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Presidential Politics & Taxes

Posted By Administration, Wednesday, September 7, 2016

Late in August both Donald Trump and Hilary Clinton shed light on their philosophy about taxes. The bottom-line is an approach from opposite polls. Trump is looking to lower the highest rates for individuals and businesses and Clinton wants to make those making more money and who are the highest wage earners pay more in taxes.


Where they do agree — and this is surprising but not — is both are adamant about doing away with the tax loopholes for investment fund managers and both want to stop U.S. corporations from moving their headquarters to other countries to avoid paying U.S. taxes. These are called inversions.


Where they divide on that topic is how to put a stop to the practice.


Business Taxes

Trump wants to drop the U.S. corporate tax rates from 35% to 15%. He says that will lead to an end of inversions. Trump also advocates for a 15% tax rate for individual businesses — or pass through businesses as they’re called — whose income is taxed on the owner’s personal return.


He also wants to allow businesses to immediately write off the cost of investments and to be able to reinvest money earned in foreign countries at a tax rate of just 10%.


Clinton says her business tax reforms will go to pay for plans to improve and rebuild the nation’s infrastructure. However, she has not been very specific about that part of her plan.


On inversions, Clinton wants to stop them completely by including an exit tax on those insisting on leaving and on the untaxed foreign earnings when they move funds out of the country. She’ll also limit the tax benefits of companies that move their headquarters overseas.


Trump disagrees with Clinton’s business tax proposals and say she’s going to require small businesses to pay close to three-times more in taxes than what he’s proposing. Clinton hit back and said Trump’s pass through tax proposal of 15% is just another way of letting the rich lower their taxes.


Trump economic advisors say while the candidate hasn’t put many details in the pass through business tax plan, there will be very tight restrictions on what constitutes business income versus personal income.”


Individual Taxes

Trump said he likes the individual tax rates the Republicans in the U.S. House want. They are 12%, 25% and 33%. It’s a bit lower than the 10%, 20% and 25% he proposed early in the campaign. Current law sets the highest individual tax rate at 39.6%.


In announcing his plan, Trump said, I am proposing an across-the-board income tax reduction, especially for middle-income Americans. The rich will pay their fair share, but no one will pay so much that it destroys jobs, or undermines our ability to compete.”


Clinton’s individual tax ideas run along the lines of those proposed by billionaire Warren Buffett and that are now being called the Buffett Rule. She says those making $1 million or more a year — after their adjusted gross income — should pay at least 30% in federal taxes.


In addition, Clinton wants to cap the value of some exemptions and deductions at 28%. These are ideas from President Obama and have been in his budget proposals but have not been — no surprise — acted upon.


Clinton also wants a 4% surcharge added to the adjusted gross income of those making over $5 million a year. Donald Trump doesn’t need a tax cut. I don’t need a tax cut. It’s time for the wealthiest Americans, whoever you are, as well as corporations and Wall Street, to pay your fair share in taxes,” she said.


On other tax topics. Trump wants to eliminate the estate tax which he calls a “death tax.” His contention is American workers work hard all of their lives and are taxed all along the line and ought not be taxed at death, too.


Clinton wants the tax kept intact and move it back to where it sat before being modified by Congress in 2009. That moves the exemption from $10.9 million back to $7 million and the rate will rise from the current 40% to 45%.

Source link: The Hill


Tags:  Insurance Content  Insurance Industry  Insurance News  Politics  Presidential Politics & Taxes  Weekly Industry News 

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Around the PIA Western Alliance States

Posted By Administration, Wednesday, September 7, 2016

California — Wildfire Cause

Police say a woman high on drugs is the cause of several wildfires. The fires totaled 450 acres and it is now 100% contained. Some people had to be evacuated because of fire danger.


Renee Hogan was driving on the right rear rim of her 2002 KIA. As you know, driving on a flat tire eventually eats the tire away. The rim then comes into contact with the roadway and creates sparks. An unidentified driver tried to get Hogan’s attention but she ignored him. He eventually pulled in front of her which got her to stop. Hogan’s vehicle then caught on fire and the unidentified driver had to pull her out of the vehicle.


Hogan was taken into custody at the scene and booked on charges of driving with a suspended license and being under the influence of a combination of narcotic analgesic and marijuana. She also being charged for causing the fire. Those accusations range from starting a fire that ended up with inhabited structures burning to starting vegetation fires.


Source link: Calaveras Enterprise



Oregon — Governor Weighs in on Measure 97

Oregonians will vote on a controversial business tax in November. It’s a $3 billion a year increase. Oregon Gov. Kate Brown endorsed the measure last month and says it’s the only “viable option” to pay for needed investments in schools, health care and other services.


Without that income — she noted — the state will face a $1.3 billion shortfall and cuts will have to be made in some very important programs. I don’t see how you make those levels of cuts without significantly reducing our school year, without increasing class sizes and without gutting our early childhood education programs and without putting up more barriers in this state to attend community college and our universities,” she said.


Brown says passage will require corporations to pay a “more fair share” of the state’s taxes. At the time Brown also disagreed with supporters of the measure that corporations won’t pass the cost of that tax onto consumers. Oregonians are smart enough to realize there will be, um, they will bear some of these increased costs,” Brown said.


The Legislative Revenue Office’s analysis said — if approved by the voters — half of the ballot measure’s $3 billion will be passed onto consumers. It will cost the average family in Oregon $372 to $1,282 a year depending on income levels. That’s in higher prices and — in some cases — lost wages.


The governor also defended criticism that she’s only backing Measure 97 because her political allies unions and labor groups want it passed. Do I think that (this) ballot measure is the best way to make public policy? Absolutely not. But I think there is a level of frustration that both the legislature and governors haven’t able to tackle the issue of tax reform. This a viable option. It restores balance; it provides resources on the table for key programs; and I think it makes sense for Oregon right now,” she added.


Source link: OPB


Oregon — 2017 Carrier Timeline Updated

The filing the 2017 Carrier Timeline document has been updated and posted to our website. The timeline impacts only Individual and Small Group Health Benefit Plans and Certified Pediatric Dental Plans. Updates include adding deadlines for filing optional Small Group quarterly Rate filings and removing deadlines that have passed.


To view the latest version of the timeline visit: 2017 Carrier filing timeline



Washington — Mudslide Lawsuit Gets Ugly

Attorneys for the families and victims of the 43 people killed in an Aso, Washington landslide are accusing lawyers for the state of fraud. They contend those lawyers have hidden or deleted emails between defense expert witnesses.


A motion complaining of the practice has been filed.


The attorneys for the plaintiffs say the state has spent $3 million to develop opinions by seven experts. They contend those opinions — with the approval of the state’s attorney general — are contrived and the experts are constantly shifting their story in service of the state’s defense.


One of the attorneys wrote, What we will never know is the true depth of this deceit, because the vast majority of emails were destroyed and will never see the light of day.”


They want sanctions placed on the state by Judge Roger Rogoff.


Source link: Insurance Journal


Washington — Conferment Ceremony

On August 18 at the Double Tree Guest Suites in Seattle, the PIA Washington held its annual CIC, CISR, CRM conferment ceremony.


Receiving CIC designations are Crella Downey, James Eliason, Laura Fitzgerald and Mark Monteith. A CRM designation was earned by Claudette Kenmir. Vladimir Ulyanchuk earned a CISR designation and Melissa Dalton received a CISR Elite designation.

The Outstanding CSR of the Year award went to Anthony Schultz who also won the Linda Fox Scholarship award.


Others picking up CISR scholarships are Meghan Rosin, Toni Matteson-Becktell and Morgan Krause. CIC scholarships were awarded to Denise Lloyd, Jennifer Welch.


L-R: Crella Downey, (Kathy Fraley, Gary Thompson, Jerry Kennedy), James Eliason, Laura Fitzgerald, Mark Monteith



Claudette Kenmir


Vladimir Ulyanchuk


CISR Elite

Melissa Dalton

Outstanding CSR of the Year:

Anthony Schulz (also won Linda Fox Scholarship award)

CISR Scholarships

L-R: Meghan Rosin, Toni Matteson-Becktell, Morgan Krause


CIC Scholarships

L-R: Denise Lloyd, Jennifer Welch


Washington — From the Commissioner’s Office

R 2015-15 This rule text (CR 103) adds a section to Chapter 284-24 WAC, requiring each insurer that uses credit history for rating personal lines of property and casualty insurance to update the credit history and resulting insurance score no less often than once every three years.  This section applies to insurers using insurance scores for rating of personal insurance under the provisions of RCW 48.19.035.


Comments on the CR 102 were due: July 26, 2016


The public hearing on the CR-102 was held July 26th at 9:00 a.m. at the OIC office at 5000 Capitol Blvd. SE, Tumwater, 98504.


If you’d like additional background information or to review the Concise Explanatory Statement (CES), please review the homepage for this rule at https://www.insurance.wa.gov/laws-rules/legislation-rules/proposed-rules/2015-15/?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=


Tags:  Around the PIA Western Alliance States  Insurance Content  Insurance Industry  Insurance News  Weekly Industry News 

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Today’s Insurance Job Market

Posted By Administration, Wednesday, August 31, 2016

The Jacobson Group and the Ward Group do an annual survey on jobs. It is called the U.S. Insurance Labor Outlook Study. This year’s study found 66% of insurance companies are going to hire in the next 12 months. 


That’s the highest rates the survey has seen since it began in 2009.


Jacobson Group CEO Gregory Jacobson said September’s survey last year saw a percentage of 65%. And those hiring then and in the next 12 months say they’re doing so in spite of the fact they expect business to be down. The continued focus on increasing staff paired with mass retirements and virtually non-existent industry unemployment will only further interfuse an already challenging recruiting environment,” he said.


Here’s what else the survey found:


   Just 4% will decrease staff in the next 12 months

   Technology, claims and underwriting is where hiring will take place

   The hardest jobs to fill are technology, actuarial and executive


While there are no current stats on how agencies will be hiring in the next 12 months, we do know that wages at independent insurance agencies — and captives, too — are rising at a phenomenal rate. The U.S. Bureau of Labor Statistics said the average salary of an insurance agent today is $64,790.


In 2013 that figure was just $47,450.


Of course the usual factors — geography, the employer involved and experience — set up just how much an agent is paid. Agents in the East and in New England make the most money and some hit low six-figure incomes. In the PIA Western Alliance states just agents in Oakland-Hayward-Berkley, California hit the six-figure average at $104,900.


As for the PIA Western Alliance states, here are the average incomes:


   Alaska — $31,780 - $54,340

   Arizona — $54,810 - $60,340

   California — $66,350 - $94,040

   Idaho — $60,650 - $65,320

   Montana — $54,810 - $60,340

   Nevada — $54,810 - $60,340

   New Mexico — $31,780 - $54,340

   Oregon — $60,650 - $65,320

   Washington — $54,810 - $60,340


One possible reason for rising salaries — other than desperation to replace retiring workers — is the improving economy. And a better economy means employees are looking to see where the grass is greener.


A survey from Aon Hewitt titled Workforce Mindset checked in with 2,000 employees. It found 52% of employees are wide-open to the possibility of leaving their current employment and 44% are now actively seeking.


To defend yourself — if you’re an employer — you need to offer:


   Above average pay — 62%

   Above average benefits — 61%

   A fun place to work — 58%

   A flexible work environment — 57%

   A strong values fit — 56%


Ray Baumruk is the employee research leader at Aon Hewitt. He said, To keep and attract the highest performers, employers need an authentic employee value proposition that sets them apart from competitors. Even more importantly, organizations must listen to their employees to understand and foster a culture where employees’ expectations and desires are closely aligned with the employment experience they offer.”


Employees also want to be engaged:


   They are 15% more likely to be engaged when workplace communication is open and honest

   They are 11% more likely to be engaged when they feel they are encouraged to share ideas and opinions


Source links: Insurance Journal, Insurance Business America, Carrier Management


Tags:  Employment  Insurance Content  Insurance Industry  Insurance News  Jobs  Today’s Insurance Job Market  Weekly Industry News 

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It’s Mid-Summer & the West is on Fire

Posted By Administration, Wednesday, August 31, 2016



Wildfires are rampant — as they have been the last couple of years — around all of the PIA Western Alliance states and other states in the West. It’s bad enough when lightning or careless campers or homeowners start fires, but some are arson.


That’s the case in Oregon where officials say at least 14 of the fires in the state’s central region were arson caused. Those same officials released few details on that arson and whether it is the same person for each or not, but did advise people to pay attention and to report suspicious activity.


As of mid-week last week the National Interagency Fire Center in Boise, Idaho said there were 112 new fires burning in the West. That’s new fires. And at the time there were another 54 large fires still out of control and not contained.


Here's a look at the major wildfires in the West:


   California — 9 fires

   Idaho — 5 fires

   Montana — 2 fires

   Oregon — 3 fires

   Washington — 6 fires


Source: Insurance Journal, National Interagency Fire Center


Tags:  Insurance Content  Insurance Industry  It’s Mid-Summer & the West is on Fire  Weekly Industry News  wildfires 

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Oregon Vs. Oracle Cover Oregon Suit — Round 1

Posted By Administration, Wednesday, August 31, 2016

In the defense of its big dollar suit by Oregon, Oracle told Judge Mary Merten James the state violated its own public records act. Oracle’s complaint is the state withholding or delaying the release of some Cover Oregon-related emails it sent to Oracle officials and others.


The judge disagrees and denied the motion. Oregon Governor Kate Brown called it a big win for Oregon.


“Oracle contends that the public records law permits it to litigate how a public agency searches for or maintains documents and that somehow the Governor's office's efforts fall short. Oracle is wrong, both on the law and the facts,” Judge James wrote.


Brown’s spokeswoman Kristen Grainger gushed over the victory. “It's a double win: Governor Brown is fully vindicated, and Oracle is foiled yet again in its repeated and desperate attempts to burden and harass the state and waste public resources,” she said.


Oregon contends Oracle defrauded the state when it billed it $240 million for the software to run Cover Oregon. It never worked. The suit also contends Oracle filed false claims and engaged in racketeering and the state wants damages of $6 billion.


The trial for the suit starts in January of next year.


Source link: OregonLive.com


Tags:  Healthcare  HealthCare.gov  Insurance Content  Insurance Industry  Insurance News  ObamaCare  Oregon Vs. Oracle Cover Oregon Suit — Round 1  The Affordable Care Act  Weekly Industry News 

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Relationship — Carriers & Independent Agents

Posted By Administration, Tuesday, August 30, 2016

Independent insurance agents are — mostly — happy with the carriers they use. But a new Channel Harvest survey suggests there are some areas where carriers need to improve.


Done annually, the Channel Harvest survey is titled Key Success Factors in Agent/Carrier Relationships: 2016 Survey. It found 80% of the 1,900 agents surveyed are extremely or — at the least — very satisfied with their personal lines carriers. Commercial lines carriers fared well at 75%.


Neither — however — does well with pricing or technology:


   96% say competitive pricing is very or somewhat important to them

   71% of personal lines agents say their carrier of choice’s pricing competitiveness above average

   67% of those using commercial lines carriers feel the same

   90% consider technology very important

   Just 70% say carrier technology is above average


Channel Harvest Principal Peter van Aartrijk said, Agents will have their favorite carriers — and love them, warts and all. In some ways, you can still be ranked as an overall so-so carrier in a number of areas, but in a basket of so-so or lousy carriers, you might not actually look that bad. It sounds harsh, but I think agents will put up with a lot in exchange for a consistent market, decent prices and products, and okay service.”


He said the best way carriers can get better agent approval is in the area of technology. Agents want more comprehensive technological offerings like real time quoting and renewals, endorsement processing and claims downloads.


Defending carriers, van Aartrijk said financial pressures and battles on where to spend technology dollars are going on internally. Plus, upgrades are expensive.


On digital support, I see a major need for agencies to understand the who, what, when, where, why and how of how to accomplish this. Carriers not only have the challenge of redefining digital communications to existing policyholders, they need to educate their agencies — even their very best agencies — on how to leverage these tools. This is a major shift in thinking, investment and agency support,” he said.


Both commercial and personal lines carriers received low scores for digital and social media support and for training and education. And when it comes to agency compensation, personal lines carriers scored below the needs of agents for more consumer choice and online shopping options.


And there are things agents need to do to build their business. He noted personal lines agents — especially — need to pay attention to what they’re doing. That means more than an updated, mobile friendly website (which is obviously critically important). It means using email wisely to reach existing customers at various times during the policy year; focused, ongoing social media marketing that shows the personal connection between the agency’s employees and the communities they serve; and partnering with centers of influence in communities on sponsorships and links and advertising,” he said.


Source link: Insurance Business America


Tags:  Insurance Content  Insurance Industry  Insurance News  Relationship — Carriers & Independent Agents  Weekly Industry News 

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2016 Politics & Insurance

Posted By Administration, Tuesday, August 30, 2016

According to most sources insurance professionals are a rather conservative lot. Historically insurance leans right in voting and — while often giving to both parties — in how it donates to political candidates and causes. So you’d think insurance will more than likely — as a generality — to vote for and contribute to Donald Trump than Hilary Clinton.


Here’s what’s odd. The Center for Responsive Politics — the operator of OpenSecrets.org — said as of July Clinton has picked up $1.2 million industry dollars and leads Trump in donations by over $1 million. He’s picked up just $111,645.


While the Clinton figure seems surprising, it actually isn’t. In 2008 P&C, auto, health and life companies gave her $1.26 million.


Ironically, the industry seems to support her in spite of Clinton’s pushing for the creation of a government option health insurance company to provide insurance for ObamaCare users. Clinton and others worry that growing rates will be too much for consumers and since the government doesn’t need to show a profit, a government option company makes sense. Plus, Aetna and others are either planning to or actually exiting the exchanges.


It doesn’t — however — make sense to many insurance companies or insurance groups. These are groups like America’s Health Insurance plans who said, A government-run plan would underpay doctors and hospitals rather than driving real reforms that bring down costs and improve quality. It’s time we focus instead on broad-based reforms that will ensure the affordability and sustainability of our healthcare system.”


Agents also question the wisdom of adding a public option to the ObamaCare insurance mix.


That’s the presidential race. Most of the time insurance goes conservative when it comes to donations. In 2016 the Republican Party has picked up $19.7 million and the Democrat Party a less than half that at $9.6 million.


More than 70% of the donations to political parties from independent agents and independent agent associations have gone to Republicans.


Here are the top insurance spenders:


   Starr Companies — $15,062,700

   New York Life Insurance — $1,570,192

   Blue Cross/Blue Shield — $1,545,471

   AFLAC — $1,215,224

   National Association of Insurance and Financial Advisors — $1,191,000

   Metlife — $1,061,109

   Independent Insurance Agents & Brokers of America — $1,005,975

   Council of Insurance Agents & Brokers — $872,948

   USAA — $788,615

   Massachusetts Mutual Life Insurance — $754,029

   Prudential Financial — $726,907

   Liberty Mutual — $701,528

   Northwestern Mutual — $690,694

   TigerRisk Partners — $674,200

   American Council of Life Insurers — $610,376

   American Financial Group — $534,536

   State Farm — $511,125

   Association for Advanced Life Underwriting — $490,000

   Zurich Financial Services — $477,785

   Nationwide — $476,801


Source link: Insurance Business America


Tags:  2016 Politics & Insurance  Insurance Content  Insurance Industry  Insurance News  politics  Weekly Industry News 

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Tough Stuff — Worker Stress

Posted By Administration, Tuesday, August 30, 2016

Stress is a killer. A study by the University of Maryland Medical Center said stress causes a number of physical and mental health problems:


   An elevated heart rate

   High blood pressure

   Immune system issues


   Mental health issues


Stress also impacts the workplace. Physical and mental stress causes issues affecting job performance adversely and that impacts the company’s bottom-line.


Identifying whether someone is stressed is easy when it’s obvious but not so easy when not. Adding to the ID problem is that we all handle it differently and some tasks are more stressful for one person than another.


Some thrive under pressure. Others avoid that pressure at all costs.


Some jobs are so low key that they’re monotonous. That’s perfect for some but leads to stress of another kind for high-energy people who’d be much less stressed in a high powered, intense corporate position.


What stress does have in common for all — no matter the person or position — is financial concerns from money troubles to potential job loss.


Stress also leads to challenges for employers, managers and supervisors. Some positions within companies require a very high level of productivity and proficiency. Sometimes poor personal decisions and financial difficulty affect that performance. Employees are distracted.


That impacts the bottom line.


It’s why many employers provide employee assistance programs, exercise programs and financial education for their workers. These are a very good defense against the loss of productivity and help harmony in the workplace as employees gain financial and personal security. In the end they perform better, take less time away from work and have better mental and physical health.


By the way, here are the results of a survey of employees and whether they identify themselves as being stressed. It was done by National Public Radio, Robert Wood Johnson Foundation and the Harvard T.H. Chan School of Public Health:


   Retail outlets — 27% admit to being stressed

   Outdoor work — 24% admit to being stressed

   Factory/manufacturing — 22% admit to being stressed

   Medical — 20% admit to being stressed

   Store 17% admit to being stressed

   Warehouse — 15% admit to being stressed


Source link: Employee Benefit News


Tags:  Insurance Content  Insurance Industry  Insurance News  Tough Stuff — Worker Stress  Weekly Industry News  work stress 

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Places to Avoid: Aggressive Driving

Posted By Administration, Tuesday, August 30, 2016

It might surprise you to learn the most aggressive drivers in the country aren’t in big city Los Angeles or New York City. They’re in the relatively flat and hot PIA Western Alliance city of Phoenix, Arizona. Drivers there are the most aggressive in the nation on highways and city streets. At least that’s the conclusion of Automatic, a company specializing in vehicle connectivity. Thus it has access to auto data.


Another PIA Western Alliance city, Tucson, Arizona has the second most aggressive drivers on city streets.


Automatic co-founder and head researcher Jerry Jariyasundant said the information comes from what the company calls an acceleration profile. It measures how often and how hard people accelerate or brake suddenly. More time spent at very high accelerations and braking indicates more aggressive driving. Drivers are usually more aggressive at lower speeds, believe it or not,” he said.


Here are the top-three cities for aggressive highway driving. All three are PIA Western Alliance cities (in bold):



  San Diego

  Los Angeles


The most aggressive city street drivers are found in two PIA Western Alliance cities:






The least aggressive combined city and highway drivers include one PIA Western Alliance city:






And least aggressive on city roads have two PIA Western Alliance cities:






As Weekly Industry News has reported before, aggressive driving statistics don’t necessarily translate to higher auto insurance rates. California has — says Insure.com — has some of the most expensive auto insurance rates.


Arizona does not. 


And then there’s what the most aggressive drivers on the road are driving:



   Mercedes Benz



Those driving Subaru are the least aggressive.


The National Safety Council says traffic fatalities in the first six-months of 2015 are up 9% compared to a year ago and 18% higher than two years ago. The increase — the NSC says — started when the economy started improving.


No word as to whether aggressive driving contributed to the 19,000 people who were killed between January 1 and June 30.


The data also notes 2.2 million people were seriously injured in the same time period. Those deaths and injuries — outside of the human misery — are expensive and cost about $205 million.


Even more worrisome says the council’s president and CEO Deborah Hersman is that annual deaths could top 40,000 for the first time in almost a decade. Last year the fatality count was over 35,000. “Our complacency is killing us. Americans should demand change to prioritize safety actions and protect ourselves from one of the leading causes of preventable death,” she said.


The Governors Highway Safety Association — who provided the NSC with much of its data — finds this worrisome, too. GHSA Executive Director Jonathan Adkins said the number of deaths are hitting crisis level.


Oddly, distracted driving isn’t mentioned in the report but driver errors is mentioned as the number-one factor. In fact, error causes 94% of all crashes. Maybe distracted driving fits there.


Adkins thinks technology that helps drivers stay focused and vehicles that drive themselves will go a long way toward solving the problem. “But we are still a long way away from fully autonomous vehicles and need to really hone in on the unsafe driver behaviors that are still so pervasive, including distraction, drowsy and drunk driving, speeding, and failure to buckle up,” he said.


The PIA Western Alliance states of Oregon, Idaho and California are in the states with the biggest increases. Since 2014:


   Oregon crashes are up 70%

   Idaho increased 46%

   California grew by 31%


The biggest increase belongs to Vermont at 82%.


Seven states — including the PIA Western Alliance state of Montana — saw declines. Delaware had the best numbers at an 8% drop. Montana’s rate fell 3%.


The council said, “While many factors likely contributed to the fatality increase, a stronger economy and lower unemployment rates are at the core of the trend.” But lower gas prices didn’t hurt either. They’re down 16% from 2015.


Source links: Insurance Business America, Insurance Journal


Tags:  Insurance Content  Insurance Industry  Insurance News  Places to Avoid: Aggressive Driving  Weekly Industry News 

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The Impact of a Cyber Attack from Another Perspective

Posted By Administration, Tuesday, August 30, 2016

Not a week goes by that a large business or government entity gets hacked in a cyber attack. They have become so frequent that they aren’t even big news anymore. That leads to what you know but haven’t seen in the news much lately. Cyber attacks are growing in frequency and in intensity.


In fact, most large organizations and businesses in this country have experienced at least one cyber attack. But do they — or you, or anyone — realize the full impact of a cyber attack on an organization or a business? While most are familiar with the basic problems, few are aware of the deeper, longer lasting troubles associated with one.


Deloitte Advisory released a report last week on the hidden costs of hacking. Those costs — Beneath the Surface of a Cyberattack: A Deeper Look at Business Impacts — will add up to 90% of the total bill and will likely be experienced for a year or two after the initial breach.


In the report Deloitte looked at 14 different impacts and classifies them as above the surface — or known costs — and below the surface which is the hidden, less visible costs.


Each category has seven impacts.


Emily Mossburg — who is a principal with Deloitte & Touche LLP — is a practice leader for Deloitte’s cyber risk services. She said, Executives have difficulty gauging potential impact partly because they are not typically privy to what their peers struggle with as they work to get their businesses back on their feet. An accurate picture of cyberattack impact has been lacking, and therefore companies are not developing the risk postures that they need.”


In the past a lot of the focus has been placed on a company’s vulnerability and the impact of technology on that vulnerability. The focus seems to be focused very narrowly on the breach notification element and the post-breach protection mechanisms that need to be in place, but the broad impact seemed to be ignored. An accurate picture of cyberattack impact has been lacking, and therefore companies are not developing the risk postures that they need,” Mossburg said.


Deloitte — she added — didn’t think a proper estimate of the true cost is being given. We thought this was being under-estimated. What we didn’t expect was how much of the true impact was beneath the surface and hasn’t been part of everyday discussion of cyber incidents today.”


Here are the above the surface costs and percentage of the cost of a breach for large firms. Smaller companies can do their own estimate of the costs of these items:


   Customer breach notifications — it last six months and costs $10 million — 0.6% of the total.

   Post-breach customer protection — lasts three years and costs $21 million — 1.25% of the total cost.

   Regulatory compliance (fines) — it’s $2 million over a two-year period — and it is 0.12% of the total.

   Public relations/crisis communications — runs $1 million over the first year — it is 0.06% of the total.

   Attorney fees and litigation — a 5 year cost of $10 million — 0.6% of the total cost.

   Cybersecurity improvements — $14 million during the first year — it is 0.83%.

   Technical investigations — a six week cost of $1 million — or 0.06% of the total.


These are the below the surface costs. And they are the biggest expense of a cyber attack:


   Insurance premium costs — $40 million over three years — it runs 2.38% of the total bill.

   Increased cost to raise debt — hits $60 million — and is 3.57% of the total.

   Operational disruption — $30 million — 1.79%.

   Lost value of customer relationships — a whopping $430 million over 3 years — 25.61% of the total loss.

   Value of lost contract revenue — a staggering $830 million over 3 years — 49.43% of the total cost.

   Devaluation of trade name — a $230 million loss over 5 years — 13.7% of the total.

   Loss of intellectual property — no cost estimate can be made.


Mossburg says businesses and organizations need to focus on four areas to prevent attacks and manage them if they happen. First and foremost, we’d look at the program elements — their strategy, their governance, their policies, their procedures, their framework, and are there any gaps related to their overall programs that would need to be fixed.”


Second, Mossburg would take a look at proactive security controls and posture, “Do they have the things in place to protect the data that they have, the systems that they have, the environment that they have, and most importantly, the business that they have?”


Third, what does a company have in place to monitor and understand things on an ongoing basis. Do they have the appropriate tools to log the activities that are happening within their systems, and do they have the appropriate analytics in place to analyze what’s happening that is outside of the normal,” she said.


And last, how do they respond? Is the company resilient? Do they have in place the processes to respond to an incident. Have they tested those processes and plans? And do they know — right up through the executive management team — who they need to communicate those things to?”


Source link: CSO


Tags:  Insurance Content  Insurance Industry  Insurance News  The Impact of a Cyber Attack from Another Perspect  Weekly Industry News 

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