A recent FBI survey revealed that 9 out of 10 organizations in the country are victims of some sort of computer security incident, and one-fifth are hit more than 20 times a year. This is not a risk to ignore, and we are making final preparations for the first of three Tech-eRisk seminars—which will be held in San Francisco, Houston, and Washington, DC, starting in a little over a month—to help you get a handle on it. Mike Rossi has updated and expanded this highly rated seminar to ensure he gives you practical knowledge about insurance and contractual risk transfer tactics for tech, media, privacy, and related risks. His "take-away tools" alone—exposure questionnaires, contract checklist, and insurance checklists—are worth the cost of the seminar. We still have space available at all three seminar locations, so make your reservation now. Learn more about Mike, the agenda, dates, locations, and our unique money back guarantee here.

We need five good CPAs. In 2006 one of our objectives for the Construction Risk and Insurance Specialist (CRIS) continuing education program is to get it approved for CPE credit (continuing education for CPAs). The NASBA process for achieving this involves having five CPAs complete each online course and answer a short questionnaire about the course. If you are a CPA, you could help us out by taking one or more of the five core courses and completing the paperwork. Of course, we would waive the normal course fees and they will qualify for insurance CE credit if you need it. If you are an interested CPA, please complete this form to send us your contact information along with a note indicating your interest in helping us get CPE approval for the CRIS courses.

I'm pleased to announce that more than 800 people are enrolled in the CRIS program and 220 have earned the designation since we launched it last March. For more information about CRIS check this site.

Thank you for subscribing to IRMI update.

Have a great day.

Jack

Jack P. Gibson, CPCU, CRIS, ARM
President
IRMI

Risk Tip

Disposable Cameras Document Losses—Disposable cameras are a cheap tool to document losses. Have a camera at each location and in every vehicle. Urge employees to take lots of photos of any accident or reported incident—location, each vehicle, surrounding area. Pictures taken within minutes of an accident can be quite useful in a dispute.

By: Scott Simmonds
Insurance Consultants of Maine
Saco, ME
www.endwimpyinsurance.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. We'll acknowledge your contribution as we did for Scott.

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New Expert Commentary

There are now 751 risk management and insurance articles on IRMI.com. Below you'll find summaries of some recent additions with links to the articles.

Additional Insured Endorsements—A Potential Minefield (Part 1)—In this first of three articles, Craig Stanovich looks at the connection between the named insured and additional insured necessary for CGL coverage.
Insurance Products for Uninsurable Chronic Medical Conditions—The solution for those deemed uninsurable for most life, health, disability, and long-term care products is personal risk management. Jack Hungelmann explains.
What To Do about Catastrophic Loss—Peter Polstein looks outside the box to find a workable solution to covering catastrophes that's less about insurance and more about facilitating a method to solve a problem.
Seven Frontiers of Internal Control and Risk Management—In discussing his seven frontiers of internal control and risk management, Matthew Leitch looks at the importance of carefully designed and implemented risk control measures.
Contract Finality—What a Concept!—Agreeing to terms and conditions of a reinsurance contract on the day of placement may reduce disputes arising out of ambiguous contract terms. Larry Schiffer explains.
How To Recognize and Avoid Health Insurance Fraud—Tim Ryles explains that being alert to insurance scams can be helpful in avoiding victimization at the hands of con artists operating through unauthorized insurers.
Variations in "Fraud/Dishonesty" Exclusions in Tech/Media/Ebusiness Policies—In conjunction with the Tech-eRisk 2006 Seminar, Mike Rossi continues his series on wording issues in newer liability insurance policies.
Investment Strategies for Captives—Michael Mead discusses how captive premiums and reserves can grow over time and how these funds are held and invested.

Contractual Risk Transfer Tactics For Technology Contracts

Are you concerned about the proper use of indemnity agreements and insurance requirements in technology-related contracts? If so, you should attend Tech-eRisk 2006. This highly acclaimed and updated seminar will be held in three cities across the country in March and April. Register or learn more about the agenda, dates, locations, and the dynamic program presenter here.

Your View—Terrorism Insurance Solutions

With the passing of the 2-year TRIA extension, insurance buyers and sellers now have a temporary reprieve from the challenges of handling terrorism exposures without a federal backstop. In IRMI Update 128, Jack Gibson expressed concern that no one is leading the industry toward a long term solution and asked readers for their thoughts about solving the terrorism insurance dilemma. Below are a few responses.

Because of some work with an ABA taskforce looking at TRIA, I was a fairly close observer of the renewal process. It looks to me like the 2-year renewal is designed to result in a final "sunset" of TRIA at the end of 2007, prior to any significant change in administration. I think it is unlikely that any innovative solution will come out of the working group in light of the general tenor of the last Treasury report, and while the industry was very active in late 2005, I don't see any real consensus developing on how to address this. So, my prediction is that TRIA will end in 2007 unless there is another major terrorist attack, which will increase attention on the issue and motivate various constituencies to seek a meaningful more long-term solution.)

—Jeffrey Thomas, Associate Dean and Professor of Law, University of Missouri, Kansas City School of Law, Kansas City

The insurance industry has spent considerable time and effort wrestling with the impact of terrorism and how to deal with it. The AIA and other insurance industry trade groups sponsored a "Workers Compensation Reinsurance Pool Feasibility Study" and a research project on "The Economic Effects of Federal Participation in Terrorism Risk." The industry has yet to find any near term viable alternative. I don't believe this is due to a lack of industry leadership or creativity, but rather to the cruel reality of the terrorism threat.

—Jim Nau, General Manager, Residual Markets,
NCCI, Boca Raton, FL

As the largest commercial servicer/lender in the world, we have a large stake in the availability and affordability of terrorism coverage. Collateralized properties which provide security for loans without terrorism coverage is much too difficult a risk to self-insure. There are a number of organizations who have worked on preliminary proposals to develop markets which depend more on industry and less by government, such as AON's proposal. What's to prevent the brokerage, insurers/reinsurers, state insurance department, private real estate communities from getting together and working out a solution? How can we get this type of initiative off the ground?

—Donald Glitz, Vice President, Corporate Insurance Risk Manager, GMAC Commercial Mortgage Holding Corp., Horsham, PA

Several lead congressional members need to be courageous and help explain how risk transfer through either insurance or self-insurance will be impacted if no terrorism coverage is available, and become aware it is just like war risk -- beyond anyone's ability to predict the frequency or severity, and therefore not possible to accurately price. It results from random acts of unkindness. Even Congress should be able to recognize that!

—John Hawley, Montrose, PA

The TRIA definition of terrorism is too narrow and the need for a catastrophic backstop extends beyond terrorism. The most beneficial thing would be to define what is insurable as opposed to the uninsurable and revise funding regulation to allow for capital accumulation for the as yet "unknown event." This would require close regulation to avoid abuse but also foster the broadest capability of the free market. Governmental involvement could be structured to provide backup support to such a mechanism.

—William White, Business Insurance Manager,
Gundermann & Gundermann, Huntington, NY

I do not believe there is any one in the industry willing to develop a plan for terrorism insurance. Without spreading the risk and premium (i.e., include a charge with no opt-out option) there is probably no way to provide coverage. Only other option would be to pass cost off in premiums under reinsurance charge .... assuming reinsurers would be willing to participate.

—Jim Sammons, Producer,
Watkins Insurance Group, Austin, TX

For some coverages, it seems logical to include TRIA, and for others, totally illogical. If mandated by law or executive order for insurers to include it on certain policies, the government should backstop it perhaps the way they backstop flood. Like flood, or other types of coverage where it is voluntary, people should be able to buy it but pay the going rate through a consortium of carriers which view this as a revenue opportunity. If this is a loser coverage, no carrier should HAVE to provide it unless they can charge enough for it to make it profitable actuarially.

The industry and insurance buyers came together years ago in the 1980s to form ACE and XL due to the fact that there was a very limited market for excess liability insurance. Why not a similar response for TRIA?

—Jim Bonzon, Sr. Vice President,
The Warren Group, St. Louis, MO

Frankly, I agree that the insuring community will fail to resolve the terrorism issue. The reason is that the peril of terrorism is a lot like flood, in that only those businesses who fear they are exposed to the peril will buy insurance and that is a small percentage of the insured exposures. If the insurance community cannot "spread the risk" they will not step up to the plate because they won't perceive an ability to make a profit.

—Linda Minson, Commercial Lines Sales,
Cretcher-Lynch & Company, Kansas City, MO

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IRMI Update—Issue #129

In This Issue