USRE Blog

Don't Think You Need Privacy Liability Insurance? Think Again!

2010-01-27T16:44:00.000-08:00

Pending situation in Tennessee. Local Blue Cross/Blue Shield health insurer has run up a $7million tab cleaning up the mess after they lost a laptop.

http://content.usatoday.net/dist/custom/gci/InsidePage.aspx?cId=jacksonsun&sParam=32630677.story

2010-01-27T16:37:00.000-08:00

Judge orders Lloyd's to fund Stanford defense. Good example of why "final adjudication" language is important in D&O policies! Even more important is to have a "non-rescindable" policy so when the CFO takes a plea bargain everyone else doesn't loose their coverage.

Story in Houston Chronicle:

http://www.chron.com/disp/story.mpl/business/stanford/6837100.html

Another Day, Another Potentially Uninsured Embezzlement Brings A Compay To Its Knees!

2010-01-07T13:38:00.000-08:00

I tell my clients all the time to not forget the crime insurance and the employee dishonesty part in particular! Here is yet another example of a company nearly going out of business because a "trusted employee" took everything. Over the years people have said to me they feel that buying employee dishonesty insurance sends a message they don't trust their employees. Not true! People buy insurance every day for all sorts of perils that may never effect them (except life insurance of course!). Good internal controls and insurance to back those controls up are an inexpensive way to keep this from happening to you. I have a folder of stories just like this one that go back 25 years and most of them are small businesses who got taken for well over $100,000.

The premium for a $1,000,000 employee dishonesty insuring clause for a company with 35 employees costs about $2,500 a year. A small investment to keep this from happening.

http://www.newburyportnews.com/punews/local_story_006223612.html

The Timing of Disclosure Regarding Legal Problems Embroils Fidelity National

2010-01-07T13:06:00.000-08:00

The dilemma of what legal matters warrant disclosure to shareholders is a difficult one for publicly owned companies and particularly for financial services companies who bring suits and are defendants on a regular basis. Fidelity National Financial is just one example of a firm where shareholders are questioning the withholding of information about a legal mess. The underlying scandal is interesting too so worth a read:

http://www.nytimes.com/2010/01/07/business/07title.html?em

Behind the deal: William A. Berry sold to Suffolk due to financial concerns - Boston Business Journal:

2009-10-16T12:16:00.001-07:00

We only handle non-construction related surety bonds but it's not every day bonding is mentioned as the prime motive for major M&A activity so I'm posting this story from the Boston Business Journal that suggest Berry construction sold to Suffolk because of bonding capacity issues.

Behind the deal: William A. Berry sold to Suffolk due to financial concerns - Boston Business Journal:

Shared via AddThis

Massachusetts Supreme Judicial Court Upholds $2million Verdict Against Wal-Mart

2009-10-07T06:40:00.000-07:00

The Mass. SJC upheld a $2million verdict in a pay discrimination case brought by a female pharmacist against Wal-Mart Stores.

Story from WSJ.com here:

http://online.wsj.com/article/SB10001424052748703298004574455311605751836.html

Insurance lesson here is be sure your Employment Practices Liability policy covers punitive damages! This verdict was $1million of compensatory damages and $1million in puntive damages.

DOL Posts Field Guidance on ERISA Bonds

2009-10-05T12:06:00.000-07:00

The Department of Labor has published a long awaited "Field Assistance Bulletin" on ERISA's fidelity bonding requirements. The format is Q&A so it's an easy read (as these types of documents go!) so consult this when you are confronted with the age old question "how much ERISA fidelity coverage do I need?" and you may feel a bit more confident about this decision!

Link to DOL website: http://www.dol.gov/ebsa/pdf/fab2008-4.pdf

9th Circuit Decision Emphasizes The Importance of Adequate ERISA Fiduciary Insurance

2009-10-05T11:33:00.000-07:00

Just catching up on my summer reading here and getting some new posts on the blog.

Over the summer the 9th Circuit of the U.S. Court of Appeals handed down a scathing rebuke to the fiduciaries of an Employee Stock Ownership Plan, most of whom also served as directors and officers of the company 100% owned by the ESOP. In summary the fiduciaries had an agreement with the company that it would advance defense costs to any claim made against them for breach of fiduciary duty to the ESOP. In 2004 the company bought out a former owner's large block of stock options and paid him significant deferred compensation. Several current and former ESOP participants sued alleging the stock options and deferred compensation arrangements violated ERISA's standards of prudent conduct. The Department of Labor took an interest in the case early on and now the 9th Circuit has upheld a district court injunction against the company barring it from advancing any defense costs. Among other things the decision seems to underscore the view held by some that if an ESOP owns 100% of a company the distinction between the legal roles and exposures of the fiduciaries of the ESOP and the directors and officers of the company are practically indistinguishable.

Decision is posted here: http://www.ca9.uscourts.gov/datastore/opinions/2009/07/27/08-17369.pdf

Blue Cross physicians warned of data breach - The Boston Globe

2009-10-05T07:48:00.001-07:00

The PLUS New England Chapter held a seminar on privacy liability on Thursday 10-1-09:

https://plusweb.org/index.cfm/p/Events.EventDetails/eventID/NE1009

Two days later the Boston Globe reports that Blue Cross Blue Shield had a laptop stolen with personal information on thousands of physicians:

Blue Cross physicians warned of data breach - The Boston Globe

I would appear the chapter chose a timely topic!

Goodbye Salomon Brothers

2009-09-29T13:32:00.000-07:00

Link to an interesting story in today's Wall Street Journal about the "final, final" end of Salomon Brothers, the firm widely credited with creating the mortgage backed securities market in the 1980s.

http://online.wsj.com/article/SB125417931158647695.html

West Virginia Investment Management Board Loses $643 Million

2008-08-11T06:46:00.000-07:00

The West Virginia Investment Management Board has lost hundreds of millions in the last year and this only highlights the challenges faced by the trustees of large public pension and other fiduciary funds who have to navigate through this challenging environment.

Click here to read the full story on Advisen

Important Allocation Case in Delaware

2008-08-07T09:00:00.000-07:00

John Paul Sutrich at ARI Risk Management told me about this case yesterday and now its on Advisen. A real blow to insurers using "allocation language" to force insureds to negotiate on defense costs before a case is resolved.

See Advisen Story: http://fpn.advisen.com/articles/article81238054-546578096.html

While the soft market for pricing and coverage on D&O continues the pain for insurers on cases still working their way through the legal pipeline makes one wonder how profitable this line of coverage is for them? Only time will tell.