Zurich Insurance Faces $275 Million in Storm Claims Costs

Costs will push the insurer’s general insurance unit to a fourth quarter operating loss


ZURICH— Zurich Insurance Group AG, an insurance giant that remains without a permanent chief executive, saw its shares fall sharply on Wednesday after it said that its largest unit has continued to suffer losses.

The Zurich-based firm said it expects to report about $275 million in losses as a result of recent storms in the U.K. and Ireland, pushing its beleaguered general insurance unit to an operating loss for the fourth quarter of last year.

Zurich Insurance, which is expected to report financial results on Feb. 11, said the expected losses are based on preliminary estimates of damage inflicted by the heavy rainfall and flooding that hit parts of North England, Scotland, and Ireland late last year. “The final cost remains uncertain,” the company said.

The expected fourth-quarter operating loss for the company’s general insurance unit, Zurich Insurance’s biggest business, comes after the same unit posted a $183 million operating loss in the third quarter. Overall, Zurich Insurance reported a 79% decline in net profit for the period.

The news of further losses comes shortly after the departure of former CEO Martin Senn, who stepped down last month. Mr. Senn’s exit was hastened by ongoing problems at the general insurance business, which Zurich Insurance has slated for roughly 200 job cuts.

In addition, problems at the general insurance business caused Zurich Insurance to back away in September of last year from an ambitious plan to acquire U.K.-based RSA Insurance Group PLC, in a deal that was potentially valued at more than $8 billion.

Mr. Senn has been replaced on an interim basis by Zurich Insurance Chairman Tom de Swaan. No permanent successor has yet been named.

Terrorism and Insurance: What You Need to Know

Terrorism and Insurance: What You Need to Know

 | Huffington Post

Whether it’s TV, the newspaper or social news feeds, today’s media coverage is a constant reminder of the violence and civil unrest around the world.

As a father and business owner, the idea of having the safety of my family and community threatened is unimaginable. Unfortunately, however, in many parts of the world (and even here in America), it’s a legitimate concern. While the idea of terrorism is an unappetizing discussion, we’d be remiss not to consider and prepare ourselves for the unthinkable. These tragedies happen more often than they should, and businesses (large and small) should prepare accordingly in case acts of terrorism strike close to home.

According to Insurance Information Institute, roughly 60% of U.S. companies carry terrorism insurance, yet there is often confusion about what this type of insurance covers and who should consider investing in it. Below are a few helpful answers to clear up some of these common questions.

Terrorism Insurance: What It Is, What it Covers

In the U.S., terrorism insurance is offered as an addition to your standard commercial insurance policy. This type of insurance often covers damages to your building and equipment following a terrorist attack. (Note: The U.S. Department of the Treasurymust certify the event as an act of terrorism before a claim can be filed).

Depending on your policy, you may also be covered for any losses stemming from an interruption to your business operation. If you manage insurance for your organization, talk to your insurance provider to see if your company would be covered for this type of loss, or if you should also consider adding business interruption insurance to your policy. The cost of this addition varies based on several factors, including your business’ needs, perceived risks, size and location. Talk to your insurance provider to receive an accurate quote to consider.

Terrorism Insurance: Quick Background

Following the devastation of 9/11, many insurance companies began limiting (and even eliminating) terrorism coverage for clients. To help solve this problem, President Bush signed the Terrorism Risk Insurance Act (TRIA) in November 2002. This temporary federal program was designed to enable the insurance industry to share losses with the federal government following a major terrorist attack–which “effectively limit[ed] insurers’ losses [and] greatly simplif[ied] the underwriting process.” The act was renewed in 2005, and named the Terrorism Risk Insurance Extension Act (TRIEA) of 2005.

In January 2015, President Obama signed the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) of 2015. This program “amended and extended” the TRIA of 2002, and is effective until December 31, 2020.

For more information about the amended Act, including filing procedures for property and casualty insurers, visit the National Association of Insurance Commissioners.

Terrorism Insurance: Who Needs It?

Investing in terrorism insurance is entirely up to your organization and the level of perceived or known risks associated with your operation. If you’re unsure if you should invest in this type of policy, contact your insurance agent to discuss your risks and exposures.

Your agent will likely assess:




What will Maurice Tulloch’s legacy as Aviva UK GI CEO be?

via Insurer – Postonline

The news that Maurice Tulloch is to step down from his post as CEO of Aviva’s UK general insurance business should not have come as much surprise.

At just over two years in the role, he has easily served his time based on the tenures of the previous incumbents who all – on average – had shorter stints.

When his predecessor Robin Spencer departed I wrote a blog painting him as a “fall guy”. Someone who happened to be in the wrong place at the wrong time, and thus carried the blame for some of the bad news that had impacted the business over the previous 12 months.

So what will Tulloch’s legacy be?

1) Repositioned Aviva as a broker favourite

Given that the last CEO of Aviva Canada to take the UK role – Igal Mayer – very much divided the broking community with his verbose approach, there might have been some understandable trepidation with Tulloch, given he was seen as one of Igal’s star pupils.

Ben Cohen, analyst at Canaccord Genuity, told Post at the time: “It will be interesting to see how [Tulloch] deals with moving to what is a very different market environment in the UK.

“Others that have moved have not found it an easy to transition. You had Igal Mayer who made the move and that ultimately didn’t end well.”

They needn’t have worried. Within weeks Tulloch was making all the right noises, and 12 months on the firm was reaping the rewards.

Brokerbility chairman Ashwin Mistry for one described Tulloch as “an absolute breath of fresh air”, adding: “He’s dynamic, broker focussed, and really wants to do business. It’s a very positive move as far as we’re concerned, especially after the three or four changes Aviva had prior to that.”

Tulloch opened his tenure as CEO with the gambit: “I have spent the best part of 22 years engaging brokers to ensure that they win and we win.” And he seems to have built a positive connection with the market.



South Carolina insurance cooperative to close; Ninth under Affordable Care Act to fold

A South Carolina health insurer has become the ninth insurance co-operative formed nationwide under the Affordable Care Act to fold.

Consumers’ Choice Health Insurance Co. said October 22, 2015 that it will not sell policies in 2016, a decision that will leave 67,000 individuals and business customers looking for new coverage.

Ray Farmer, director of the South Carolina Department of Insurance, said Consumers’ Choice and state regulators reached a mutual decision to shut down the company’s business. He said the company was in a “financially hazardous condition.”

“I did not have the confidence that this company would be a viable entity throughout the entire year of 2016,” Farmer said.

Consumers’ Choice joins co-operatives in Tennessee, Kentucky and Colorado, among other states, that have shut down for next year, leaving some consumers on the health care overhaul’s public insurance exchanges with fewer options.

Officially called Consumer Operated and Oriented Plans, these non-profit co-ops were devised during the overhaul’s creation in order to inject more competition into insurance markets. They were seen as a fallback option by liberals who wanted a government-run insurance program to compete with corporate insurers that control the market for commercial coverage in the United States.

The federal government provided more than $2 billion in taxpayer-financed loans to help seed the co-ops, and a total of 23 were created. A report released during the summer by the Health and Human Services department’s inspector general’s office said only that only one out of the 23 – the co-op in Maine – made money last year.

Consumers’ Choice said it was hurt, in particular, by smaller-than-expected payments from a provision of the law designed to stabilize premiums while insurers built their business on the new public exchanges. Insurers who incurred higher-than-expected costs were supposed to get help from a program funded by other insurers that had lower-than-expected expenses.

But in 2014, the government collected only $362 million from insurers that did well. Meanwhile, companies with sicker-than-expected patients requested nearly $2.9 billion in payments to help cover their claims. The imbalance meant that insurers would get less than 13 per cent of what they sought.

That led to an “unavoidable outcome” for Consumers’ Choice, CEO Jerry Burgess said in a statement.

Customers who have coverage through that company will keep it for the rest of this year, but they will have to find another plan once open enrolment for 2016 begins next month. Consumers’ Choice said it was making the announcement now so customers could line up new coverage before then.

South Carolina’s individual exchange will now have four insurers offering coverage instead of five. A separate exchange for small businesses will be down to two insurers.

Consumers’ Choice covers about 40 per cent of the 168,000 people who bought coverage on South Carolina’s exchanges.


Business Leaders Gaining on Cybersecurity Risks: Survey

Source: pwc Press Release

  • New tools are helping to transform cybersecurity frameworks, yielding holistic, integrated
    safeguards against cyberattacks
  • Cloud computing has had a significant impact on technology innovation in the past
    decade, and it is increasingly central to secure interconnected digital ecosystems
  • The Internet of Things are expected to increase the stakes for securing cloud-based
    networks as the number of internet connected devices continues to surge to greater than 30
    billion by 2020
  • There was a 38% increase in detected information security incidents, as well as a 24%
    boost in security budgets observed in 2015

Year after year, cyberattacks continue to escalate in frequency, severity and impact. However, prevention, detection methods and cybersecurity innovation are on the rise as forward-leaning business leaders focus on solutions that
reduce cybersecurity risks and improve business performance. The Global State of Information Security® Survey 2016 released today by PwC US in conjunction with CIO and CSO examines how executives are looking towards new innovations and frameworks to improve security and mitigate enterprise risk.

As cyber-risks become increasingly prominent concerns in the C-suite and boardroom, business leaders are increasingly rethinking cybersecurity practices, focusing on a nexus of innovative technologies that can reduce enterprise risks and improve performance. The vast majority of organizations – 91% – have adopted a security framework, or more often, an amalgam of frameworks. These technologies are yielding considerable opportunities to improve cybersecurity and produce holistic, integrated safeguards against cyber-attacks.

“We are seeing more of what we once saw as a risk, being turned into possible solutions,” said David
Burg PwC’s Global and US Advisory Cybersecurity Leader. “For example, many organizations are
embracing advanced authentication as a cloud service in place of solely password based authentication.”

The adapting of traditional cybersecurity measures to an increasingly cloud-based world is an example of this effort with considerable investments being made to develop new network infrastructure capabilities that enable improved intelligence gathering, threat modeling, defense against attacks and incident response. According to the report, 69% of respondents said they use cloud-based security services to help protect sensitive data and ensure privacy and the protection of consumer information.

Connected to the emergence of cloud-based systems, Big Data and the Internet of Things are each ascendant technologies that present a host of cyber challenges and opportunities. In the case of Big Data, often considered a cyber liability, 59% of respondents are leveraging data-powered analytics to enhance security by shifting security away from perimeter-based defenses and enable organizations to put real-time information to use in ways that create real value.

As the number of internet connected devices continues to surge, the Internet of Things will inevitably increase the stakes for securing cloud-based networks. Investment intended to address these issues doubled in 2015, but at this point only 36% of survey respondents have a strategy specifically addressing the Internet of Things.
“There is no one-size-fits-all model for effective cybersecurity. It’s a journey toward a future state that starts with the right mix of technologies, processes, and people skills,” added Burg. “With those components in place, cybersecurity potentially serve as an indispensable ongoing business enabler.”

Over the past three years, the number of organizations that embrace external collaboration has steadily increased. Sixty-five percent of respondents report they are collaborating with others to improve security. As more businesses share more data with an expanding roster of partners and customers, it makes sense that they also would swap intelligence on cybersecurity threats and responses.

“An advanced and enhanced information security program will not only enable companies to better defend against cyberthreats, it will also help create competitive advantages and foster trust among customers and business partners,” said Bob Bragdon, VP/publisher of CSO.

  • Additional notable findings this year include:
    Information security spending increases: Respondents boosted information security spending significantly, reversing last year’s slight drop in security spending. This year respondents boosted their information security budgets by 24% in 2015.
  • Evolving Cybersecurity Roles: 54% of respondents have a CISO in charge of the security program. The most frequently cited reporting structure is the CEO, CIO, Board and CTO, in that order.
  • Increasing Board Involvement: 45% of boards participate in the overall security strategy. This deepening of Board involvement has helped improve security practices in numerous ways.
  • Mobile Payments Going Mainstream: 57% of respondents have adopted mobile payments systems – but the ecosystem continues to rapidly evolve as new partnerships are formed among a constellation of technology, financial, retail and telecommunications firms.
  • Investing in Insurance: Technically adept adversaries will always find new ways to circumvent security safeguards. That’s why many businesses (59%) are purchasing cybersecurity insurance to help mitigate the financial impact of cybercrimes when they do occur.
  • Government Surveillance Impacting Buying Decisions: Purchases in certain countries are either under review (34%) or happening less frequently (22%) as a result of hearing about reports that the government is conducting surveillance on hardware, software and/or services from certain countries.

Clinton announced another Canada policy this week, could affect millions: Pharma

Lost in the noise of her headline-grabbing coming-out against the Keystone XL pipeline, Hillary Clinton announced another Canada-U.S. policy this week that could affect millions of people.

She called for legalizing prescription-pill imports from Canada, becoming the second Democratic presidential candidate to adopt the position and effectively making it party policy in the 2016 election.

Millions of Americans who struggle with high drug prices have purchased cheaper medicine abroad since online pharmacies first opened two decades ago, with Canada pioneering that grey-market industry.

The issue has resurfaced politically as U.S. drug prices experience their biggest jump in years. One company was forced to back down last week amid news that a life-saving medicine had increased overnight from $13.50 to $750 per pill.

The same pill is available from a Canadian online pharmacy for $5.28. It’s generally illegal for Americans to buy and import that medicine, but the law is rarely enforced.

Now Clinton wants to normalize the practice.

“If the medicine you need costs less in Canada, you should be able to buy it from Canada _ or any other country that meets our safety standards,” she told an Iowa audience the same day she announced her long-awaited pipeline position.

“When I was privileged to represent upstate New York (as a senator)… every week there would be buses of American seniors going over to Canada, to buy drugs that were American-manufactured, drugs that were invented by American companies, for a much cheaper price over the border.

“That makes no sense at all, folks … I don’t want you to have to drive to Canada. So you can order them online.”

She became the latest candidate to endorse that policy. As he presented a bill this month, socialist Sen. Bernie Sanders reminded people that he helped spread word of cheaper drugs in Canada, in 1999 when he took a busload of seniors on a cross-border trip to the pharmacy.

“I will never forget the tears in the eyes of women who were able to buy the breast cancer drug tamoxifen at one-10th of the price that they were paying in the U.S.,” Sanders said.

“If we can import lettuce and tomatoes from Mexico, there is absolutely no reason why we cannot import safe and affordable prescription drugs from Canada.”

The issue cuts across partisan lines. There’s a similar Senate bill from Republican John McCain. Republican Mike Huckabee is campaigning on the idea. A survey from the Kaiser foundation said 72 per cent of Americans support buying prescription drugs from Canada. The proportion was higher among Republicans.

Congress even passed a law allowing importation in 2000 _ but the president, Clinton’s husband, gutted it. George W. Bush and Barack Obama both campaigned on a policy change _ it never happened.

The pharmaceutical industry has considerable pull in Washington.

It spent US$229 million lobbying Congress last year, according to the transparency site Open Secrets, and it donated $50 million in the 2012 election. For the sake of comparison, that last sum is almost as much as all the national spending allowed for political parties in Canada’s current election.

As their shares dipped slightly this week, the industry blasted Clinton’s speech and argued her policies would hurt companies that create new drugs.

She laid out other proposals including ending certain tax breaks, creating spending targets for research, and a $250-a-month limit on out-of-pocket expenses under insurance plans.

She accused the industry of anti-competitive behaviour and price-gouging, citing the controversial 5,000-per-cent price increase in the drug Daraprim.

Her plan proposes a crackdown on one factor believed to be driving high prices: collusion.

Like Sanders, she wants to curb the practice dubbed “pay to delay” _ where drug makers pay off generic rivals to keep them from bringing cheaper alternatives to market. U.S. federal regulators have punished companies over that practice on different occasions this year alone, and Sanders proposes far more severe penalties, including stripping companies of exclusivity rights over a drug.

But how would that affect Canadians?

One health-policy researcher worries it could hurt them by causing supply shortages and driving up prices.

“The giant sucking sound that would empty our pharmacies into the U.S. would be heard across the country,” said Amir Attaran, a health-policy researcher at the University of Ottawa.

“The drug shortages … in Canada … would be massive.”

A prominent health economist is less worried. A supply crisis would be far likelier in a major outbreak or a terrorist attack, said Steve Morgan of the University of British Columbia.

But he agreed online pharmacies wouldn’t solve the price problem for Americans.

He proposes a single-payer pharmaceutical system for Canada _ and for the U.S., he says, greater government management would improve the system.

Right now, U.S. prices are mostly fictitious, he says. Patients with insurance providers get discounts negotiated in secret. Others use online coupons.

The net result is a system designed to make everyone pay the maximum they can afford. And those without access to insurance or discounts could be out of luck.

With a better-managed system, he said, “you would just eliminate all these games.”



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