It’s Still a Big Risk, Even Though Sometimes You Can’t See It

You’ve been reading about it, hearing about it and have potentially been affected by it.  Yet, most people have yet to protect themselves from the potential of a loss due to a cyber-attack or a data breach.  It’s becoming more and more apparent that the new order of terrorism lies in creating havoc within the databases of companies of all sizes.  Sometimes, the act of invasion is merely to disrupt and to make a statement, while most of the time, the invasion is seeking records that can provide saleable information to the wider criminal marketplace.    And, as society around the globe becomes more desperate, the risk grows.  Following is a summary of some of the largest breaches of 2014.  There were thousands of others that you won’t read about, unless you’re the victim, of course.

January, 2014.  Michaels had over 3 million customer’s information compromised.  During the same month, Target followed up with an episode that exposed over 70 million customer names, addresses, phone numbers and email addresses.  Fortunately, there was some coverage for Target.  In a quarterly report to shareholders, Target reported that they have currently accounted for about $200 million in expenses relating to the breach, of which $90 million was collected as an insured loss.

August, 2014.  Community Health Systems, which operates 206 hospitals across 28 states, had hackers from China uncover information pertaining to 4.5 million patients.  Although personal health information was not compromised, social security numbers and other personal information were captured, exposing the system to potential for litigation.

September, 2014.  Home Depot discovered that approximately 56 million shopper’s credit card information and about 53 million email addresses were gathered as a result of malware installed for the self-checkout operation between April and September.  There are currently about 44 lawsuits resulting from the cyber-attack.

October, 2014. JP Morgan experienced the effects of Russian hackers affecting 76 million households and information including names, addresses, phone numbers and email addresses.  Fortunately, account numbers were not compromised.  Although no unusual fraud activity was observed as a result of the breach, it does portray the risk is real.  Additionally, nine other financial institutions were hacked by the same group of Russian instigators.

November, 2014.  The US postal service had over 800,000 employee’s personal information compromised.

Although those were situations that received attention from the press, there are daily occurrences to small businesses and individuals that you won’t read or hear about, unless it happens to you. 

Cyber liability and data breach is becoming a common area of risk to insure against.  Make sure that you review your coverage and include protection for cyber liability and data breach occurrences. Sometimes what you can’t see can hurt you. 

Teach Risk While They’re Young

If you have a child in high school and, more importantly, entering college, there’s no better time than now to start teaching the fundamentals of managing risk.  You’ve been doing it for years with common statements like, “Stop, Look and Listen.”  But as they grow into young adults, there are new areas that deserve your lessons.  Following are some areas worth talking about before they become claims.

Discuss dangerous situations, especially surrounding automobiles.  If your child has a car, explain the implications of lending that car to another driver.  It’s enough of a risk for you to have your child behind the wheel of your car, not to mention the increased risk of an unknown entity.  Certainly, driving under the influence, texting while driving and any other means of distracted driving is worth a conversation, too.  There are dozens of statistics surrounding automobile accidents and fatalities. Unfortunately, most occur when one of the drivers was either under the influence or driving while distracted.

Stay close to your child through social media.  Remind him or her that anything posted to a social media platform is similar to writing on a wall in permanent marker with no way to paint over it.  Talk about instances whereby an individual has been harmed as a result of a social media mishap.  Additionally, if you are a “Friend” on Facebook, Twitter or any one of the other social media outlets, it’s likely that the communications will be well thought out prior to posting, knowing that you may see it.  There have been cases whereby a son or daughter of a high net worth family has been implicated through a bad social media exchange leading to losses.  Good coaching can avoid those problems.

Make sure that your child understands how to protect assets.  First things first, if away at school and the home address is the main address for your son or daughter, then your homeowner’s policy will generally cover losses, subject to your policy limits.  However, if he or she has rented an apartment, that’s not always the case.  Be sure to review your coverage to understand what is and what isn’t covered when they live away from home.  Renter’s policies can be very economical and useful, especially when a laptop or television set is stolen from your kid’s apartment.  Discuss how to protect belongings by staying organized, locking up financial information in a secure location and keeping valuables securely out of the sight of visitors.  When at school, sometimes a best friend can be the most desperate perpetrator of a robbery.  You can’t teach enough “Street Smarts” to your children.

Finally, make sure that your coverage adequately covers you for losses, notwithstanding the amount of time that you’ve spent preparing your child.  Umbrella liability coverage in an amount proportional to your net worth is very important. That’s because if there is an event that results in a lawsuit, the discovery process will undoubtedly uncover your net worth, which provides plaintiff’s attorneys a basis for establishing damages.  It also makes sense to have a separate policy for valuables when there is jewelry, artwork, collections or any other items of value that would create a significant loss if damaged or stolen.

I’ll conclude with a quick story.  A boy was at college and pledged a fraternity.  He was a successful student and ultimately became the president of the house.  During one popular social event that the fraternity sponsors on an annual basis, a freshman pledge decided to perform an act that only a cartoon character would attempt without injury.  Unfortunately, for everyone involved, the pledge was injured seriously and has lifelong implications.  A lawsuit followed by the parents of the injured individual.  A healthy claim was paid.  Guess where the money came from?  The president of the house father’s homeowner’s policy. The father has a significant net worth and typically, the lawsuit follows the money.  Oh, and by the way, the president of the fraternity is legally responsible for the actions of the house. 

Moral of the story, it pays to teach your children how to manage risk early.

Be Aware of Things that Can Affect Your Homeowners Premium

Have you ever wondered how your insurance premium is determined?  Individuals insure property through transfer of risk, whereby the individual pays a relatively small premium to an insurance company for protection against a much larger potential loss.  The concept, although simple, involves a great degree of complexity behind the scenes.  Let’s keep it simple by illustrating a few of the things that can affect how much you pay for insurance.

First and foremost is your credit score.  Typically, you will pay a higher premium for coverage if the insurance company doesn’t trust your creditworthiness.  Some companies will deny coverage altogether if your credit score is too low.  Good credit can assist in keeping your premiums lower.

If you have pets, it might matter.  Most domestic pets are considered fine and don’t necessarily create a heightened risk.  However, attack dogs or breeds that are aggressive by nature and other wild animals not customarily found in most homes can certainly create a higher premium.  Exotic animals, while interesting, are not interesting to the underwriter when analyzing risk.  Don’t be surprised if your German Shepherd is scrutinized during the underwriting process.

Recreational items on your property such as pools, trampolines, climbing walls, etc. can also inflate premiums.  According to the Insurance Information Institute (III), there are approximately 92,000 hospital visits per year for injuries related to trampolines.  Swimming pools account for greater than 1000 deaths per year.  Be sure to mitigate risk by having appropriate barricades which prevent people from using items when you’re not available to supervise.  Additionally, avoid risky behavior while using recreational equipment.

If your home is too far away from the fire department and/or a fire hydrant, it can also create a more expensive policy.  Concurrently, poor maintenance procedures and preparations for weather events, such as heavy snow, rain, winds, etc. can be examined by the insurance company, thus creating increased premiums or even rejection of the property. According to the III, over 17% of losses in 2012 resulted from leaking or freezing pipes and ensuing water damage.  Be sure to inspect insulation, roof tiles, gutters and any other structural components that assist in protecting the home from the elements to ensure that they are in the condition that they should be to perform in normal and severe weather conditions.  Many insurance carriers provide services to assist you in mitigating future risks through a site analysis.

Where you live can make a difference for many reasons.  If you live on the coast, hurricane risks can create higher premiums.  If your neighborhood has a high crime rate, that can also create a higher premium, due to the increased likelihood of a robbery and/or vandalism. 

Finally, the reason you invest in insurance is to protect you from a loss.  While that fact is true, keep in mind that the frequency of claims can have a direct effect on your premium.  Therefore, in order to keep your premiums affordable, prepare your property and your procedures to avoid losses.  That way, when a loss does occur, your insurance company will likely keep you insured at a reasonable premium level.  They do plan for losses; however, they do have limits.  Too many losses and they might send you searching for alternative coverage.

So, while you can’t control all issues that affect your insurance premium, at least now you have a short list of some things you can pay attention to in order to save.

Makes You Want To SHOP Around

If you run a small business, you’ve likely heard of the Small Business Health Options Program, known as SHOP.  As a subset of the affordable care act, the SHOP was created to attempt to assist small businesses in acquiring affordable health care for their employees.  While the intentions are good, many small businesses might find it difficult to participate in the SHOP and receive the tax credits that are part of the program.

Here are a few details that are important to know regarding the SHOP in Illinois for 2015:

·       In order to participate in the SHOP, you must have fewer than 50 Full time equivalent (FTE) employees.

·       For 2015, the employer can only offer one qualified SHOP plan to its employees.[1]

·       In order to take advantage of the tax credit that is available, the following criteria must be met:

o   You must have less than 25 FTE employees.

o   Average earnings for each employee must be less than $50,800.[2]

o   The employer must pay at least 50% of the Employee Only portion of the premium.

o   70% of the employees must participate.

o   Coverage must be made available to all employees.[3]

o   The tax credit requires SHOP Marketplace coverage.

o   If a tax credit is qualified for, it is available for 2 consecutive years and can be up to 50% for for-profit companies and 35% for not-for-profit entities.

As you might conclude from the requirements, there are many small businesses that don’t qualify for a tax credit or for participating in the SHOP at all.  If you’re a very small company with two owners operating the entity and no other employees, the SHOP is really not an option. 

You will be hearing a lot about the SHOP in the coming weeks as we approach Open Enrollment.  While the SHOP might provide a solution for some companies, unfortunately, the hype will disappoint far more as they realize the caveats that come with qualifying for the tax credits. They are not realistic for their circumstance.

Therefore, before you get too excited about the SHOP, it might be wise for you to shop around.  The market, while inflated as a result of new coverage requirements and taxes, provides other alternatives for those that don’t fall into the mold required by SHOP.  And, at least company paid premiums for group coverage are still tax deductible expenses.[4]

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[1] In 2016, it is projected that there will be more choice available for each employee.

[2] The following persons would not be included in computing the number of employees and used in the earnings computation:  Owner, Partner, Shareholder of an S Corp., Owner of more than 5% of another business, family.  The income qualification limit is subject to cost of living adjustments on an annual basis.  The limit was $50,000 in 2014.

[3] This is a requirement to participate in the SHOP, notwithstanding the eligibility for a tax credit.

[4] Company paid premiums for Individual coverage (Not part of a group plan) are NOT tax deductible.

Are You Prepared for the Breach?

Does your company use computers for storing data, including private information?  Does it generate revenue online?  Do your employees use email?  A “YES” answer to any of those questions is the reason to cover your risk of a cyber- attack that results in a data breach.

A data breach is an event that compromises personally identifiable information.  It can be caused by hackers, malfunctioning technology, human error, a faulty transaction or simply lost or improperly disposed data.  The effects on your small business could be devastating, as you will be responsible for many activities including credit monitoring for those people affected.  Also, you will have to invest in an analysis into how the breach occurred and steps involved, preventing future occurrences.

Just recently, companies of all sizes have been talking about cyber-attacks and the need for data breach coverage.  Something as simple as sending an infected email that results in the loss of a third party’s private information can result in a liability.  And, contrary to public belief, you don’t need to be Target or Home Depot or Jimmy Johns to be concerned about a risk to your business.  Most data breaches occur to small and mid-size businesses and frequently never hit the news.  Visa estimates that 85% of data breaches occur at the small business level.

Data Breach covers the insured entity for third party claims relating to privacy injury and identity theft.  When a breach occurs, the coverage typically includes costs necessary to notify people of the breach, costs to indemnify the injured party and, in certain cases, the costs for forensic work to determine how the breach occurred and to assist in preventing future incidents. 

A recent study by the Ponemon institute, which studies data breaches, estimated an average post-breach cost of $188 per record. [1]  Those expenses can add up quickly and can ruin many small businesses if coverage has not been implemented prior to the breach.  A simple example can provide the proverbial wake-up call. 

A restaurant owner experiences a hacker attack whereby credit card numbers are stolen.  Assuming 1600 customer records were affected, the estimated cost would be $102,400.[2]  That cost is before the costs associated with lost business and reduced productivity due to the breach.  Data breach coverage becomes a very small price to pay when compared to the costs of dealing with a breach event without existing coverage.

Here are some more facts to help you understand the importance of protecting your business:

40% of data breach cases result from people making mistakes.

36% result from system glitches, such as software updates that expose sensitive private files.

24% of data breach cases are from malicious and criminal attacks.

Don’t be a victim of our evolving technological environment.  Talk to your broker about cyber liability or data breach coverage to protect your business from the dreaded risk of a data breach.

About Hipskind Seyfarth Risk Solutions

Hipskind Seyfarth Risk Solutions offers a wide-range of insurance products for individuals and businesses of all sizes. HS Risk Solutions, located in Chicago, provides expertise in the area of health and ancillary benefits and property and casualty insurance for businesses and individuals. For more information, visit HS Risk Solutions website at www.hsrisksolutions.com or on Facebook atwww.facebook.com/HSRiskSolutions. 

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[1] This estimate includes $124 in lost business cost and $64 of actual remediation cost per record.

[2] $64 estimate of costs of remediation x 1600.

What is the benefit of a Health Savings Account (HSA) used in conjunction with a High Deductible Plan (HDHP)?

Let’s start with a brief introduction into what a HDHP and HSA are. With a HDHP the participant takes on more initial risk with a higher deductible.  This reduces exposure to the insurance company and results in a lower premium to you.  A Health Savings account (HSA) can be funded using pre-tax dollars, contributed by you, your employer, or anyone else on your behalf.   The withdrawals from an HSA account are tax free, as long as the monies go toward heath related expenses authorized by the IRS.  The HSA acts similar to an IRA and is only taxed if the participant does not use the funds for health related expenses.  Each year the IRS will determine the amounts allowable to contribute to the participant owned bank account.

You can certainly opt to have a HDHP without electing to have a HSA, although you might be losing the trip tax advantages described below.  There are insurance coverage plans that will provide for office co-pays and drug benefits, similar to conventional PPO arrangements.  For some people, that allows protection for catastrophic coverage and continuing preventive and routine medical care at a lower premium than plans with lower deductibles.

Consumers can purchase a HDHP and open an individual HSA in both the individual and group markets.  The money is contributed tax free to the HSA, the money is allowed to grow tax free and the money is withdrawn tax free, provided it’s used for a qualified medical expense.  While there are pros and cons to having a HDHP coupled with an HSA account, Hipskind Seyfarth Risk Solutions can help determine which plan is right for you.

HSA Limits for 2014 and 2015:

HDHP Minimum Deductible Amount

	2014	2015
Individual	$1,250	$1,300
Family	$2,500	$2,600

HDHP Maximum Out of Pocket Amount

	2014	2015
Individual	$6,350	$6,450
Family	$12,700	$12,900

HSA Maximum Contribution Amount

	2014	2015
Individual	$3,300	$3,350
Family	$6,550	$6,650

Catch-Up Contributions (age 55 and older)

2014	2015
$1,000	$1,000

About Hipskind Seyfarth Risk Solutions

Hipskind Seyfarth Risk Solutions offers a wide-range of insurance products for individuals and businesses of all sizes. HS Risk Solutions, located in Chicago, provides expertise in the area of health and ancillary benefits and property and casualty insurance for businesses and individuals. For more information, visit HS Risk Solutions website at www.hsrisksolutions.com or on Facebook atwww.facebook.com/HSRiskSolutions. 

Water Always Wins

It’s that time of year, when lightning presents a spectacular show in the skies and heavy rains, winds and sometimes twisters create havoc for those of us that enjoy the modern luxury so taken for granted called electricity.  When power goes out, basements fill with water, food begins to spoil, temperatures rise and worries persist.

There are several things one can do to prevent the summertime havoc from raining on your everyday activities.  Having a solid plan to mitigate storm risks is paramount.  If you have a limited budget and can’t afford the more expensive solution to a power outage, pay close attention to some of these simple steps.

1.     Make sure all tree branches are cut back away from power lines and your home’s roofline.

2.     Clear your gutters, downspouts and drains of any excess debris so that runoff water will drain appropriately during heavy rains.

3.     Invest in a battery backup system for your sump pump.  That way, at least your pump will continue to operate for a period of time when your power is out.  However, keep in mind that battery back-up systems will not hold a charge for extended outages.

4.     Have a cell phone power adapter handy (that can be used in your car or that is solar powered) so you can charge your phone using the car’s power, if necessary.

5.     Store items that can be easily damaged by water on higher shelves in basements and lower areas of the home. Try to avoid placing cardboard boxes or other loose items on the floor.

6.     Have plenty of flashlights available with extra batteries and be very cautious if using candles for light.  You don’t want to have to deal with a fire during a power outage!

For those who can afford it, a whole house generator system is a wonderful solution to the perils associated with power outages.  Many homes with a value of $1,000,000 or more (and many with lower values) have incorporated a natural gas powered generator into the home’s mechanical system.  That way, when the power supply is cut off, the transfer switch communicates to the generator to begin supplying power until the regular power service is restored.

Keep in mind that even with a generator, normal maintenance is required.  Generators that run for many hours or even days require oil to be added, just like an automobile.  Also, generators should cycle through a test once each week for a brief period of time.  This is normally mandated by the manufacturer and designed into the generators system.  Finally, generators require maintenance, just like your car, at least twice per year.

Assuming you’ve prepared appropriately, and still suffer a loss, it’s smart to make certain that you have the appropriate coverage for a water loss due to sump pump failure or a sewer drain back-up on your homeowners insurance.  Not all coverage is considered equal in this regard.  If you’re residing in an expensive home, make sure you have consulted with your insurance professional to ensure that you have the appropriate carrier and coverage.  Additionally, if you’ve taken appropriate steps to mitigate losses, such as installing an emergency generator back-up system, you can receive a credit on your premium for being proactive.  Again, not all carriers are equal in this regard.  If you are with a carrier that normally does not cover a significant loss for water damage, consider alternate coverage or inquire as to your ability to purchase an endorsement with extended coverage for a water loss.

Unfortunately, storms have been around forever and will continue to show up.  It’s time to review your plan and protect your family and belongings from water related losses because, water always wins.

About Hipskind Seyfarth Risk Solutions

Hipskind Seyfarth Risk Solutions offers a wide-range of insurance products for individuals and businesses of all sizes. HS Risk Solutions, located in Chicago, provides expertise in the area of health and ancillary benefits and property and casualty insurance for businesses and individuals. For more information, visit HS Risk Solutions website at www.hsrisksolutions.com or on Facebook at www.facebook.com/HSRiskSolutions. 

Want 24/7 Access to Health Care?

Ever wake up in the middle of the night and feel the need to talk to a doctor?  How about that busy day at work that you can’t afford to miss, while you suffer from the early spring cold?  Imagine if you could just make a phone call and you could have a licensed doctor consult with you and, if necessary, even prescribe the appropriate medication and call it in to the most convenient pharmacy of your choice.  Well, that dream has become a reality.

Telehealth is becoming more popular as a supplement to major medical insurance products. In fact, it has been determined that over 70% of all emergency room, urgent care and doctor office visits can be safely and effectively handled over the phone.  While it’s technically not insurance, it provides a solution to the most common issue surrounding health care; “I just need to talk to a doctor and get on with my life.”   Offered at an affordable rate (As low as $15/month for single coverage) and providing 24/7 access, thousands of customers have reported being very satisfied with the process.  In fact, many companies have incorporated telehealth as a solution to reducing the costs associated with doctor visit co-pays and affiliated expenses resulting from a loss of productivity.  Here’s how it works at one of the more successful telehealth providers:

1.     Call to request a consultation.

2.     Provide medical history (Your medical history can be catalogued for future use)

3.     A call is scheduled with an appropriate doctor.

4.     Doctor receives on line patient history and calls the member.

5.     If prescription is necessary, sent via Escript to member’s choice of pharmacy.

6.     Doctor updates EMR with consultation notes.

7.     Member receives a follow-up survey.

All of the doctors are licensed in the US and credentialed, accredited and subject to state regulations.  The service is available in all 50 states, 24 hours a day and 7 days a week. From a statistical point of view, 97% of members at our selected company would use the service again; 93% of patients with issues were able to have them resolved by the service; 95% of patients would recommend the service. 

An included wellness component allows you to consult with a health care professional regularly, on your schedule, to assist you in leading a healthier lifestyle.  And, as you may have heard, if you’re living a healthier lifestyle, it’s likely that your cost of health care is going to be lower. From a personalized wellness point of view, 74% experienced relieved stress levels; 61% experienced improved sleeping and 50% reported losing weight.  Comparatively speaking, The national satisfaction rate for a doctor visit is just 68%. 

Today’s health care environment is certainly confusing and complex.  Telehealth is an effective way to enhance your major medical plan and your quality of life, at a fraction of the cost.

About Hipskind Seyfarth Risk Solutions 

Hipskind Seyfarth Risk Solutions offers a wide-range of insurance products for individuals and businesses of all sizes. Representing reputable and competent carriers, HS Risk Solutions facilitates effective and customized insurance solutions on behalf of their clients. Hipskind Seyfarth Risk Solutions LLC, located in Chicago, provides expertise in the area of health and ancillary benefits and property and casualty insurance for businesses and individuals. For more information, visit HS Risk Solutions website at www.hsrisksolutions.com or on Facebook at www.facebook.com/HSRiskSolutions.

Listen to Your Mother’s Advice

You likely understand the importance of safe driving and the corresponding fundamentals.  They’ve been reinforced through ads, special service announcements, and specific education throughout your driving career.  You don’t even have to be a driver to be aware of safe driving fundamentals.  But, outside of the toddler zone, one rarely gets any advice on being a safe pedestrian.  Remember when your mother told you, hounded you, to look both ways before crossing the street?  Well perhaps that advice is worth hanging onto for life.

During the years 2003 through 2012, approximately 47,025 pedestrians died while walking on our streets. That’s more than 16 times the number of Americans who died in natural disasters during the same time period. [1] Concurrently, 676,000 people were injured as a result from being struck by a vehicle.[2]  In fact, during 2012, people on foot represented nearly 15% of all traffic fatalities.

The Pedestrian Danger Index (PDI) measures the rate of pedestrian deaths relative to the number of people who walk to work in the region.  The index was first developed in the 1990s by the Surface Transportation Policy Partnership and used more recently by Transportation for America. [3]

The national average PDI is 52.2.  That equates to approximately 1.56 deaths per 100,000 people.  Following are the 10 most dangerous areas for pedestrians based on PDI:

            Metro Area                                                                PDI

10.       Charlotte-Gastonia-Concord, NC-SC                     111.74
9.         Phoenix-Mesa-Scottsdale,  AZ                                118.64
8.         Atlanta-Sandy Springs-Marietta, GA                     119.35
7.         Houston-Sugarland-Baytown, TX                          119.64
6.         Birmingham-Hoover, AL                                          125.60
5.         Memphis, TN-MS-AR                                               131.26
4.         Miami-Ft. Lauderdale-Pompano Beach, FL          145.33
3.         Jacksonville, FL                                                          182.71
2.         Tampa-St.Pete-Clearwater, FL                                190.13
1.         Orlando, Kissimmee, FL                                           244.28

Noting that Orlando has an index that is 4 times higher than the national average indicates that our pedestrian thoroughfares can be better engineered to coexist with our roadways, especially in areas of growth and where aging populations flourish.  However, based upon the lack of public funds for infrastructure improvements and other services, it’s probably best to pay closer attention to what your mother told you many years ago…”Look Both Ways!”  It very well could save your life.

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[1] According to data available from the National Weather Service and the U.S. Geological Survey. See

www.nws.noaa.gov/om/hazstats/resources/weather_fatalities.pdf and

earthquake.usgs.gov/earthquakes/states/us_deaths.php

[2] National Highway Traffic Safety Administration. General Estimates System. Available at www.nhtsa.gov.

[3] Smart Growth America Dangerous By Design 2014.