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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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Filing for a Public Offering? 5 Tips to Prepare for Public Company Status

A successful Initial Public Offering offers a sense of pride for a firm. Watching your publicly traded company’s symbol flash across the ticker is an elevating experience. But what additional risks does your company face after an IPO?

Changing from a private to public company status will have additional risks that your organization may need to be aware of and it is important to develop a solid risk management strategy that can help your company adapt successfully after an IPO.

Accountability and scrutiny must be taken into account after a company goes public. The amount of exposure involved with an IPO is enormous and senior management must adjust to their new risk profile.

A successful IPO extends your reach from initial investor interest to public stakeholders. Investors and stakeholders must feel confident in your strategic plan and your ability to manage a wide range of risks. In addition, those firms experienced in turning risk into opportunity will be rewarded. Remember your company is now comprised of public as well as private funding and with great power comes great responsibility. Sound strategies for nurturing investor and stakeholder confidence are essential for an IPO’s success.

Here are 5 tips on transitioning your risk management program, as you move from private to public company status.

  1. Start from the top: Your board needs to be in position for successful development of a risk management strategy. Encourage your CFO and your CRO to work in conjunction. Compliance between these positions will successfully build the necessary framework for risk avoidance. This in turn, will set the pace for senior management strategy planning.
  2. Set the stage for effective and robust board governance: Your board governance will need to adapt to your new planning techniques. Since investors are watching more closely, it is time for your board to shine. Make sure you have key players in place that have versatile talents which will enhance rich governance techniques.
  3. No alarms and no surprises: The public market hates surprises. Surprising your investors can cause alarm which will affect confidence. New ideas and strategies should be carefully vetted. This will ensure that new product launches goes smoothly. Make a practice of including risk management in all of your core business unit discussions.
  4. Stay ahead of regulation: Regulations are constantly impacting the market. After an IPO — stay ahead of the curve as much as possible. Keep you investors informed about these changes and share your plans for compliance. This lets investors know your board is effectively keeping your firm on track.
  5. Stop watching everyone else: During the immediate period after an IPO, focus on understanding your unique risk profile and building mitigation strategies to manage the risks. This will provide a solid platform for discussing “risk” with public shareholders.

Adjusting your insurance and risk management program as your firm goes from private to public is important. Contact a TechAssure Association member to learn more about the support they can provide as your build your risk management program.

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Ten Tips for Establishing a Board of Directors that Will Ensure Your Company’s Growth

Establishing a board of directors helps take your business to the next level. As a company grows, one may find it needs a board to keep the company running smoothly and efficiently. Being an entrepreneur, it is satisfying watching your company succeed, here are some tips to help you decide how to form the board of directors perfect for your firm.

  • Always plan for the long term. Recruit directors you feel will make it a priority to further company growth.
  • Root out the potential leader. During the establishment of your board, there will be an individual who stands out from the rest as your right hand man or woman. This individual should be a natural leader with exceptional governance skills. If possible this individual should be trained or chartered by the National Association of Corporate Directors
  • Create clear and concise job descriptions for each member. Executive and non-executive directors should have a clear idea of their responsibilities. These job descriptions should help the board tackle issues directly and strategically.
  • Each member should be and integral part of the team. Each should be diverse and well versed in their field of governance, but also be able to work well in a team environment.
  • Pick those who are not afraid to disagree with you on certain issues. Each individual should not be afraid of conflict and should be able to challenge certain decisions they feel will be damaging to the company. The board is not there to agree with you %100 of the time, they are their to help the company exceed expectation.
  • Seek consensus on all issues presented to the board. After discussion, presentation, and analysis, the board should be able to come to important decisions in matters of importance. Majority rules.
  • Be clear about each individual’s specific role on the board and allow each to stick to his or her position. For example do not combine or confuse CEO and the chairman as one in the same; delegate accordingly.
  • Respect the Hierarchy established on your board. It is the board’s collective wisdom and enhanced discipline that will get the job done and your company growing.
  • Always seek expert advice. If you need help deciding on how your board should be set up, don’t be apprehensive about asking for help.

In this tough economy, it is the professionals at TechAssure that understand that it is the entrepreneur who will keep America’s economy on track. Contact a TechAssure member to learn more about the insurance products and services we provide in management liability. Let us help you keep your business growing.

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What is Cyberliability Insurance?

A Chubb Group survey recently found that 2 in 5 companies suffered from a computer security issue in a 12-month period, with the typical data breach costing $5.5 million in organizational costs for 2011. About a quarter of the respondents expect another major incident this year. Yet, 65 percent do not have the proper cyberliability insurance to respond to their exposures. In the study it finds that the most likely reason for the omission is that most people don’t know what cyberliability is and that insurance protection exists for it. Further, most buyers don’t understand that the insurance policies vary greatly from carrier to carrier.

Cyberliability refers to the risks that your company faces from the operation of your network. The exposures include first and third party risks. It could involve risks to your company when information is compromised. or it may involve a virus entering your system and destroying your product data, a hacker stealing the customer credit card numbers stored in your database. It could also include a third party suing you for inadvertently putting a copyrighted picture on your website without permission.

When such incidents happen, at the very least, you’ll spend time and money to restore information, eliminate the threat, and perhaps, deal with any public relations fallout. Your company may also need to compensate third parties for any damages they suffered because of your computer problems.

Although specific policies differ, your traditional business insurance does not generally cover cyberliability. The and legislation to deal with computer security is rapidly changing and still evolving. You need a policy that specifically addresses your cyberliability exposures.

Please contact a TechAssure member to learn more about the insurance and risk management options available to your firm.

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Reducing Your Cyberliability Risk

Cyberliability is a term used to describe how much damage will be done if your company experiences a data leak. Handling private data, as every modern business does, puts you at risk for having it lost or stolen which in turn could leave you facing some very costly lawsuits. Fortunately, there are some relatively easy steps you can take to reduce your cyberliability exposures.

Don’t carry vital data around with you. Mobile devices are great for efficiency. You can look over reports or check your email almost anywhere you go. The down side is that any vital data you carry on these devices becomes a cyberliability risk. It’s too easy to lose or have a smart phone, laptop, or tablet, stolen, then all that data is there for everyone to see. A great alternative is cloud storage. It allows you to access data online without ever downloading it. You log on with a password, use the data, and log off. Nothing is stored so if your device goes missing, the data doesn’t go with it.

Password protection and firewalls are great ways to protect data, but sometimes they are not enough. If a hacker gets through these, you need data encryption as a last line of defense. When you encrypt all your data, even if someone does hack into your system and steal it, they can’t use it.

Strict password policies are something most staff members hate. Coming up with new passwords every month can be irritating and difficult. If you really want to reduce your cyber liability risk this is a vital tool to use. Do not use one password for all your personal and business accounts. All it will take is for a hacker to gain access to one of those accounts, then all of your company data is in jeopardy. It may seem like a pain and it will upset your staff, but a strict password policy will save you a lot of money in the long run.

To discover other ways in which we can help you protect your organization from cyberliability risks, please give us a call.

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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.