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Archive for category: Security

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TRIA Dies in US Senate

 Washington, DC – After the United States House of Representatives approved the reauthorization of the Terrorism Risk Insurance Program (TRIA) on December 10th, the bill died in the Senate last night (December 16th, 2014) after soon-to-retire Oklahoma Senator Tom Coburn blocked the legislation from being called for a vote. Without renewal, the existing legislation expires on December 31st, 2014.

TRIA was enacted after the 9/11 attacks on New York City, which resulted in a majority of insurers declining to write coverage on buildings in NY due to the threat of future attacks. The bill, similar to Flood Insurance through FEMA, provides governmental assistance on systemic, multi-industry losses – in TRIA’s case: terrorism-related.

Coburn’s opposition to the bill stems from a new provision that would require insurance agents and brokers to register with a newly-formed body, the National Association of Registered Agents and Brokers Reform Act (NARAB).

The Property Casualty Insurers of America (PCI) issued the following statement today, expressing concern and disappointment in the bill’s defeat:

It is unconscionable that the U.S. Senate would adjourn without finishing their job and reauthorizing a long-term Terrorism Risk Insurance Act (TRIA) when the threat of a terrorist attack against the United States is at the highest level it has been in a decade,” said David A. Sampson, PCI’s president and CEO. “TRIA plays a vital role in our national economic security. If a massive attack occurs before TRIA is reauthorized, there could be no terrorism insurance coverage or taxpayer protection. PCI is profoundly disappointed by the dysfunction in Washington and we urge the next Congress to address a long-term reauthorization of TRIA immediately when they convene in January.

Without TRIA’s backstop support, fears are wide-ranging throughout the insurance industry that insurers could face insolvency without the legislation, should a terrorist attack occur.

Even with the bill passing, many within the insurance industry are concerned with whether the legislation would address cyber terrorism or not. The bill makes no mention of “cyber,” which leaves a great deal of ambiguity. More on that HERE.

Sources: Bloomburg News, Insurance Journal, Advisen

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Securities Class Action Lawsuits Against Life Science Firms on the Rise

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Executive liability is a large threat for all sizes of technology and life science firms.  In addition to litigation damages and expenses, companies face distractions, and loss of corporate opportunities.  Although a comprehensive executive liability insurance policy will go a long way towards reducing the exposures, they face greater exposures if they have no risk control practices in place.

Reviewing the Claims Data

Upon the release of this year’s Dechert Survey of Securities Fraud Class Action Lawsuits, many Life Science firms have been forced to take a closer look at their risk avoidance strategies. The Survey showed that securities class action lawsuits against life science firms have continued to rise steadily since 2011. 

The survey showed that in 2012, 27 pharmaceutical, bio-technical, and medical companies faced security suits. This number represents over 18% of all securities suits filed during the year of 2012. During the year of 2011 only 17 companies experienced securities suits, reflecting a total of 9% of total securities claims. This information shows that from 2011-2012, securities claims nearly doubled.  Unfortunately, small cap Life Science firms continue to be targets for suits. Those with market caps under $250 million made up 50% of all claims against Life Science firms. In comparison, the survey showed in 2011 these firms accounted for 58% of total claims. 

Over 43% of the total claims dealt with misrepresentations of products and product safety.  In addition, insider trading still appears to be a common part of most of the complaints that are filed.  It is important to develop a comprehensive Directors and Officers Liability program that includes a solid risk control program. Smaller companies must be especially vigilant as the studies show they are at the highest risk.

Directors and Officers Liability and Risk Control

D&O insurance is designed to protect against claims made against them while serving on a board of directors or as an officer.  These policies are written on a claims-made basis, usually contain no duty to defend policy language and the scope of the coverage, pricing and underwriting criteria can vary. 

When a Life Science firm includes risk control into their comprehensive D&O program they can do a lot to reduce the threat of D&O claims.  D&O loss control programs specifically tailored to their company Includes risk control in areas of securities trading, antitrust compliance, financial integrity, managing conflicts of interests, bribes and kickbacks, board appointments and behavior, misappropriation of corporate assets and confidentiality. The goal of any D&O loss prevention program is to sensitize the company’s executives to exposures and place policies and procedures to minimize the exposures.

Working with a TechAssure Association member can help you develop a comprehensive D&O program.  A TechAssure member will help you customize an insurance plan, which will work seamlessly with your risk control strategy.  Please contact us for more information on how a TechAssure member can help your firm.

 Source: http://www.dechert.com/Dechert_Survey_of_Securities_Fraud_Class_Actions_Brought_Against_US_Life_Sciences_Companies_03-20-2013/

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The Multitude of Risks Facing the Life Science Industry

The life science industry by nature carries a multitude of inherent risk. The board of directors and executive body must address risk management on a continual basis, meeting constant demands stemming from partners, insurers, physicians, patients, lawyers, and media. As need arises, added complexity and heightened risk can overlap these issues, creating a more difficult environment for overall efficient company management.

Because of the nuances involved in the life science industry, you must take appropriate precautions to identify and evaluate all risks to your organization. They could include:

  • Compliance with numerous regulatory entities such as the Food and Drug Administration, Department of Health and Human Services, Securities and Exchange Commission, Department of Justice, etc.
  • The ability to adapt to constantly changing and accelerating global regulatory activities
  • Security breaches and IT failures
  • Inadvertent exposure of intellectual capital
  • Cost and availability concerns

Life Science firms can also take risk and turn it into a marketplace opportunity. The most common areas where we witness life science firms that manage the flip side of risk include:

  • Competitor product failure that allows for your firm’s product to become a forerunner for approval
  • Products are approved ahead of schedule, allowing for early availability
  • Product manufacturing improves or is produced ahead of initial projected time frame
  • An unanticipated gain in market need for a product or unanticipated market sharing upon launch of product

It is important to implement a broad risk management plan. Tips for advancing your risk management strategies include:

  • Keeping on or ahead of schedule for product review and release through strategic planning
  • Addressing increased demand for cost effective products from physicians, consumers, politicians and regulators and increased interest from investors
  • Heeding the call from consumers for safer or risk-free breakthrough therapies

Biopharmaceutical and life science firms need to rely on a comprehensive insurance plan to deal with an ever-evolving matrix of risk. TechAssure members can help your firm deal with a multitude of issues concerning risk management including, but not limited to: network and privacy security, increased global competition, loss of intellectual property and delays or business interruption in Research and Development. Please contact us for more information on how our members can help you minimize risk to your life science firm.

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Cyberliability Costs Can Challenge Emerging Growth Firms

More and more focus has been put on cyberliability. Internet data breaches, denial of service attacks, and other cyber losses affect Fortune 500 companies as well as small businesses. Loss of customers, sales, costs of investigations, responding to losses, lawsuits and regulatory fines can be astounding. Ponemon Institute estimates that costs to remediate compromises caused by loss or breach can run as high as $200 per affected account. At that rate, it’s easy to imagine how costs can quickly run into the millions of dollars. Most media coverage goes to the big companies, but small companies also run the risk of cyberliability expenses. Big businesses can more easily absorb or has the means to stave off such costs. But emerging companies may be left bare.

Fortunately, there is some help from the insurance industry. In response to serious gaps left by typical liability coverage, companies continue to fine tune their insurance products for cyberliability exposures for emerging firms. Most old policies only covered physical losses such as damage to servers, laptops, or other hardware; the data itself wasn’t protected. The new cyberliablilty policies can be tailored to cover almost any loss, whether tangible or not. In this way, small businesses can protect themselves because of an error, theft, or malicious act against them.

As with any other type of insurance, coverage, rates and reimbursement policies vary from provider to provider. For more information and tips on protecting your corporation from cyberliability exposures, please give us a call and we will connect you with a TechAssure member.

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Beef Up Computer Security with These No-Cost Tips

Your business survives on its data. Information about your customers, products in development, budgets, and employees must remain confidential and secure if you want your company to prosper. Protecting against viruses, corporate espionage, hackers, and malware generally requires some spending on software, hardware, and training. However, some basic tips can beef up your security without cost.

Prohibit the use of any password-protected websites on mobile devices in coffee shops, restaurants, and other areas with unsecured networks. This should extend not only to accessing confidential parts of the company website but also to personal email accounts that employees use to conduct business. Hackers can use unsecured networks to break into your computer. They can also use their smartphones to physically record the usercode and password you type in.

In the office, require that any unused mobile devices be locked in a drawer or cabinet. It’s too easy for a company visitor to pick up a smartphone that’s just sitting on a desk in plain view. When not in use, monitors should be turned off either manually or automatically with screen savers. This prevents potentially sensitive data from being left on display.

Hackers can use networked cameras and microphones to look inside your company or listen to private conversations. If possible, turn these devices off or disconnect them from the network when not in use. If they must remain on, such as when built into a laptop or tablet, put a piece of black tape over the lens or microphone.

If you’d like more information on improving security for your company or how we can use out expertise to implement more comprehensive insurance and risk management solution for your network, security and privacy exposures, please contact us.

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California, are you Ready for More Changes?

Again the California bill, designed to expand data security breach notification law, has cleared the senate. The California state Senate passed SB46. This bill has been expanded to include a number of additional items. Bill SB46 expands the triggers to include passwords, user names, security questions and answers and more. The additional list of triggers expands the responsibilities that a firm has on their reporting requirements.

As this bill makes its way to the Assembly for review, California firms will need to review their new requirements, processes and procedures for managing their risks.

A TechAssure member can help you better understand your network, security and privacy risks.