Insurance Blog

Our fellow bloggers at Workers Comp Insider tipped us off that this week is Protect Your Identity Week, so it seems fitting to end it with a post on ID theft. This is a timely reminder that fast approaching is the November 1 deadline by which financial institutions and creditors have to comply with the Federal Trade Commission’s (FTC) so-called “red flags rule” which requires them to develop and implement written identity theft programs. Regular readers will remember that the FTC has delayed enforcement of the new rule a number of times. Now an October 21 online article at Lawyers USA by Kimberly Atkins reports that earlier this week the House passed H.R. 3763, a bill that would amend the Fair Credit Reporting Act to exempt certain businesses from the red flag guidelines. Under the bill, healthcare, accounting and legal practices that employ fewer than 20 people would automatically be […]

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The indictments of three individuals allegedly responsible for five corporate data breaches including the single largest data breach in history is a reminder of the risk businesses face from this threat. Yesterday’s indictment by the Department of Justice describes a scheme in which more than 130 million credit and debit card numbers together with account information were stolen from payment processor Heartland Payment Systems, 7-Eleven Inc and supermarket chain Hannaford Brothers Co. For more on this story, check out today’s New York Times article by Brad Stone. ID theft remains the number one consumer complaint received by the Federal Trade Commission (FTC), accounting for 32 percent of all fraud complaints in 2007. Some 258,427 identity theft complaints were reported to the FTC in 2007, up 5 percent on the previous year. Check out I.I.I. info on ID theft.

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The economy is currently dominating the risk management agenda, according to a survey of 570 global business leaders by the Economist Intelligence Unit, commissioned by Lloyd’s. As a result, environmental and natural hazard risks are increasingly being seen as low priority. Among the top 10 global risk priorities identified in the survey, all of the risks are either directly or indirectly related to the economy. This raises the question of whether companies are sidelining other, vital risks in their efforts to navigate their businesses through the current economic downturn. Although respondents claim they are well prepared to manage environmental and natural hazard risks, their low priority suggests there may be gaps emerging in the ability of companies to withstand some longer term and tail risks. According to the survey, executives need to look beyond the headlines when assessing risk priorities and not focus entirely on short-term issues. “Risk management can […]

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The Federal Trade Commission (FTC) has given financial institutions and creditors a further temporary reprieve – until November 1, 2009 – to comply with the so-called “red flags rule” which requires them to develop and implement written identity theft programs. This is the third time the FTC has delayed enforcement of the new rules which were originally slated to take effect in 2008. The FTC said it will provide additional resources and guidance to clarify whether businesses are covered by the rule and what they must do to comply. The FTC’s Web site, www.ftc.gov/redflagsrule, offers resources to help businesses determine if they are covered and, if they are, how to comply. The red flags rule requires financial institutions and creditors with covered accounts to implement prevention programs to identify, detect and respond to patterns, practices or specific activities that could indicate ID theft. A July 29 online article at Lawyers USA by Kimberly […]

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Securities class action filings declined by 22.3 percent in the first half of 2009 amid continuing litigation against financial services firms. According to the mid-year report from Stanford Law School and Cornerstone Research, a total of 87 federal securities class actions were filed in the first half of 2009, down from 112 filings in both halves of 2008. Only 35 filings were observed in the second quarter, the lowest quarterly total since the first quarter of 2007. Financial services firms are defendants in 66.7 percent of these filings, an increase over the 50 percent share of all filings in 2008. The report noted there were 15 filings related to Ponzi schemes so far in 2009, of which 11 filings were on behalf of investors in Madoff funds, with most suits targeting so-called feeder funds, hedge funds and others. A possible explanation for the decline in filings so far in 2009 […]

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The financial crisis is the greatest business risk facing the insurance sector in 2009, according to the second annual business risk report from Ernst & Young and Oxford Analytica. It suggests that the consequences of economic events, financial shocks and their aftermath have been so profound that they are likely to shape the industry for the next 10 years. Major forms of change involve products, regulation, investment strategies and capital requirements. Model risk ranked as the second greatest business risk facing insurers. According to the study, the failure to recognize the shortcomings of models and to adequately capture the nature of underlying risks has left some insurance companies unprepared for the depth of recent financial events. Regulatory intervention ranked as the third top risk for insurance. While the full extent of regulatory change is unknown, early signs are that revisions to insurance sector regulation have the potential to be dramatic. […]

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Governments around the world are increasingly becoming involved in developing insurance programs and pools to provide terrorism coverage, though some countries still offer no governmental support at all, according to a new report from Guy Carpenter. The 2009 Global Terror Update summarizes terrorism insurance market developments in 34 countries across six continents. According to the briefing, developments on a country-by-country basis are being shaped largely by events, including new or evolving threats and local developments in insurance and reinsurance markets. A section on aviation insurance notes that though most of the government-sponsored aviation insurance schemes adopted in the wake of September 11, 2001 have been withdrawn and replaced by commercial cover, the U.S. government has extended the duration of its cover. Other governments still providing third-party liability cover in 2008 include Canada, Brazil, China, Jordan, New Zealand, Qatar and Saudi Arabia. With market capacity increasing and prices dropping considerably, coverage […]

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Although the prospect of a major terrorist attack in a Western country is ever present, Aon’s 2009 Terrorism Threat Map shows a more settled outlook for North America, Europe and Australia. In a press release, Aon notes that while evidence of plots emerges from time to time, there is often a protracted timeframe between them. “We are unlikely to see the frequency of attacks in Western countries that we might have expected a few years ago. We attribute this to better counter-terrorism capability,” Aon said. However, it warned that the global recession could lead to a new generation of terrorists emerging from disaffected communities in a re-emergence of class-based politics. This raises the prospect of new terrorist groups forming in the developed world on the far right and left of the ideological spectrum. With the election of a more liberal President in the United States, uplift in activity from domestic […]

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The Federal Trade Commission (FTC) has given financial institutions and creditors a further three months – until August 1, 2009 – to comply with the so-called “red flags rule” which requires them to develop and implement written identity theft programs. This is the second time the FTC has delayed enforcement of the new rules which were originally slated to take effect November 1, 2008. For entities that have a low risk of identity theft, such as businesses that know their customers personally, the FTC also said it will soon release a template to help them comply with the law. The red flags rule requires financial institutions and creditors with covered accounts to implement prevention programs to identify, detect and respond to patterns, practices or specific activities that could indicate ID theft. During 2007, the FTC received 813,899 consumer fraud and identity theft complaints, an increase of 21 percent over 2006. […]

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Climate change will increase water scarcity, alter food production and dramatically change energy supply and migration patterns, according to a new report from Lloyd’s and the International Institute for Strategic Studies (IISS). The report, titled Climate Change and Security: Risks and Opportunities for Businesses, finds that businesses have a vital role to play in the mitigation of and adaptation to climate change. There are many ways that business can protect itself from the adverse effects of climate change and adapt to the new conditions, but business can also contribute to the goal of minimizing climate change. Boards should consider four key points: awareness and information; risk assessment and analysis of vulnerabilities; awareness of opportunities as well as risks; and spreading best practice. The report concludes that significant changes in the natural and political environment will place great stresses on businesses of every sort, but they will also create opportunities for […]

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