IRMI Update—Issue #97
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
September 28, 2004
In This Issue
Colleague,
We recently performed an analysis of our customer base to try to quantify
the trend toward online access of reference material. By customer base, I mean
those firms that purchase subscriptions to IRMI reference manuals
and newsletters. The results are very interesting, and I thought I would
share some of what we learned.
Insurance agents and brokers represent a large component of our customer
base, and they have definitely been moving their subscriptions to the online
arena. For example, 76 of the top 100 (including 9 of the top 10) brokers—as
ranked by Business Insurance—currently
are providing all of their employees with online access to IRMI publications
through
SilverPlume
or IRMI Online.
We're seeing a similar trend with insurers. Currently 37 major insurers give
all their employees online access to IRMI publications through
SilverPlume
or IRMI Online.
This includes 4 of the 5 largest commercial lines insurers.
Risk managers are the third major component of our subscriber base (for example,
some 84 percent of the Fortune 500 companies are customers). They also seem
to be jumping on the Internet bandwagon, though the move isn't as rapid as with
the insurance industry.
Of course, we still have thousands of customers who elect to receive their
manual supplements and newsletters in print form. However, the rapid shift from
print to electronic delivery in the last 2 years has caused our heads to spin.
This is further evidence of the trend toward using technology to increase
the efficiency and accuracy of people in business. Where print reference manuals
were once stored in a central area for all to share, they are now just a click
away for anyone in the organization. This also illustrates our ever-growing
dependence on the Internet and the need to keep it secure.
If you subscribe to our publications in print or online, let me thank you
again for your business. It is an honor to serve your risk management and insurance
information needs.
We are only 6 weeks away from the 24th IRMI
Construction Risk Conference. As one
veteran attendee recently told me, "Orlando in the winter is good!" I hope to
see you there.
Have a great day.
Jack
Jack P. Gibson
President
International Risk Management Institute, Inc.
Go Beyond Loss Runs in Your Submissions—To
effectively structure and negotiate retention levels or deductibles, the risk
professional must have a clear understanding of the organization's historical
loss experience. The vast majority of underwriting submissions only include
recently valued loss runs. Loss stratifications and loss development triangles
are also needed to ensure that underwriting and organizational decision-making
are on a firm foundation. To compile loss stratifications, the risk professional
should first trend individual claims to current dollars using published claim
cost indices, then calculate the amounts that fall within various deductible/retention
levels on a current dollar basis. Loss development triangles using total paid,
total incurred, number reported, and closed claims should also be included in
the submission to demonstrate the effect of the organization's unique risk management
practices on claims costs and closure rates, particularly important for liability
and workers compensation lines. If you are dealing with claims data from multiple
insurers, check to see if the definition of "incurred loss" consistently includes
(or excludes) allocated loss adjustment expenses and recoveries. Some insurers'
claims systems allow the risk professional to download historical claims experience
into a spreadsheet program, making it much easier to produce these value added
reports.
By: Brenda M. Olson, MBA, ARM, CPCU
President & Principal Consultant
ORG Risk Management / ORG Captive Management
Bigfork, MT
bolson@orgcaptives.com
www.orgcaptives.com
Suggest a Risk Tip.
Send us a practical tip (less than 300 words) for identifying and managing risks,
buying insurance, managing claims, or filling gaps in insurance coverages. We'll
acknowledge your contribution as we did for Brenda.
There are now 584 risk management and insurance articles on IRMI.com. Below
you'll find summaries of some recent additions with links to the articles.
Agents,
accountants,
architects, engineers,
and lawyers —get
the continuing education (CE) credit you need at the IRMI Construction Risk
Conference in Orlando on November 8–11. We file the entire 3 1/2-day with a
large number of state licensing boards and professional organizations. For the
first time this year, the conference is being filed with the AIA for architect's
continuing education. As we obtain approvals, the number of credit hours available
for each day of attendance will be posted on a state-by-state (and profession)
basis on the Conference Web site.
The Motor Carrier Act of 1980 requires that the MCS-90 endorsement be attached
to insurance policies covering auto liability exposures of certain types of
businesses. But it is a highly misunderstood and often litigated one-page endorsement.
The MCS-90 Book—Truckers versus Insurers and the
Government Makes Three clarifies the pitfalls, coverage traps, underwriting
concerns, and claims issues lying under the surface of this seemingly innocuous
endorsement. Written by the Consulting, Legal, and Expert Witness (CLEW) Section
of the CPCU Society, this book will explain the Act, the endorsement, the policy
forms, and the litigation issues. For more information, visit the
Products & Services
section of IRMI.com.
In IRMI Update 96, Jack Gibson asked readers
whether they encountered employees using the company's computers to steal and,
if so, what safeguards did they use to handle this exposure. Following are the
responses received.
-
To deter computer crimes by employees:
1) Limit access to the building with electronic card keys that store
access data on the employee.
2) Require internal electronic safeguards, checks and balances -- electronic
approval is required by one or more persons in the hierarchy.
3) Perform random internal audits.
—Louie Allocco, Claims Advocate Supervisor, Willis,
Global Operations, Nashville
-
I just experienced hiring someone from an employment agency who stole
checks from two of my accounts (one business account and the other, my personal
account) and forged my name on 24 checks. When using my online banking,
I discovered a check out of sequence in an amount I did not remember writing.
After pulling it up online to view the front and back of the check, I saw
that it was endorsed by the employee's father. I approached him at which
time he denied knowing anything about the check. I terminated his employment
and filed a police report.
One month later, he approached the cleaning crew after hours acting as
if he forgot something in the office and they let him in the office. This
time, he stole checks from another business trust account, a new computer,
and flat screen I had just purchased for his use in the office, money from
my desk, client gifts such as Sees Candy Certificates, Blockbuster Certificates,
a postal scale, checks in my drawer that I had not taken to the bank, his
employment file with all the information from the first violation, and my
signature stamp!
Needless to say, I have spent hours between filing another police report,
sending fraud verification to each of the businesses where he cashed my
checks, having affidavits notarized, closing three checking accounts and
reopening new accounts, coordinating each detail with the investigators,
etc., etc., etc. Come to find out, he had been accused of committing a similar
crime and had a scheduled court date this month.
I have requested all the information on this person from the employment
agency who sent him to us, but have received nothing. I can only tell you,
it has been a nightmare and a waste of energy that I could have devoted
elsewhere in a more productive endeavor.
It would be very informative to know exactly what information a prospective
employer is entitled to and where to get this information to prevent the
hiring of someone with a past history of fraud or at the very least, to
find out if the person is being accused of a crime. At this point, I am
reluctant to consider hiring another employee until I determine what my
rights are in finding out about someone's past crime history.
—Lorie Hart, Lorie Hart Insurance, Laguna Hills,
CA
-
Employee theft is still "employee theft" no matter how it is done. Seems
like there will always be reasons for employees to steal from their employer.
My personal opinion is that most thieves eventually get caught, but I guess
the really good ones we never know about. Some of our sister companies have
had employee thefts by manipulating data or information on the computer
but not by hacking per se. The list of "to dos" in your message (password
protection, background checks, drug testing, monitoring) are all things
we do and as part of a larger financial institution we are constantly on
the watch. We also make these suggestions to our clients. As respects our
clients, I am not aware of any employee dishonesty claims via theft by computer.
Maybe they/we have just been lucky?
To me the big issue I have personally is with spam. I have somehow gotten
on an list and cannot get off. I tried all the spam blocker techniques our
internal IT staff has suggested and still receive as many as 70 spam e-mails
a day.
Jack, I am really afraid that someday the Internet/e-mail system will
be shut down by abuse of the system. If that happens, it will cost all of
us untold amounts. I guess we can go back to the days before Internet. Even
though I am old, and I know the old way of using pony express, I really
do not want that to happen. Jack, if that happens, you probably really would
see a decline in responses to your messages -- me for one!
—Jim Sammons, CIC, Vice President, Guaranty Insurance
Services, Inc., Austin, TX
-
My problem isn't that any of my employees would steal from the company.
We have very devoted employees here. The problem is web surfing and downloading
off the Internet. I am getting ready to purchase new computers and will
buy software to safeguard the computers against downloading stuff.
Every morning, I open my e-mail and get no less than 150 spams. We do
have a server, but our Internet provider is COX. I need a good spam blocker,
as well.
—Diane Russell, Office Manager, COMP Risk Management,
Inc., Oklahoma City
-
I have not seen people use company computers to steal, but people are
being forced to use computers as a replacement for information previously
available in paper form. People that do not own or know how to operate computers
are being left behind because workplaces and society in general are pushing
towards a paperless environment. In some ways, this makes us all more vulnerable.
As an example, do you feel safer paying your bills by writing a check
and mailing it in or by paying it online? Sure, you save a stamp and have
the convenience of paying a bill with a few clicks of a computer mouse,
but you are also revealing private information about yourself to an unknown
array of "watchers." Lately when I go online at home, it seems like my Internet
provider is keeping track of what time of day I am signing on to my computer.
—Patty Black, CIC, CPCU, AU, Commercial Underwriting,
Grange Mutual Casualty Company, Columbus, OH
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