Cyber insurance market sees steady growth as awareness increases

By Modestus Anaesoronye | Business Day

Cyber attacks were once again in the spotlight in 2017, with increasing frequency and severity, offering plentiful opportunities for growth of insurance, especially in small and medium-sized companies, according to A.M Best report.

The WannaCry and NotPetya ransomware attacks and the Equifax data breach received significant media attention and affected millions of people and businesses. The NotPetya attack in particular highlights the growing business interruption exposure associated with cyber risks. Also, in October 2017, Yahoo! updated its 2013 data breach tally from one billion to three billion of its accounts, potentially making this the most substantial, most extensive cyber breach ever recorded.

These events highlight the vital need for cyber insurance, but the market is bifurcated. On the one hand, national accounts and Fortune 500 companies seem to be embracing the need to partner with insurers and brokers as a way to counter cyber risks.

Financial institutions and healthcare companies are acutely aware of their cyber exposures and are increasing their coverage. Average policy limits are rising, with some of the largest companies’ coverage towers above the half-billion dollar mark.

On the other hand, the take-up rate for small to medium-sized enterprises (SMEs) remains in the low teens, presenting an area where insurers would like to see growth.

In 2017, cyber packaged policies in force increased 28 per cent, some of which was due to the addition of affirmative cyber coverage to packaged policies. This increase is significant, but this is still something of a fledgeling business, and an increase of this magnitude, while material, does minimal to close the protection gap. However, interest from SMEs does seem to be gaining traction, and capacity from insurers is ample.

In the short term, despite the inherent challenges in managing aggregations and pricing, we believe the cyber insurance market presents a favourable opportunity for insurers. Demand is expected to grow due to the accelerating adoption of technology and the increasing awareness of cyber risks, especially among SMEs. Given the abundant supply of capital and the cautious growth strategies of insurers, we expect the overall exposure of the property and casualty industry.

However, as insurers expand their cyber offerings, they will need to be prudent in establishing underwriting standards and limits, and exercise appropriate risk management and mitigation measures to ensure that these exposures remain aligned with the company’s risk tolerances and appetites.

The extent to which an insurer grows its cyber business should also lend to a broader understanding of this relatively new risk and a company’s ability to aggregate, monitor, and manage its exposure in various scenarios. Data quality is a crucial factor when insurers provide information to regulators, other stakeholders.

Overall, cyber insurance take-up remains low, as SMEs remain complacent about these risks, under two assumptions: that hackers target only more prominent businesses such as Target or Home Depot or that they already have coverage under another policy when they might not. However, this sentiment and tepid interest in cyber insurance among SMEs may be changing, in light of the near daily reminders of cyber-threats, attacks, and breaches feeding social media.

Pricing is another factor, as more business owners see the cost benefits and also realize their vulnerabilities due to their interconnectivity with vendors, suppliers, and customers.

A data breach is only one factor in cyber risk, however many SMEs may be underestimating business interruption risks, and the impact on smaller enterprises of business interruption could be much higher, as they may not be as resilient or diverse as national account clients.

Source: Business Day By Modestus Anaesoronye
Edited for ILSTV

Founder of Chinese company with billions in B.C. assets gets 18 years for fraud

SHANGHAI _ A court in Shanghai sentenced the founder of the Chinese insurance company that owns New York City’s Waldorf Hotel to 18 years in prison on Thursday after he pleaded guilty to fraudulently raising billions of dollars from investors, state media reported.

Shanghai’s No. 1 Intermediate People’s Court also ordered the confiscation of 10.5 billion yuan ($1.6 billion) in assets from Wu Xiaohui, the former chairman of Anbang Insurance Group, which had gained a reputation for ambitiously expanding into hotels, real estate and insurance from Canada to South Korea.

Wu, who founded privately owned Anbang in 2004, has been accused of misleading investors and diverting money for his own use. He was detained last year and regulators seized control of Anbang in February. He was shown on state TV in March admitting guilt.

Wu initially had denied his guilt at his one-day trial, according to an earlier court statement.

According to Xinhua, Wu concealed his ownership of shares in companies controlled by Anbang, filed false statements with financial authorities and lured investors by offering rates of return above that offered elsewhere. Much of the business relied on selling insurance products to raise investment capital.

It said he used more than 100 companies under his control to manage funds and authorities later recovered bank savings, real estate and other assets. Wu used his position to misappropriate 10 billion yuan ($1.5 billion) in Anbang’s deposits, according to Xinhua’s lengthy report.

Xinhua said the court determined the length of the sentence according to the facts of the case, the severity of the crime, and its “degree of social harm.” It said more than 50 people were present at the sentencing, including Wu’s relatives and journalists.

Anbang last month said it was receiving a $9.6 billion bailout from a government-run fund. That would mean the government fund owns 98 per cent of the company, wiping out most of the equity stake once held by Wu and other shareholders.

The company had engaged in a global asset-buying spree in recent years, raising questions about its stability. Anbang discussed possibly investing in a Manhattan skyscraper owned by the family of U.S. President Donald Trump’s son-in-law and adviser, Jared Kushner. Those talks ended last year with no deal.

The negotiations with Kushner Cos. about 666 Fifth Ave. prompted members of the U.S. Congress to raise ethics concerns.

The Anbang case is one of a string of scandals in what had been a stodgy Chinese insurance industry long-dominated by state-owned insurers. The industry’s former top regulator was charged in September with taking bribes and other insurers have been accused of reckless speculation in stocks and real estate.

The Communist Party has made reducing financial risk a priority this year after a surge in debt prompted rating agencies last year to cut Beijing’s credit rating for government borrowing.

Anbang is being run by a committee of officials from China’s insurance regulator, central bank and other agencies. They have said its obligations to policyholders and creditors are unaffected.

Over the years, Anbang grew to more than 30,000 employees with 35 million clients. It diversified into life insurance, banking, asset management, leasing and brokerage services.

Speculation is rife over possible sales of Anbang’s assets, which, in addition to the iconic Waldorf purchased for almost $2 billion include Dutch insurer Vivat NV, the San Francisco Westin St. Francis and hotels, real estate and insurance holdings in Canada, Belgium and South Korea.

WASHINGTON: Small businesses grapple with maze of conflicting pot laws

By Christopher Rugaber

THE ASSOCIATED PRESS

WASHINGTON _ A low unemployment rate and the spreading legalization of marijuana have led many businesses to rethink their drug testing policies for the first time in decades. A small but increasing number are simply no longer testing for pot.

For small businesses, however, how to handle these challenges may be a tougher call than for bigger corporations. There is a bewildering patchwork of state laws regarding medical and recreational marijuana use. And it’s still illegal under federal law. Yet smaller companies don’t have extensive HR and legal departments to help them sort through it all.

“There is a lot of conflict there, and many employers, they just don’t know what to do,” said Kathryn Russo, a lawyer at Melville, New York-based firm Jackson Lewis. Recreational marijuana use is legal in nine states plus Washington, D.C., and medical marijuana is legal in 29 states.

Here are some questions small businesses need to consider when deciding on what drug testing policies to follow:

IS IT A FEDERALLY REGULATED POSITION, OR SAFETY-SENSITIVE?

Employment lawyers say these cases are the easy ones. If your business is regulated by the federal Department of Transportation or is a defence contractor, you are likely legally required to drug test for all drugs illegal at the federal level, including marijuana. Similarly, if a job raises safety concerns _ such as a forklift driver, an operator of heavy factory equipment, or a meat slicer _ it’s in the best interests of the employer to still test for pot, even if it is legal in your state.

DON’T DISCRIMINATE

In states where medical marijuana is legal, small businesses increasingly risk running into legal trouble if they deny a job to someone who has obtained a medical marijuana prescription.

Until last year, courts typically deferred to employers who didn’t want to hire marijuana users, regardless of state law. It’s still illegal under federal law, after all.

But three court cases in the past year have sided with employees, forcing companies in Connecticut, Massachusetts and Rhode Island to reinstate workers with medical marijuana cards who were fired, or whose job offers were rescinded, because they tested positive.

In roughly a dozen states, medical marijuana users are protected to some degree from employment discrimination, Russo said. Yet the state laws around the issue are “all different,” she said. In Arizona and Pennsylvania, for example, state law explicitly allows employers to bar medical pot users from safety-sensitive positions, Russo said. Other states don’t have clear rules.

WHAT ABOUT WORKERS’ COMP?

Some companies may receive discounts on their workers’ compensation insurance premiums if they conduct drug tests. If an employer is thinking about stopping testing, they should find out whether they would lose that discount.

Michael Clarkson, head of the drug testing practice at Ogletree Deakins, recommends small companies check in with their insurance brokers before making a final decision.

KEEP AN EYE ON THE WHITE HOUSE

In January, Attorney General Jeff Sessions revoked a policy from the Obama administration that had discouraged federal prosecutors from pursuing marijuana cases in states where the drug is legal.

That move suggested the Trump administration would crack down on marijuana users and caused even greater confusion among employers.

Last month, Trump promised Colorado Senator Cory Gardner, a Republican, that the federal government wouldn’t target his state’s marijuana industry. The state was one of the first to legalize recreational pot when it did so in 2014.

Still, it’s not clear to most employment lawyers where exactly the administration stands.

“Your guess is as good as mine where the federal government is,” Clarkson said.

International probe shuts down cyberattack provider

By Mike Corder

THE ASSOCIATED PRESS

THE HAGUE, Netherlands _ In a major hit against cybercriminals, an international police operation has taken down what investigators called the world’s biggest provider of potentially crippling Distributed Denial of Service attacks.

On Wednesday, police hailed the success of the operation Wednesday, saying that a joint investigation led by Dutch and British experts and supported by European Union police agency Europol led to the arrest on Tuesday of the administrators of the website webstresser.org.

Europol said webstresser.org had more than 136,000 registered users and racked up 4 million attacks on banks, governments, police forces and the gaming industry. Distributed Denial of Service, or DDoS, attacks attempt to make online services unavailable by overwhelming them with traffic from multiple sources.

“It used to be that in order to launch a DDoS attack, one had to be pretty well versed in internet technology,” Europol said in a statement. “That is no longer the case.”

The agency said that registered users could pay a fee of as little as 15 euros ($18) per month to rent its services and launch cyberattacks.

Administrators of the service were arrested Tuesday in Britain, Croatia, Canada and Serbia, Europol said. The illegal service was shut down and computers and other infrastructure seized in the Netherlands, the United States and Germany.

Croatian police said that a 19-year-old Croat, whom they described as the owner of webstresser.org, was detained on charges of “serious criminal acts against computer systems, programs and data” that carry a possible sentence of one to eight years in prison.

Gert Ras, head of the Dutch police’s High Tech Crime unit, said the operation should send a clear warning to users of websites like webstresser.

“Don’t do it,” Ras said. “By tracking down the DDoS service you use, we strip you of your anonymity, hand you a criminal record and put your victims in a position to claim back damages from you.”

Fly now, pay later: Are travel loans a good deal?

By Amrita Jayakumar

THE ASSOCIATED PRESS

Dreaming of a spring getaway with white-sand beaches and a cool drink in your hand?

A search for airline tickets can bring your dream down to earth, if the steep fares charged by many airlines outstrip your savings.

What if you could book your trip today and pay for it later without maxing out your credit cards?

Major airlines including American Airlines, JetBlue, Southwest Airlines and United Airlines integrate buy-now-pay-later concepts into their online booking. Working with technology startups that provide the financing, they offer loans to travellers who would rather pay a fixed amount over time than dip into savings or use high-interest credit cards.

Financing a trip may be a reasonable option in a few situations for trips that are important and have inflexible dates, for example, or for emergency travel. But if you don’t know how you’ll pay, borrowing isn’t a good idea, experts say.

LOAN OR LAYAWAY

“We are trying to help people take the trips of a lifetime,” says Brian Barth, founder and CEO of UpLift, a Silicon Valley startup that gives travel loans through four major airlines’ websites.

Travel lenders say they appeal to people with average credit scores who may not qualify for travel reward cards that require excellent credit. The loans also can make sense for people who are building credit and prefer the discipline of fixed payments over credit cards’ revolving payments.

It’s not just airlines offering financing for travellers. Travel deal sites such as CheapAir.com, Expedia and Groupon Getaways offer loans through Affirm, a San Francisco-based online lender. Airfordable and FlightLayaway.com offer layaway-style plans, in which you pay off your ticket in online installments before you fly. Other sites like STA Travel market financing to college students.

Some experts advise against going into debt for travel at all, whether you use travel loans or credit cards. “Taking out debt (to travel) is risky and can be harder to pay off in the long run,” says Brett Snyder, president and founder of airline industry blog Cranky Flier.

THE COST OF CONVENIENCE

Even when a travel loan might make sense, know how you’ll pay it back, such as by carving money out of your budget or using a tax refund, Snyder says.

Before you choose a loan, understand all the costs, says Graciela Aponte-Diaz, director of California policy for the Center for Responsible Lending, a non-profit advocacy group.

The typical UpLift customer borrows $500 to $2,500, says Barth, and the company charges annual percentage rates from 8.99 per cent to 36 per cent, based on your credit profile. If you borrow $1,500, for example, and pay it back over 12 months at 17 per cent _ UpLift’s average rate for borrowers _ you’ll pay $137 per month and a total of $1,642.

Affirm charges 10 per cent to 30 per cent APR, and travellers borrow $1,400 on average, says spokesperson Elizabeth Allin. Airfordable charges a one-time service fee equal to about 13 per cent of the ticket cost, according to a calculator on the website.

Lenders may also charge cancellation and modification fees if your plans change, or try to sell you travel insurance.

THE CREDIT EFFECT

Both UpLift and Affirm say they perform soft credit checks _ essentially a background check of your credit report, which won’t hurt your score. If you are approved, the loan and your payment history will show up on your credit report. Paying on time can build your credit score; not paying will hurt it, and you may be charged late fees.

UpLift considers borrowers with average to low credit scores and looks at data beyond credit scores, such as the person’s travel history with an airline, says Barth. The lender has approved people with scores as low as 475, he says.

Affirm which targets those who are new to credit  says it may ask applicants for permission to scan checking account transactions to gauge financial behaviour. More than 70 per cent of Affirm travellers have credit scores between 620 and 729, says Allin.

ALTERNATIVES TO TRAVEL LOANS

Saving is the cheapest way to fund your dream getaway.

In some cases, charging the trip to your credit card and paying more than the minimum monthly payment may be cheaper than a travel loan with interest, as long as you pay it off within a fixed time frame, says Aponte-Diaz.

Still dreaming of that beach? Find an affordable version of it, says Snyder.

“You don’t have to go to Bali. Go to Florida without putting yourself into debt,” he says.

This article was provided to The Associated Press by the personal finance website NerdWallet. Amrita Jayakumar is a writer at NerdWallet. Email: ajayakumar?nerdwallet.com. Twitter: ?ajbombay.

New way of defining Alzheimer’s aims to find disease sooner

By Marilynn Marchione

THE ASSOCIATED PRESS

Government and other scientists are proposing a new way to define Alzheimer’s disease _ basing it on biological signs, such as brain changes, rather than memory loss and other symptoms of dementia that are used today.

The move is aimed at improving research, by using more objective criteria like brain scans to pick patients for studies and enrol them sooner in the course of their illness, when treatments may have more chance to help.

But it’s too soon to use these scans and other tests in routine care, because they haven’t been validated for that yet, experts stress. For now, doctors will still rely on the tools they’ve long used to evaluate thinking skills to diagnose most cases.

Regardless of what tests are used to make the diagnosis, the new definition will have a startling effect: Many more people will be considered to have Alzheimer’s, because the biological signs can show up 15 to 20 years before symptoms do.

“The numbers will increase dramatically,” said Dr. Clifford R. Jack Jr., a Mayo Clinic brain imaging specialist. “There are a lot more cognitively normal people who have the pathology in the brain who will now be counted as having Alzheimer’s disease.”

He led a panel of experts, working with the Alzheimer’s Association and the National Institute on Aging, that updated guidelines on the disease, published Tuesday in Alzheimer’s & Dementia: The Journal of the Alzheimer’s Association.

ABOUT ALZHEIMER’S

About 50 million people worldwide have dementia, and Alzheimer’s is the most common form. In the U.S., about 5.7 million have Alzheimer’s under its current definition, which is based on memory problems and other symptoms. About one-third of people over 70 who show no thinking problems actually have brain signs that suggest Alzheimer’s, Jack said.

There is no cure current medicines such as Aricept and Namenda just temporarily ease symptoms. Dozens of hoped-for treatments have failed, and doctors think one reason may be that the studies enrolled patients after too much brain damage had already occurred.

“By the time that you have the diagnosis of the disease, it’s very late,” said Dr. Eliezer Masliah, neuroscience chief at the Institute on Aging.

“What we’ve realized is that you have to go earlier and earlier and earlier,” just as doctors found with treating cancer, he said.

Another problem: as many as 30 per cent of people enrolled in Alzheimer’s studies based on symptoms didn’t actually have the disease they had other forms of dementia or even other medical conditions. That doesn’t give an accurate picture of whether a potential treatment might help, and the new definition aims to improve patient selection by using brain scans and other tests.

BETTER TESTS

Many other diseases, such as diabetes, already are defined by measuring a biomarker, an objective indicator such as blood sugar. That wasn’t possible for Alzheimer’s disease until a few years ago, when brain scans and spinal fluid tests were developed to do this.

They measure certain forms of two proteins amyloid and tau that form plaques and tangles in the brain _ and signs of nerve injury, degeneration and brain shrinkage.

The guidelines spell out use of these biomarkers over a spectrum of mental decline, starting with early brain changes, through mild impairment and Alzheimer’s dementia.

WHAT TO DO?

People may be worried and want these tests for themselves or a family member now, but Jack advises: “Don’t bother. There’s no proven treatment yet.”

You might find a doctor willing to order them, but spinal fluid tests are somewhat invasive, and brain scans can cost up to $6,000. Insurance usually does not pay because they’re considered experimental outside of research. A large study is underway now to see whether Medicare should cover them and when.

Anyone with symptoms or family history of dementia, or even healthy people concerned about the risk can consider enrolling in one of the many studies underway.

“We need more people in this pre-symptomatic stage” to see if treatments can help stave off decline, Masliah said.

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