 4.7% increase from that of the same peri- pany spokeswoman. In addition, Mark Restre- Roger Schillerstrom (Chicago) od a year earlier. The company’s net income po has joined XL Catlin as underwriting direc- Advertising Sales Director: Marsh names U.S., Canada climbed 11.9% to $480 million. Each of the com- tor for global risk management. Mr. Restrepo, Peter Oxner (Chicago) Director, Major Accounts: pany’s four operating companies reported rev- who is also based in San Francisco, was previ- Ron Kolgraf (Boston) president, shuffles execs enue growth. The total revenue of the risk and ously managing account executive for Zurich Mid-Atlantic Advertising Manager: insurance services segment — which consists North America’s construction casualty busi- Mark Krawiec (New York) Midwest/West Advertising Manager: ■ Marsh L.L.C. announced that Martin South of insurance brokerage unit Marsh L.L.C. and ness. Lizette Junor has joined XL Catlin as Spencer Moysey (Chicago) will head its U.S. and Canada business divi- reinsurance brokerage Guy Carpenter & Co. underwriting director of multinational casual- Director, Major Accounts: sion effective Sept. 1 and that it would realign L.L.C. — grew 5.7% to $1.85 billion including ty programs in Los Angeles. She most recently Kimberly Jackson (Boston) Sales & Marketing Specialist: some of its international fiduciary interest income. Marsh’s revenue served as director and Western region manag- Katie Kett (Chicago) units. Mr. South will suc- grew 6.1% to $1.56 billion, while Guy Carpenter er for Aon Global Client Network. Media Services Manager: Nicole Dionne (Chicago) ceed Rob Bentley, who grew 3.6% to $285 million. Revenue for the com- will work on strategic ini- pany’s consulting segment, which consists of Associate Group Publisher - Conferences & Marketing Services: tiatives across parent employee benefits and human resources con- Aon posts lackluster Nikki Pirrello (New York) company Marsh & McLen- sultant Mercer L.L.C. and consultant Oliver Director of Conference Programming: Joanne Wojcik (Denver) nan & Cos. Inc.’s risk and Wyman, grew 3.5% to $1.54 billion. For the first second-quarter results Events Manager: insurance segment, which six months of this year, Marsh & McLennan’s Julie Ford (Chicago) includes both Marsh and revenue grew 4.2% to $6.71 billion, while net ■ Aon P.L.C. reported that revenue for the sec- Diversity & Inclusion Institute Community Manager: Guy Carpenter & Co. income rose nearly 5.0% to $970 million. Rev- ond quarter of this year dropped 1.4% from that Antoinette Dean (New York) Mr. South L.L.C., Marsh said in a enue for the risk and insurance services seg- of the same period a year earlier to $2.77 billion. Director, statement. Mr. South will ment grew 4.6% to $3.72 billion, with Marsh Revenue for its risk solutions segment, which Digital and Audience Development: Sherry Skalko (Chicago) report to John Doyle, president of Marsh L.L.C., growing 5.1% to $3.0 billion and Guy Carpenter includes retail brokerage and reinsurance, Digital Product Manager: and be based in Marsh’s New York office, over- growing 2.5% to $659 million. Six-month revenue increased less than 1% to $1.85 billion, including Christina Kneitz (Chicago) seeing Marsh’s U.S. and Canadian brokerage for the consulting segment increased 3.7% to interest income. Both the retail and reinsurance Digital Marketing Coordinator: Claire Bohrer (Chicago) businesses. Previously, Mr. South was CEO of $3.02 billion. components of the segment posted revenue Reprint Sales Manager: Marsh’s Asia-Pacific region since 2013. In addi- increases of less than 1%. In its earnings Lauren Melesio (New York) tion, Marsh’s businesses in Asia-Pacific and the announcement, Aon said that increase in rev- EDITORIAL: Middle East, which previously reported to Mr. NBA players union to fund enue was driven by a 3% organic growth in com- Chicago: 312-649-5200; London: 44-207-457-1400; South, have been realigned into three regional missions and fees, partially offset by a 2% unfa- New York: 212-210-0100; units reporting to Mr. Doyle. David Jacob has vorable impact from foreign currency transla- San Jose: 408-774-1500; health coverage for retirees Washington: 202-434-4500 been appointed CEO of Marsh’s business in tion. Revenue for Aon’s HR solutions segment, ADVERTISING: ■ Boston: 508-243-2690; Asia, based in Singapore; he most recently The union representing National Basketball which deals with employee benefits, however, Chicago: 312-649-5224; served as Asia sales and specialty leader. Scott Association players will begin funding health dropped 4.9% from that of the same period a New York: 212-210-0136 SUBSCRIPTIONS & SINGLE COPY SALES: Leney will continue to serve as CEO of Marsh insurance for retired athletes who played at year earlier to $931 million, which Aon attribut- 1-877-812-1587 (U.S. & Canada) Pacific, based in Sydney. Stephen Lundin will least three years in the league. The National ed to a 5% decrease in commissions and fees. 1-313-446-0450 (All other locations) continue to serve as CEO of Marsh Middle East, Basketball Players Association voted unani- Net income for the quarter rose 48.9% from that Business Insurance is published by Crain Communications Inc. based in Dubai. mously in June to establish the retiree health of the corresponding period a year earlier to Crain Communications Inc. Board of Directors insurance program, which will include medical, $280 million. Net income for the same quarter Chairman: Keith E. Crain President: Rance Crain hospital and prescription drug coverage in 2015, however, had fallen 40.0% from the Treasurer: Mary Kay Crain Florida workers comp challenge through UnitedHealthcare Services Inc., the same period in 2014. For the first six months of Cindi Crain Executive Vice President/Operations: players association said in a statement. Current the year, revenue dropped 1.7% to $5.56 billion. William A. Morrow seeks U.S. Supreme Court review NBA players will fund the insurance plan, with Revenue for the risk solutions segment Executive Vice President/ Director of Strategic Operations: coverage beginning Jan. 1. 2017. Retired play- remained virtually flat at $3.72 billion, while Christopher Crain ■ The U.S. Supreme Court has been asked to ers who were in the NBA for three to six years that of the HR solutions business fell 4.5% to Senior Vice President/Group Publisher: David Klein review a challenge of the constitutionality of but who are not yet eligible for Medicare will be $1.86 billion. Net income for the first half of Chief Financial Officer: Florida’s workers compensation system in a offered medical, hospital and prescription drug this year increased 14.7% to $607 million. Thomas Stevens Vice President/Group Publisher: Chris Battaglia Vice President/Production & Manufacturing: Dave Kamis Chief Information Officer: Anthony DiPonio

WASHINGTON STAFF MOVES INTO NEW OFFICE G.D. Crain Jr.: Founder (1885-1973) rain Communications Inc. has moved its 202-434-4529. insurance.com. Mrs. G.D. Crain Jr.: Chairman (1911-1996) C Washington office to a new location, a Business Insurance Editor-at-Large Jerry Mr. Hofmann can be reached at 202-434- Merrilee P. Crain: Secretary (1942-2012) move that also affects Business Insurance Geisel and Senior Editors Mark A. Hofmann 8466. His email remains mhofmann@ S.R. Bernstein: staff. and Gloria Gonzalez also have new phone businessinsurance.com. Chairman-executive committee (1907-1993) The new office, effective Aug. 1, is located numbers. Ms. Gonzalez can be reached at 202-434- at 1200 G St. NW, Eighth Floor, Washington, Mr. Geisel can be reached at 202-434-4500. 4512. Her email remains ggonzalez@ D.C. 20005. The fax number has changed to His email remains jgeisel@business businessinsurance.com.

8 August 1, 2016 BUSINESS INSURANCE BE A PART OF THE DIVERSITY&INCLUSION INSTITUTE

CONFERENCE. September 28-29, 2016 Westin Michigan Avenue in Chicago

IN PARTNERSHIPWITH

Be a part of creating a more diverse and inclusive workforce within the commercial risk and insurance industry. This dynamic two-day conference will feature:

OPENING KEYNOTE: “Everyday Bias” EXECUTIVE INSIGHTS SESSIONS: Pat Ryan | CEO | Ryan Specialty Group Howard J. Ross - D&I considerations in client engagement Nationally recognized expert on diversity, John Kinney | Chief Claims Officer | The Hartford - “Covering” at work leadership & organizational change Eric Joost | COO | Willis Towers Watson - Technology demonstrations Founder & Chief Learning Officer Marcus Cooper | Head of Commercial Markets, - Regulator focus on driving diversity in the Cook Ross South Region | Zurich North America industry and more... CLOSING KEYNOTE: DIVERSITY TRAINING: Eric Alva By Second City Works, an arm of the Second Iraq War Veteran and LGBT Activist City comedy club, followed by a networking reception at the Signature Room in the John Hancock Center.

View the full AGENDA and REGISTER www.businessinsurance.com/diconference Information on the Lloyd’s Second Annual Dive In Festival can be found at: diveinfestival.com

CHANGE BROUGHT TO YOU BY: FOUNDING PARTNERS

SUPPORTING MEMBERS

16bi0183.pdf RunDate: 08/01/16 Brown full Page Color: 4/C 20160801NEWS---0010-NAT -CCI-BI_-- 7/28/2016 5:43 PM Page 1 INTERNATIONAL

MARKET AIG adds Brexit DEVELOPMENTS coverage to D&O policy PROFILE: ITALY ITALY UPDATED MARCH 2016 ■ A December 2015 resolution by ■ American International Group 2015 P/C gross premiums regulatory body Istituto per la Vigilanza sulle Assicurazioni Inc.’s United Kingdom unit has Italy, which became a republic in creates an incentive-based added coverage to its directors and 1946 after nine centuries as a mechanism for motor insurers officers liability policy for the cost monarchy, is starting to pull out of using parameters such as average of legal challenges associated with a prolonged economic slump, claims cost, speed of settlement the U.K.’s vote to leave the Euro- though public debt — which stood and claims costs over time to the $ at 132% of gross GDP in 2015 — and benefit of efficient insurers. pean Union. AIG said the free add- eurozone stability questions remain AREA ■ A March 2015 IVASS regulation on provided by AIG U.K. will cover concerns. Despite continued slow 29.17 allows the use of certified email, premium growth, insurers are legal challenges in the event of digital signatures and e-payments expected to be profitable. The permanent residency applications to simplify the relationships BILLION topography of the Italian peninsula being rejected before Britain’s exit 116,311 square miles between insurers, intermediaries is mostly mountainous, with plains and clients. from the European Union, and sub- and lowlands near the seas, and flooding and earthquakes are the main ■ sequent challenges to repatriation natural threats. However, low levels of insurance penetration kept losses POPULATION A legislative directive passed in orders post-Brexit. Also covered from the most recent major flood event, in 2012, at a minimum. May 2015 allowed the adoption of Solvency II capital requirements will be legal costs for U.K. nation- on Jan. 1, 2016. als if their applications for perma- MARKET SHARE 60.7 million ■ Fondo Assicurativo Tra Agricoltori nent residency in an E.U. member S.p.A., an agriculture specialist SURETY, BONDS state is rejected, the insurer said. MARINE, acquired by Società Cattolica di & CREDIT The coverage will also pay legal MISC. AVIATION & GLOBAL P/C MARKET RANKING Assicurazione-Società Cooperativa 1.3% costs for executives living in the 2.7% TRANSIT from Assicurazioni Generali S.p.A. LIABILITY U.K. and the E.U. to fight a repatri- 1.3% in 2013, was fully incorporated 9.0% PA & HEALTH into Cattolica in April. Lloyd’s of ation order as a result of termina- CARE WRITTEN 9 London coverholder AEC tion of the U.K.’s membership in BY NONLIFE Underwriting Agenzia di the E.U. If the legal challenge to COMPANIES Assicurazione e Riassicurazione 2016 GDP CHANGE (PROJECTED) the repatriation order is unsuc- 17.8% S.p.A. in January became Italian MOTOR managing general agent of CNA cessful, the addition will also cover 52.1% Hardy, a unit of CNA Financial “reasonable” repatriation reloca- Corp. HDI Assicurazioni S.p.A., a tion costs, including moving PROPERTY 0.7% unit of Talanx A.G., acquired CBA expenses, travel fees and unpaid 15.7% Vita S.p.A., Sella Life Ltd. and school fees for the executives and InChiaro Assicurazioni S.p.A. from Gruppo Banca Sella S.p.A their direct family members, the Source: Axco Global Statistics/Industry Associations and Regulatory Bodies insurer said. Besides having no additional cost, there will be no deductible, AIG said. COMPULSORY INSURANCE NONADMITTED INTERMEDIARIES MARKET PRACTICE ■ Third-party liability for motor Unauthorized insurers cannot carry on Agents and brokers have to be IVASS monitors for nonadmitted vehicle, aviation, rail and boat insurance activity in Italy. To do authorized to carry on business in insurance, issuing alerts when it finds Bangladesh files murder operators business in the country, the insurer Italy. Registered intermediaries cannot insurers operating without must have an office there or in any place business with nonadmitted authorization. Penalties for carrying on ■ Liability for charities or volunteer European Economic Area nation (the insurers. unauthorized insurance activity range charges in collapse organizations European Union, plus Iceland, from two to four years in prison and ■ Hunters liability ■ A court in Bangladesh formally Liechtenstein and Norway). Likewise, fines up to $217,000. ■ buyers cannot place business with charged 38 people with murder in Liability for nuclear plant operators and fissile materials carriers nonadmitted third-country insurers. connection with the 2013 collapse ■ of the Rana Plaza building, which Liability for blood donor and transfusion centers killed 1,135 people in the country’s ■ worst industrial disaster. A total of Liability for winter sports operators and sports federations 41 defendants face charges over Information provided by Axco ■ the collapse of the complex, which Liability for educational Insurance Information Services. establishments housed five garment factories sup- www.axcoinfo.com plying global brands. Plaza owner Sohel Rana is the principal accused. Public Prosecutor Abdul ing on marine, aviation, energy Jayasekera was the acting head of a new Bermuda exempt company, construction, mining, energy, oil Mannan said 38 people had been and terrorism lines, represents the division, the authority said in XL Group Ltd., will replace XL and aviation, serving Colombia, charged with murder while three less than 2% of Atrium’s annual a statement. He is based in George Group P.L.C. as the ultimate hold- Ecuador and Costa Rica, JLT Re were charged with helping Mr. worldwide premium income, Town, Grand Cayman. ing company for XL Catlin, the said in a statement, adding that Rana flee after the incident. Mr. according to the statement. “We insurer and reinsurer said at the Olsa Re aviation brokers Jose Rana was arrested after a four-day cannot see the operation growing time. The move went against the Espinosa and Clara Escobar have manhunt, apparently trying to to the size that we had previously XL Catlin completes trend of the past 10 years in which joined JLT Re Peru to manage the enter India. If convicted, defen- envisaged given the specialty lines several insurers and reinsurers aviation line. dants could face the death penalty. that Atrium Singapore concen- domicile move with major operations in Bermuda Reuters trates in, hence our decision to have redomesticated to domiciles regrettably cease underwriting ■ XL Catlin has completed the in Europe. Canada to phase out from the platform,” Richard Har- relocation of its incorporation to Lloyd’s syndicate ries, CEO of Atrium Underwriting Bermuda from Ireland. The com- crude-by-rail cars Group Ltd., said in the statement. pany announced the plan in Febru- Peruvian broker sells closes in Singapore ary, stating that the move reflects ■ Canada will take older tank cars the greater concentration of portfolio to JLT Re out of crude-by-rail service much ■ Atrium Syndicate 609 will no Cayman Islands names Bermuda-based operations in its earlier than originally planned, its longer write new business on its balance sheet since XL’s acquisi- ■ JLT Re, the reinsurance arm of transport minister said. It’s the Singapore platform. All existing insurance supervisor tion of Catlin Group Ltd. last year Jardine Lloyd Thompson Group government’s latest move to Atrium policies will remain valid, and Bermuda being recognized P.L.C., has acquired the portfolio of toughen rail safety after a deadly and business will be conducted ■ The Cayman Islands Monetary last November as having full reg- Lima, Peru-based Olsa Re. Terms 2013 crash. The decision, which through its London office, Atrium Authority has named Ruwan ulatory equivalence under the of the deal were not disclosed. Olsa moves Canada’s retrofit schedule said in a statement. The business Jayasekera as head of the Insur- European Union’s Solvency II reg- Re is a Lima, Peru-based reinsur- further ahead of the United States’, written in Singapore, concentrat- ance Supervision Division. Mr. ulatory regime. To effect the move, ance broker that specializes in was partly prompted by a sharp

10 August 1, 2016 BUSINESS INSURANCE 20160801NEWS---0011-NAT -CCI-BI_-- 7/28/2016 5:44 PM Page 1

drop in oil prices since 2014 that in resources and increasingly Korean online shopping site and ing money in bitcoin virtual cur- team. Patrick Bousfield has been has cut the volume of crude trans- home to international companies,” stealing personal records of more rency, it said. Its shares are down named broker, while Jane Palmer ported by rail. “With fewer cars in David Watson, XL Catlin’s chief than 10 million shoppers. The 6% since news of the hack broke. and Alice O’Dwyer-Smith have use, the industry has more capac- executive for EMEA reinsurance, South’s national police agency said Reuters been named account managers, ity to retrofit existing cars to the said in the statement. it had traced the data breach to London-based Capsicum Re said in current standard,” said Delphine North Korea’s spy agency, and it a statement. Previously, Mr. Bous- Denis, a spokeswoman for Trans- had detected the same IP address- Reinsurance broker field was a broker at EC3 Brokers, port Minister Marc Garneau. Some South Korea blames es and codes similar to ones used Ms. Palmer was a broker in the older DOT-111 tanker cars had in previous attacks. North Korea expands cyber team specialty casualty team at BMS been scheduled to go out of service North for data breach has denied wrongdoing. Online Group and Ms. O’Dwyer-Smith on May 1, 2017. A version with an shopping operator Interpark Corp. ■ Capsicum Reinsurance Brokers was a broker on Willis Re’s non- extra layer of metal to make it ■ South Korea says it suspects said the hacking occurred in May. L.L.P. announced that it has made marine team. They will be based in stronger was set to be phased out North Korea of hacking a South A hacker had sent emails demand- additions to its cyber coverage London. March 1, 2018. Both types of cars will be taken out of service by Nov. 1, 2016, Mr. Garneau said. Reuters Berkshire specialty unit adds to Canada offerings

■ Berkshire Hathaway Specialty Insurance Co. has launched new executive and professional lines products for financial institutions in Canada. The products include: Financial Institution Bonds, WE UNDERSTAND RISK including manuscript/enhanced forms 14, 24, 25 for Canada and Financial strength with a global platform and local fiduciary bonds; Professional First expertise. An integrated team of underwriting and Asset Manager Liability Insurance claims specialists providing customized solutions for hedge funds, mutual funds, pri- to complex and evolving risks. vate equity funds, venture capital funds and other investment funds OUR BUSINESS LINES and firms; Professional First Property, Primary & Excess Casualty, Bankers Professional Liability Insurance for banking and lending Environmental, Marine, Energy & Construction, institutions, including credit Management Liability, Professional Liability, unions; Professional First Insur- Commercial Surety, Programs, Accident & Health, ance Company Professional Liabil- Crisis Management, Railroad, Cyber Risk ity Insurance for property/casual- Visit us at RIMS Booth #3335 ty and life insurance companies. Claims manager acquires aspen-insurance.com services provider

■ Insurance and claims manage- ment firm Charles Taylor P.L.C. has acquired Chichester, England- based Cega Group Services Ltd. Terms were not disclosed. Cega Group is a specialist provider of technical medical assistance and travel claims management ser- vices, London-based Charles Tay- lor said in the statement. XL Catlin staffs up for Africa launch

■ XL Catlin has set up a reinsur- ance unit focused on providing fac- ultative and treaty reinsurance across Africa. Alex St. James has been named head of Africa for XL Catlin’s reinsurance operations, and Matthew Gillies has been named actuarial underwriter, the insurer said in a statement. Messrs. St James and Gillies come to XL Catlin from London-based One Re Ltd. and remain based in OUR OFFICE LOCATIONS London. “Africa is a varied and complex collection of frontier and Aspen Insurance | Atlanta | Boston | Chicago | Houston | Jersey City | Miami | New York | Pasadena | Rocky Hill | San Francisco developing markets, generally rich

BUSINESS INSURANCE August 1, 2016 11 20160801NEWS---0012-NAT -CCI-BI_-- 7/28/2016 4:44 PM Page 1 PEOPLE

Francie Starnes, who was BROKERAGE NETWORK CHIEF named chief executive of San Mateo, California-based Worldwide Broker Network on Aug. 1, joined WBN as SUPPORTS INTERNATIONAL GROWTH president and chief operating officer in July How did you happen to come to idation of the industry is very 2015 after a 23-year career Q work at WBN? important, and the change in own- at American International ership. I came in last July as the presi- But frankly, it has been, for the Group Inc. Members of the A dent and chief operating officer. past 40 years, a fact of life that international network of That position was created by the acquisitions of these insurance independent insurance board to help put more infrastruc- firms have been going on, so we ture around certain areas, includ- are prepared if we have to replace brokers and employee ing multinational training, career our U.S. members. We have FRANCIE STARNES benefits consultants relationships and employee bene- inquiries weekly on joining. generate an estimated $50 fits. We don’t see (technology) as so I had a very close working rela- much of a challenge as an opportu- WORLDWIDE BROKER billion in property/casualty tionship with (former CEO) Bruce nity. We have committed signifi- NETWORK and employee benefits Basso and the board when I was at cant capital to create our techno- AIG. When Bruce and I began dis- logical platform, called WBNet 3.0, premiums annually. She cussions about me working at and we partnered with (Chicago- discussed her plans for the organization with Business WBN, he was very clear upfront icant areas that have served WBN based risk management software Insurance Senior Editor Judy Greenwald. Edited excerpts that he would name me to take well. Europe was an area that I felt firm Origami Risk L.L.C.) to create over the CEO role a year from the needed someone on the ground, so this platform. The priority of the follow. time I came in. we’ve hired (Toni Gambonini, CEO platform is to support global risk I’m following in such great shoes. of Gambonini Consulting Ltd., in programs. It’s a collaborative glob- Bruce is just a legend. His perspec- London) to run our European ini- al system where clients can view to see, with the next government We’re in 101 countries, so we have tive on the independent network tiative and to conduct multination- their international risk programs, in place, the prime minister in the a very broad footprint. Our mem- — and I think the respect, the cred- al training. their policies and documents. U.K., how she will be overseeing bers have very long-standing ibility, he has with the insurance it and the implications. roots. They’re very familiar and carriers — has really served WBN What are the challenges facing What impact do you anticipate knowledgeable with respect to so well. Q WBN? Q Brexit will have on WBN? Is there anything else you’d like their country’s laws, the insurance Q to add? requirements and their cultural What are your plans for the Certainly, the current wave of We are looking at it very close- and economic considerations. Q organization? A (merger and acquisition activi- A ly, keeping our members One thing we haven’t touched They are on-the-ground resources, ty). We’ve had a number of our advised as we get information. We A on is, what is the advantage of and many of our firms are actual- I’m going to continue on the members purchased by private have a designated site on our web- an independent broker network as ly going from one generation to the A same path for some of the signif- equity firms, so I think the consol- site for Brexit. We are still waiting opposed to an owned network. next.

COMINGS & GOINGS

Professional Moves & Promotions

Visit www.businessinsurance.com/ComingsandGoings for a full list of this week’s person- UP CLOSE: MARK R. SHUMWAY nel moves and promotions. Check our website daily for additional postings and sign up for the weekly email. PHILADELPHIA-BASED GLOBAL HEAD OF STRATEGIC ADVISORY BROKERS JLT Re (North America) Inc. Alliant Insurance Services Inc. Mark Laman PREVIOUS POSITION: Singapore-based WHAT SURPRISED ME: The complexity All Risks Ltd. Erika Montoya head of strategic advisory, Asia-Pacific, Guy and diversity of insurance products and the Integro Ltd. Esther Ro Carpenter & Co L.L.C. extent to which global economic growth and XS Brokers Insurance Agency Inc. Alan Dudkiewicz stability depend on the performance of those LOOKING FORWARD TO: Joining a Willis Towers Watson P.L.C. Kemp Ross products and their carriers. growing, entrepreneurial firm that Lockton Cos. L.L.C. Jeffrey A. Sumner understands the need for continuous ADVICE: Try new things, visit new places, investment in order to deliver long-term insert yourself into situations that are INSURERS value to clients and shareholders. uncomfortable. Allianz S.E. Emmanuel Roman CHALLENGES FACING INDUSTRY: OUTSIDE THE INDUSTRY, A DREAM Berkshire Hathaway Specialty Insurance Co. Emma Osgood Continued low interest rates, competition JOB: Community financial planner. I want to Chubb Ltd. Lauren Webb from low-cost new entrants — including leaders in other help people get their finances in order so they can CNA Financial Corp. Rick Childs industries — and an increasing gap between economic and eliminate one worry and do better things with their time. Pen Underwriting Ltd. Adrian Scott insured exposures due to institutionalized risk aversion. THING MOST PEOPLE DON’T KNOW ABOUT ME: I Sompo Canopius A.G. Laurie Banez CRYSTAL BALL: Without going too far out on a limb … worked my way through college doing a string of jobs, XL Catlin Lizette Junor within 15 years, much of the transactional and including driving a van and guiding tours in New York City. administrative role of reinsurance brokers will be replaced OTHER DON’T LEAVE THE HOUSE WITHOUT: Clothes. And by distributed ledgers, leaving brokers primarily with Cayman Islands Monetary Authority Ruwan Jayasekera hopefully a smile. analytical and advisory roles. Hanover Stone Partners L.L.C. William P. White PET PEEVES: Parochialism. FIRST INDUSTRY JOB: My first corporate exposure to Business Insurance would like to report on senior-level changes at commercial insurance the insurance industry was at KPMG (L.L.P.), then known companies and service providers. Please send news and photos of recently promoted, WHEN I RETIRE: Financial planner, in Hawaii. Or New hired or appointed senior-level executives to: Joyce Famakinwa, Business Insurance, as KPMG Peat Marwick. Zealand. 150 N. Michigan Ave., Chicago, Ill. 60601-7524. [email protected].

12 August 1, 2016 BUSINESS INSURANCE The Business Insurance Cyber Risk Summit leads dynamic discussions dictated by the most pressing topics of our time. It is the only cyber risk conference specifically tailored to the needs and interests of the risk management community.

JOIN US FOR OUR PANEL DISCUSSION: Best Practices for Responding to Cyberattacks Legal and claims experts will discuss best practices for responding to a variety of scenarios derived from actual cyber incidents that have occurred.

MODERATOR: Meredith Schnur | Professional Risk Practice Leader Wells Fargo Insurance Services Inc. FEATURING: Jeremy Gittler | Practice Leader and Head of Cyber Claims Americas XL Catlin Theodore Kobus | Privacy and Data Protection Team Leader Baker & Hostetler L.L.P. Jim McQuaid | U.S. Head of Cyber Media and Technology MEREDITH SCHNUR Financial Lines Division American International Group Inc. Jim Prendergast | Managing Partner Lewis Brisbois Bisgaard & Smith L.L.P. REGISTER NOW: www.BusinessInsurance.com/cyberrisksummit

PLATINUM SPONSOR GOLD SPONSORS

SILVER SPONSORS

16bi0182.pdf RunDate: 08/01/16 Brown full Page Color: 4/C 20160801NEWS---0014-NAT -CCI-BI_-- 7/28/2016 4:45 PM Page 1 OPINIONS

EDITORIAL SCHILLERSTROM ACA RIPE FOR REPAIR NOT RAZING

hen it comes to the health care reform law, Republican Party leaders couldn’t be clearer on what they want: Its repeal. The GOP 2016 plat- form adopted last month at the Republican National Convention in Cleveland doesn’t mince W words about the Patient Protection and Afford- able Care Act. “Any honest agenda for improving health care must start with repeal of the dishonestly named Affordable Care Act of 2010: Obamacare. It weighs like the dead hand of the past upon American medicine,” the platform says. To be sure, there are big problems with the ACA, not the least of which is far fewer people than expected have enrolled in public insurance exchanges, while several major insurers, COMMENTARY hit by big losses, are significantly reducing the number of exchanges in which they will do business next year. Those problems and others must be addressed by regula- tors and legislators. For example, it has become clear that one of the reasons exchange insurers are losing money is MORE SERIOUS GLOBAL RISKS adverse selection as individuals put off enrollment until they have medical problems. That type of abuse has to stop. Lawmakers also must repeal the law’s “Cadillac” tax, a pop- ular reference to the ACA’s provision that, starting in 2020, CALL FOR THICKER ARMOR imposes a 40% federal excise tax on health care premiums that exceed $10,200 for single coverage and $27,500 for fami- isk managers and insurers with international financial risks arising out of ly coverage. operations or exposures have had a lot to think the U.K.’s vote will fall into The theory is that the tax would raise billions in new fed- R about over the past several weeks. the category of general busi- eral revenue as employers who cut benefits to avoid the tax To begin with, the decision by voters in the United ness risks, which insurers would raise employees’ taxable wages so they could better Kingdom to exit the European Union continues to baf- cover at their peril. afford to pay for uncovered health expenses. But there is no fle many inside and outside the country. Dry econom- Other events overseas evidence to back that theory. ic analysis suggests that the decision will likely hurt highlight the growing risk of the country financially, but U.K. voters’ willingness violence facing companies Further, the excise tax is likely to place a heavier and unfair to leave an organization that developed from a post- operating internationally. burden on employers in parts of the United States with the World War II trade pact into a cornerstone of the GAVIN Shocking terrorist attacks in highest health care costs. modern geopolitical order says much about current SOUTER France and the coup attempt feelings in Britain and elsewhere regarding issues in Turkey, which has also That said, the health care reform law’s accomplishments EDITOR are significant. It has slashed the nation’s uninsured rate such as national sovereignty and immigration. suffered terrorist attacks, How the Brexit vote will affect business remains present distinct problems with its federal premium subsidies for lower-income people unclear, but it’s fairly safe to say it will be disruptive. for organizations with overseas locations and staff. to get coverage in exchanges, subsidies for states that agree In the insurance field, some insurers in London have While the pursuit of growth and profit is the driving to ease eligibility requirements for Medicaid and the require- said they are looking to roll out contingency plans and force behind most international expansion efforts, ment that employers extend coverage to employees’ adult establish operations or licenses in countries that will from a risk management perspective, protection of children up to age 26. remain part of the European Union after Britain people and property remain key concerns that have We hope legislators and the next U.S. president keep the leaves. And last week, about a month after the vote, become a lot more concerning in light of these events. American International Group Inc. launched some Successful risk managers are expected to find ways ACA’s successes and problems in mind as they work to Brexit insurance coverage. to make their businesses’ operations work regardless improve, not repeal, the law. The free add-on to its directors and officers liability of the challenges, but in the face of new terrorist tac- policy will cover legal action if their applications to tics and political disruptions in once-relatively sta- become a permanent resident of the U.K. or E.U. mem- ble countries, it is tough for risk managers to live up Business Insurance welcomes letters to the editor. The section is intended to ber are rejected. The coverage presages the difficul- to those expectations. be a forum for readers’ opinions and comments. We reserve the right to edit ties companies may face as Britain negotiates with the While tapping available insurance coverage – letters for clarity or space. We will not publish unsigned letters. E.U. over freedom of movement, which allows E.U. whether new-style Brexit cover or old-style property Please send your letters to: residents to live and work in other E.U. countries. and political risk cover – is an option, such insurance Letters to the Editor, Business Insurance, In the big picture, the insurance won’t be covering can’t provide a complete shield for the barrage of 150 N. Michigan Ave., Chicago, Ill. 60601-7524 a huge exposure for companies or their executives, risks. Instead, companies must take time to update but it’s indicative of how quickly insurers can react to their international risk management plans to reflect Fax: 312-280-3174; email: [email protected] an exposure and an opportunity. Indeed, much of the the new reality of global exposures.

PUBLISHED AT 150 N. Michigan Ave., Chicago, IL 60601-7620, Fax: 312-280-3174, [email protected]. Offices: 711 Third Ave., New York, NY 10017-4036; Suite 814, 1200 G St. NW, 8th Floor, Washington, DC 20005; 35 New Broad St., London EC2M 1NH, U.K.; 77 Franklin St., Suite 809, Boston, MA 02110-1510. $10 a copy and $149 a year in the U.S., $169 in Canada and Mexico (includes GST). All other countries, $249 a year (includes expedited air delivery).

14 August 1, 2016 BUSINESS INSURANCE 20160801NEWS---0015-NAT -CCI-BI_-- 7/26/2016 10:31 AM Page 1

PERSPECTIVES Look hard at the risks involved before leaping into the cloud

Cloud computing becomes even more attractive “Cloud computing” has been an information technology darling since on mobile devices because it provides on-demand access, computing, networking and storage capa- it became increasingly widespread over the past decade. Offering more bilities without the software memory drain. flexible, accessible and less-expensive resources, cloud computing is Authentication an attractive alternative to traditional computing environments. But it Accessing applications over the internet is easy, has its costs, including increased security risks and web-based threats, but security risks can be high. Authentication ver- ifies that the user is who he says he is. To increase particularly as it accessed through mobile devices. Edgar Germer of assurance, authentication should be combined with encryption and secure data transmission pro- OneBeacon Technology Insurance discusses the risks of operating in tocols. Various authentication mechanisms have Edgar Germer is been proposed to secure data access suitable for a risk control the cloud and measures companies should take to assess the risks they mobile environments. Examples include login IDs, specialist at passwords, personal identification numbers and face when they make the move. multifactor authentication. Applying identity OneBeacon management and other security measures, includ- Technology ing malicious code detection, through the cloud Insurance. he National Institute of Standards and Tech- Gmail and Salesforce. is more convenient and reduces consumption of nology defines cloud computing as conve- ■ Platform-as-a-service — This offers soft- limited processing capability on mobile devices. Contact him at T nient, on-demand network access to shared ware developers tools to create applications. 610-213-0671 or configurable computing resources. Think of cloud Examples include Microsoft Windows Azure and Winning the battle computing as a utility like a gas or phone compa- Google App Engine. egermer@one ny. An organization buys computing and storage ■ Infrastructure-as-a-service — This provides No network can be 100% secured. Therefore, an beacontech.com. space and services and pays at the end of the servers, software, data center space or network organization should: month. Data exists on the provider’s remote equipment resources as a metered, outsourced ■ Define objectives — Prioritize objectives servers (“the cloud”) and is accessed over the service. Examples include Amazon Elastic Com- and set realistic risk tolerances to allocate internet. pute Cloud and Rackspace. resources to critical areas. Five characteristics typically differentiate cloud ■ Implement a security plan — Understand services from conventional computing: the threat landscape, such as hacking, cyber ■ On-demand self-service — Users directly attacks, media and social scams, and protect the buy computing services with minimal interaction organization using policy and technology (end- with the provider. point security, firewalls, antimalware and ■ Broad network access — Services are avail- Think of cloud computing as antivirus software). able over the internet and accessed through “thin” ■ Prepare an attack response — Respond (smartphone or tablet) or “thick” (laptop or desk- a utility like a gas or phone quickly to a breach to mitigate damage. top computer) platforms. ■ Establish a security awareness culture — ■ Resource pooling — Storage, processing, company. An organization Employees working together to safeguard enter- memory, bandwidth and hardware are shared prise data; it takes only one mistake to infect a net- with other users. buys computing and storage work. ■ Rapid elasticity —- Services can be rapidly space and services and Organizations planning to take advantage of the purchased in any quantity at any time and discon- low costs and high accessibility of a mobile cloud tinued with equal ease. pays at the end of the computing platform should follow federal Nation- ■ Measured service — Usage is monitored, al Institute of Standards and Technology recom- controlled and optimized. month. mendations: Four, primary cloud-service models are used — ■ Carefully plan the security and privacy private, public, community and hybrid — with aspects of cloud computing before adopting it. offerings ranging from single occupancy configu- ■ Understand the environment offered by the rations (private) to shared services available to cloud provider and ensure that it satisfies organi- multiple clients. zational security and privacy requirements. The client’s degree of control over the comput- ■ Ensure that the client-side environment ing environment depends on the type of cloud meets organizational security and privacy used, ranging from almost no control in public requirements for cloud computing. clouds to full control in private clouds. ■ Maintain accountability over the privacy and Just as different deployment models affect an security of data and applications in cloud comput- organization’s scope and control over the cloud, ing environments. so, too, does the providers’ service model. Three In other words perform a risk assessment, common ones are: understand the exposures and proactively reduce ■ Software-as-a-service — Providers host risks to an organizationally acceptable level while software while subscribers connect and use it, understanding that the organization is ultimately eliminating the need for software downloads. responsible for safeguarding its data and data of Examples include Twitter, Facebook, Yahoo, others under its care, custody and control.

FOR SUBSCRIPTION INFORMATION and delivery concerns, please email [email protected] or call 1-877-812-1587 (in the U.S. and Canada) or 1-313-446-0450 (all other locations). Send subscription correspondence to Audience Development Department, Business Insurance, 150 N. Michigan Ave., Chicago, IL 60601-7620. Microfilm copies available through ProQuest, 800-521-0600 or www.proquest.com. Portions of the editorial content of this issue are available for reprint or reproduction in other media. FOR REPRINTS or reprint permission, please contact Lauren Melesio/Crain Communications at 212-210-0707 or email [email protected].

BUSINESS INSURANCE August 1, 2016 15 OCEAN CARGO INSURANCE: • Covers every type of cargo being moved KEY CONSIDERATIONS legally anywhere in the world, by any conveyance means, with no advance 1. Replacement coverage? Buying ocean reporting requirement cargo coverage through a steamship, air cargo or express carrier may not cover • Can extend to warehouse and full replacement value of a customer’s transshipment locations goods. While most freight forwarders 4 TOP ADVANTAGES oŠ er full value coverage options, the rates 4. Claims handling? Businesses, such as OF 1ST-PARTY OCEAN are typically higher than for comparable foreign manufacturers of parts sourced CARGO COVERAGE coverage from a business’s own insurer. for U.S. manufacturing, typically use 1. Tailored coverage foreign insurers in their own countries,

2. Greater transparency 2. Limitations or exclusions? Coverage which can complicate claim resolution. oŠ ered by a freight forwarder may A manufacturer that secures shipping 3. Lower pricing opportunities include certain exclusions and coverage from its U.S. property package 4. More responsive claims resolution limitations that result in policyholder insurer has the benefi t of working with obligations for the business if a its local broker, as well as the protection customer’s goods are lost or damaged. of applicable state laws in the event of a problem. The Hartford Marine has 3. Gaps in coverage? Freight forwarders dedicated marine claims adjusters ready often insure each shipment separately to assist if the unfortunate happens. Leave port to port. There may be no coverage the headaches of subrogation to us. A BETTER WAY TO PROTECT YOUR CLIENTS’ if a shipment placement is overlooked. A GOODS AND THEIR WALLETS. better alternative is The Hartford’s Ocean Cargo Choice “all-risk” policy, which:

Businesses can lower their shipping insurance costs and secure a policy that SPECIALIZING IN MARINE RISKS as well as experts in risk control and claims management, work closely with agents in better fi ts their exposures — while getting a more responsive claims resolution. In this age of global trade, the uncertainties designing tailored cargo programs for clients. and complexities of a business’s shipping- related risks are best handled by experienced CAREFUL ATTENTION TO BETTER COVERAGE FOR THEIR DOLLARS marine underwriters. “When losses do occur, our network of UNIQUE EXPOSURES international claims adjusters is ready to jump Switching to a fi rst-party ocean cargo policy provides into action when and where they are needed Many businesses aren’t aware of the greater the ability to tailor coverage based on a business’s “Our marine team has decades of experience to make the claims process signifi cantly easier fl exibility, transparency and lower pricing specifi c exposures. in addressing our customers’ specialized for our customers,” said Higley. opportunities available through fi rst-party cargo protection needs,” said David Higley, ocean cargo insurance. The Hartford’s Ocean Cargo Choice® policy provides vice president of The Hartford’s Marine He added, “Marine is a sweet spot for broad coverage for damage to goods being shipped by insurance practice. The Hartford. Agents can feel confi dent Certain businesses in particular should consider air or sea. Coverage is tailored according to the terms of placing their clients’ business with us.” ocean cargo insurance. These include: sale, whether the exposure is primary or contingent. Dedicated marine underwriters in The Hartford’s o€ ces across the country, • Manufacturers PROOF OF NEGLIGENCE NOT REQUIRED • Technology companies A business simply needs to show loss or damage to its • Wholesalers and distributors shipment for the ocean cargo policy to respond. Proof To learn more, visit thehartford.com/marine, or of negligence is not required. [email protected] • Installers and processors email us at . NO MIDDLEMAN, NO EXTRA FEES When businesses purchase coverage through their shipping carrier or freight forwarder, their shipment Also, by purchasing their own policy, businesses can Prepare. Protect. Prevail.® is often grouped in a commodity rate. This can leave avoid extra fees from freight forwarders, shipping Business Insurance them with insu€ cient coverage, depending on the brokers and other middlemen. In short, they can Employee Benefi ts actual value of their goods. purchase more precise coverage at a lower cost. Auto Insurance coverages mentioned in this article are underwritten by the Hartford Fire Insurance Company and its property and casualty insurance company affi liates. This article contains only a general description of coverages that may be provided and does not include all of Home the features, exclusions and conditions of these policies. Certain coverages, features and credits vary by state and may not be available to all insureds. All information and representations herein are as of July 2016. 16-0219 © 2016 The Hartford Financial Service Group, Inc. All rights reserved.

16bi0178a.pdf Issue: 08/01/2016 Color: 4/C Size: Full OCEAN CARGO INSURANCE: • Covers every type of cargo being moved KEY CONSIDERATIONS legally anywhere in the world, by any conveyance means, with no advance 1. Replacement coverage? Buying ocean reporting requirement cargo coverage through a steamship, air cargo or express carrier may not cover • Can extend to warehouse and full replacement value of a customer’s transshipment locations goods. While most freight forwarders 4 TOP ADVANTAGES oŠ er full value coverage options, the rates 4. Claims handling? Businesses, such as OF 1ST-PARTY OCEAN are typically higher than for comparable foreign manufacturers of parts sourced CARGO COVERAGE coverage from a business’s own insurer. for U.S. manufacturing, typically use 1. Tailored coverage foreign insurers in their own countries,

2. Greater transparency 2. Limitations or exclusions? Coverage which can complicate claim resolution. oŠ ered by a freight forwarder may A manufacturer that secures shipping 3. Lower pricing opportunities include certain exclusions and coverage from its U.S. property package 4. More responsive claims resolution limitations that result in policyholder insurer has the benefi t of working with obligations for the business if a its local broker, as well as the protection customer’s goods are lost or damaged. of applicable state laws in the event of a problem. The Hartford Marine has 3. Gaps in coverage? Freight forwarders dedicated marine claims adjusters ready often insure each shipment separately to assist if the unfortunate happens. Leave port to port. There may be no coverage the headaches of subrogation to us. A BETTER WAY TO PROTECT YOUR CLIENTS’ if a shipment placement is overlooked. A GOODS AND THEIR WALLETS. better alternative is The Hartford’s Ocean Cargo Choice “all-risk” policy, which:

Businesses can lower their shipping insurance costs and secure a policy that SPECIALIZING IN MARINE RISKS as well as experts in risk control and claims management, work closely with agents in better fi ts their exposures — while getting a more responsive claims resolution. In this age of global trade, the uncertainties designing tailored cargo programs for clients. and complexities of a business’s shipping- related risks are best handled by experienced CAREFUL ATTENTION TO BETTER COVERAGE FOR THEIR DOLLARS marine underwriters. “When losses do occur, our network of UNIQUE EXPOSURES international claims adjusters is ready to jump Switching to a fi rst-party ocean cargo policy provides into action when and where they are needed Many businesses aren’t aware of the greater the ability to tailor coverage based on a business’s “Our marine team has decades of experience to make the claims process signifi cantly easier fl exibility, transparency and lower pricing specifi c exposures. in addressing our customers’ specialized for our customers,” said Higley. opportunities available through fi rst-party cargo protection needs,” said David Higley, ocean cargo insurance. The Hartford’s Ocean Cargo Choice® policy provides vice president of The Hartford’s Marine He added, “Marine is a sweet spot for broad coverage for damage to goods being shipped by insurance practice. The Hartford. Agents can feel confi dent Certain businesses in particular should consider air or sea. Coverage is tailored according to the terms of placing their clients’ business with us.” ocean cargo insurance. These include: sale, whether the exposure is primary or contingent. Dedicated marine underwriters in The Hartford’s o€ ces across the country, • Manufacturers PROOF OF NEGLIGENCE NOT REQUIRED • Technology companies A business simply needs to show loss or damage to its • Wholesalers and distributors shipment for the ocean cargo policy to respond. Proof To learn more, visit thehartford.com/marine, or of negligence is not required. [email protected] • Installers and processors email us at . NO MIDDLEMAN, NO EXTRA FEES When businesses purchase coverage through their shipping carrier or freight forwarder, their shipment Also, by purchasing their own policy, businesses can Prepare. Protect. Prevail.® is often grouped in a commodity rate. This can leave avoid extra fees from freight forwarders, shipping Business Insurance them with insu€ cient coverage, depending on the brokers and other middlemen. In short, they can Employee Benefi ts actual value of their goods. purchase more precise coverage at a lower cost. Auto Insurance coverages mentioned in this article are underwritten by the Hartford Fire Insurance Company and its property and casualty insurance company affi liates. This article contains only a general description of coverages that may be provided and does not include all of Home the features, exclusions and conditions of these policies. Certain coverages, features and credits vary by state and may not be available to all insureds. All information and representations herein are as of July 2016. 16-0219 © 2016 The Hartford Financial Service Group, Inc. All rights reserved.

16bi0178a.pdf Issue: 08/01/2016 Color: 4/C Size: Full 16bi0178b.PDF Issue: 08/01/2016 Color: 4/C Size: Full 20160801NEWS---0018-NAT -CCI-BI_-- 7/27/2016 1:02 PM Page 1

BUSINESS INSURANCE Marine, Aviation & SPECIAL Transportation Risks Drone regulations Telematics offer Data on aviation, open the skies to real-time tracking transportation and REPORT insurance sector for truck drivers marine sectors PAGE 19 PAGE 20 PAGE 21 Marine sector awash in capacity Underwriters compete aggressively for business as demand drops and capitalization soars

BY SARAH VEYSEY

gainst a backdrop of a slow- down in global trade and an extremely competitive ship- A ping environment, buyers of marine hull and cargo insurance continue to see lower rates for

their coverage and abundant SEPI/SHUTTERSTOCK.COM PAVEL capacity for their risks. Experts say marine hull insur- ance buyers are experiencing “double-digit” rate declines as underwriters compete for premi- ums. “I have seen hard and soft mar- kets,” but “I have never seen any- thing like this,” said Marcus Baker, chairman and managing director of the global marine practice at Marsh Ltd. in London. He said many underwriters are clamoring for premiums and mar- ket share. There is plentiful capacity for marine insurance with a client base that is struggling with falling freight and commodity shipments, Mr. Baker said. “The market is very competitive across all lines of business and in all geographies,” said Lee Meyrick, managing director and chief underwriting officer of global marine at XL Catlin in London. “Capacity continues to exceed demand,” which itself has declined against a backdrop of lower insured values, said Mark Crack- nell, senior partner of marine at JLT Specialty Ltd., a unit of Jar- dine Lloyd Thompson Group “I don’t think buyer demand for P.L.C., in London. “I have seen hard and soft markets,” but “I have never seen anything like this.” hull insurance is any higher now There is new capacity coming Marcus Baker, Marsh Ltd. than in the past,” Mr. Hughes said. into the market, so some under- But “the necessity for proper cover writing talent is moving, which has never been greater, given the also increases competition for need for asset protection — with business, Mr. Meyrick said. man and CEO of Shipowners ranean, continues to develop. Local access can be useful when which lenders are perennially con- While there is plentiful capacity Claims Bureau Inc. in New York. Many underwriters have set up dealing with claims, which Mr. cerned — particularly in a trou- for marine hull insurance busi- But, he said, the hull capacity of local offices around the world to Baker said eliminates time zone bled freight market.” ness, it has stabilized in recent regional markets, such as those in attract more business from those differences as one example of its “Buyers are really looking for a months, said Joe Hughes, chair- East Asia and the eastern Mediter- markets, Mr. Baker said. benefits. commercial deal,” Mr. Cracknell

18 August 1, 2016 BUSINESS INSURANCE 20160801NEWS---0019-NAT -CCI-BI_-- 7/27/2016 1:02 PM Page 1

EXPERIENCE AT SEA Drone regulation updates IS BEST SAFETY TRAINING perceived overreliance training hands-on to “moti- expand insurance sector’s horizons by some ships’ crews on vate crews to understand A technology and a lack of the importance of it,” said crew experience is leading Andrew Kinsey, senior Business uses increase for insurers and policyholders to safety concerns in the marine risk consultant at maritime industry, experts Allianz Global Corporate & say. Specialty S.E. in New York. BY DONNA MAHONEY ance companies wanting to use our drones,” Mr. “There is no substitute for While vessels are increas- Tobias said. There has also been a lot of interest from experience at sea,” said ing in size, crews are getting hile the latest drone regulations don’t resolve states with severe weather, such as Texas, which Steve Harris, senior vice smaller because of the eco- all issues related to using unmanned aerial vehi- recently experienced bad hailstorms, he added. president for Marsh Ltd.’s nomic pressures facing the W cles, they do have welcome news for the com- Jill Bay-Weber, the Orange County, California-based marine practice in London. shipping industry, he said. mercial drone insurance marketplace and insurers president of the excess and surplus wholesale busi- He said that while there In addition, he said, many that want to use the devices themselves for business ness division at Paragon Insurance Holdings L.L.C., are new safety measures, mariners are on short con- purposes. a BetterView client, said the insurer uses drone data such as the Polar Code tracts of only six months or Federal Aviation Administration regulations Part when underwriting and binding and for future claims. adopted by the Internation- one year, again as a result of 107, released June 21, didn’t lift the line-of-sight rule Drones help Paragon review property, she said, al Maritime Organization in the economic headwinds fac- for unmanned aircraft weighing less than 55 pounds allowing them to see roofs of several buildings at once 2014, that require adequate ing their employers. flown for commercial operations, meaning one person or those with obstructed access. Drones can take pic- training for crews of vessels “There is a shortage still must watch each drone and making package tures to confirm the quality of the roof. entering the Arctic or worldwide of experienced” delivery impossible, said Terry “This will help if there are any Antarctic, “very few people crew, Mr. Kinsey said. Miller, president of Conifer, Col- future claims as well,” she said. “It with both the necessary He said that the current orado-based aviation brokerage is crucial to have the snapshot of the experience and ability to generation of seafarers has Transport Risk Management Inc. roofs at the time of binding the train others exist.” grown up with video games, Part 107, effective Aug. 29, does, account versus when a loss may be He added that there are but online training, for however, remove roadblocks such turned in.” concerns about crews’ over- example, does not necessar- as the requirement that an operator Some insurers that use drones reliance on technology such ily equate to carrying out a be a licensed pilot and the need for underwrite the risk themselves, as electronic chart displays job. an FAA 333 exemption, which DRONE RULES sources said, but that is not always and information systems. Therefore, he said, training allows a commercial business to the case. “There is a growing con- “needs to reflect reality and legally use a drone for specific tasks, Summary of the main changes “It’s only been on the scene in the for the small unmanned consequences.” last few years, so there hasn’t been cern among the maritime a lengthy process that kept many aircraft rule (Part 107 of FAA community about ‘PlaySta- But Joe Hughes, chairman players away, sources said. regulations) that takes effect enough loss data collected because tion syndrome,’ which is the and CEO of Shipowners The changes are of particular Aug. 29, 2016: there haven’t been enough losses overreliance on and trust in Claims Bureau Inc. in New value for insurers as potential poli- ■ Operator must pass an that have occurred — or been technology,” as well as the York, said concerns over cyholders emerge — and as they aeronautical knowledge test reported” — so insurers don’t know “hypnotic effect” of screens crew experience — or lack find their own uses for drones. in place of previous pilot if it would be worth it to buy insur- on ships’ bridges “to the thereof — are probably “Some of the middle-market and license requirement ance or to take the risk and save the point where perceptions of lower now than they were smaller companies who don’t have ■ No FAA medical certificate premium, said Rich Nocella, a New distance and clearances may from 2003 to 2008, “when the the same resources that the larger required York-based vice president in Marsh become warped,” Mr. Harris shipping boom was creat- companies do were waiting for the ■ Only pilot needs to watch USA Inc.’s Aviation & Aerospace said. ing a real crisis of human regulatory environment to firm up instead of at least two Practice. people observing operations “Technology should be resources within the mar- before entering into the space, both Mr. Van Meter said Allianz writes ■ complementary to, rather itime industry.” on the coverage side and the usage Operator must pass a coverage for insurers using drones background check by the than a replacement of, expe- Indeed, he added, the side for insurers,” said Tom Santos, Transportation Security for claims adjustment because most rience — both in the engine slump in the maritime indus- vice president of federal affairs for Administration insurers don’t want to self-insure room and on the bridge,” Mr. try may now be creating a the Washington-based American ■ Operator must perform a due to conflicts with the issuance of Harris said. glut of workers. Insurance Association. preflight check of the small the policy and any potential claims It is important to make By Sarah Veysey James Van Meter, Atlanta-based UAS that arise. aviation practice leader of Allianz ■ May not operate over “It would be difficult for an insur- Global Corporate & Specialty S.E., people who are not ance company to adequately and said the new rules are “a huge boost participants or indoors fairly underwrite its own exposure said. Reducing retentions is the buyers. for the industry.” ■ Maximum ground speed of — the pricing and terms would be only major change marine hull The “relatively benign loss pic- “The 107 rules provide a clear path 100 mph highly questionable,” he said. “The buyers can secure, he said. ture” and the ability of under- to operate drones legally,” he said. ■ Remain lower than 400 feet claims process would also be subject Likewise, no great changes are writers to release prior-year “Those on the sidelines are coming or, if higher than 400 feet, to intense scrutiny: Would the claim remain 400 feet away from be handled in a fair and ethical man- being made to terms and condi- reserves means that many insur- off and acquiring UAVs so they can any structure tions, but some extensions are ers continue to post acceptable integrate this technology into their ner? Are claims being paid that ■ Day operations only being made on marine hull busi- results despite the soft condi- business.” should not be paid?” ■ ness, such as widening business tions, said XL Catlin’s Mr. The insurance business is already One person can fly a “Some (clients) don’t insure the maximum of one unmanned hull — it depends on the company interruption coverage, said Meyrick. seeing an uptick in clients, accord- aircraft at a time Marsh’s Mr. Baker. While experts say it likely ing to Mr. Miller, particularly among and their price point — but most are would take more than a large operators in mining and agriculture Source: FAA getting hull and liability, third-party Protecting value, revenue loss to turn the market, attrition- or cell tower inspections, with high- liability exposure for business inter- al losses — which typically er-end systems costing up to $50,000 flown by trained ruption and first-party property damage for the Some buyers are looking at increase when the shipping pilots. “We’re seeing higher-quality operators come drone’s exposure,” he said. coverage such as residual value industry’s margins are squeezed out of the shadows,” he said. “They didn’t want any Allianz sees interest from small, midmarket and big insurance, which insures the — may start to hurt underwrit- visibility before 107, but now they are looking for insurers, he said, using drones for claims adjustment, forecast value of leased assets at ers’ results. insurance.” roof inspections and testing the technology for use in a given point in time, because The fact that underwriters are Large property insurers are also using drones, said major catastrophes — “anywhere you can get a photo current ship values are thought collecting less in premiums Dave Tobias, the Burlingame, California-based co- but don’t want to put an employee in a dangerous to be toward the lower end of the because rates are falling may founder and chief operating officer of BetterView Mar- position,” he added. scale, said Mr. Cracknell. mean that attritional losses will ketplace Inc., a company that flies drones to capture He said Allianz insures most of the drone manufac- Some buyers also are exploring begin to bite when reserve aerial imagery for data analysis, primarily for roofers turers, distributors and facilities set up to train oper- ways to protect revenue, such as releases slow, Mr. Meyrick said. and insurers. ators. He said it sees “a huge spectrum” of end users loss-of-hire coverage, Mr. Crack- Mr. Baker said steady pricing “We’ve had more than one conversation frozen from from Fortune 100 companies to startups purchasing nell said, though he noted that on repairs and materials also regulatory concerns that are now moving forward. A units for $1,000 each. “Right now we are binding new these remain marginal for many could increase attritional losses. couple of those are with the top five property insur- UAV business every day.”

BUSINESS INSURANCE August 1, 2016 19 20160801NEWS---0020-NAT -CCI-BI_-- 7/27/2016 10:58 AM Page 1

SPECIAL REPORT Telematics drives behavioral changes behind the wheel

BY ROB LENIHAN not that much tomorrow, but in the next this data captured if an organization is not safety. “You don’t want to collect too much year or two, we should see much, much, prepared to use it or chooses not to use it.” information,” said Peter VanDyne, Liberty hen Jamie Pierson looks at a semitrac- much better experiences.” Noting the variety of telematics programs Mutual’s Milwaukee-based technical direc- tor-trailer, he sees a lot more than just Todd Ewing, director of product marking available, Christopher Hayes, second vice tor of risk control service who developed the W a truck. for Dublin-based Fleetmatics Development president of transportation risk control for program, “but you want to capture what’s “Tractor-trailers today, the way we view Ltd., said in an email that “telematics has Travelers Cos. Inc., said the ability or will- truly aggressive and not what is the normal them, are rolling computers,” said Mr. Pier- revolutionized the management of the ingness of fleet managers to use the data to driving style.” son, chief financial officer of YRC World- mobile workforce.” improve safety also varies widely. The program doesn’t focus on just the wide Inc., an Overland Park, Kansas-based “It provides fleet managers and operators “From what we have seen in our fleet drivers; Mr. VanDyne said its root-cause holding company for several freight compa- access to real-time and historical vehicle and assessments, only one-third (of fleet man- analysis is probably geared 60% toward nies. “Five or 10 years ago, it was a chaise, driver behavioral data,” he said. “Fleet man- agers) with telematics programs take full management. a cab and an engine. Today, all the data agers can now monitor the location, advantage of the safety information avail- “It’s easy to say, ‘Well, gee, if we just train we’re able to get because of all the telemat- movement, status and more of a able to them,” he said. “The larger and more these drivers, the problem will go away,’ ics on a real-time basis is incredible.” fleet vehicle and its driver. In turn, well-run the fleet, the more likely it is to when really you may need management sys- Telematics, a wireless technology used these insights can be used to have telematics.” tems changes to address the motivation,” in vehicles to collect performance data, increase productivity, reduce labor A 2015 Travelers customer survey found Mr. VanDyne said. can relay to fleet managers such infor- costs, control fuel costs, increase that 8% were using telematics in light trucks While telematics might raise concerns mation as a vehicle’s speed, brak- fleet safety and more.” and vans, and 11% were using telematics for about privacy, Javier Baixas, Chicago-based ing and distance between cars. Rich Bleser, Milwaukee-based fleet spe- medium, heavy and extra-heavy trucks. InsurTech lead for PricewaterhouseCoopers “If there are certain things we’re cialty group practice leader for Marsh Risk Mr. Hayes said that since most companies L.L.P., said gamification, which applies game looking for in terms of habits of drivers — Consulting’s workforce strategies practice, with commercial trucks in the U.S. must mechanics and design techniques to moti- do they accelerate too hard, do they brake said telematics has allowed companies to begin using electronic logging devices to vate people, is one way to inspire drivers. too hard? — that’s the type of information essentially get into the cab with the driver, monitor driving hours by December 2017, “I’m willing to share my data if I get some we want to have,” Mr. Pierson said. “We can “not as Big Brother, but more so as an oppor- “we anticipate that many commercial fleets benefits from it,” Mr. Baixas said. “Make the sit down with the driver, and we can say, tunity to guide them, coach them and mas- will look for integrated systems that provide journey a game.” ‘Hey, you need put to more distance between sage those risk-free behaviors” to protect telematics data as well as electronic log- He also said the telematics data could help you and the car in front of you’ or ‘Don’t run drivers and reduce collisions. ging.” cut insurance costs: “If I use my data to so hard up into a stoplight.’” “The insurance marketplace is starting to Liberty Mutual Insurance Co.’s Managing understand what my risk factors are, and if “From an insurance perspective,” Mr. Pier- look very favorably upon organizations that Vital Driving Performance program, which I act to minimize drivers’ risk, I should go son said of telematics, “I think that this is effectively capture and use telematics data,” won a 2016 Business Insurance Innovation back to the insurance company and say I incredible in the long run. Today, it’s proba- he said. “By the same token, the insurance Award, is geared toward helping policyhold- want to pay lower premium because my risk bly not that much of an impact and maybe marketplace is also very reluctant to have ers use telematics data to improve driver is lower. You will have the data as proof.”

20 August 1, 2016 BUSINESS INSURANCE BI_20160801p21.qxp 7/28/2016 5:46 PM Page 1

RESEARCH & DATA MARINE, AVIATION & TRANSPORTATION

MARINE PREMIUMS TRUCK AND BUS ACCIDENTS Global marine insurance premiums declined 3.2%, to $32.6 billion in 2014, the latest data available, due in part to a strong U.S. dollar. A 7.1% decline in cargo premiums and a 5.8% decline in hull premiums offset an 11.1% increase in offshore energy insurance. Category Premiums 11.8 MILLION Liability The number of large trucks and buses registered 6.6% in the United States in 2014, the highest number Cargo $16.95 billion since 2009.

Energy Hull $7.60 billion 18.2% 3,978 Cargo 51.9% The number of accidents involving fatalities, a 5.4% decline from the previous year despite an Energy $5.70 billion Hull 23.2% increase in miles traveled. The number of accidents involving injuries increased 9.9%, to 100,000. Liability $2.35 billion

Total $32.60 billion

Source: 2015 Cefor presentation at the International Union of Marine Insurance 84%

MARITIME LOSSES The percentage of fatal crashes involving large The number of total maritime losses in 2015 declined for the third straight year and the lowest total in at least a decade. Nearly three-quarters of the total losses trucks that occurred on weekdays. were due to ships that foundered, and about 60% involved cargo and fishery ships. Shipping incidents were most likely to happen on a Thursday and least likely to happen on a Sunday.

171 154 149 61% 129 125 123 112 95 88 85 The percentage of fatal crashes involving large trucks that occurred on rural roads.

37% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: Allianz Global Corporate & Specialty analysis of Lloyd’s of London casualty data

The percentage of fatal crashes that occurred between 6 p.m. and 6 a.m. AVIATION PREMIUMS AVIATION ACCIDENTS Source: Federal Motor Carrier Safety Administration There were 2,983 weather-related U.S. aviation accidents from 2002-2013, 182 of which were caused by turbulence 2015 hull and liability premiums of and 38 of which involved fatalities. California, Colorado, Arizona, Alaska and Washington had the highest number of $1.25 billion were the lowest since turbulence events. 2000 and a 65% decline from 2001. COMMERCIAL AUTO Year Weather-related Turbulence % turbulence 2002 380 14 3.6% $31.21 BILLION $1.6 BILLION 2003 409 22 5.1% U.S. commercial auto direct written premiums Estimated total incurred claims in in 2015. 2015, the third consecutive year 2004 379 20 5.0% losses exceeded premiums. Physical damage 2005 336 11 3.2% 24.1% ($7.51 billion) 2006 303 8 2.6%

10% 2007 317 26 7.6% Average decline in lead hull and 2008 170 14 7.6% liability premium in 2015 despite an average 5% increase in fleet value. 2009 155 9 5.5% Liability coverage 75.9% 2010 136 14 9.3% ($23.7 billion) Industry safety improvements over 2011 118 21 15.1% the past 20 years and the weak global economy have factored into 2012 156 15 8.8% more capital coming into the market, resulting in an “exceptionally high 2013 124 8 6.1% level of capacity” and generally softer insurance rates. Total 2,983 182 6.1% Source: “Airline Insurance Market Outlook 2016,” Aon P.L.C. Source: Federal Aviation Administration Source: National Association of Insurance Commissioners

BUSINESS INSURANCE August 1, 2016 21 20160801NEWS---0022-NAT -CCI-BI_-- 7/28/2016 4:49 PM Page 1 MARKET PULSE

CNA offers tool to assess dollar basis and provides a separate limit health care merger risks of $50,000 per policy, New York-based DEALS & MOVES Ironshore Specialty said in a statement. CNA Financial Corp. has launched a The third-party product recall cost tool and related consulting services that endorsement compensates the policy- are designed to help health care organi- holder for costs that resulted from prod- Specialty broker partners zations assess new and potentially unfa- uct recall for up to 12 months after the miliar exposures resulting from merger recall. Ironshore provides reimburse- with private equity firm and acquisition activity. ment for communications and media The tool was designed as a response notifications, cancellation of promotion- Dallas-based U.S. Risk Insurance Group Inc. has the growing number of merger and al advertising and retail shelf slotting entered into a definitive agreement with Kohlberg & acquisitions among health care fees, according to the statement. Co. L.L.C. for a “significant transaction and partner- providers, CNA said in a statement. Coverage includes the actual costs for ship” with the Mount Kisco, New York-based private The self-assessment tool presents responsible disposal of a named product equity firm. users with questions that health care and the value of the recalled or destroyed Terms of the agreement were not disclosed. The organizations and providers can use to product that cannot be reused, distribut- transaction is expected to be completed during the asses risks. ed or salvaged. third quarter, U.S. Risk said, subject to regulatory “Competitive pressures, health care approval. reform and the cost of doing business are U.S. Risk said Kohlberg, through its $1.6 billion pri- a few of the reasons that health care Commercial output policy vate equity fund, Kohlberg Investors VII L.P., will organizations decide to either merge for inland marine offered invest in U.S. Risk and reserve substantial additional with or acquire another organization or equity capital to support the company’s growth plans. practice,” Joyce Benton, assistant vice Berkshire Hathaway Specialty Insur- Randall Goss, U.S. Risk’s founder, chairman and president of health care risk control, said Global pandemic ance Co. has launched a commercial out- CEO, will remain in his current position and continue in the statement. “CNA’s experience in put policy to round out its U.S. inland to be the company’s largest individual stockholder. collaborating with health care organiza- model expanded marine offering. tions and providers across the continu- The policy targets the logistics/trans- um of care and across the country AIR Worldwide has expand- portation/trucking industry, contractors, Randall & Quilter acquires affords us a comprehensive industry ed its Global Pandemic and equipment dealers, the company view to help our customers successfully Model to include additional dis- said in a statement, combining its new reinsurance specialist navigate the post-merger integration eases. admitted property insurance policy with process.” The model includes new bacteri- its inland marine coverages. The policy Randall & Quilter Investment Holdings Ltd. has al and viral diseases, in addition to responds to property risks in conjunction acquired Agency Program Insurance Co. Ltd. previously modeled influenza, with motor truck cargo, warehouse legal Hamilton, Bermuda-based Randall & Quilter paid Online legal advice coronaviruses, and filoviruses: two liability, contractor’s equipment, instal- $1.4 million in cash from existing resources, the com- offered for brokers pathogens from the Bunyaviridae lation and builder’s risk exposures. pany said in a statement. viral family, Rift Valley fever virus Bermuda-based APIC, which is in runoff, has a total Online legal services provider Epoq and Crimean-Congo hemorrhagic net asset value of $2.4 million and reserves of around North America has launched a legal ser- fever virus; Lassa (hemorrhagic) Tokio Marine Kiln $8.6 million, and generated pretax profit of $600,000 vice available for professionals that sup- fever from the Arenaviridae viral launches broker platform in 2015, according to the statement. port broker networks. family; and bacterial-pathogens- LawAssure is available to group bene- associated cholera (Vibrio choler- Tokio Marine Kiln said it has launched fit brokers and advisers, insurers, third- ae), plague (Yersinia pestis), and One TMK, a digital exchange for brokers Berkshire Hathaway unit party administrators and others, Epoq meningococcal meningitis (Neisse- to quote and bind policies online in real said in a statement. ria meningitidis). time with the specialty insurer. acquiring med mal insurer LawAssure functions on Epoq’s Rapi- AIR models the impact to 24,000 One TMK is a web-based platform that docs technology platform. Users pay a municipalities worldwide, AIR gives brokers direct access to specialist New York-based Medical Liability Mutual Insurance monthly subscription fee that gives them Worldwide said in a statement. business lines that can be difficult and Co. is being acquired by a Berkshire Hathaway Inc. access to LawAssure for less than $5 Additionally, AIR will collabo- uneconomical to reach through tradition- unit. per employee per year. It mimics the per- rate with the World Bank on the al channels, London-based Tokio Marine MLMIC Vice President Edward Amsler said the deal sonal question and answer session a launch of the Pandemic Emergen- Kiln said in a statement. will be valued at about $1.8 billion, which was its pol- lawyer would have with a client when cy Financing Facility, a global “High expenses and inefficiencies have icyholder surplus as of Dec. 31, 2015. drafting a legal document, according to financing mechanism designed to been an ongoing problem for the insur- Berkshire unit National Indemnity Co. will acquire the statement. protect the world against deadly ance market. The purpose of One TMK MLMIC pending regulatory and policyholder pandemics. In the case of an out- is to help brokers reduce the time, and approval, following completion of MLMIC’s conver- break, it would release funds therefore lower the cost of getting a sion to a stock company from a mutual company, Schinnerer offers solution quickly to countries and qualified quote and a policy to their clients,” MMLIC said in a statement. for cyber protection international responding agencies, Charles Franks, group CEO for Tokio The transaction is expected to close in 2017’s third according to the statement. Marine Kiln, said in the statement. quarter. Underwriting manager Victor O. Schin- “MLMIC is a gem of a company that has protected nerer & Co. said it has launched a cyber New York’s physicians, midlevel providers, hospitals security protection solution with Span- The product also has Spanning Backup Political risk insurance and dentists like no other for over 40 years,” Berkshire ning, an EMC company. for Office 365, which is an SaaS data pro- for life science firms Chairman Warren Buffet said in a statement. The collection, which features tection solution that provides daily auto- Microsoft Office 365 products, is designed mated backups of data stored in Office Berkley Life Sciences, a W.R. Berkley to help small and midsize organizations 365 mail, calendars and OneDrive, the Co. unit, has launched coverage designed Gallagher buys E&S broker safeguard their business and data, Schin- statement said. Spanning provides back- to address life science exposures faced nerer said in a statement. up and recovery for SaaS applications. by customers with assets or operations with professional liability focus The collection includes Schinnerer’s overseas. cyber protection insurance for digital Most property insurance policies do not Arthur J. Gallagher & Co. has acquired Gabor Insur- crime, breach liability and breach recti- Endorsement mitigates provide protection from the financial ance Services Inc., including its American Profession- fication. Microsoft Office 365 and product recall costs impact of government actions like confis- al Liability Underwriters subsidiary. Microsoft Enterprise Mobility Suite, cation, expropriation and nationalization Terms of the transaction were not disclosed. Miami- which combines Office applications with Ironshore Specialty Casualty will offer of assets, or from currency inconvertibil- based Gabor is a managing general agency and excess the cloud, includes data encryption, iden- a third-party product recall cost endorse- ity or political violence, Ewing, New Jer- and surplus lines insurance broker that provides com- tity and access management, informa- ment, an enhancement to its primary sey-based Berkley said in a statement. mercial and personal property/casualty insurance tion protection, device and application general liability coverage form. The coverage includes traditional polit- products and services to its retail brokers throughout management and cyber intrusion detec- The endorsement covers specified ical risks, such as confiscation and polit- the U.S. Southeast, Gallagher said in a statement. tion. Microsoft Office 365 and Microsoft costs caused by a direct customer of the ical violence, but also includes life sci- It specializes in commercial property and profession- Enterprise Mobility Suite also come with policyholder when a recall must be ence-specific perils like delayed access al liability with a focus on architects and engineers, 24/7 technical phone support. ordered. The coverage applies on a first and wastage of perishable material. lawyers, health care and other professionals.

22 August 1, 2016 BUSINESS INSURANCE 16bi0184.pdf RunDate: 08/01/16 Brown full Page Color: 4/C To place your ad, contact Erin Smith at [email protected] Business Insurance, Classified Department, 150 N. Michigan Ave., Chicago, Il. 60601 CLASSIFIEDS Call 212-210-0719 for details on print and online advertising.

PUBLIC NOTICE

NOTICE TO THE CLAIMANTS, CREDITORS AND ALL OTHER PERSONS INTERESTED IN THE AFFAIRS OF EXCALIBUR REINSURANCE CORPORATION (EXCALIBUR) (IN LIQUIDATION) NOTICE IS HEREBY GIVEN: The Commonwealth Court of Pennsylvania ordered Excalibur Reinsurance Corporation (Excalibur) into liquidation effective July 18, 2016. Teresa D. Miller, Insurance Commissioner of the Commonwealth of Pennsylvania, was appointed the Statutory Liquidator, and was ordered to take possession of Excalibur’s property and to liquidate its business. Deputy Insurance Commissioner Laura Lyon Slaymaker oversees the liquidation on her behalf. This information is important. It is recommended that you read it carefully before contacting the Liquidator’s Office with questions. You may also want to consult your attorney or insurance advisors before you proceed. Certain claims may be covered by guaranty associations in the policyholder’s state of residence or where the loss occurred. Guaranty associations and funds were created by state law to provide protection in the case of a liquidation. The various state laws governing the guaranty associations include eligibility requirements and limits on the amount of coverage available. Claimants that are covered by an Excalibur policy may be entitled to the protection of the property and casualty insurance guaranty association in the state where they reside or where the loss occurred. If you have a claim against Excalibur that you intend to pursue, you must file a proof of claim in order to have your claim considered. Proofs of claim must be received no later than 5:00 pm EST November 30, 2016. • A proof of claim must be filed even if a claim was made against Excalibur prior to liquidation. Also, a separate proof of claim form must be filed for each claim you have. A proof of claim must include: • proof of claim form containing the original signature of the claimant • description of the claim and any security interest • whether collateral security or personal security is pledged in accordance with the terms of the contract or policy • documentation of any payments made on the claim; • a statement that the amount is justly owed the claimant. • A proof of claim may be submitted by: • Mail: Sign and mail the proof of claim form to the following address: Statutory Liquidator for EXCALIBUR, Capitol Associates Building, 901 N. 7th Street, Harrisburg PA 17102 • Email: Print, sign and scan the proof of claim and supporting documentation to the following email address: [email protected] • Fax: Print, sign and fax the proof of claim and supporting documentations to the following number: (717) -772-4543 If you require additional proof of claim forms, you may make copies of the one attached. There are several ways to request a Proof of Claim form. They are: Download: http://www.insurance.pa.gov/Regulations/LiquidationRehab/Pages/Excalibur-Reinsurance-Corporation.aspx Request by E-Mail: [email protected] Request by Telephone: (717) 787-7823 Request by Mail: Statutory Liquidator for EXCALIBUR, Capitol Associates Building, 901 N. 7th Street, Harrisburg, PA 17102 It may be several years before all of Excalibur’s assets are collected and distribution amounts can be determined. To participate in a distribution, you must file a proof of claim. This is particularly important where there is no guaranty association coverage or where the claim exceeds the limits of such coverage. It is important that you keep Excalibur fully advised of all developments in any cases that impact your claim so that Excalibur can use this information to recover funds from reinsurers and thereby potentially increase the distribution to policyholders and creditors. If a claim is based upon an “instrument in writing,” that document should be attached to the proof of claim. If the document has been destroyed, a statement of the facts and circumstances of the loss must be filed, under oath, with the claim. Article V of the Insurance Department Act enjoins all persons from instituting or continuing any action at law or in equity or any attachment or execution against Excalibur, or the Statutory Liquidator. All persons indebted to, or having any property of Excalibur in their possession, directly or indirectly, are hereby notified to tender an account of the indebtedness. Payment of the debt or delivery of the property should then be made to the Statutory Liquidator.

YOU ARE REQUIRED BY ARTICLE V OF THE INSURANCE DEPARTMENT ACT TO NOTIFY THE STATUTORY LIQUIDATOR OF YOUR CHANGE OF ADDRESS. IF YOU FAIL TO DO SO YOU MAY JEOPARDIZE RECOVERY FROM THIS ESTATE. Included with this Notice are some frequently asked questions which may assist in your understanding of the liquidation process. Please review this material carefully.

This notice and the information are in summary form and may not contain all necessary information for your particular situation. You are urged to consult an attorney if you have any questions. All claims are subject to payment only in accordance with applicable law.

General questions about the liquidation procedure should be addressed to the Statutory Liquidator at: Statutory Liquidator of Excalibur Capitol Associates Building 901 N. 7th Street, Room 201 Harrisburg, PA 17102 (717) 787-7823

24 August 1, 2016 BUSINESS INSURANCE 20160801NEWS---0025-NAT -CCI-BI_-- 7/29/2016 3:53 PM Page 1

“Hopefully, they’ve got a robust avoid crowded areas if possible, TRAVEL travel assistance and travel risk said Lockton’s Mr. Payne. management program in place,” When an employee leaves a Continued from page 4 said Tim Crockett, Atlanta-based hotel, he or she can ask hotel man- vice president of security at HX agement or a local taxi driver for another location or through a con- Global, the U.S. subsidiary of Heal- the best way to get to the destina- ference call, Mr. Horner said. ix International Ltd. tion, said Jim Breitkreitz, vice Most travel should be booked “Statistically, depending on the president and executive technical through a centralized hub, which organization, between 85% to 93% director of risk engineering at allows for an interface with a secu- of calls will be medical in nature,” Zurich North America in Schaum- rity intelligence travel provider, he he said. This could include prob- burg, Illinois. said. lems stemming from what some- He cautioned against relying too For East Carolina University in one ate, chest pain and twisted heavily on GPS systems. Greenville, North Carolina, the ankles, he said. “All those sort of “If you walk, make sure your university continues to follow its things are more likely to happen GPS system is set to route you on basic policies, structures and pro- than the real scary stuff.” the major route instead of simply cedures, said Tim Wiseman, assis- As a result, make sure the per- defaulting to the fastest route,” Mr. tant vice chancellor of enterprise son is fit to travel, said Mr. Crock- Breitkreitz said. “The GPS does risk management and chief risk ett. Employers should take care not know where the high crime officer. He said the school is moni- to keep employees out of situa- rates are.” AP PHOTO toring threat situations as they tions that could aggravate their He said if employees know, for Police stand at the scene where a truck plowed through a crowd of people develop and tailoring pretrip plan- existing medical conditions. example, that a political demon- during Bastille Day celebrations July 14 in Nice, France. ning as well as contacts for “those Once there, employees should be stration is slated to take place, who are out and about.” able to call prearranged emergen- “avoid that area,” he said. The university has about 30,000 Lockton Cos. L.L.C. in Kansas City, have and how do we communicate cy services. As a general rule, employees students. Missouri. that to employees before they go “Have a dedicated phone line and should avoid wearing flashy cloth- ECU is conducting a comprehen- Logan Payne, assistant vice pres- overseas,” he said. have someone at the other end of ing or jewelry to avoid attracting sive review of all categories of stu- ident in Lockton’s international “Communication is key,” said the phone line who knows who’s criminals. dent and faculty travel and is practice, cited “the importance of Stephen Page, assistant vice pres- calling and can deliver the aid they Mr. Breitkreitz also urged devising a matrix that shows the a joined-up communication strate- ident of international employee need,” said Mr. Crockett. “That is employees who want to play Poké- degree of active involvement and gy” across human resources and benefits at Lockton. “It doesn’t reassuring for the traveler.” mon Go to be “extremely cautious” responsibility the university risk management. He said workers matter what programs they have In some cases, this means giv- while playing the game, especially would have in travel, oversight compensation and perhaps travel in place, if the employee doesn’t ing an employee a predetermined in areas they don’t know. and safety preparation under dif- accidents might be handled know how to use it, it does nobody word he or she would use to indi- “You’re restricting your periph- ferent circumstances, Mr. Wise- through risk management, while any good.” cate they are calling while under eral vision,” he said. “There’s man said. HR would handle other benefits, An employee’s health issues duress, he said. going to be a lot of things going on Information can’t be siloed, noted such as medical care. should be taken into account Employees always should be that you would normally be aware two travel security experts at “Determine what coverage do we before the trip begins. aware of their surroundings and of that you won’t notice.”

state insurers. PLATFORMS While the Democratic Party platform backs the ACA, it does suggest some Continued from page 4 changes. For example, the platform would reduce Humana Inc. to stop offering exchange cov- the ACA’s annual out-of-pocket limit, which erage in certain states next year. currently is $6,850 for single coverage and It also responds to the long-time support $13,700 for family coverage. It also would by former presidential contender Sen. repeal the 40% “Cadillac” tax on premiums Bernie Sanders, I-Vt., for a single-payer that exceed $10,200 for single coverage and national health insurance system, Mr. $27,500 for family coverage employers are to Manville said. face in 2020. The GOP platform would ask state officials “There is a lot of detail here,” said James to reconsider “medical mandates” that Gelfand, senior vice president of health pol- require insurers to offer certain benefits in icy at the ERISA Industry Committee in their health plans. Washington. But the Democrats’ plan, which Such mandates “price millions of low- also advocates expanding Medicare eligibil- income families out of the insur- ity and adding a public health ance market.” In addition, the “Where will the plan to the exchanges, does not AP PHOTOS GOP platform says more price suggest how to replace excise Republican nominee Donald Trump has called for repealing the Affordable Care Act. transparency concerning medi- money come from? tax revenue. Democratic nominee Hillary Clinton backs a lower Medicare eligibility age. cal services is needed. “Where will the money come The GOP platform also sup- Will there be new from? Will there be new taxes DIFFERENT APPROACHES ports growth of health savings on employers or providers? We accounts, saying HSAs taxes on employers don’t know that,” Mr. Gelfand The 2016 Republican and Democratic platforms differ on health care. “empower patients.” or providers? We said. The HSA proposal “is not sur- Earlier, the Congressional Republican platform: Democratic platform: prising. Republicans are very don’t know that.” Budget Office projected that the ■ Repeal the Patient Protection and Affordable ■ Add a public option for enrollees in ACA health supportive of that,” said Katy excise tax would raise $87 billion Care Act; insurance exchanges; Spangler, senior vice president James Gelfand, ERISA in new revenue from 2018 ■ Promote medical price transparency; ■ Allow individuals age 55 and older to enroll in Medicare; of health policy at the American Industry Committee through 2025, based on the ■ Allow individuals and small employers to form Benefits Council in Washing- assumption that employers cut- purchasing pools; ■ Repeal the 40% ACA “Cadillac” tax; ton. Several weeks ago, GOP members of the ting benefits to stay under the tax trigger ■ Protect individuals who maintain continuous ■ Reduce the annual out-of-pocket expense limit; coverage from discrimination; House Ways and Means Committee united would boost employees’ taxable wages. ■ Cap prescription drug cost increases; to pass legislation that would significantly Experts, however, question the validity of ■ Allow consumers to purchase health insurance ■ Resist insurers trying to impose “excessive” from out-of-state insurers; increase the maximum annual HSA contri- that assumption. premium increases; bution limit starting in 2017. Not surprisingly, the party platforms par- ■ Extend tax breaks to individuals purchasing ■ Push states to ease Medicaid income eligibility health insurance; In addition, the GOP platform advocates tially mirror the presidential candidates’ rules; continuing the current ban on employers stances. ■ Support legislation to cap noneconomic damages ■ Allow individuals, pharmacists and wholesalers to in medical malpractice suits. and insurers denying coverage to people For example, Democratic nominee Hillary. import prescription drugs from Canada. with pre-existing medical conditions who Clinton backs a lower Medicare eligibility have not allowed their prior coverage to age, repealing the tax and reducing out-of- lapse. pocket health plan limits. Without going into detail, the platform GOP nominee Donald Trump has called for jority that prevented Republicans from neither party is likely to have supermajori- says individuals buying health insurance repealing ACA and giving people buying blocking ACA in 2010, this election is differ- ty in the Senate, making legislative changes should receive tax breaks, and individuals health insurance a tax break. ent. more difficult to pass without broad bipar- should be able to buy policies from out-of- While Democrats held a Senate superma- “Regardless of who is elected president,” tisan support, ABC’s Ms. Spangler said.

BUSINESS INSURANCE August 1, 2016 25 20160801NEWS---0026-NAT -CCI-BI_-- 7/29/2016 5:56 PM Page 1

states to train prescribers on best components and access to infor- based vice president of workers ited to 100, but experience has won OPIOIDS practices for opioids and to edu- mation not only at state level but compensation claims at The Hart- doctors’ support of the expanded cate the public; and now at a federal level shows great ford Financial Services Group Inc., limit of 275. Continued from page 3 ■ Funding federal research on support for what workers comp said in an email. Since the increase in opioid pre- new pain medications that are less carriers, employers and payers The law’s easing of limits on vention and treatment programs CompPharma L.L.C., a workers addictive. have been trying to do,” she said. patients that addiction treatment will be at the state and local levels, comp pharmacy benefit manage- Other provisions in the law will The educational provisions providers can handle also is wel- Thomas Ryan, New York-based ment consortium. finance treatment programs for aimed at patients and prescribing come, said CompPharma’s Mr. market research leader at Marsh However, Rita Wilson, Delray physicians are the most promising Paduda. L.L.C.’s Workers Compensation Beach, Florida-based CEO of “Any act from a regulatory aspect of the law, she said. “There are millions who are Center of Excellence, said he hopes claims administrator Tower MSA “Legislation that funds education addicted to opioids that are on that will put workers on a fast Partners L.L.C., said, “Any act position that focuses on opioids that can impact prescribing habits waiting lists to get into these treat- track for recovery. from a regulatory position that is a tremendous opportunity for ment facilities,” he said. The law’s electronic prescription focuses on opioids is an extremely is an extremely positive thing.” that change we hope to see,” she The law also expands treatment reporting at a national level also positive thing.” said of the law that will allow availability to qualifying licensed will help reduce abuse, he said. Rita Wilson, Provisions in the law that affect states to apply for federal grants to nurse practitioners and physician Currently, some workers comp Tower MSA Partners L.L.C. workers compensation include: expand their efforts. assistants who have expertise in claimants get prescriptions from ■ Establishing national elec- “Efforts that create even greater prescribing medications for opioid multiple doctors, “With no way to tronic prescription reporting; awareness in the medical commu- use disorder. Currently, only track this, there is the high propen- ■ Increasing from 100 to 275 the veterans, young athletes, pregnant nity about pain management and select trained physicians can do so. sity for abuse,” Mr. Ryan said. number of patients that qualified women and babies addicted to opi- opioid prescribing practices, as Mark Pew, senior vice president An electronic database with the opioid treatment providers can oids. The law also will aid drug well as increased focus on preven- at Duluth, Georgia-based medical history of all prescription informa- oversee while expanding the defi- smuggling investigations. tion, treatment and education are management company Prium, said tion will help states monitor drug nition of treatment providers to Federal involvement is key, Ms. positive steps in helping injured when the overdose treatment drug dispensing by providing a line of include law enforcement and Wilson said. workers return to health and naloxone began to get greater use vision for providers and insurers nurse practitioners; “Having prescription drug mon- avoid opioid addiction,” Peter Mac- at the turn of the century, the num- to investigate any drug abuse sit- ■ Providing federal grants to itoring programs, educational donald, Hartford, Connecticut- ber of patients per doctor was lim- uation, he said.

“I think it’s a big deal and I think it’s a surprise to most insurance

POKÉMON AP PHOTO COLLATERAL professionals in the market,” said Continued from page 3 Continued from page 3 Nicholas Bradley, a partner and head of insurance at Pinsent rate email, which is pretty com- genuine claim might have been Masons L.L.P. in London. mon in a (bring-your-own-device) dishonestly exaggerated. Either “Potentially it encourages fraud- world, there’s a much greater way, the insurer would not be ulent behavior by insureds,” said risk these apps can open people liable to pay the claim, the high Mr. Bradley. up to cyber attacks,” said court ruled. “It’s obviously contrary to how Thomas Reagan, Marsh L.L.C.’s In the third case, the entire claim the insurance industry expects its New York-based cyber practice may be justified, but the informa- customers to behave. If the lie is leader. tion given to support it may have designed to induce the insurer to Andrew Laubmeier, senior bro- been “dishonestly embellished, pay their claim or to pay an exag- ker in Aon P.L.C.’s financial ser- either because the insured was gerated claim, that’s not the sort of vices group in Chicago, said one unaware of the strength of his case customer the insurer wants to do initial source of worry was that or else with a view to obtaining business with,” Mr. Bradley said. most people who downloaded the payment faster and with less has- Mr. Atkins sees the ruling’s game did so through their Google sle,” Lord Jonathan Sumption effect as more limited. email accounts, which required wrote for the court. “The present “I don’t see it really having a agreeing to provide Niantic with MINIMIZING LIABILITY appeal is concerned with embel- higher impact on day-to-day main- full access to any information in Steps experts say businesses can take to minimize liabilities in the Pokémon Go lishments of this kind.” stream claims,” Mr. Atkins said. those accounts. phenomenon “Although a lie uttered in sup- “It’s very much the exception While the provision later was Review policies on company-issued smartphones and bringing employee-owned port of a claim need not have any narrowed considerably, “the devices to work adverse impact on the insurer, I underlying concern is still there,” Include such policies in the company’s handbook consider that it must at least go to “I think it’s a big deal and I think Mr. Laubmeier said. Check corporate-owned devices periodically for malware the recoverability of the claim on it’s a surprise to most insurance Philippe Weiss, Chicago-based Keep current on potential hacking and malware threats the true facts,” Lord Sumption managing director of Seyfarth wrote. “It does not apply to a lie professionals in the market.” Establish remote-wiping capabilities to remove malware from company- and Shaw at Work, the compliance which the true facts, once admitted employee-owned smartphones Nicholas Bradley, training and consulting services or ascertained, show to have been Communicate potential threats to employees as they arise Pinsent Masons L.L.P affiliate of Seyfarth Shaw L.L.P., immaterial to the insured’s right to said businesses also may be Install or reinforce security to keep members of the public out of restricted or recover.” hazardous areas liable for game participants who In his dissent, Lord Jonathan “wander into facilities where Expand security to remote or little-used areas Mance said “insurers will no doubt rather than the rule but it does they may endanger themselves.” Procure liability insurance to cover Pokémon Go-related claims be advised” about “making happen from time to time.” Workers could also hurt them- express” in the future their under- A U.S. lawyer who represents selves while playing the game standing of and actions taken as a policyholders said the decision during breaks, potentially raising for example, smartphones could address these issues “at the very result of “fraudulent devices” used could bring more balance into workers comp issues, experts pick up data in legal files or per- least would provide the company by policyholders during the claims English insurance law. say. “Both employees and third sonally identifiable information, with evidence that it had thought process. Peter Halprin, an attorney with parties are racing all over the experts say. about it and tried to give people “It’s good news for corporate risk Anderson Kill P.C. in New York, landscape in search of Pokémon,” Experts say the game can also advice to protect themselves,” managers, and it’s good news for noted that the high court rendered which creates possible liability create workers comp issues as Mr. Brill said. insureds,” said Nick Atkins, a part- the decision just before the Insur- issues if they get hurt, said Mr. strangers come on companies’ Meanwhile, no one expects ner in the London office of Hogan ance Act takes effect Aug. 1, which Weiss. premises uninvited and injure Pokémon Go to be the last word Lovells International L.L.P. makes it harder for insurers to “We have an agricultural client, workers. in augmented reality games. “The Supreme Court rather sur- deny claims. and they had an issue because You can have “all kinds of peo- Anthony Dagostino, executive prised us in coming down the way “England, which is traditionally someone was chasing one of ple descending on your office vice president and FINEX cyber that it did. I think most people considered a pretty harsh environ- these Pokémon creatures and unexpectedly,” leaving the com- practice leader at Willis Towers expected the court would follow ment for policyholders, including almost fell into a grain elevator,” pany unable to protect employ- Watson P.L.C. in New York, said the line of the dissenting opinion, U.S. policyholders, is moving in a Mr. Weiss said. Another report ees’ safety, said Jeffrey Adelson, he is concerned gaming compa- which says if you effectively tell more favorable direction,” he said. had an employee leaning out a general managing partner at nies will push the envelope fur- stories in putting forward your “English law which has kind of a window to get better reception as Adelson, Teslan, Brundo, Novell ther, making games “bigger and claim that you know to be untrue, draconian reputation is trying to he played the game. & Jimenez P.C. in Santa Anta, better and more exciting to peo- then you can expect and should move away from that and inject Privacy is a risk was well. California. ple, which can be more danger- expect that your claim won’t be some proportionality into insur- When the game is in video mode, Having policies in place to ous at the same time.” paid.” ance disputes.”

26 August 1, 2016 BUSINESS INSURANCE 20160801NEWS---0027-NAT -CCI-BI_-- 7/29/2016 5:57 PM Page 1

president of the Chicago-based and even purposeful part of the specialty risk underwriter. activity.” Some insurers will even “pull out A main difference in the WWE of the class because of what they case is that wrestlers didn’t wear consider unknown future expo- helmets they believed would pro- sure,” he said. The fact that more tect them against head trauma, players are sitting out for extend- said Thomas Demetrio, a partner ed periods of time or retiring early at Chicago-based Corboy & as a result of head trauma does Demetrio, which represents Paul have “to be factored into the way Hornung and other former NFL we rate our products.” players in the lawsuit against Rid- The increased awareness gener- dell. ated by recent lawsuits — namely Before the litigation that the class action suit against the increased awareness and prompt- NFL — is likely to spur lawsuits ed an NFL concussion protocol, from athletes in other sports, “players didn’t want to know, experts say. Whether that means coaches didn’t want to know, doc- more billion-dollar settlements tors didn’t want to know,” Mr. remains to be seen. Demetrio said. “These guys want- In a statement, the WWE said it’s ed to play football. If they got “confident” the suit filed by more dinged, they oftentimes wouldn’t than 50 former professional even tell anybody because they wrestlers in a New Haven, Con- knew there was somebody else AP PHOTO necticut, federal court will be dis- just waiting for them to be hurt so Haruki Nakamura of the Carolina Panthers, left, is suing underwriters at Lloyd’s of London for not honoring his missed. they could take their place.” $1 million career-ending injury policy. U.S. District Judge Vanessa The key for employers of profes- Bryant in Hartford, Connecticut, in sional athletes or construction at Baruch College’s Zicklin School There’s only so much an insurer March dismissed similar com- workers, for example, is “making CONCUSSIONS of Business in New York. “Unless can charge for a policy that plaints, stating that the plaintiffs sure they don’t return to work the NFL decides to substantially excludes “what could be, and like- “were financially compensated to until they have been released by a Continued from page 1 change the nature of the sport, the ly will become, the No. 1 career- engage in an activity in which neurologist that knows what he’s risk portfolio for insuring profes- ending injury” among profession- physical violence was a known doing,” Mr. Demetrio said. also sued World Wrestling Enter- sional football players will begin to al football players, said John W. He added that premiums for tainment Inc. in July for head look more like the risk portfolio for Schryber, a partner at law firm workers compensation insurance injuries they sustained during insuring professional boxers.” Reed Smith L.L.P. in Washington. CONCUSSIONS AND might be high, but if workers are matches, and a Carolina Panthers That means “substantially ele- “You can’t exclude your way to ASBESTOS required to heal properly before player who suffered a career-end- vated premiums,” Mr. Edelman profits,” added Mr. Schryber, who ■ Claims for sports-related brain returning to the game or to work, ing concussion in 2013 filed suit to said. represents Haruki Nakamura, the injuries and asbestos-related “that’s a good thing for every- collect benefits under his profes- Sports-related brain injuries are Carolina Panthers player suing mesothelioma and asbestosis are body.” similar in that the number of people sional athlete insurance policy. a top emerging insurance claim in underwriters at Lloyd’s of London Meanwhile, insurers have rallied potentially affected is “huge.” Meanwhile, a federal judge the U.S. and the U.K., but “effective for not honoring his $1 million since the NFL’s class action settle- ■ Like lung damage resulting from ordered the National Hockey emerging risk management” by career-ending injury policy. ment covering more than 20,000 inhaling asbestos, brain damage may League’s workers compensation insurers can prevent such claims Although two physicians said take years or decades to manifest. retired football players to obtain insurer, Chubb Ltd., to share from becoming as costly as Mr. Nakamura was permanently depositions of league officials and ■ While total U.S. asbestos claims have redacted independent medical asbestos-related claims, Standard disabled after suffering a concus- been estimated at $200 billion to $275 third-party physicians that could exams related to head trauma & Poor’s Corp. said last week in an sion during a preseason game, an billion1 and U.K. asbestos claims help them avoid indemnifying the claims with retired players who analysis. insurer-appointed medical exam- through 2050 have been estimated at league. A New York state judge in 2 allege the league didn’t adequate- “U.S. insurers have learned from iner said he can continue to play £11 billion ($14.42 billion ), sports- April sided with insurers. related brain injuries are not expected ly protect them from concussions. their experience of asbestos-relat- football but urged him to consider to reach that level. “What was disappointing to me “Insurance companies should ed claims, and are increasingly the “probable long-term effects of as part of the NFL settlement was, ■ U.S. insurers already have taken steps reasonably be concerned about drafting exclusion clauses for con- repetitive concussions,” according to limit their liabilities, and U.K. we got no discovery,” said Mr. providing insurance to individuals cussion claims and capping con- to the complaint. insurers are advised to take such Demetrio, who was not involved in that play contact sports with head- cussion lawsuit payouts,” S&P While some underwriters have steps due to their “widespread that case. “We learned nothing as to-head contact or repeated con- said. U.K. insurers also should started excluding cumulative head sponsorship of sports.” to when the NFL knew about long- tact between a ball and one’s take steps to reduce their potential trauma from their coverage, Pro 1 American Insurance Association. 2 Asbestos term damage, and that’s one of the head,” said Marc Edelman, a law exposures, according to the rat- Financial Services L.L.C. will not Working Party reasons the case settled, so there professor and sports law expert ing agency’s London analysts. take that path, said Dan Burns, Source: Standard & Poor’s Corp. wouldn’t have to be disclosure.”

program on health, work and pro- their workforce to help make the reality is that it really is a culture- you’re not going to have the level DMEC ductivity at Tufts Medical Center business case. based issue. If you can have people of engagement that you’re looking in Boston. For JetBlue, behavioral health more comfortable in seeking help for.” Continued from page 4 “All those things make claims a costs represent 5% of overall med- and support, they will.” Pacific Gas & Electric Co. has an little less trustworthy as a way to ical costs, but the average number Every year, about 30% to 40% of “amazing” culture that encour- Bringing chief financial officers of work days lost through short- behavioral health claims initiated ages employees to use the utility’s into the discussion is critical, given “We can have the best term disability claims was 79.3 by employees are denied by the EAP — 10.2% of employees and that a February study by the Inte- days when behavioral health was Aetna Inc. unit that evaluates 14.6% of dependents do so — driv- grated Benefits Institute found programs in the world, the primary or secondary factor — them because they are driven by en by “well-informed supervisors” that 85% of CFOs play a role in ben- a “tremendous” amount of time workplace-related issues such as making referrals, particularly efits decisions, with 53% saying but if the culture doesn’t that Mr. Spencer believes is still conflict with a supervisor, a shift when they see employees strug- they could make better benefits understated. change, job demand changes or a gling, said Heather Holladay, decisions if health-related im- support those programs, you’re One reason that mental health poor performance evaluation, said PG&E’s San Francisco-based inte- provements in job performance not going to have the level of conditions are understated is Adele Spallone, vice president of grated health manager. were linked to business metrics. social stigma, which stifles diagno- business integration and strategy One PG&E program involves “We’re moving into this era engagement that you’re sis, treatment, dialogue and for disability and absence manage- about 40 employees who have suf- where we have to prove the busi- awareness. This is problematic ment with Aetna in Miami. fered from alcoholism or sub- ness case,” said Thomas Parry, looking for.” because most people with mental This gives employers an oppor- stance abuse and who voluntarily president of the San Francisco- health conditions can improve tunity to educate managers and have their names, phone numbers Adele Spallone, Aetna Inc. based institute. “You have to talk with treatment, said Rich Paul, supervisors to recognize symp- and photos listed on posters so the CFO’s language to make the senior vice president of employer toms and help employees before a other employees can reach out to business case.” strategy and development at Bea- disability event occurs, she said. them for help without judgment, But the challenge is mental establish prevalence in your com- con Health Options Inc. in Norfolk, “It starts with one word, and that which 500 employees did last year, health conditions typically are panies,” she said, adding that Virginia. word is culture,” Ms. Spallone said. Ms. Holladay said. underreported, often misdiag- employers can apply federal data “People like to criticize (employ- “We can have the best programs “One of the great things about nosed or inappropriately treated, showing patterns based on age, ee assistance programs) for hav- in the world, but if the culture that is that it breaks the stigma,” said Debra Lerner, the director of race, gender and other factors to ing low utilization,” he said. “The doesn’t support those programs, she said.

BUSINESS INSURANCE August 1, 2016 27 20160801NEWS---0028-NAT -CCI-BI_-- 7/29/2016 6:03 PM Page 1

REACTION Continued from page 1

cerns. Aetna Chairman and CEO Mark Bertolini added an excla- mation point to the written statement in a CNBC interview, in which he said Aetna and Humana “are willing to take this (litigation) all the way to the very end.” Anthem also pledged to fight for its merger with Cigna, and filed a response in the U.S. Dis- trict Court for the District of Columbia arguing that the com- bination “will increase compe- tition and result in cost savings, efficiencies and other benefits that will make health care more affordable and accessible to consumers.” Anthem also said its takeover of Cigna would allow expansion of where it sells insurance merger process with Anthem. He ment’s lawsuit. has been assigned to the cases, will through public health insur- LITIGATION also said that in case the merger is At the heart of the Justice rule. ance exchanges. blocked, Cigna will have signifi- Department’s objections to the However, federal antitrust Cigna, however, has recently Continued from page 1 cant capital to seek growth oppor- Anthem-Cigna union is reduced enforcers have “been on a hot played the role of the reluctant tunities elsewhere. competition for health insurance streak” of winning antitrust cases partner. Barclays P.L.C. analysts said in a As of late last Friday, Anthem and administrative services in the lately, Ms. Murino said. In an unenthusiastic response research report. was the only insurer to file a national and local employer mar- In the past two years, several to the Justice Department’s lit- However, Stephen Zaharuk, New response to the Justice Depart- kets. large companies have abandoned igation, Cigna said it “is cur- York-based senior vice president ment’s litigation. Anthem also has The Justice Department also merger plans after the Justice rently evaluating its options at Moody’s Investors Service Inc., asked for a speedy antitrust trial, argues that eliminating Cigna as a Department filed suit. They consistent with its obligations said “the deck seems to be stacked though government attorneys late competitor to Anthem would include Halliburton Co. and Baker under the agreement” and against” the Anthem-Cigna combi- last week urged the court not to reduce innovation in moving Hughes Inc., General Electric Co. doesn’t believe the deal will nation. rush the complex case. Aetna and toward value-based care in the and AB Electrolux, and National close until next year at the ear- “We see the likelihood of any set- Humana also motioned for an health insurance industry — a CineMedia Inc. and Screenvision liest, “if at all.” tlement or win for the companies expedited trial due to merger major movement today to reduce L.L.C. On Friday, however, Cigna in court as slim given the political agreement deadlines, according to health care costs. Still, federal courts ruled against President and CEO David Cor- nature of the outcome and the tone court documents. “That’s been a factor in some the Federal Trade Commission dani downplayed the health of the communication” from the antitrust merger cases, the fact twice this year in cases brought insurer’s stance. Justice Department, Leerink Part- Competition objections that one company that’s merging against hospital mergers in Chica- Most industry stakeholders ners L.L.C. Managing Director and ... is a maverick,” Mr. Greaney go and Pennsylvania. The FTC has and other observers lauded the Analyst Ana Gupte said in a The Justice Department’s objec- said. In that case, “you’re losing appealed both. litigation. research note after the Justice tions to the Aetna-Humana combi- the one that puts price and innova- There’s also political tension in “The prospect of reducing five Department litigation. nation center largely on reduced tion pressure on the others.” merger cases, Ms. Murino said. national health insurance car- In lawsuits filed July 21 in U.S. competition in the Medicare The Justice Department also Antitrust law appears to be at odds riers to just three is unaccept- District Court for the District of Advantage market that would argued that the mergers would with the Affordable Care Act, able,” American Medical Asso- Columbia, the Justice Department result from the merger. Humana, harm competition that holds down which seems to encourage consol- ciation President Dr. Andrew objected to the potential deals on the second-largest Medicare prices on public health insurance idation and collaboration in the W. Gurman said in a statement. anticompetitive grounds and sug- Advantage provider by covered exchanges, and Mr. Baer said health care sector, she said. “Given the mergers’ potential gested that there were no circum- members, competes with Aetna, divestitures proposed until that “The DOJ will tell you that — to significantly compromise stances in which it would change the fourth-largest, in nearly 90% of point were “incomplete and and the FTC would say this, too — market competition, the AMA its mind. the counties where Aetna offers impractical” and unlikely to solve that there’s no tension between strongly supports the antitrust If allowed, the mergers that are Medicare Advantage. any antitrust concerns. the ACA and the antitrust laws, challenge from federal regula- “unprecedented in their scope and The Justice Department holds Aetna Chairman and CEO Mark but I bet if you asked (the health tors.” in their scale” would likely “threat- that Medicare Advantage does not Bertolini countered during a insurers’) lawyers, they would say “The Department of Justice en to increase insurance premi- compete with traditional Medi- CNBC interview July 21 that there very much is,” Ms. Murino recognized that the health — ums, to reduce benefits, to lower care. Aetna and Humana disagree. Aetna has provided “two separate said. both physical and financial — of the quality of health care and to Barclays analysts said in a bidders with complete bids, Litigation could take months, the American people is at slow innovation,” Principal Deputy research note after the Justice signable contracts that would buy and the losing party could appeal stake,” Topher Spiro, vice pres- Associate Attorney General Department suit that the federal the whole business from us” in the decision, Mr. Greaney said. ident of health policy at the William Baer said during a news agency did not make a compelling each of the problem markets the Observers say the outcome of the nonpartisan Center for Ameri- conference about the litigation. argument why the two markets Justice Department pinpointed. litigation may not be known until can Progress, said in a state- Aetna, Humana and Anthem don’t compete, adding that both Even so, sources said post-merg- next year. ment. The mergers “would quickly responded to the Justice cater to seniors and offer the same er divestitures often fail to restore If the deals are blocked, Anthem have irreversibly transformed Department’s decision with vows base benefits. competition. would owe Cigna a $1.85 billion and destabilized the health care to fight (see related story), each However, the fact that seniors breakup fee and Aetna would owe landscape at a critical junc- arguing that the mergers would have the choice between the two Decided in the courts Humana a $1 billion breakup fee, ture.” benefit consumers and not harm products “doesn’t mean they are according to their merger agree- But a spokeswoman for competition. substitutes,” said Thomas Gre- Ultimately, it’s not the Justice ments. health insurance industry Cigna, on the other hand, seemed aney, an antitrust expert formerly Department’s call whether the five Anthem and Aetna have the cash lobbying group America’s less enthusiastic in its initial with the Justice Department’s largest national health insurers to pay those fees, sources say, and Health Insurance Plans said in response, stating that it would antitrust division who now is co- become three, with UnitedHealth the fees would give Cigna and a statement that “mergers evaluate its options and that it director of the Center for Health Group Inc. being the largest and Humana opportunities to expand, among health plans can deliver expected the transaction to close Law Studies at St. Louis Universi- not involved in the mergers, said Mr. Zaharuk said. significant benefits” and urged in 2017, “if at all.” ty School of Law. Andrea Murino, a Washington- The insurers could turn their federal regulators to set their On Friday, however, Cigna Pres- Medicare Advantage has distinct based partner and co-chair of the sights to “less transformational” sights on “anti-competitive ident and CEO David Cordani characteristics, such as greater antitrust group at Goodwin Proc- deals with smaller health insurers, provider mergers and the soar- attempted to dispel concerns benefits, lower premiums and a ter L.L.P. as they’ve done in the past, said ing cost of pharmaceuticals about the insurer’s commitment, cap on annual out-of-pocket costs, It’s unclear how U.S. District Mark Rouck, Chicago-based senior driven in part by anti-competi- saying it is “fully engaged” in the according to the Justice Depart- Court Judge John D. Bates, who director with Fitch Ratings Inc. tive pricing tactics.”

28 August 1, 2016 BUSINESS INSURANCE 16bi0159.pdf RunDate: 07/04/16 Full page Color: 4/C 20160801NEWS---0030-NAT -CCI-BI_-- 7/29/2016 2:55 PM Page 1

Contributing: Stephanie Goldberg, Judy Greenwald, OFF BEAT Rob Lenihan, Donna Mahoney, Dave Roknic Trademark suit shows MOVIE PRODUCER passion for vodka

he image of a pair of lips may strike many as a kind of strange focus for a 26-page appellate FEELS FULL FORCE T court opinion, not to mention the thousands of dollars in legal expenses that led to it, but that in fact is the case in a decision last week in a trademark infringement dispute over flavored OF SAFETY RULES vodka. Worker bitten According to the July 14 ruling by the 9th U.S. Circuit Court of Appeals in San Francisco, in July 2005, Henderson, by comp denial Nevada-based JL Beverage Co. obtained a trademark showing a pair of Virginia worker got a one-two punch of lips for its Johnny Love line of flavored bad news when she was bitten at work vodka. A by a poisonous snake then learned her The lips were colored red for unflavored, purple workers comp provider was denying her for passion fruit, yellow for “aloha,” orange for coverage for her treatment. tangerine and green for apple, according to the Ke’Vonia Cousins, 29, of Chesterfield, ruling in JL Beverage Company, L.L.C., v. Jim Beam Virginia, was headed outside her employer’s Brands Co. Richmond, Virginia, building for a break Then in 2010, Deerfield, Illinois-based Jim Beam when the baby copperhead struck, landing Brands Co. entered the flavored vodka market with her in the hospital for three days and two Pucker Vodka, whose bottles had a prominent lip rounds of antivenom, according to local image, with colors varying by flavor. media reports. After JL Beverage sued Jim Beam, the U.S. “I felt a ting on my big toe and wetness, District Court in Reno, Nevada, granted Beam like hurting pain. ... I looked down and the summary judgment, dismissing the case. snake was on my big toe,” she said. But a three-judge appeals court panel reinstated Now undergoing physical therapy, Ms. the litigation. Consumers purchasing the vodkas Cousins, has learned The Results Cos.’ “were not likely to exercise a high degree of care in insurer has denied her comp claim. distinguishing between the two” and could become The company told Richmond’s NBC12, the confused between the brands, said the panel, in denial “is based on (the insurer’s) remanding the case for further proceedings. preliminary interpretation of the facts of the injury as they relate to the State of Virginia Workers Compensation Statute. We have reached out to the Insurance Adjusters and their Legal Counsel for further clarification” and anticipate a response in a couple days.

The sky’s the limit for fast food delivery FEATUREFLASH PHOTO AGENCY/SHUTTERSTOCK.COM drone has forever changed the meaning of fast Harrison Ford was pinned by a hydraulic door on the set of the Millennium food by delivering Slurpee drinks, a chicken Falcon spaceship during filming at Pinewood Studies outside London. Old-fashioned risk A sandwich, doughnuts, hot coffee and candy to a family’s house via GPS. alt Disney Co.-owned Foodles Production Ltd., the production The drone was operated by Flirtey, a Nevada- company responsible for working on the U.K. set of “Star Wars: The for modern art based drone startup that teamed with Force Awakens,” admitted to health and safety breaches following a 7-Eleven in Reno, Nevada, on July an accident that crushed actor Harrison Ford’s leg. Mr. Ford was odern art can be a bit of a brain- 15 to legally deliver an order that W pinned by a hydraulic door on the set of the Millennium Falcon teaser. Not quite “The Thomas Crown took two flights to complete, news spaceship during filming at Pinewood Studies outside London on June 12, 2014, M Affair,” a woman visiting the Neues reports said. and he had to be airlifted to a nearby hospital following the accident. Museum in Nürnberg, Germany, mistakenly This marks the drone company’s Mr. Ford, who was 71 at the time, was reprising his iconic role as Han Solo, filled in the blanks on a crossword puzzle- largest commercial relationship, bringing the and could have been killed, according to court testimony, which compared the looking piece valued at more than $88,000, delivery of online retail and food one step closer to accident to the force of being hit by a small car. according to media reports. reality. Earlier this year, Flirtey also delivered Foodles pleaded guilty to one count under section two of the U.K. Health and The 91-year-old woman, who has not been medical supplies to an offshore vessel as a Safety at Work Act 1974, relating to a breach of duty in relation to employees, named, apparently said she was confused by demonstration, a first in the U.S. Last summer, the and a second under section three, a breach over people not employed by the an “Insert words” sign hanging next to company used a drone to deliver medical supplies, company. Arthur Köpcke’s 1977 “Reading-work-piece.” the first commercial drone package delivery The company will be sentenced on Aug. 22 at Aylesbury crown court. The piece, presented to the museum by a approved by the Federal Aviation Administration. private collector, will likely cost a few Regulations for package delivery have not yet hundred euros to repair, but the damage is been finalized; although the FAA did release new Business Insurance isn’t all business all the time, and we know you’re not either. So not permanent, the museum director told commercial drone rules in June that will go into visit www.businessinsurance.com for more Off Beat stories and monthly photo The Telegraph. effect in August, the rules don’t allow drones to fly galleries featuring the best of the weirdest news about insurance, fraud, liability The museum, however, has to yet to share outside of the line of sight of the operator, making issues and related topics that make people and companies do funny, silly and how many answers the woman got correct. mass delivery impractical. strange things.

30 August 1, 2016 BUSINESS INSURANCE 16bi0185.pdf RunDate: 08/01/16 Brown full Page Color: 4/C You take on complex issues. We help you pinpoint solutions.

&200(5&,$/$872_*(1(5$//,$%,/,7<_3523(57<_:25.(56&203(16$7,21

@LibertyB2B

‹/LEHUW\0XWXDO,QVXUDQFH,QVXUDQFHXQGHUZULWWHQE\/LEHUW\0XWXDO,QVXUDQFH&R%RVWRQ0$RULWVDI¿OLDWHVRUVXEVLGLDULHV86&

16bi0145.pdf RunDate: 06/20/16 Full page Color: 4/C