Risk Insider: Martin Frappolli

Three Producer Cyber Strategies

By: | May 13, 2016 • 2 min read

Martin J. Frappolli, CPCU, FIDM, AIC, is Senior Director of Knowledge Resources at The Institutes, and editor of the organization's new “Managing Cyber Risk” textbook. He can be reached at [email protected]

Cyber risk is still poorly understood by a lot of organizations. Agents and brokers are optimally positioned to help their clients get cyber under control. Here are three ways that a skilled producer can help clients prepare to manage cyber exposures.

Share the News: Cyber Risk Involves More than Customer Data

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The headlines continue to focus on breaches that involve customer data, perhaps because so many people are potentially affected.

Agents and brokers can help clients measure and then prepare for the great variety of cyber risks, including first party exposures. Insureds may not be thinking about the costs of forensics, fines and restoration of systems and data in the wake of a cyber breach.

Perhaps the biggest threat is business interruption, whether from a targeted attack or a widespread outage of network services resulting from state-sponsored cyber terrorism.

Scott Addis, founder of “Beyond Insurance,” says “There is a misconception that breaches are caused primarily by hackers. Recent studies show that more than one-third of cyber breaches are caused by negligent or rogue employees.

“A well written cyber policy is far more expansive than just protection for the liability and response costs associated with a data breach. Policyholders may benefit from comprehensive protection including coverages such as network interruption, data restoration, reputational harm, social engineering, regulatory fines and penalties, and media liability, just to name a few.

“When a breach occurs, the board will be far more interested in the adequacy of coverage than the premium that was charged. Work with an expert.”

Use the Whole Toolbox

Producers sell insurance, and they help insureds understand policy choices and then match proper coverage to their exposures. But at a more fundamental level, insurance is just one tool in a risk manager’s toolbox. Especially for the mid-size and smaller organizations, the producer can serve as the de facto risk manager.

Consider all of the hygiene practices we employ to manage well-known risks like fire. We build to safety code standards, we equip buildings with sprinklers and extinguishers, we don’t store greasy rags next to the boiler, and we conduct fire drills. We do all that to mitigate the fire risk, and then we buy insurance.

A savvy producer can help a customer embrace that same approach with cyber risk. Mitigate the exposure by good cyber hygiene, understand the first party risks, understand that employees are still the biggest area of vulnerability, and only after that buy cyber risk insurance.

Read the Policy, and Then Read it Again

Stephanie Snyder, national cyber sales leader with Aon Risk Solutions, says that “cyber insurance policies are consistently inconsistent. There are over 60 cyber insurance markets that offer 60 different policy forms. These forms may contain different coverage triggers, definitions and exclusions.”

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She says that no cyber policy should be bound “off the shelf.” Due to the unique needs of every organization and the inconsistency in policy wording, “all cyber policies require coverage to be manuscripted.”

To get to the right policy that properly addresses the client’s cyber exposures, the producer must consider the industry exposure and specific customer concerns. “Ask questions,” Snyder advises.

“The dynamic nature of cyber risk means that just as your clients are trying to address their enterprise cyber risk exposures, the underwriters are trying to understand potential losses and how to underwrite to them. The evolving nature of cyber risk means that to an extent, we are all learning together.”

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]