summer 2018 - risk placement services · 2018-06-26 · summer 2018 the eu data breach regulation...
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NAVIGATOR
THE
Summer 2018
The EU Data Breach Regulation & Your U.S. Business Clients By Dean GoodwinMarketing ManagerRPS Technology & Cyber
Companies that collect data on citizens in EU countries must comply with strict new rules that protect customer data. The “GDPR” went into effect on May 25, 2018 and sets a new standard for consumer rights regarding their personal data.
The following FAQs give a quick overview for businesses located in the U.S. and will give agents the answers to some of the most commonly asked questions:
What do the initials “GDPR” stand for? General Data Protection Regulation
My clients are all based in the United States. Should U.S.-based businesses care about this? Yes. Even if the company does not have a business in the EU, the regulation can apply if:
• The business offers goods or services to EU subjects regardless of whether payment is required.
• The business monitors the behavior of EU subjects (clicking on social media links, analyzing marketing likes/dislikes, etc.).
• Storing and holding the personal data of EU subject.
What should U.S. businesses do now? Here is a great resource to review: https://www.dacbeachcroft.com/media/889656/gdpr-guide-for-businesses-outside-of-the-eu-interactive.pdf. If your client hasn’t purchased a comprehensive Cyber Liability policy for their business, it should be considered now. If they have purchased Cyber Liability, it is important to understand how the carrier is/is not addressing GDPR fines & penalties and what their respective policy triggers are.
Please note that the information provided above is not legal advice. This article is intended to be a starting point for a conversation with your client. Each business’s obligations and liability regarding the GDPR may be different.
Can you give me a quick idea of what this new law is about? The GDPR unifies data protection laws for personal data across the European Union with the intention of strengthening privacy rights of consumers. It imposes hefty fines on companies that don’t comply. The GDPR has many requirements, but here are the primary ones:
• The personal data a business collects must be “minimized, accurate and portable.”
• You need to obtain informed consent from an EU consumer before collecting, storing or using their personal data.
• Their personal data must be “provably deleted” if the consumer so chooses.
Who is affected? Any U.S. business that offers goods and/or services to customers in the European Union or holds any personal data on European Union subjects.
What does the new law consider “Personal Data”?
• Name• Address • Photo• Email Address• Financial information• Healthcare information• The law also includes data that could indirectly identify
an individual (racial or ethnic origin, political opinions, religious beliefs, etc.)
What does GDPR say a business must do if they are the victim of a data breach? The GDPR requires that companies notify individuals of a breach of their personal data. Notification must include:
• The name and contact information of the company’s data protection officer
• The anticipated consequences of the breach• Any measures taken by the company to remedy or
mitigate the breach
What are the penalties if a U.S. business doesn’t comply with GDPR? The monetary penalty is 20 million Euros or 4% of a company’s annual revenue, whichever is greater.
Just as real estate appraisers focus on providing careful property valuations, they should also be as diligent about securing customized insurance for their own livelihood. In fact, many financial institutions and appraisal management companies require real estate appraisers to carry Errors & Omissions coverage. Real Estate Appraisers Errors & Omissions policies are specifically constructed to protect them against wrongful acts, which are generally defined as an actual or alleged negligent act, error or omission committed solely in performance of, or failure to perform professional services. Some appraisers may carry other forms of insurance such as General Liability or Professional Liability, but it’s important to note that these types of losses aren’t typically included on those policies. Below are some reported Errors & Omissions policy claims:
Real Estate Appraisers Errors & Omissions: The Need for Customized SolutionsBy Jessie MontneyeBusiness AnalystRPS eCommerce
In the day-to-day operations of real estate appraisers it’s their responsibility to visit multiple properties in order to evaluate and determine the location’s worth. Sounds simple, right? Not so fast…
As of a 2016 survey by the United States Department of Labor, there are 80,800 active real estate appraisers in the U.S. that are accountable for surveying a property and identifying the unique characteristics of the structure and nearby areas. They take extra time to identify any undesirable features which could lower a property value, such as a noisy highway or an obsolete infrastructure. All aspects of a property are considered and photographed including the foundation, roof, interior, exterior and any renovations that may have occurred. Following the on-site visit, the appraiser uses tools such as comparable home sales, lease records, location, view, and previous appraisals to make a final value determination.
These and many more considerations come into play when evaluating a home’s worth which could be questioned if the appraiser’s customer feels the value is incorrect. Without proper protection your client, the appraiser, could be financially responsible if a discrepancy is found in the value of the property versus the appraisal. A faulty evaluation could result in expenses upward of tens of thousands of dollars assessed to the appraiser.
Claim Example 1: The appraiser measures the square footage of a residence incorrectly and unintentionally overvalues the property by $80,000. The lender then approves a mortgage based on the value appraised. Years later the borrower defaults and the lender discovers the square footage originally reported was incorrect and sues the appraiser for the difference in value.
While proper insurance protection can give your client peace of mind in the event of a claim, risk management can mitigate the circumstances that might lead to a lawsuit. Implementing and following proper procedures that require documentation for each step of the process is the most impactful action that your client can take to avoid a claim. Once procedures are in place, it’s important to train new hires, communicate the processes, and perform a frequent review of the processes to ensure they are valid. Taking these precautions will help to reduce the possibility of an Errors & Omissions claim.
RPS eCommerce offers Errors & Omissions coverage for residential and commercial real estate appraisers through our online portal. We offer limits up to $1M each claim and $2M aggregate, as well as expert witness coverage, coverage for appraisal reviews, and a deductible reduction incentive for early claims resolution.
Claim Example 2: An appraiser provides the boundaries of a plot to their trainee and asks the trainee to prepare an appraisal report on the subject property within a neighborhood. The trainee provides the incorrect delineation due to a number of typographical errors in the measurements, which the appraiser fails to notice. These numbers are mistakenly provided as being accurate, and the appraiser significantly under-values the property. The bank does not approve the loan to the buyer, and the property is sold to another party. The seller then offers a similar property they have for sale, but at a higher value. The buyer sues the appraiser for negligence and for the difference in the sale price of the two properties.
Claim Example 3: An appraiser fails to mention ongoing construction of a major highway near the subject commercial property. A year after the property sold, the buyer claims the newly finished construction has significantly diminished its value as potential customers no longer have direct access to their location. The buyer sues the appraiser for the difference in property value and loss of business income, demanding $500,000, by alleging that they failed to adjust for the apparent construction.
Claim Example 4: A complaint is filed against an appraiser with the state. An investigation of the appraiser’s files show comparable sales were stated in the appraisal report. However, the state auditor finds the file does not meet USPAP requirements, and is missing the documentation necessary to substantiate how he/she reached the final value. The state fines the appraiser $6,000 and orders additional CE courses to be taken.
The Making of the RPS Road Show By Chris CrawfordVice President-Client RelationsRPS Client Relations
What’s that flash of green cruising down the highway? Why, it’s the inaugural RPS Road Show! Over the past few months, our state-of-the-art RV has visited 10 states, spending quality time with our partners every step of the way. The initiative was proposed by three up-and-coming RPS brokers at the Lion’s Den, an internal program designed to empower employees to share their ideas on driving business forward.
To bring the winning idea to life, we conceptualized a state-of-the-art design and then gutted an RV to create a customized, multi-functional space from scratch. Meticulous attention to detail went into every element, from the exterior RPS branding to the high-tech interior. Built for flexible use, the interior features a main media area, mobile workstations, a conference area, satellite internet, and the all-important refreshment space. The abundance of technology allows our partners to come aboard and truly experience the power of RPS.
But the RV isn’t just a showpiece—it can also be deployed as a disaster relief vehicle, serving as a mobile communication network with internet access so victims can connect with their loved ones. It’s a flexible space that can be quickly adapted to meet needs during disaster recovery.
Want a firsthand look at this impressive vehicle? Follow us on LinkedIn, Facebook, Twitter, and Instagram to find out which state the #RPSRoadShow will be pulling into next.
Workers’ Compensation & the Healthcare Staffing Sector By Richard SkinnerArea Assistant Vice President RPS Casualty
Healthcare staffing is one of the fastest growing segments in the staffing industry. Despite making up only 9% of the overall industry, healthcare staffing is an over-$13 billion sector. The expected growth rate of the segment is 6-7% per year, with the potential to increase by even more. The Bureau of Labor Statistics recently put projections of healthcare employment growth for 2016-2026 at 18%, significantly outpacing overall employment growth of 7.4%. The BLS also noted that by 2026, healthcare-related jobs will account for 1 out of every 5 new jobs in the U.S. Many of these healthcare labor demands will be met by the staffing industry.
The incredible growth within the healthcare staffing sector is directly attributed to several key factors:
• There has been an increased insured population due to the Affordable Care Act, resulting in an increase in overall healthcare utilization. Over 16 million people have already gained coverage due to the ACA, and estimates are that nearly 25 million will be newly insured by 2020.
• An aging baby boomer population. The number of Americans over the age of 65 is growing rapidly. Individuals over the age of 65 are 3 times more likely to seek medical care and they have the longest average stay in the hospital.
• The United States has had an on-going nurse and healthcare professional shortage and the situation is potentially getting worse—half of current nurses are over the age of 50 and quickly approaching retirement age. As they leave the workforce, the demand for skilled nurses will skyrocket.
Matching individuals seeking employment with jobs at customer sites is the operational focus of any staffing firm, including a healthcare staffing firm. The extent to which a staffing firm is successful and profitable is dependent upon how well they understand and how effectively they manage the inherent risks associated with the industry. Typically, a staffing firm’s greatest expense after payroll is Workers’ Compensation insurance and related costs. A risk management program specifically designed to meet the unique challenges of a staffing company is one of the most important operational measures for a firm seeking to prevent and control losses and maximize profitability.
Like a traditional staffing company, a healthcare staffing company should utilize a comprehensive risk management program where receptionist, recruiters, salespeople, branch managers,
risk managers, and owners are all seen as vital role players in the staffing firm’s risk management infrastructure. Each person’s duties are building blocks in the overall risk management system and important to the success of the risk management concepts. Also like a traditional staffing company, a healthcare staffing company’s risk management program should include operational components like prescreening, the application process, employee interviews, employee orientation/training, defined client selection criteria, established doctor/clinic relationships, accident/injury protocol, accident investigation, modified duty, and sound TPA/carrier communication.
The unique risks of the healthcare staffing sector begin to surface and become the most apparent when assessing exposures at the jobsite. In any healthcare setting where employees physically interact with patients or residents, there are two major exposure areas responsible for the greatest number of and potentially most severe claims. These are ergonomics and bloodborne pathogens (BBP).
During the client assessment process, a determination should be made as to what the healthcare staffing company’s employees will be exposed to within their job duties. Emphasis should be placed on ergonomics and BBP, and more importantly, what the prospective client is doing to address the hazards. If the answer is “nothing,” the staffing company will have to assume the entire burden of assessing the workplace for specific hazards, implementing the control programs, and conducting and providing training—all of which may not be things they want to do.
It is important for the healthcare staffing firm to note the numbers, availability, and condition of patient handling devices and aids, which range from full overhead hoist systems and built-in aids like no-threshold shower stalls to simple manual aids like walking/transfer belts. There are also ample accessories used with patient handling devices, such as canvas slings for hoisting, and it’s important that these accessories can be readily accessed. Training must be provided to the temp employees on the specific equipment used by the facility, and the facility is best equipped to provide this training. Copies of training documentation should be provided to the healthcare staffing company.
Ergonomics and BBP exposures are not just limited to patient handling. Laboratory workers may be exposed to blood, or blood derivatives, giving them a BBP exposure. If a lab worker does repetitious work, there may be ergonomic hazards such as carpal tunnel or other repetitive-motion injury exposure. Although patient handling is the largest single category of ergonomics-related injuries in healthcare, there are other recognized hazards as well, such as phlebotomists. These workers may take up to 50 blood draws per shift, developing back injuries from repeated bending at the waist and holding in that position. Nurses and nursing assistants may also develop ergonomic injuries from spending entire shifts on their feet on hard flooring, developing back, leg, and foot ailments.
Ergonomics and BBP in a healthcare setting are covered by specific OSHA standards and/or guideline programs. OSHA has issued ergonomics guidelines for hospitals, nursing homes, and other healthcare settings that can be enforced under the General Duty Clause. A key provision of these guidelines is that manual patient handling must be reduced as much as possible and eliminated whenever possible. The OSHA Bloodborne Pathogen Standard requires that a written Exposure Control Program exists, including evidence of employee input into selection of engineered sharps (safety needles, etc.). Training records should be up to date and cover every employee who is potentially exposed. Records must also include evidence that exposed employees were offered immunizations against Hepatitis B, and refusals to accept immunizations should be documented.
Some aspects of the healthcare staffing industry present significant challenges to implementing a thorough risk management program, especially the aforementioned ergonomic and bloodborne pathogen-related issues. However, difficulty of implementation does not diminish the value provided by preventing injury to a staffing firm’s most valuable asset–its people—and controlling the costs associated with injuries.
State of the Property Market: 2nd Quarter 2018By James Rozzi, CPCU, ASLIArea Executive Vice PresidentRPS San Francisco
Happy 4th of July. I hope you all enjoyed some time around the BBQ with friends and family and took in some much needed R&R which has probably been missing from the Usain Bolt-like sprint that has characterized the first half of the year.
The last six months have been nothing short of interesting and even though we have had almost ten full months to digest the aftermath of Harvey, Irma, and Maria (HIM), we still seem to be moving one foot in front of the other in an attempt to make sense of market conditions. With $150B+ in global property losses stemming from 2017 and still climbing, many would have thought we would have seen an instant hard market or a sharper adjustment to rates that had been in decline for four straight years. Instead, it truly has been day by day and account by account. Some carriers have taken a broad brush approach and demanded rate increases on everything. Others have been as aggressive as ever as they look to grow their portfolios in more favorable market conditions, and then there are a few markets who act as if they aren’t aware of up from down or left from right. They are in what Dr. Seuss would call “the waiting place” (read “Oh the Places You’ll Go” if you have no idea what I am talking about).
As the year has unfolded we have seen markets exit certain business segments, close underwriting platforms, and merge with other companies in an effort to retool their business models, stay relevant and make a profit. Today’s market is like reading a Jack Kerouac novel because absent the punctuation, the sentences don’t make much sense and at times they seem to go on and on. If you are not a Kerouac fan, a more appropriate analogy would be running for political office in America today where absurd behavior is more and more the norm. Think of it this way: “Millions in losses and rate reductions…sure! Why not!” “No claims and millions in premium with a massive rate increase just because the model says so…sure! Why not!” You get the idea—the only thing we really can count on right now is that carriers are consistently inconsistent.
I would imagine that if we asked the carriers using the broad brush approach to review their books, they would see that they have retained some of their worst performing accounts and loss leaders. Simultaneously, I would be willing to bet that this broad brush approach has cost many of these markets some really good business. The folks that have been as aggressive as ever have been pricing risk below healthy levels, and have not created the margin the industry so desperately needs to create long term stability. I would imagine they would feel really good about how the year is shaping up because they are seeing healthy growth on their books. Ask them how they feel in six months or so when the losses start rolling in and the margin isn’t there. If you are a broker placing a lot of business with these shops, get ready for a Magic Mountain roller coaster ride. Most of the carriers in this
camp are newer providers, MGAs and others who are primarily using alternative capital, and my guess is they are clueless of the fact that they have undercut established providers on long-term renewals thus fostering the concept that one person’s trash is another’s treasure. They may also have a sense of apathy towards appropriate rates because they are gambling with someone else’s capital. The last camp of players is filled with those who seem to be a bit lost, or have been living under a rock. This group is inconsistent at best and figuring out their appetite, price point, and desired classes of business is next to impossible. With this group, brokering has become a game of darts in the dark.
When all is said and done, I think the best way to sum up the market after the last six months is with the word “frustration.” Insureds are frustrated because they don’t think carriers are doing a proper job of differentiation and of rewarding long-term relationships. I think insureds are also questioning the intelligence level of our industry as a whole because it has become clear that some of the activities our peers undertake make no logical sense from a practical business standpoint. Brokers are frustrated because carriers are inconsistent, which is making managing client expectations extremely difficult, and carriers are equally as frustrated because they are operating in a market that doesn’t add up when using the words rate adequacy, modeling, and attrition.
For the look ahead, all eyes will be on the Atlantic hurricane season and if losses amount to levels at even half that of 2017, we could be in for further rate tightening. We may even see carriers start to trim back the amount of capacity they are willing to deploy in certain geographies and on various asset classes. I would continue to remind my clients that sometimes insurance is like simple math and if you are in the Hospitality, Multi-Family, or Wood Frame Builders Risk space, in the last 12 months the math lesson has probably not been in your favor. These three market segments have driven losses on almost every carrier’s book and as a result, their rates have been up sharply. In some cases, their rates have doubled. Over the last six months, here is what we have seen in the market broken down by asset class and region:
Hab • Clean Accounts +10% to 15%• Loss Driven Accounts +20% to 50%+• Carriers requiring higher AOP retentions and increased
Wind & Hail Deductibles in states like, CO, TX, OK, NE• Base Rates of $0.20 Ex CAT on Primary Layers on new
business • UWs are paying more attention to valuations, roof ages,
management practices, and building updates
Hospitality • Clean Accounts +5% to 10% with CAT Exposure and
relatively flat with non-CAT Exposure• Loss Effected Risks by HIM are +15% to 50% depending
on the size of the loss
General Real Estate • Clean Accounts are +2.5% to 10% with CAT Exposure
and relatively flat with non-CAT Exposure• Loss Effected Risks by Attrition or HIM are +7.5% to 25%
depending on the size of the loss
Municipality/Higher Ed• Clean Accounts are relatively flat• Loss Effected Risks or Heavy Tier 1 Risks are +10% to
30% depending on the size of the loss• In many cases, deductibles are being increased to
offset increases (higher AOP deductibles or CAT NWS deductibles) or clients are buying less limit
Wood Frame Builders Risk• Rates are in the $0.275 to $0.35 annual Ex CAT range
and continue to rise due to large notable Wood Frame Builders Risk losses
• Many of the most recent claims have involved arson so carriers are becoming more focused on adequate site security and surveillance
General Comments• CA EQ DIC business is relatively flat to +10% for
consistency depending on the size of the risk and how negatively it may have been affected by RMS 17. In some cases, modeled results are going down and clients are seeing decreases that are model driven.
• Gulf Coast and Southeast NWS Driven Risks are +5% to 15% as a result of market conditions and more awareness to what is perceived to be a period in which we will have a few years of more activity during hurricane season
• Midwest and Southwest Exposed Business is relatively flat to + 7.5% but carriers are very focused on more adequate retentions on Wind & Hail
• The market as a whole seems to be hovering around +5% to 15% but there are still many cases of flat renewals and even some rate decreases
