More than $421 million in claims have been filed since deadly mudslides tore through the coastal community of Montecito during extremely heavy January rains, California’s insurance commissioner said Monday.
Insurers have received more than 2,000 claims for residential and commercial losses, commissioner Dave Jones announced. Those include $388 million for residential personal property, $27.2 million for commercial property and $6.7 million for auto and other lines of insurance.
Recently burned by California’s largest recorded wildfire, the hillsides of Montecito northwest of Los Angeles could not absorb the rainstorm with an epic downpour of nearly an inch (2.5 centimetres) in 15 minutes early on Jan. 9.
“Once the rains hit, the water runs down, begins to take mud with it, and before you know it you have a 30 or 35-foot high wall of mud demolishing Montecito,” Jones said.
Twenty-one people were killed and two remain missing.
The mudslide insurance claims come on top of California wildfire claims that topped $12 billion in 2017, making it the most expensive series of fires in state history, Jones said.
That exceeds the total insurance claims from the top 10 previously most costly wildfires in California. Most of last year’s claims were connected to Southern California’s fires in December and October’s devastating blazes in wine country north of San Francisco.
Jones said he fears the staggering number of insurance claims represent a “new normal” for California.
“It used to be we could talk about a wildfire season. Now that’s simply not the case. Wildfires are year-round, and Californians need to protect themselves accordingly,” he warned.
In Montecito, 1,415 residences were damaged and 107 were destroyed, in some cases swept completely off their foundations, Jones said. Five commercial properties were demolished and 235 others suffered damage when torrents of water flowed down hills carrying mud, boulders and debris.
Jones recalled the experience of touring the devastation zone as “extraordinarily chilling.”
The commissioner predicted that the $421 million total will climb as additional claims are made and existing ones are adjusted.
Few residents in Montecito, with 3,200 households, had flood or mudslide insurance prior to the destruction. But the Department of Insurance has instructed insurers to honour claims if they had fire coverage, Jones said.
That’s because the debris flow’s “proximate cause” was the enormous Thomas fire that scorched a huge swath of Ventura and Santa Barbara counties starting in December and loosened hillsides that became vulnerable to mudslides weeks later.
Jones said insurers have enough reserves to pay the massive claims. But he said the fires and subsequent debris flows may prompt them to re-evaluate the fire risk and raise premiums, especially for California homes in high-risk areas.
The founder of the Chinese insurer that owns New York City’s Waldorf Hotel went on trial Wednesday, March 28, 2018 on charges he fraudulently raised $10 billion from investors and misused his position to enrich himself.
Wu Xiaohui, chairman of Anbang Insurance Group, was detained last year. Regulators took control of privately owned Anbang in February following a multibillion-dollar global buying spree that prompted questions about its financial stability.
The case added to an avalanche of scandals for Chinese insurers. The industry’s former chief regulator was charged in September with taking bribes. Executives of other insurers have been charged with corruption and mismanagement.
Beijing announced plans March 13 to merge the Chinese banking and insurance regulators in an effort to step up scrutiny of those fast-evolving industries. The ruling Communist Party has made reducing financial risk a priority after a run-up in debt owed by Chinese companies and local governments prompted rating agencies last year to cut Beijing’s credit rating for government borrowing.
Wu is accused of fraudulently raising 65 billion yuan ($10 billion) and abusing his post to divert money for his own use, according to a report by prosecutors on the social media account of the Shanghai No. 1 Intermediate People’s Court.
In court, Wu’s lawyer argued what he was accused of doing was a violation of regulations but not illegal, according to another post. A third post said Wu objected that he didn’t understand the law and didn’t know whether what he did was illegal.
Most trials in China last no more than a day, even for complex financial cases. There was no indication when a verdict in Wu’s case might be issued.
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.
Regulators said they took control of Anbang on Feb. 23 to protect its solvency and consumer rights. The China Insurance Regulatory Commission said the takeover had no effect on Anbang’s financial obligations.
On Wednesday, Anbang issued a statement on its social media account saying its business is stable has “sufficient cash flow” to meet policy commitments.
Wu founded Anbang in 2004 and gained a reputation for aggressive expansion in a stodgy industry dominated by state-owned insurers.
The company grew to more than 30,000 employees with 35 million clients. It diversified into life insurance, banking, asset management, leasing and brokerage services.
Questions about Anbang’s future have swirled since it announced Wu handed his duties to deputies in June following news reports he was detained for questioning.
Anbang’s buying spree stumbled after Beijing tightened investment controls in late 2016. Regulators said they wanted to cool spending on foreign real estate and other assets they said did nothing to develop China’s economy.
Following that, Anbang failed to complete several deals, including the proposed purchase of U.S.-based Fidelity & Guaranty Life for $1.6 billion.
Wu also is accused of ignoring regulatory limits in selling high-interest investment products as short-term insurance contracts, according to Wednesday’s statement.
Such sales raised 724 billion yuan ($115 billion) from 10.6 million investors from 2011 to 2017, the statement said. It said some of that money was transferred to companies controlled by Wu for “reckless personal spending.”
Regulators warned Anbang and other insurers last year about use of such investment products.
Other insurers have been accused of endangering the financial safety of their industry through reckless speculation in stocks and real estate. The chairman of a life insurance company was barred from the industry last year in an unrelated case and a third company was prohibited from trading stocks.
Anbang’s early investors included a state-owned automaker, an oil company and a mix of rural villagers and small business owners. Its multibillion-dollar string of global acquisitions raised questions about how it paid for its buying spree, including the $2 billion purchase of the Waldorf.
The company’s negotiations with Kushner Cos. about a possible investment in its flagship property, 666 Fifth Avenue, prompted members of the U.S. Congress to raise ethics concerns.
Five lawmakers said in a letter to the White House the possible deal represented a “clear conflict of interest.” They asked the Trump administration to confirm Kushner, who transferred his ownership stake to other family members, played no role in the negotiations.
Anbang said it raised 50 billion yuan ($8 billion) in capital in 2014 by taking on dozens of new shareholders. That increased its registered capital fivefold to 62 billion yuan ($9.5 billion), the biggest among Chinese insurers.
A prominent business magazine, Caixin, said in May 2017 at least 30 billion yuan ($4.3 billion) of that money really came from premiums paid by policyholders _ a violation of insurance regulations.
Anbang denied that and accused Caixin of publishing negative information about the company and Wu after pressing it to buy advertising.
The CIRC sent investigators to Anbang in June. It said in a statement in February they ordered unspecified improvements in operations and management.
- March 28: Veterans Affairs Secretary David Shulkin
- March 22: National security adviser H.R. McMaster
- March 13: Secretary of State Rex Tillerson
- March 12: Special assistant and personal aide to the president John McEntee
- March 6: Economic adviser Gary Cohn
- Feb. 28: Communications director Hope Hicks
- Feb. 27: Deputy communications director Josh Raffel
- Feb. 7: Staff secretary Rob Porter
- Dec. 13, 2017: Communications director for the White House Office of Public Liaison Omarosa Manigault Newman
- Dec. 8, 2017: Deputy national security adviser Dina Powell
- Sept. 29, 2017: Health and Human Services Secretary Tom Price
- Aug. 25, 2017: National security aide Sebastian Gorka
- Aug. 18, 2017: Chief strategist Steve Bannon
- July 31, 2017: Communications director Anthony Scaramucci
- July 28, 2017: Chief of staff Reince Priebus
- July 21, 2017: Press secretary Sean Spicer
- May 30, 2017: Communications director Michael Dubke
- May 9, 2017: FBI Director James Comey
- March 30, 2017: Deputy chief of staff Katie Walsh
- Feb. 13, 2017: National security adviser Michael Flynn
Article by Henning Schaloske, Kathrin Feldmann and Amrei Zürn
Companies that become a target of a cyber-attack may face global impacts. Cyber-attacks often cause cross-border and thus cross-jurisdictional data breaches as, for example, data is often stolen or illegally published from a company’s subsidiary in a different country.
An issue in such events is that each jurisdiction has different requirements regarding the notification of authorities and the subjects of the data breach. Companies have to establish in how many countries a data breach occurred and if there are special notification requirements with respect to the data subject and the national authorities. Further, targets of cyber-attacks may face difficulties estimating the amount of fines and penalties and third party claims since the relevant provisions vary from one country to another. In addition, each jurisdiction imposes different requirements on risk management.
Within the European Union, these different approaches will be harmonised on 25 May 2018 when the General Data Protection Regulation (“GDPR”) comes into effect. As a regulation, the GDPR directly applies in each member state and does not need to be transposed into national law. The GDPR contains provisions regarding data breach notifications, data protection management systems, fines and penalties as well as third party claims. Even though these provisions are partially stricter than national regulations, the GDPR’s advantage is that companies, in general, only have to consider this data protection regulation instead of, potentially, 28 individual domestic data protection laws in all member states. However, with respect to non-EU member states, companies will still face various data protection provisions.
Cyber cross-jurisdictional risks not only occur in connection with data breaches. Internationally operating companies also face different regulations when it comes to general IT risk management and the prevention of cyber-attacks. In Germany, for example, pursuant to section 8a of the Act on the Federal Office for Information Security (“BSIG”), so called operators of critical infrastructure, such as energy, transportation or telecommunication companies as well as insurers, have to take organisational and technical measures to avoid errors of the availability, integrity, authenticity and confidentiality of their information technology systems, components and processes which are essential for the functionality of the operated critical infrastructures. Operators of such infrastructure have to prove that they are meeting these requirements to the German Federal Office for Information Security (“BSI”) every two years.
Since 3 November 2017, financial institutions have been obliged to meet special IT risk management requirements. The German Federal Financial Supervisory Authority (“BaFin”) published the Supervisory Requirements for IT in Financial Institutions (Bankaufsichtliche Anforderungen an die IT, “BAIT”). The intention behind BAIT is to provide clarity for executive boards of banking institutions regarding the banking supervisors’ expectations with respect to a secure design of IT systems and the associated processes. These requirements form a core component of IT supervision in the banking sector in Germany. The financial institutions have to define a sustainable IT strategy outlining the institution’s objectives and measures to achieve these objectives. BAIT furthermore requires companies to put in place an information risk and information security management as well as a user access management. Similar regulatory requirements for insurance companies shall be published at the end of 2018.
Another significant cross-jurisdictional issue is the assessment of global litigation risks. It may be easier for a company to estimate its potential liability in a country like the United States where cyber cases have already been subject of legal proceedings than in other countries such as Germany where there is hardly any case law on cyber liability. What is more, companies cannot be certain whether or not cyber claims will be covered by a cyber policy. Since 2017, the German cyber market has grown significantly. However, German courts have not yet had to deal with cyber policies and it is difficult to predict how a German court would decide in a cyber coverage dispute. Thus, for insurers and their insureds alike, it is important to continuously improve legal certainty of the policy wordings as well as to understand, manage and allocate cyber risks appropriately between different types of cover, including, e.g., crime and general liability next to the cyber policies. Last but not least, in the international cyber breach scenario, the interplay of local and master policies brings along additional challenges, in particular in relation to non-admitted countries and the setup of well-functioning international insurance programmes.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Scope and breadth of coverage varies by policy and specific details
Allegations of sexual misconduct in both the private and public sector are dominating headlines. These sexual harassment claims can impact not only a company’s reputation but also its bottom line. Marie-France Gelot, senior vice president and insurance and claims counsel in Lockton’s Northeast operation, explains that this risk is typically covered under an employment practices liability insurance policy (EPLI) or a hybrid private company directors and officers liability (D&O) policy.
“As with any claim, the specific factual circumstances surrounding the matter will be critical in determining whether coverage is ultimately triggered,” Gelot writes in her white paper “Sexual Harassment: Is Your Company Exposed?”
The term sexual harassment is used widely today, but Gelot reminds companies that the Equal Employment Opportunity Commission (EEOC) has a legal definition for this phrase. She outlines the legal procedures for filing a sexual harassment claim under Title VII of the Civil Rights Act and explains specific claim scenarios where the line between insured versus uninsured acts can be confusing.
For example, a customer of a retail chain alleges that he or she was sexually harassed by a store employee while in the store and that he or she suffered damages. This would likely constitute a covered claim under the company’s EPLI policy, assuming that policy had third-party coverage. Many, but not all, EPLI policies cover claims brought by third parties, like clients, customers or vendors. Such a policy would provide defense costs coverage and indemnity coverage for the company and employee.
Insurers also look at where the sexual harassment took place and if the employee was acting in the course and scope of their employment. For example an employee alleges that her manager sexually harassed her in a bar on a Saturday evening during a social event. The insurance carrier would undoubtedly question whether the manager was “on the job” during the social event to determine whether coverage applied.
Employers should also be aware of frequent exclusions like the conduct exclusions for intentional acts and the bodily injury exclusion, which may broadly exclude coverage for assault and battery. Since the definition of battery means unwanted or unpermitted touching, this limits sexual harassment coverage to nonphysical sexual harassment only, even if that is not explicitly stated in the policy wording. However, EPLI policies that do exclude bodily injury typically contain an exception for claims alleging emotional distress, mental anguish and humiliation.
Due to the coverage of recent sexual harassment cases, employees and employers are paying more attention to such claims. For now, corporations should examine their own policies to ensure they have the right coverage. Read Gelot’s white paper “Sexual Harassment: Is Your Company Exposed?” to understand coverage should such a claim arise.
Lockton is a global professional services firm with 6,500 Associates who advise clients on protecting their people, property and reputations. Lockton has grown to become the world’s largest privately held, independent insurance broker by helping clients achieve their objectives. For nine consecutive years, Business Insurance magazine has recognized Lockton as a “Best Place to Work in Insurance.”
by Michael Knezovich & Kevin Brasler, Delaware Valley Consumers’ Checkbook
As with your personal vehicle, when you rent a car you want to make sure you have adequate insurance coverage for damage to the rental, damage to the property of others, and liability lawsuits. Rental companies will happily sell you coverage, but it isn’t cheap.
For example, for a compact car rental from Budget, we recently were quoted a base price of $45 per day (plus tax and the usual jumble of fees). Adding the “recommended” coverages pushed its total daily rate to $100.19 — more than double the base rental rate.
Should you spring for this stuff? If you own and insure your own car, your personal policy likely protects you against big losses you might incur when renting, so the quick answer is “probably not.” But detailed below are important exceptions and caveats. And if you don’t own a car, there are even more issues to consider.
If you’re covered as a driver under your or your family’s personal auto insurance policy, and that policy includes collision and comprehensive coverage, it will pay claims for physical damage to cars you rent. Similarly, your own liability coverage continues when you rent. If you hit someone or something, your insurer will pay out and charge you your deductible.
Although most personal auto policies won’t cover rentals outside the U.S. and Canada, check what you get before you pay the rental company extra for insurance. The automatic coverage you get in some countries is very high. For example, Hertz automatically includes coverage up to 1 million euros per person for rentals in Italy, and rentals in Spain automatically include unlimited liability coverage. But, as you might expect, the limits in many other foreign countries are far lower — for example, less than $2,000 per injured person in Thailand and $20,000 per accident in Nicaragua.
If you are an employee driving a rental car on company business, your employer’s auto insurance policy might provide coverage — but only if your employer has paid extra for it. Also, these policies usually cover only liability, not physical damage.
If you rent using a credit card, you likely get free physical damage coverage — but not liability coverage — as a free perk. It’s standard on all American Express, Discover, MasterCard, and Visa cards. You get this protection only if you decline the rental company’s physical damage coverage.
If you’re still considering buying extra insurance protection from a rental car company, it’s important to understand that the coverage is secondary insurance. This means that if you have an accident that your personal auto policy covers — which includes most accidents that occur in the U.S. — before you can collect from the rental company’s insurance, you first have to file a claim with your own insurer. In other words, the extra insurance you bought from the rental car company for physical damage or liability really covers only your deductible.
During the checkout process, rental company reps often warn that coverage you get from your personal insurer and credit card doesn’t cover you against loss-of-use fees. If you damage the car, the rental company will charge you for loss of use to theoretically recoup money from rentals the company can’t make while the vehicles are in a body shop and out of commission. Although these penalties are usually excessive — even though you rent a car for $19/day, a rental company might charge you an undiscounted $45/day “rack rate” for the number of days it takes to repair it, even though the company rarely charges that full rate and even though it might not bother to repair the car — insuring against the risk of these fees doesn’t make mathematical sense. Paying the rental companies hefty $20 —$40 per day to cover the unlikely risk of losing $40 —$100 per day for loss-of-use fees just doesn’t add up.
If you don’t have a personal auto policy or want extra insurance, consider buying coverage from a third party. Companies like Allianz and Insure My Rental Car sell primary insurance for rentals (if you have an accident, you don’t have to file a claim with your personal auto insurance company). If you don’t own a car, it’s worth considering one of these plans, rather than paying what are usually higher rates offered by the rental companies. But, note that these policies don’t include liability or loss-of-use coverage.
If you’re an American Express cardholder, it’s worth considering enrolling in its “Premium Car Rental” program. For a flat fee of $24.95 for each rental you charge to your card, you get primary insurance that offers coverage for rentals that’s similar to what get for a personal car with a conventional auto insurer.
Apart from providing primary insurance, the American Express program is a better deal than what the rental companies offer in that you pay a (fairly low) flat fee for each rental (for up to 30—42 consecutive days, depending on the state). The rental companies typically charge $30 or more per day. So, while the American Express fee for a one-day rental is not only less than what most rental companies offer, it’s a screaming deal for longer durations.
Source: News Daily News philiy.com