IRMI Update—Issue #129
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
January 25, 2006
In This Issue
Colleague,
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
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,
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acknowledge your contribution as we did for Scott.
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phone in tandem with computer demonstrations. Candidates must have 3 or more
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If you have commercial lines experience and live or want to live in the Dallas
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with benefits. Send Resume and salary history to .
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.
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.
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
-
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
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