By: Swiss RE Corporate Solutions

*This article was featured in our May 2020 Wisconsin Independent Agent Magazine. Click here to read the full May 2020 issue. 

You are all very aware of the events of the last several weeks and the Coronavirus. We are not health experts and there are many others more qualified to give you that advice. We CAN, however, give advice regarding how to reduce the likelihood of an errors and omissions exposure as a result of this event. We have already become aware of some attorneys who are trying to take advantage of this situation for monetary gain against insurance agents. Our advice during this event is no different from what we have said in the past. If your agency has developed good practices, you will be better positioned to avoid problems. Here are the practices of a good insurance agency:

• DON’T MAKE CLAIMS DECISIONS! Let the insurance carriers do that. 

• DON’T ADVISE YOUR CUSTOMERS IF CORONAVIRUS related    items are COVERED OR NOT! Let the insurance carriers do that. 

• If a carrier takes the position that losses arising from the Coronavirus are not, or may not be covered, do not engage in advocacy asserting that “We thought it was covered...” That will simply be used by your client to prove that you knew the client wanted coverage for perils like the Coronavirus, but you failed to procure coverage.

• Report all claims and potential claims to EACH AND EVERY    CARRIER that could potentially have a policy that could apply. This includes CGL, Personal lines, Umbrella, Excess, Workers Compensation, Specialty and any other policy in place for your    customers.

• USE THE RESOURCES PROVIDED BY YOU BY THE IIABA. It is a valuable resource for you, your staff and your agency that provides many sources of information. 

• Be empathetic, but don’t tell anyone that something is covered    or not. You can continue to tell them you feel sympathy for all affected by the Coronavirus, but customers MUST report a claim to their insurance carrier to determine if there is any coverage for the event.

• Remember, if you executed an agency agreement with one or more insurance companies, you MUST report all claims or potential claims as required by that agreement, even if your customer tells you not to do so.

• Maintain vigilant contact with your insurance carriers to determine what action THEY want you to take.

• DOCUMENT DOCUMENT DOCUMENT!!! This continues to be

the foundation of sound E&O risk management. DOCUMENT 

EACH AND EVERY TELEPHONE CONVERSATION, EMAIL, 

TEXT, TWEET, OR ANY OTHER TYPE OF COMMUNICATION 

WITH YOUR CUSTOMERS!

• Assume that any telephone conversations with your customers or carrier claims representatives ARE BEING RECORDED. While some states prohibit recording of telephone conversations without advising that they are doing so, IT DOESN’T STOP SOME PEOPLE FROM DOING SO. 

• If you use social media for your business, make sure it is up to    date! Do not make any promises that something may or may not have been covered by insurance companies and policies. 

• DO NOT GIVE ANY STATEMENTS, RECORDED OR OTHERWISE, WITHOUT FIRST CONTACTING YOUR E&O PROVIDER. The Swiss Re Corporate Solutions/Westport Insurance Company/First Specialty Insurance Company claims staff are available if you have any questions about any communications you receive. 

• If you have a conversation with your customer that leads you to believe that they may be fishing to make a claim against you, DO NOT HESITATE to contact our claims department. 

• DON’T MAKE CLAIMS DECISIONS! DON’T ADVISE YOUR 

CUSTOMERS IF SOMETHING IS COVERED NOR NOT! Let the

insurance carriers do that. We know this was stated before, but it must be ingrained in your mind. 

• If the Coronavirus ends up being declared a “catastrophe” by 

the ISO Property Claims Service, you may be eligible under your Westport policy for “Cat Extra Expense” benefits: “CATASTROPHE EXTRA EXPENSE. We will pay up to $25,000 per catastrophe subject to a per POLICY PERIOD aggregate limit of $50,000 for the actual extra expenses incurred by you as a result of a catastrophe during the POLICY PERIOD beginning on the date of a catastrophe and for thirty (30) days thereafter. The extra expense incurred must be incurred by you only to assist in the insurance claims processing needs of your customer(s) who have been affected by the catastrophe. The catastrophe must be a declared catastrophe by the Property Claims Services. A $500 deductible for each catastrophe shall apply. Limits provided by this paragraph are part of and not in addition to the limits

provided by this POLICY.”

We hope that this will help you as this event progresses. If you should have any questions, please let us know. 

By: Josh Johanningmeier | IIAW General Counsel

* This article was featured in our April 2020 Wisconsin Independent Agent Magazine. Click here to read the full April 2020 issue. 

Federal Court Rules Business owners Policy Covers Ransomware Attack Damages

In late January, the United States District Court for the District of Maryland, in National Ink & Stitch, LLC v. State Auto Property & Casualty Insurance Co., ruled that a business owners policy provided coverage for an embroidery and screen-printing business that had fallen victim to a ransomware attack.  The court described its decision as a continuation of a nationwide trend of courts finding coverage for loss of data or systems functionality following a cyber-attack.  Implicit in the court’s decision may have been a recognition of the increasing frequency and severity of ransomware attacks across the country.  It is critical that you and your agencies also take note of these trends.

The National Ink & Stitch Case and Decision

In December 2016, National Ink & Stitch suffered a ransomware attack, which prevented it from accessing all art files and other data contained on its server along with most of its software.  The attacker demanded payment in the form of bitcoin to release access to the software and data, which National Ink & Stitch paid.  However, the attacker then requested further payment.  At that point, National Ink & Stitch contracted with a security company to replace and reinstall its software.  While the business’s computers functioned after the reinstall, the new protective software slowed the system.  Further, National Ink & Stitch still does not have access to the lost data, meaning it has to reproduce all of the lost art files.  Finally, computer experts found that it was likely there are still remnants of the virus on the business’s computers, which could ultimately “re-infect the entire system.”

Due to past and continuing damages resulting from the attack, National Ink & Stitch presented a claim to its insurer, State Auto, for the cost of replacing its computer system.  The relevant business owners policy states that State Auto “will pay for direct physical loss of or damage to Covered Property…resulting from any Covered Cause of Loss.”  The policy defines “Covered Property” to include “Electronic Media and Records (Including Software).”  However, State Auto denied the claim, finding its insured did not experience “direct physical loss of or damage to” its computer system under the policy. National Ink & Stitch then sued to resolve the coverage dispute.

Ultimately, the court held that State Auto’s policy did provide coverage for National Ink & Stitch’s losses.  The court began with the policy language, which explicitly includes “data” and “software” within the definitions of “Covered Property.”  The court also construed the phrase “physical loss or damage” to include the inefficiency of National Ink & Stitch’s computer system following the installation of protective software, finding that a computer can “suffer ‘damage’ without becoming completely inoperable.”  While the court came to its conclusions based on an analysis of Maryland state law, it noted that its interpretation tracks with holdings “reached by the majority of courts interpreting similar policies.”

 Now What?

Before getting to the potential effects of this ruling on your agencies and clients, it is important to understand the basics.  Ransomware is a computer virus that effectively holds a computer, or an entire system, hostage until a fee is paid.  Ransomware attacks have become increasingly common in recent years.  In the first four months of 2019 alone, there were more than 40 million ransomware detections.  Experts predict that by 2021, a business will fall victim to a ransomware attack every 11 seconds.  Further, the costs for businesses targeted with ransomware can be incredibly high.  The total damages associated with ransomware in 2019 surpassed $11.5 billion, or an average of $141,000 per incident.  In other words, this problem is common, it’s expensive, and it’s not going away any time soon. 

So what does this all mean for your agency?  To start, as reflected by the National Ink & Stitch decision, courts across the country have begun to construe business owners policies to cover damages arising from ransomware attacks.  Given the severity and frequency of the problem, and its effects on organizations ranging from multi-national corporations to small towns, courts are unlikely to reverse this trend.  As a result, it is critical that you and your agencies understand the policy language you are presenting to your clients and the coverage they are requesting.  Further, it is increasingly important to have connections with consultants, lawyers or firms that have expertise in not only insurance law, but in the expanding field of data privacy and cybersecurity, so that evaluating response strategy, security planning and coverage can be accomplished.  

Conclusion

Ransomware attacks may soon become a daily headache for your business clients.  In order to recoup some of the costs associated with these attacks, those clients are likely to bring claims under their business owners policies.  If past is prelude, courts may be sympathetic to those claims and you need to be prepared to handle coverage requests and claims arising from these attacks.

By: Matt Banaszynski | IIAW CEO

* This article was featured in our April 2020 Wisconsin Independent Insurance Agent Magazine. Read the full April issue here. 

The Coronarita is a drink that seems to defy gravity. You would expect that, when you flip the beer upside down in your cocktail, the mixture would overflow and spill all over the place. But curiously, it all stays in place.

How the Coronarita works has to do with pressure. If you flipped a bottle of Corona upside down normally, the beer would fall out and be replaced inside the bottle by air. But, in a Coronarita, the mouth of the bottle is surrounded by liquid, which prevents air from entering the bottle. The air that is inside the bottle creates pressure that keeps the beer from spilling out into the margarita. But, when you sip on the margarita with a straw, the liquid level in the glass will go down, and the beer inside the bottle will then flow into the glass to make up for the missing liquid.

Matt's Mixology - Coronarita

Ingredients: 

• Ice cubes

• Rimming salt

• 1 1/2 oz. silver tequila

• 3 oz. lime sour mix

• 1 12 oz. bottle of Corona, Dos Equis, Pacifico, Tecate, Carta Blanca, Modelo or your favorite Mexican beer

Steps to Make It: 

1. Pour ice cubes, tequila, triple sec, and lime sour mix into a cocktail shaker.

2. Shake the mixture and strain it into a salted pint glass.

3. Quickly flip the beer upside down and place it into the drink, so it dispenses slowly as you drink your delicious Coronarita from a straw.

Whether you call it a Coronarita, a Mexican Bulldog Margarita, or a Mexican Car Crash, this tequila-inspired Mexican drink recipe is sure to be a hit with your friends and family. Though this drink is not always served in a traditional margarita glass, it still delivers on the familiar and refreshing flavors of two classic beverages. Perfect for Cinco de Mayo!

By Misha Lee | IIAW Lobbyist

This article was featured in our April 2020 Wisconsin Independent Agent Magazine. Click here to see our full April 2020 magazine. 

NAIC Model Cybersecurity Bill Advances

NAIC model legislation creating cybersecurity standards for the insurance industry is quickly moving through the Wisconsin Legislature. Assembly Bill 819 was approved on a bi-partisan, voice vote in the Assembly and awaits final approval from the Senate in late March. We anticipate unanimous approval when the Senate convenes its final floor period. The legislation creates standards for insurance businesses that will help protect private consumer information from data breaches. Under the bill, businesses are required to conduct risk assessments, develop information security programs based on those assessments, and submit those plans to the Office of the Commissioner of Insurance (OCI).

During development of the model legislation last year, IIAW worked with OCI’s legal staff to advocate for an exemption for our members with fewer than 25 employees, or annual revenues under $5 million, or assets less than $10 million from having to comply with the provisions in the bill. The draft model had originally only exempted businesses with fewer than 10 employees. In addition, IIAW worked with the department to ensure that our member agencies would not be directly responsible for cybersecurity events that occur in a system maintained by an outside third-party service provider. The initial draft model had included this burdensome requirement.

So far, eight states have adopted a version of the NAIC model Law and more like Wisconsin are on the way.

Sweeping Data Privacy Legislation Fails 

With Industry Opposition

River Falls Republican State Representative Shannon Zimmerman unveiled late in the legislative session three bills he headlined, the Wisconsin Data Privacy Act (WDPA), that would fine companies up to $20 million or assess a portion of their annual revenue if found in violation of rules established in the legislation. IIAW opposed these bills at a public hearing held in February by the Assembly Science and Technology Committee. These sweeping bills, if enacted into law, would have unnecessarily created millions of dollars in added compliance costs for our industry and placed significant regulatory burdens on agents. Furthermore, the legislation overlooks the importance of how innovation, new technologies and the use of data within the insurance industry is benefiting consumers and enhancing marketplace competition. Property and Casualty insurance is a heavily state-regulated industry and it’s important that any proposals related to data security and privacy take into account existing laws and regulations administered by the Office of the Commissioner of Insurance (OCI). The Assembly has adjourned session without any action on these proposals. See Assembly Bill 870, Assembly Bill 871, and Assembly Bill 872.

Gov. Evers Signs Public Adjuster 

Consumer Protection Bill

Legislation brought forward this session by State Representative David Steffen (R-Green Bay) and State Senator Dan Feyen (R-Fond du Lac) will make registration of public adjusters part of Wisconsin law following a recent bill signing by Governor Tony Evers. The bi-partisan legislation, Assembly Bill 357, requires registration with the Office of the Commissioner of Insurance (OCI) for nonresident public adjusters not already registered with their home state. Those registered as nonresident public adjusters will be subject to examination, continuing education and fee requirements. Wisconsin resident public adjuster have the option of registering with OCI and are also subject to requirements in the bill related to contract formation, certain compensation arrangements and professional conduct.

Wisconsin becomes the 46th state to regulate public adjusters in some manner. Matt Banaszynski of the IIAW testified in support of the bill highlighting in his testimony the importance of protecting Wisconsin homeowners from increasing public adjuster scams that have been occurring in the state following natural disasters.

Gov. Evers Signs 45-Day Renewal With 

Altered Terms Notification Bill

Governor Evers also signed legislation supported by the Wisconsin Insurance Alliance (WIA) that shortens the time requirement on personal lines property and casualty coverages from the current 60-day requirement to 45 days on a renewal notification that includes less favorable terms or higher premiums. Twenty-eight states have notice requirements of 30 days or less. Eleven states use the 45-day requirement and five states have a 60-day notification requirement. The WIA had initially asked for a 30-day notice and the final bill as signed by the Governor reflects the good-faith negotiations between the independent insurance agent community and insurance carriers.

By: Matt Banaszynski | CEO IIAW

During this time, COVID-19 is creating many obstacles for businesses across the country. Whether it requires small businesses to close their doors for the time being or large corporations to activate their disaster response plan, the consequences are creating road bumps for everyone. Governor Evers issued a “Safer at Home” order on March 24th and the OCI has released a variety of recommendations and requirements for insurers. Independent agents are deemed as “essential businesses” (as of the time of this writing) and for the time being, allowed to stay open. However, agencies are encouraged to use their discretion in determining essential functions for essential employees. For example, an agency may determine it is appropriate to close to walk-in visitors, while remaining open for business, and available to consumers through calls and e-mail.  Subsequently, non-essential staff with the capabilities to work remote are directed to work from home. 

The IIAW addressed the issue early by introducing a COVID-19 Online Resource Center (www.iiaw.com/coronavirus), and began sending out “text alerts” when new information is announced or updated online. The team continues to create new resources to assist our members with their operations. It’s critical to stay up-to-date with information and be agile in the changing environment. As you continue to work during the pandemic, here are some resources and considerations for your agency as you implement new policies.

IIAW’s COVID-19 Resource Center

IIAW’s COVID-19 Resource Center contains all of the resources your agency will need to stay educated on the topic and tools you can implement in your agency. The page includes 4 different sections: Communicating to Customers, Agency Considerations for Employees, General Information and Webinars. The page is updated daily to provide our members with the latest news and resources, some of which can be shared with your clients. 

If you haven’t already, join our text alerts by texting “IIAW” to (833) 384-0094. You will receive a text alerting you to when important information is announced and uploaded to our resource center.

Virtual Learning (CE)

The IIAW also offers a variety of continuing education classes online. Almost daily, there is a new CE class presented via webinar for agents to stay up to date on their CE credits. You may have employees working from home and unable to work at full-capacity or one of your employee’s license renewal is coming up. This is a great time to allow them to complete all their continuing education credits.  Our online CE classes are conducted by professional instructors and accessible on any computer. Don’t let your license expire, take an online CE class with the IIAW!

Click here to view all of the available online CE courses.

Remote Access

Does your staff have the capability to connect and work remotely? Do they have or can they be provided with a computer at home? Do they have internet access from home? If they can get online, can they access work files? This would be the time to check the “cloud access” of your programs (Ex. AMS), server and files with your IT professional. If you need other options for remote access, consider programs like Logmein, Gotomypc, Remotepc, Teamviewer and others. Need phone access as well? If your agency does not have a VOIP system, it may be difficult to set up call forwarding and other features. Host My Calls are a solution worth exploring. The staff at the IIAW all have remote workstations, a VOIP phone system in place and VPN’s setup on their computers to access work files not stored in the Agency Management System or Association Management System. 

Agency Management Systems (AMS)

Hopefully your agency management system has a cloud option, app or other online/remote interface (perhaps a VPN connection) that allows staff to enter and retrieve data. If not, this will likely be a vital question for your remote work plan. If your agency doesn’t possess these capabilities, you should develop a system where information is shared with one key contact at your agency who can enter the data. Use an Excel form or other template (Google Sheets is a free online option) that promotes standardization so that there aren’t lapses or E&O exposures created. Then review the data when everyone returns to work. The staff at the IIAW has their AMS and Association Management systems on the cloud.

Conferencing

To continue having meetings and discussions with your staff, it will be important to set up conference calls, video chats, etc. There are free resources out there like Skype, Google Hangouts, and Lifesize. Some require downloads of software and may have limits, but your agency can investigate which one may be the best fit. iPhones and Android phones allow “Add Call” as an option for small group conferencing– just select it from your screen (assuming your phone’s service provider allows it). Other options may be conference call services like UberConference or using a free trial from a service like GoToMeeting or Join.Me. The staff at the IIAW uses GoToMeeting.

Collaboration

Have projects that your team needs to work together on in a shared format? Programs like Slack, Microsoft Teams, Basecamp, Asana and others can give you a platform to communicate, work on files, update project statuses and pool resources. Facebook even has a solution called Workplace. The staff at the IIAW uses Slack. 

Client Tools

Your clients will have new access needs as well. Look at the offerings made available by your carriers for client portals apps and other tools. Consider programs like DocuSign for digital signature, ePayPolicy for online payments and other programs that allow remote ease of doing business. The IIAW uses DocuSign and ePayPolicy. 

Promote Routines

Try to provide some structure to the group as they learn this new environment. Schedule conference calls for your staff, encourage daily team meetings, have video happy hours, virtual lunches or other social options like virtual games. Suggest people create a specific workspace at home and develop a workday routine. 

Encourage Strict Cyber Security Measures

On top of everything else, cyber security is an even greater concern in times like this. When possible, encourage your staff to use a secure wi-fi connection or set up the security on their home’s internet if they haven’t already. Ask them to be extra vigilant on opening emails and links. Have them confirm any unusual requests like wire transfers or monetary transactions they receive by phone with their supervisor. (

Be a Resource

Do what you do best during times of hardship for your clients – be a resource. Try to provide useful information on business continuity, how to apply for government assistance programs, help promote initiatives to support your community and show the power of small business. One platform to consider using to help spread your message and market you and your agency is SoapBox.

Please reach out to the IIAW if you need further assistance and have any questions regarding the transition. Remember that our COVID-19 Resource Center will continue to be updated with the most recent news and resources for you to use at your agency. Click here for a downloadable "Become a Digital Agency" handout. 

Source:  Brian Hunter of the Insurors of “Remote Work Resources for Your Agency” article