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Supreme Court Ruling upholding PPACA will not lead to immediate changes

The Medical Professional Liability industry has enjoyed an unprecedented period of decreased claim activity leading to reduced loss costs. Industry executives have debated the reasons for the improvement, ranging from better patient safety to tort reform, the reality is no one has been able to pinpoint or quantify the exact cause.

The main goals of the Patient Protection and Affordable Care Act (PPACA) are to improve both access to, and the quality of health care as well as to reduce costs. It does not, however, address tort reform. Just as the Medical Professional Liability industry has tried to determine what drove decreased loss trends over the past eight years, they have similarly been debating the potential impact of PPACA on their insured base in an attempt to predict the future direction of loss costs.

While it is easy to argue for decreases in malpractice claims from elements of PPACA, it is just as easy to speculate that the same provision could lead to an increase in claim activity. Electronic medical records (EMRs) will mean better records and continuity in care, but will also provide better discovery to plaintiffs. Access will provide for earlier treatment, but providing care to 30-35 million new insureds will strain current health delivery resources, perhaps leading to more errors.

While not everyone agrees on PPACA itself, what everyone does agree on is there is far too much cost in our healthcare system. As a country, we must finds ways be more efficient and wring cost out of the system. Elements of PPACA, such as EMRs and a more integrated delivery, will continue to improve care due to better information and continuity of treatment, while attempting to accomplish it at a reduced cost.

Medical Professional Liability (re)insurers need to adapt to the real and fundamental changes in the healthcare system of physician consolidation, physician and hospital integration and hospital system consolidation to be able to provide unique and creative (re)insurance products to a changing risk and client base.

Cyber News Round Up

Rupert Alabaster, Director BMS Wholesale – P&FS team, reviews the recent cyber news.

27 June

Global companies urged to prepare for ‘likely’ cyber attacks     

BMS Message: cyber attacks are no longer something that might happen to someone else. All companies should take steps to prepare for cyber attacks and to plan for the aftermath.

Reducing the profile of the business to criminals in cyberspace should be a priority. Specialist firms like Digital Shadows can help massively in this area.

Companies should also buy cyber insurance as an equal priority to the normal ‘bricks and mortar’ insurance of property damage and business interruption.

26th June 

Cyber Arms Race Could Change the World Around Us

BMS Message:  Another interesting article endorsing the BMS view that as viruses are becoming more sophisticated the risks to business are becoming larger.

Here we see that the risks broadly are twofold: what are the consequences of a third party taking over physical assets and destroying them as in Stuxnet, and secondly what happens if they use it to record confidential information .e.g. the secret information of a proposed M&A deal that sits in a Corporate Finance house’s or lawyers’s server as in Flame virus. Scary stuff!

The articles below reinforce the BMS view that Intangible Asset Protection is one of the fastest growing areas in need of tailored protection.

Cyber-attack costs one company £800m, reveals MI5 chief

Argo Group Announces New Cyber Liability Insurance

XL adds six to its US cyber team

Cyber criminals may have siphoned off 2 billion euros from 60 banks

Click here to view the full BMS Intangible Asset Protection site – including expert videos and indepth case studies.

BMS Intangible Asset Protection Solutions – Video

At BMS, we recognise that intangible assets have become one of the key areas of risk that are of paramount importance to businesses now and in the future. They cover a very wide spectrum of assets broadly defined by the fact that they are not physical. Wipo figures suggest that over 80% of a company’s value is now contained within these non-physical assets.

Intangible assets can be split into legal intangibles such as patents, copyrights, trade secrets and trade marks or competitive intangibles such as data and know-how.

Watch BMS’ Rupert Alabaster discuss the importance of Intangible Asset Protection and how it is so much more than cyber risk:


NAMIC Management Conference – Leading by example

The NAMIC Management conference bills itself as a conference built by leaders for leaders. With that guiding principle in mind the sessions tend to focus on operational strategy, industry trends and leadership growth. The first day began with three “Power Sessions”.

Power Session one, Industry & Weather Trends, was lead by Mike Smith from Accuweather. He began by reviewing 2011 – which was the worst weather year in US history. The most unusual events being the tornados, many of which were “metronados” tornados that struck in cities, causing severe damage. He pushed for the insurance industry to campaign for hurricane level building codes in tornado prone areas and the enforcement of building codes already in place, which would save both lives and property.

Power Session two, A Broker’s Perspective on the Reinsurance Relationship, was lead by James Kent of Willis Re. He too focused on how bad 2011 was from a Reinsurance point of view, with between 40% and 50% of the 2011 losses paid by reinsurers. 2012 is shaping up to be a much better year for both the primary insurance carriers and the reinsurers, with good results for the first two quarters of the year. He expects Reinsurance pricing to continue to be flat to down barring any major catastrophe.

Power Session three, Economy, was lead by Dr. Robert Genetski. He reviewed the current economic situation from six viewpoints: US economic weakness, the financial collapse of 2008, the Euro debt crisis, the US debt crisis, financial and economic outlook, and the upcoming November elections.

All in all, I found these sessions provided a great deal to consider and gave us all a thought-provoking start to the conference. Tomorrow is devoted to breakout sessions and Wednesday returns to the three Power Session format.

To read more about the BMS P&C offering, click here.

PIAA Analysis – Unique Update Review

Dave Spiegler, EVP and Head Actuary at BMS, updates his unique analysis report on the profitability of the Physician Insurers Association of America (PIAA) companies and what it means for the MPL market.

Click here to read the full report.

Cyber Risk – The BMS View

BMS’ Rupert Alabaster, Director Professional & Financial Services, reviews current cyber risk news and gives you the BMS view:


Travel Security

The FBI have warned that hackers are targeting guests’ data when they log into hotel Wi-Fi. It warned of corrupt software update pop-ups when using hotel Internet connections overseas. When they clicked on the “update,” malicious software was installed on their computer.

Hotel Wi-Fi connections are especially risky because often they are set up without proper security settings. But all free Wi-Fi internet connections accessed when travelling can the likelihood of private personal or corporate data being compromised.

BMS view – It is important that corporate security procedures are kept up to date to ensure that executives are fully aware of the exposures they face when travelling and what they should do to protect themselves and the company. It is also worth checking the cyber insurances to see if there is any exclusion where such procedures have not been followed.


Cyber security for industrial control systems

Joel Langill, Chief Security Officer and Control System Cyber Security Specialist for SCADAHacker, explains how easy it is to hack into most PLCs and provides you with steps to take now to protect your operations.

BMS view – in this day and age all companies should have a form of cyber insurance in place that will help protect them from such breaches. It should rank up there alongside of buying property and business interruption coverage.


Reuters – Scores of U.S. companies have not disclosed breaches of their computer systems, even though eight months have passed since U.S. securities regulators issued guidelines on disclosing cyber attacks, according to leading security experts.

There have been lots of breaches in every industry that have never been publicized,” said Shawn Henry, the FBI’s former top cyber cop, who joined a new cybersecurity company, CrowdStrike, in April.

Henry said the FBI was working on 2,000 active cyber cases when he retired from the agency in March. “There’s only a handful of cases that anybody has ever heard about.” he said.

U.S. government officials and cybersecurity consultants have been raising alarms about the growing sophistication of attacks on private and government computer networks.

Some companies do not disclose cyber breaches because they feel they were not material, said Dmitri Alperovitch, founder and chief technology officer of CrowdStrike. He said he knew of a publicly traded defense contractor that lost intellectual property (IP) to China because of a cyber intrusion.

“The justification they used for not announcing is that they only do business with the U.S. government and it doesn’t really matter that the Chinese stole all their IP because the U.S. government will never buy from China, so it wasn’t really material to them,” said Alperovitch, who declined to name the company.

Henry and other top U.S. officials have underscored the severity of cyber threats by citing a case in which one publicly traded company lost $1 billion of intellectual property in a single intrusion over a weekend.

A Reuters review last winter of more than 2,000 SEC filings that mentioned cyber risks found that some companies revealed significant new information about hacking incidents, but the vast majority merely described a general risk of cyber incidents. Some defense companies and other firms known to have suffered computer breaches did not mention the incidents in their filings at all.

LinkedIn Corp (LNKD.N), a social network for job seekers and professionals, last week became the latest high-profile company to be hacked. It said it was working with the FBI to investigate the loss of millions of member passwords, but has not submitted any SEC filing on the matter

LinkedIn spokesman Hani Durzy said the company had complied with SEC requirements, and had been giving members and the public “ongoing disclosures” and updates on its corporate blog.

BMS view – not only is the scale of cyber crime phenomenal, but the losses involved are serious. All companies need to seriously look at buying appropriate protection, and the insurance market needs to work together to provide relevant cover and higher limits.

Click here to access the full BMS Intangible Asset Protection website, with expert, in-depth videos and case studies.

Data Protection – the growing risk for the Healthcare industry

BMS Professional & Financial Services Director, Phil Murphy, discusses how significant data protection is to the healthcare industry:

Healthcare providers face rising costs and pressures from politicians to cut budgets, while at the same time they are waking up to the significant cost a data breach can have on their business and reputation.

The healthcare industry currently collects and stores massive amounts of private data, from a wide range of individuals, including credit card numbers and social security numbers. This can include details belonging to government officials, politicians and celebrities. This data is easily lost or stolen by individuals seeking to gain financial advancement through the use of this data. This means the healthcare industry now sees this as an additional exposure that needs to be considered when looking at an insurance programme.

It is very much a growing problem. After a few high-profile incidents of breaches publicised in the media and the resultant cost of those profile breaches to the healthcare industry –  has had a massive impact on bottom line revenues.

Hospitals are places where data is often at risk. The physicians within the hospital systems generally use laptops or handheld data palm readers which store a lot of data. They are very easy to lose, and sadly with the laws in the US, once you have lost something like this, you have to then involve the regulators and everyone else in making sure that the data breaches are communicated to the public and that credit monitoring and various steps are put in place to ensure that the data is protected and that affected individuals are recompensed for it.

With the HITECH law that has just been introduced, there are very severe regulatory sanctions and penalties that can be imposed for loss of data. They can fine you up to $25,000 per patient record, plus an additional $100 per day for every individual affected that it goes unreported.

On top of that, there is the reputational risk and harm that you can do to your own goodwill by the loss of data. The attendant crisis management costs associated with that can be quite staggering.

Overall, the need for the insurance industry to offer protection to the healthcare industry in case of a data breach or loss has never been more prominent and it takes the right kind of broker to provide tailored products that will amply cover all areas of potential loss.

Click here to access the full BMS Intangible Asset Protection site and Phil Murphy’s Video discussing Data Protection & the Healthcare Industry.