Cyber Insurance Will Change Everything

Cyber Insurance Will Change Everything

Cyber attacks are one of the greatest threats to business and individuals alike because of the scalability of hacks.  Once a hacker has the ability to hack 100,000 people, it takes no more effort or skill to hack a hundred million people (Meltdown and Spectre are proving that once either processing chip can be hacked once it can be scaled to a majority of computing devices in the world- and most cloud storage).  This is highly alarming, but what can we do about it?

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Why It Matters If We Call The Las Vegas Shooting Terrorism or Not

Why It Matters If We Call The Las Vegas Shooting Terrorism or Not

Just because people feel terrorized, does not legally make an incident terrorism.  The generally accepted term for terrorism requires political, religious, or ideological motive.  The authorities are continuing to look for the shooter's motive.  Whether the Secretary of the Treasury certifies it as such can have a major impact on insurance. 

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There is No Such Thing as Cyber Security

There is No Such Thing as Cyber Security

This past year Verizon nearly dropped its bid for Yahoo after uncovering a massive data breach.  Wanna Cry, the ransomware virus that effected 230,000 computers in 150 countries, shutdown important infrastructure such as the UK's National Health Service, and FedEx, a shipping giant.  Eighty one million dollars of Bangladesh's money was stolen from the Federal Reserve Bank of New York using the "highly secure" Swift system.  Until incentives are created for software developers and hardware makers to tighten up their security, businesses and individuals will remain greatly exposed to cyber hacks. Insurance companies are one of the few forces that can incentivize software makers to become more secure.   

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Are Christiano Ronaldo's Legs Really Insured?

When one hears a headline that Jennifer Lopez's gluteus maximus or David Beckham's face is insured for tens-of-millions of dollars skepticism naturally arises.  How does someone value that? And can insurance companies actually insure for these things?

There are a few key tenets that need apply in order for insurance to be written.  

  • It cannot be a speculative risk, meaning that a risk has both the possibility of a gain and a loss such as a game of blackjack.  It must be a pure risk which involve only the possibility of a loss.
  • It must be unexpected. 
  • The loss must be calculable

According to a 2013 report, Chritiano Ronoldo had his legs insured for 103 million Euros.  This insurance policy qualifies because there is pure risk, the worth of his legs are directly tied to his contract and an injury would be clearly unexpected.  In the event of a catastrophic accident while playing soccer he would be covered under a workers compensation policy.  If the career ending injury were to happen off the field, its hard saying if his legs would be covered.  Inferring on this article- it is likely that this is a workers compensation policy since the policy is through the club.  It's doubtful that he would be payed 103,000,000 Euros if it happened in a car accident or shark attack, but without seeing the insurance policy we can't be too sure.

As for J-Lo's backside...doubtful. 

Medical Marijuana Insurance

Maine is one of 25 states that allows medical use of marijuana and looks likely that it will pass this autumn's ballot initiative for legalized recreational use.  Nationally, sales reached $5.4 billion in 2015 and are expected to hit $6.7 billion in sales for 2016.  Maine's sales were nearly $24 million in 2015.  With adult use legalization looming, sales are expected to explode in Maine as it will usher in marijuana tourism that is sure to attract a lot of out-of-staters and bring the state's black market into the fold. 

Where full legalization has gone into effect, the outcome has been deemed successful.  There has been virtually no negative unforeseen consequences and has raised a substantial amount of state revenues.  As for the medical sector, science continues to support marijuana's use for a myriad of medical complications.  All of this is helping normalize the public's perception of marijuana and its stigma is fading.  

One of the ongoing issues nationwide has been that, despite states' legalization efforts, marijuana possession is still illegal at the federal level.  Former Attorney General Eric Holder issued federal agencies not to enforce the law in states where marijuana has been legalized, but until it becomes law the situation remains precarious because that decision could be overturned with a single decree.  This has made banks weary of lending and doing business in this sector. Hence why transactions within the industry are mostly in cash.

Although technically insurance is part of the financial sector it is not constrained like banks are. Now that some form of legalization has been in place for years a number of insurance companies have had the time to look at risk data and have tailored products for growers, dispensaries, and others in the marijuana supply chain.  They offer everything from general liability to crop insurance.  For example, one insurance carrier we broker offers different coverages depending on crop maturity.  One can insure the crop at seeds, immature seedlings, vegetative plants, flowering plants, harvested plants, and finished stock.  

Without getting into the weeds about the ins and outs of insurance for the marijuana industry, what is important to know is that there is insurance out there for your business that covers everything regardless of the grey area the industry may be in due to federal regulations. Between growing equipment and the value of the marijuana itself, taking a loss would be catastrophic to an uninsured grower.  Make sure you are adequately covered.  There are lots of good options out there for you.  



Insurable Value vs. Market Value

A common reaction we receive when issuing a homeowners' policy is one of bewilderment when the insured looks at the replacement cost for their home after having just gone into contract for a home they are about to purchase.  One of two scenarios happen: 1) we most often run into situations where someone just bought a home for the market value of $600,000, but their insurable value is $350,000.  And 2) the opposite situation when someone buys a home for $300,000, but the insurable value is $550,000.  Many people are quick to think that they either overpaid for their home, or that they are over insured and are being ripped off.  Neither is likely the case.

Insurable value for a home is the replacement cost in the event of a total loss.  For instance, take the first scenario- Someone purchases a newly built 2,800 sq. ft. home on a 1.5 acre plot near the coast with ocean views for $750,000.  Now take that exact 2,800 sq. ft. newly built home on 1.5 acres and move it inland 15 miles to the next town over to a less wealthy area.  This home was purchased for $350,000.  Now assume that both of those homes burn to the ground and need to be rebuilt.  In this situation, the replacement cost would be identical regardless of paying a market value of $750,000 or $350,000.  The same contractor would be buying the same materials at the same location and charging the same rates to rebuild.  Market value takes into account a number of factors, where insurable value only looks at what it would cost to rebuild the structure only (and its contents).  Land value and location are not factors in this equation.   

Conversely, we have situations where homeowners have put more into their home than they could possibly sell it for in a particular town, or area of town.  They may put their home on the market for $400,000 because that is the predicted maximum price they will be able to receive (market value).  This home's insurable value may exceed what it can get on the market, meaning that in the event of a total loss the structure's insurable value may exceed $650,000 regardless of what it could sell for.  Again, market value is affected by a number of factors- ultimately driven by supply and demand.   

How Independent Insurance Agents Quote

As independent insurance agents we have access to both direct writers (i.e. Progressive, Travelers) and insurers that work exclusively through agents (i.e. Cambridge Mutual, Vermont Mutual).  Getting insurance through an agency will give you more options, therefore making each insurance company more competitive for your business.  When someone is seeking insurance each insurance company examines the risk levels and gives a quote based on risk and value assessment.  In order for insurers to move the process along to ensure coverage as quickly as possible the initial assessment and quote given is based on the information given directly by the person seeking insurance.  Once someone agrees to a policy the insurance companies will take a deeper look at value assessments provided by the insured via tax records and any other available public records.  Insurance companies make their final value assessments based on public records. So on occasion you will see an increase or decrease in your coverage which will be reflected in a change in premium due from the original quote.  

Why an Independent Insurance Agency?

What sets an independent insurance agency apart from direct writers such as Geico, Farmers, Allstate, State Farm, Progressive, and Nationwide? As independent agents we take the time to understand exactly what you need and make sure you are covered appropriately. We have long standing relationships with each of the insurance carriers we represent so we have a thorough understanding of the varying coverages each of our Insurers provide. Insurance companies that utilize the agency channel to provide insurance coverage know that they need to compete for your business. They are not spending millions of dollars on advertising.  The money that is saved on advertising costs often times results in reduced premiums.  Direct writers will also tout that they can give you a quote in 15 minutes, but it would be wise to call a few different direct writers if you really want the best deal.  All that time begins adding up... Let a local independent insurance do that for you a no additional cost.