IRMI Update—Issue #112
An E-mail Newsletter for Risk and
Insurance Professionals
ISSN: 1530-7948
May 3, 2005
In This Issue
Colleague,
Certificates of insurance are a big source of frustration to
risk and insurance professionals. While they are required to evidence
compliance with contractual obligations to procure certain types
of insurance, much to the consternation of certificate holders,
the standard forms used in the United States contain several "escape
clauses" designed to make them nonbinding on the issuing insurer.
As a result, the lowly certificate has little credibility, and much
time and effort is expended by people trying to compensate for that
fact.
While the "escape clauses" (the purpose of which is to avoid
having the certificate override the policy's coverage terms) are
justifiable, I don't understand why insurers can't promise to send
certificate holders notice of cancellation. The "endeavor to give
notice of cancellation" provision was included in standard certs
back in the days when it took entire buildings to hold computer
systems. Today's technology should allow insurers to promise certificate
holders a notice if the policy is canceled or not renewed and to
easily make good on that promise.
In fact, this is the easiest change to negotiate on certificates
of insurance. Many insurers allow their field underwriters to agree
to do so. In my book, it is long past time for insurers to commit
to certificate holders that they will provide such notice. What
do you think? Am I missing something here, or should the industry
make this little concession in the standard certificate forms? [See
reader
comments].
On another note, I would like to ask you for a favor. The subscriber
list for IRMI Update has hovered around 29,000 for over a year now,
and I'd really like to see it grow to 30,000. Would you please recommend
it to a few colleagues or clients who would benefit from the articles
and commentary? I would sure appreciate your help. They can sign
up here.
Have a great day.
Jack
Jack P. Gibson, CPCU, CRIS, ARM
President
IRMI
Insuring Potential Liability for Fax/E-Mail—A
number of plaintiffs are pursuing class action suits for violation
of the Telephone Consumer Protection Act (TCPA) for improperly sending
faxes to recipients who did not solicit them. These communications,
known as "blast faxes," can create significant liability. Hooters
recently settled such a claim for nearly $9,000,000.00, following
entry of a judgment against it for $11,889,000. See
Hooters of Augusta Inc. v American Global
Ins., 272 F Supp 2d 1365, 1379 (SD Ga 2003). Hooters procured
coverage under the "advertising injury" offense for "oral or written
publication material that invades the privacy of another" which
is presently on appeal to the 11th Circuit. With one recent exception
(an opinion from the 7th Circuit applying Illinois law which an
Illinois state court judge subsequently refused to follow), courts
have uniformly found coverage for such claims.
A new ISO exclusion, CG 00 67 03-05-Exclusion—"Violation of Statutes
that Govern E-Mails, Fax, Phone Calls, or Other Methods of Sending
Material or Information," was introduced in March of 2005. Similarly,
while multimedia policies typically include coverage for "invasion
of privacy" where the alleged wrongful conduct emanates from internet
related activity, most of these policies contain exclusions for
liability "for or arising out of the transmission of unsolicited
commercial e-mail messages and faxes." Both exclusions appear to
impact claims under the Can-SPAM ACT of 2003, effective in 2004
which prohibits transmission of unsolicited e-mails.
Risk managers would be wise to either seek to remove these exclusionary
endorsements by negotiation or procure a form of CGL/umbrella or
multimedia/cyberspace policy that does not yet contain these exclusions.
The latter course is easier but requires careful review of pertinent
policy forms. It is therefore critical in this renewal cycle to
see the full policy form with all endorsements before acquiring
CGL/umbrella coverage.
By: David Gauntlett
Gauntlett & Associates
Irvine, CA
www.gauntlettlaw.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.
Submit your tips.
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There are now 659 risk management and insurance articles on IRMI.com.
Below you'll find summaries of some recent additions with links
to the articles.
-
Commercial
Property/Casualty Premium Rates Continue to Soften—The
Council of Insurance Agents & Brokers survey shows
a continuing significant decline in premiums, with
most large and medium accounts showing a 7-10 percent
drop in premium.
-
School
Violence—The potential for school violence
has led many school systems to either implement
a school violence prevention program or augment
the one already in place. Dr. James Madero explains.
-
Unexpected Hazardous Materials—What Do You Do When
the Owner Says "Keep Going"?—As Mike
Loulakis relates the lesson learned from a recent
case, contractors cannot simply sit back and raise
unsubstantiated fears about a contamination problem
when faced with an undoable deadline.
-
Silica—The
Next Environmental Issue—Silica exposure
can be deadly. Jeff Slivka discusses the mineral,
how it kills, the workplace hazard, and the insurance
and risk management implications.
-
Why
the COSO Frameworks Need Improvement—Matthew
Leitch looks at the recent "Enterprise Risk Management—Integrated
Framework," pointing out weaknesses that need to
be rectified before it becomes an internal control
standard.
-
Sales
and Use Tax Bonds—Sureties must act quickly
upon receipt of a notice of claim from taxing authorities
to avoid liability for interest and attorney fees.
Marilyn Klinger explains.
We have recently updated IRMI Online to include the latest issues
of our newsletters, The Risk Report,
Captive Insurance Company Reports,
and Strategic RM, as well as
supplements to a number of the reference manuals. See a
summary of all the new
stuff with direct links into the publications.
RIMS 2005: Spitzer's Legacy—Jack
Gibson chronicles the debate over broker compensation and contingency
commissions that took place at the annual RIMS conference, provides
links to other source material on the web, and offers his own thoughts
as to the changes that will occur.
Is a captive the right choice for your company or clients? Learn
the key differences between the various alternative captive approaches
and how they compare to other "ART" programs. Avoid costly mistakes
when formulating your captive business plan.
Spend only 2 days out of the office in this intensive program
led by Kate Westover. Seating is limited—register today for Dallas
or Orlando! Get pricing, see testimonials, and view the
agenda. Plus, obtain insurance CE credit
for most states. Satisfaction guaranteed!
This one-of-a-kind reference manual is the industry's most thorough
explanation of how to allocate risks in all types of contracts.
You'll save hours of drafting time with "boilerplate" insurance
clauses. Use the state-by-state analyses of how the courts interpret
hold harmless and indemnity clauses to bulletproof your clauses.
Explains when and how to require additional insured status. Plus,
many more strategies to protect your company!
New information recently added on these topics:
- Surety bond requirements
- The 2004 additional insured endorsements
- Permissible scope of indemnification in a given
jurisdiction
- CGL insurance requirements in construction contracts
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