Why Life Insurance Should be Reviewed Often

When most people purchase a life insurance policy, they do not usually review it as often as they should to make necessary updates. Dealing with life insurance is something that most people consider unpleasant, but it is a very necessary part of making sure survivors are properly provided for. It is also important for covering final expenses, which can otherwise leave loved ones financially strapped or may make them go bankrupt in some cases.

Life is not static. It is common for a person’s circumstances to change. People may buy a house, start a new job that pays more, get married, have more children or start taking care of an aging parent in their own home. All of these life changes are also good times to review and modify a life insurance policy. For example, a man who purchased a policy when he had a spouse and two children might not leave enough behind if he did not update it after having one or two more children or receiving a job promotion. As a rule, life insurance benefits should always be commensurate with current living situations and life details.

Even if the year passes and there are no major life changes, it is still wise to review personal coverage. Keep in mind that a policy should not just cover expenses for a funeral and a few months’ living expenses after death. Survivors will probably require at least a few months to recover. Every person should decide how much is necessary based on an agent’s suggestions. People who are the main earners for the family and have children who they want to attend college may also want to make sure there are enough funds that children can pay for tuition and some other expenses.

Life insurance is not only necessary for people who work. A spouse who stays home to care for children should also have enough life insurance to cover child care expenses and any costs associated with keeping up the home. People who are single and have no heirs may think they do not need coverage, but they should always have enough to cover their own funeral expenses and any debts. They may also choose to purchase extra coverage so they can leave a sum to a charity, family member or friend of their choice.

While reviewing coverage every year, it is helpful to confirm beneficiaries and their information. Keep addresses and phone numbers current. When there are any doubts that coverage will not be adequate for supporting survivors, it is important to discuss any concerns with an agent as quickly as possible. Life insurance is not a pleasant topic to think about or discuss, but being prepared and covered is important.  ACBI can help you review your options and be sure you have the best solution for your individual needs.  Call our office at 203-259-7580 or visit our website.

Protection Against Data Breaches

Just prior to the Christmas holiday in 2013, the prominent retail chain Target announced that it had been the target of a massive hack of its credit card processing systems. The breach compromised as many as 40 million credit card numbers. Law enforcement authorities and Target’s own investigators confirmed that stolen card numbers were coming up for sale on Internet sites catering to identity thieves at anywhere from $20 to $100 per card.

The complaint reads, in part: “Target failed to implement and maintain reasonable security procedures and practices appropriate to the nature and scope of the information compromised in the data breach.”

All businesses are at risk

If Target’s modern Internet security and encryption can be hacked into, so can yours. And if your business fails to protect this information against criminals both internal and external to your organization, you could be liable for damages.

Target was named a defendant in a lawsuit within days of the news breaking. Naturally, Target can afford the top attorneys in the country to defend its interests For most small or medium-sized businesses, the attorney’s fees alone involved in mounting a defense would be a very significant hardship, even in much smaller cases.

The fact is that credit card thieves, hackers, and extortionists attack not just large businesses, but medium- and small-sized businesses, too. In fact, it happens every day. Servers in restaurants, for example, can swipe a credit card using a smart phone and a tiny reader they can carry around in their pockets – or photograph your accounts receivable records. Advances in technology and business methods have also created new dangers for businesses, and an emerging area of insurance and law centered around cyber-risks.

As a small business, your risk isn’t confined to credit card numbers and transactions. You could be facing immense liability from any of these cyber-crime related risks:

 

  • Security breaches business checking accounts
  • Electronic theft of money you hold as a fiduciary for your clients or customers
  • Health insurance records
  • Theft of e-mail addresses
  • Customer bank account and other billing information
  • Personally-identifiable medical information

 

It’s not just criminals that can cause a claim, either. Your servers could be destroyed in a fire, or infected with a computer virus.

Damages can quickly total into the hundreds of thousands or millions of dollars, depending on the size of the business and the nature of the data that was destroyed, compromised or stolen.

Insuring Against the Risk

Fortunately, it’s now possible to insure against the devastating effects of a cyber breach or network disaster. While there is no “standard policy form” at this point, most policies currently available will provide coverage against the following types of risks:

 

  • Data destruction
  • Data recovery costs
  • Business continuation
  • Data theft costs
  • Extortion
  • Legal fees arising from cyber risks

As with any type of insurance, definitions matter, so look beyond the monthly or annual premium costs to see how each peril is defined, and review any exclusions, before electing a carrier or policy.

Who To Involve      

Selecting appropriate coverage is frequently a team effort. Best practices include getting input not just from management and from a licensed insurance agent, but also from dedicated IT personnel, who may be tracking the latest scams and risks in their own professional reading and can help keep management apprised of risks and vulnerabilities.  Call ACBI at 203-259-7580 for a review of this crucial coverage.

Why Insurance Premiums are Increasing

Insurance premiums are a function of these factors: The perception of future risks, recent catastrophic claims and the return available on investment. Huge fires and other disasters factor in, such as the Colorado Springs blazes earlier this year and other natural disasters have also forced large payouts. Even the devastating Japanese earthquake and tsunami from 2010 affects insurance premiums in the United States, since insurance companies routinely purchase re-insurance coverage from very large companies. And these reinsurance companies, such as General Re, have been increasing their rates. In addition, jury awards and settlement costs in a variety of commercial fields have put pressure on insurance company reserve funds.

Yes, insurance companies are just like you: They assess the risks they can cover, and then buy insurance themselves to protect themselves against very large but unlikely events that would overwhelm their reserves.

We saw a similar tightening of the property and casualty insurance world across the board, in 2001, following the 9/11 attacks on the World Trade Center. The direct costs themselves were significant, but reinsurance companies also increased their rates then, in order to cover their own risks and ensure clients were protected in case of acts of war, nuclear strikes, chemical strikes, etc.

Fortunately, their worst fears weren’t realized, but prudent insurers are in business to cover the worst case scenario, and so they had to plan and set premiums accordingly.

Fast forward to today, though, and we have a different phenomenon at work. Reinsurers had just started to climb out of the substantial capital shocks of 2008 and 2009 when they got hit with the Japan tsunami, which put pressure on capital pools. But as they work to replenish their reserves, all insurers, all over the world, have been forced to reckon with a new reality: Low interest rates.

Insurance companies make money in two ways: Bringing in premiums, and investing the “float.” Normally, insurers break even or even run a slight loss on premiums. This keeps premiums affordable, but is only possible because they can invest their accumulated reserves at a profit.

Ten years ago, an insurance company could get 5 or 6 percent on a portfolio of Treasuries. Now that same insurer struggles to get 2 or 3 percent on a AA-rated bond portfolio, and U.S. Treasuries – the traditional mainstay of conservatively-run insurance companies, may well be generating a negative real return after inflation.

Something has to give.

That’s what we’re seeing now: Actuaries have no choice but to increase premiums to cover anticipated payouts in light of the new lower interest rate environment. To do otherwise risks insolvency, which does no service to the insured at all, and even defeats the purpose of insurance.

The tightening of the reinsurance market, combined with adjustments to account for the lower returns on assets, is now making its presence felt on Main Street: Aggregate commercial insurance ratios increased for the fifth consecutive quarter, and by 5 percent in the first quarter of 2012 alone. That’s the biggest increase we’ve seen since 2004 (remember those summer hurricanes in Florida that year?)

The two lines responsible for the largest increases, according to a Towers Watson survey, were the two segments most vulnerable to jury award and medical cost increases (workers compensation), and increased reinsurance costs from megadisasters and lower interest rates (commercial property insurance), respectively.

Insurance markets tend to cycle along with other industries. As reinsurance pools of capital get replenished, or as interest rates rise, allowing carriers to generate more revenue from the “float” rather than rely so much on point-blank premium collection, rate increases tend to moderate, and new carriers spring up to compete for business.

So if you are seeing rates increase, it’s more a matter of prudence in the face of risk and low returns on capital, which affect all carriers everywhere. As a result rates increase to make sure there are enough in reserves to cover future claims . No one is exempt, and it’s a bigger issue than any single insurance agency, carrier, or insurance line.  If you would like to review your coverage to be sure you have the proper protection at the most cost-effective level, please call ACBI at 203-259-7580 or visit our website

Employers Increasingly Embracing High-Deductible Health Plans

More and more employers are offering high-deductible health plans, or HDHPs. These are specially-designed major-medical health insurance plans that come with a relatively high deductible. To compensate for the high deductible, plan participants can contribute pre-tax dollars to a health savings account, or HSA. Money in HSAs compounds tax-deferred, and funds spent for qualified health care expenses are tax free. HSAs are only available in combination with a high-deductible health plan.

Because the plan isn’t on the hook for common but small expenses, HDHP/HSA plans are able to save a good deal of money in claims. Part of this savings, of course, flows back to plan sponsors in the form of reduced health care premiums.

These reduced premiums have been a key driving factor in causing employers to migrate to HDHP plans. Case in point: In 2006, only 4 percent of covered workers were covered under an HDHP; as of 2012, that figure had exploded to 19 percent. Likewise, the percentage of workers covered under a plan with at least a $1,000 deductible also exploded, from just 10 percent in 2006 to 34 percent this year. At small employers, the percentage of workers with deductibles over $1,000 was close to half.

Savings Data

According to the 2012 Kaiser Family Foundation’s Employer Health Benefit Survey, the average cost to employers was $4,163 per year per worker for an individual plan, while family HDHP plans cost employers $10,409 per covered worker, on average. HMOs, on average, cost employers $4,554 for individual plans and $11,166 for family plans, on average. Other plan types are even more expensive, both for employers and workers.

When contributions from employees and employers are combined, the total premium for HDHP workplace plans was $411 for individuals and $1,177 for families. This compares favorably with $468 per month for individual plans and $1,362 for family plans of all types.

Of course, to maximize the efficiency of these plans, the employers and employees can’t simply pocket the cash savings. They should also contribute part or all of the premium savings to health savings accounts.

2013 Limits

For tax year 2013, the IRS sets an annual limit of $3,250 for contributions to individual health savings accounts. That limit is increased to $6,450 per year for family plans.

The IRS also sets a minimum annual deductible for health plans to qualify as HDHPs – and thus qualify participants to make deductible contributions to HSAs. For individuals, the health plan must feature a minimum annual deductible of $1,250 for self-only coverage, and $2,500 for family coverage. Out of pocket expenses are capped at $6,250 per year for individual coverage, and $12,500 for families.

Employer Contributions

Employers can choose to contribute to employee HSAs as part of the overall compensation package. Generally, you can’t match employee contributions, because that would run afoul of comparability rules. Employers must make a comparable match among all eligible employees. Generally, employers will make contributions gradually over the plan year, since they have no control over the funds once the contribution is made.

Communication is Key

For most employees in good health, there are advantages to going with an HDHP/HSA combination – especially for those in higher tax brackets. Premiums are lower for the employee as well as the employer, and it’s easy for most workers to grasp the value of pre-tax contributions. Some workers, however, focus on the higher deductibles, rather than on the long-term benefits.

Additionally, some workers and families with people with long term, chronic illnesses that require regular medical treatment don’t benefit much, or at all, from these plans. Owners and HR managers may want to make other types of plans available for workers who fall into this category.  If you have any questions about your benefits program, call ACBI at 203-259-7580 or visit our website

Why Homeowners Should Ask Hired Workers For Proof Of Insurance

When doing business with someone else, it is crucial to know whether that person is insured or not. Asking this question is very important. If a service worker such as a gardener, arborist or contractor does not have insurance and causes damage on a homeowner’s property, the homeowner may be on the hook to pay for it. The same is true if an uninsured worker is injured. Hired workers who do not carry insurance tend to be less responsible than those who do, so asking about coverage is also a good way to determine whether someone will be a reliable worker. It is always best to pay a little more for someone who is insured than to take the risk of hiring an uninsured worker.

Avoid taking a person’s word if he or she says there is insurance. A verbal confirmation will do no good if the person is actually injured while being uninsured. Ask the individual to have his or her broker send a certificate of insurance. If the broker sends it via email or fax, then the policy can be verified. In some cases, smaller firms may try to convince homeowners that insurance is not necessary. Avoid falling for this lie, because it is a common trap used by amateurs to convince homeowners to buy services or products that are usually poor quality. In addition to this, damages or inadequate services will have to be compensated for out of pocket due to lack of insurance.

The following are some examples of types of workers and services a homeowner should request insurance certificates for:

– Installation or repair services for home, business or automobiles.
– People who have a lease or rental agreement with the homeowner.
– Contractors hired to work on commercial or home remodeling projects.
– Independent contractors or contract-based employment agreements.
– Professionals such as mortgage brokers, staffing firms, CPAs and consultants.
– Housekeepers, gardeners, maids and other service contractors.

Contractors and carpenters should have a general liability policy or CGL that is designed for their field of work. Professionals such as CPAs and consultants should carry professional liability insurance, which includes errors and omissions coverage. Hired workers should also carry workers’ compensation insurance. This is especially important if they will be bringing in a sizable crew of their own workers to complete a project. If vehicles will be used on the job, ask for commercial auto coverage as well. Whether or not to request insurance proof for every service agreement is a decision each homeowner must make. However, it is especially important to purchase coverage when paying large sums of money for jobs. Also, consider the type of job and potential for injuries. To learn more about these types of insurance, call ACBI at 203-259-7580 or visit our website. 

What Americans Think About Safety and Public Surveillance

After the bombings at the Boston Marathon, many Americans showed their support for surveillance cameras in public areas. When asked if these cameras could help reduce crime, many Americans answered favorably. According to Rasmussen Reports, a recent phone survey they conducted found that less than 20 percent of American adults are against the use of public surveillance and security cameras. About 70 percent supported the idea, and the remaining participants were undecided.

The survey also showed that about 55 percent of participants believed they were safer in public when security cameras were in use. However, more than 25 percent disagree with this idea. More than 50 percent of respondents said that surveillance cameras would reduce crime, and almost 30 percent disagreed with this statement. More than 85 percent of Americans think cameras are at least somewhat important tools for assisting law enforcement officers in solving crimes. Of this number, almost 60 percent felt strongly that cameras were vital for solving crimes. About 10 percent of respondents felt that cameras were unimportant.

More than 85 percent of likely voters said that law enforcement agencies did well at conducting investigations during the Boston bombings. Another 70 percent of respondents felt that another terrorist attack would likely occur within the span of one year. Less than 20 percent of survey participants felt that the United States would be safe from attacks indefinitely.

In a similar survey conducted in 2011, more than 65 percent of voters were in favor of surveillance cameras in public stadiums, parks and transportation stations. Of the favorable respondents, the majority were elderly individuals and women. Younger participants were less enthused about the idea of public surveillance. More than 80 percent of Democrats showed favor for the cameras, but slightly more than 65 percent of Republicans were in favor. More than 60 percent of participants without a political affiliation were in favor of the idea. While these groups may not agree on whether cameras make citizens safer, they mostly agreed that cameras were helpful for law enforcement officers.

The survey showed that black respondents had more faith in the effectiveness of surveillance systems than white people or other minorities showed. Although Americans claim they value privacy, about half of respondents said they would compromise their privacy for security. Only about 15 percent believe that the United States allows too much freedom. Almost 45 percent of respondents said the American justice system is mostly fair, but 40 percent disagreed. However, Americans generally agree that the justice system’s main problem is setting criminals free and arresting innocent people.

Top 10 Predicted Video Surveillance Trends For 2014

Researchers expect to see several changes in the video surveillance market during 2014. They said that the demand will continue rising and is expected to grow more than 10 percent. These are the top 10 trends they expect to see.

1. Video Surveillance Markets
Experts say that equipment demands have grown in double-digit rates during the past decade. They predict that 180/360-degree cameras and fixed-dome cameras will be the top product segments to grow, and they expect to see utilities, energy and city surveillance as the top vertical markets growing the fastest.

2. Big Data
Smart phones with cameras and Internet connectivity combined with social media apps have led to the availability of images through crowd sourcing. Experts say that police will likely request this information more often and use it frequently. While it gives them quick and easy access to others’ information, it will present challenges for data manipulation and quality analysis. This will certainly be a challenge for software vendors and systems integrators.

3. Cloud-Based Surveillance
Although it is not widely available throughout the world yet, China has started using cloud-based surveillance. With network bandwidth improving and product pricing becoming lower, this is a likely possibility for civil use. Experts predict that any cloud-based surveillance services will be priced and evaluated based on the features providers offer to customers.

4. Thermal Cameras
During the next few years, experts predict that the product market seeing the biggest average selling price drop will be the un-cooled thermal camera market. More competition, new product improvements and new markets will present some challenges for this specific market.

5. Panoramic Cameras
The biggest winner among surveillance cameras for 2014 is the 180/360-degree panoramic camera. These types of devices are expected to have the largest number of global shipments, which are expected to increase by 60 percent. They are also expected to pick up market share in places such as retail stores, casinos and airports where panoramic views are vital surveillance needs.

6. Network Infrastructure
Network video surveillance trends continue, so the focus is shifting more toward obtaining infrastructures to support it. Power is essential for this, and recent standards make it easier for security managers. Experts predict that manufacturers will expand their product lines to include more low-powered cameras that conform to new PoE standards.

7. Live Video And Mobile Access
Experts say there have been talks about schools and other facilities possibly sharing live video feeds with law enforcement when necessary. There is already technology in place to make this possible, but there are important cost issues to think about. However, more value is being placed on security and costs are decreasing, so 2014 may be the year when live streaming video surveillance to law enforcement becomes more common.

8. Video Analytic Tools
Many surveillance vendors have been adding low-end analytic applications to their devices free of charge, but the question has been raised whether there will still be a market for such tools. If not, experts wonder if they will continue to be offered for free. The market has reached a point where a decision must be made on this, but they expect that devices with chargeable VCA will exist for applications where reliable analytic tools are needed.

9. Audio Capabilities
More than 70 percent of cameras shipped during 2013 had multi-directional or uni-directional audio capabilities that were rarely used. Despite this, experts predict that the market will see a bigger push for audio capabilities with video equipment during 2014.

10. Vendors And New Markets
Many people think the security market is consolidating, but this is not true. Surveillance vendors are considering new markets as they continue expanding their products and services. Experts predict even more products to be released from network-focused security companies in 2014.

Some Illnesses may no Longer be Barriers for Life Insurance Rates

In the past, people who had a history of serious health problems would not be able to buy affordable life insurance. However, the industry has experienced a dramatic shift, which resulted in the rules being changed. Experts note that the rules still vary from one company to another for preexisting conditions, but people who have these conditions will find it easier to obtain coverage.

Experts say that consumers should not just assume they will not be approved for coverage if they have health issues. With the possibilities of an earlier diagnosis, better detection and more treatment options, many people can live longer with serious health issues than they could in the past. Insurers are offering coverage to people who have chronic conditions due to the availability of information. As outcomes and care improve, people who could not afford coverage in the past might even qualify for standard rates with some companies. Experts say that they are hopeful these trends will continue.

With survival rates improving every year, life insurers have to shift their policies. In the past, people were evaluated based on several risk factors, family history, lifestyle and medical conditions. While job related and other risk categories may remain the same, acceptance for medical conditions is changing. The risk of insurers having to pay out a death benefit in a shorter amount of time is not as likely, which is part of what makes the policies more affordable.

Since the 1970s, the rates of survival for many serious illnesses have improved. For example, cancers such as those of the prostate, esophagus and pancreas often came with less of a chance of survival. With newer treatments and medications, people can survive these types of cancer for several years. For early detection of breast cancer, the five-year survival rate is more than 95 percent if treatment is used. However, the survival rate in the 1970s was only about 75 percent. The five-year survival rate for prostate cancer that is treated is also more than 95 percent, which is a climb from less than 70 percent in the 1970s.

Due to improved treatment options, many people can stabilize their health for longer. Once their illness is under control or in remission, they may qualify for lower life insurance rates. Experts gave the example of PSA testing used for prostate cancer. If the levels are acceptable, insurers can offer better rates. However, the rates are higher when the PSA test is not at a favorable level. These methods are not limited to just cancer. There are other ways of evaluating additional illnesses. For example, insurance companies are now more likely to offer decent rates to people with obstructive sleep apnea or well-controlled diabetes. People who have had organ transplants or have illnesses that cannot be controlled as well may not qualify for standard rates. However, they are still likely to receive better rates than those offered in the past. To learn more about these options, call ACBI at 203-259-7580 or visit our website

What Contractors Need to Know About Venturing to Other Types Of Work

Contractors who are picking up projects to stay busy in a tough economy are starting to move into areas that they are not familiar with, which means they are taking more risks. Experts say that with such limited work opportunities, contractors are faced with having to change their operations. When contractors also decide to work with subcontractors on these projects, they are often taking on the risks of working with the sub’s employees. In many cases, the employees are not properly trained, so they only contribute to the existing risks. Many of the areas contractors are choosing to migrate to have different legal implications, but some may not be aware of the risks involved in such a change.

Experts say that going out of a specialty area to take on new types of work is a mistake that many experienced contractors advise newer ones against. Acquisitions and mergers for contractors are happening more and more often in the tough economy. When contractors combine their work through mergers, it is important for them to involve their insurance underwriters and engineers to help in identifying risks.

Types of work that would have drawn less than five bidders in the past are drawing between 15 and 20 now, but many contractors who are bidding are unfamiliar with the work. They may think it sounds interesting and may be confident that they can complete it. However, getting involved in an entirely different type of work could be disastrous. For example, a carpenter who decides building roads sounds more interesting would not have the right skills to make an immediate jump.

When contractors start working in states where they have not worked before, the exposures become even more complicated. In addition to rules and regulations, several aspects of construction can differ from one state to another. Some examples are different weather conditions and different soil. Moving to a new state also puts contractors in different selection pools. This means they will not be familiar with which subcontractors are reliable and which ones are not. It is important for contractors to stay alert and keep their insurers informed of their plans. This will help insurers identify risks before incidents happen that may result in uncovered claims.

When contractors who are not familiar with certain types of work are winning bids, it usually means they are undercutting specialists who know what it takes to do the job. The main issue for contractors moving into new areas is expertise. If they lack it, they should not bid on the job. Taking a job without the right expertise only harms the specialists who miss out, the party contracting for the job and possibly the environment or the neighbors of the contracting party. Contractors looking to change to a different area of work should ensure they receive the proper training before making such a switch and also be certain insurance coverage is in place for any new venture.  If you would like to review your policies or have any questions, call ACBI at 203-259-7580 or visit our website

Teens Drinking at House Parties Means More Insurance Needed for Parents

During the spring, two events most teens participate in are graduation parties and prom after-parties. Both types of events usually also include alcohol. When they are at unsupervised parties, teens are at a greater risk of hurting themselves or others by drinking. Whether parents are present or not, they are the ones who take the responsibility for what happens. Liability insurance may cover financial damages, but the details of the situation dictate which type of policy will respond. This affects the amount of coverage the parents have.

If a house guest drinks several bottles of beer, drives away and is in an accident, the parents of the injured teen and any other passengers in the car may sue the parents whose house the party happened at. The first logical step would be to notify the homeowners insurance company, but liability coverage will not apply in the following situations:

– The actions of a minor while driving.
– The operation, use or occupancy of a motor vehicle by anyone.
– The insured’s failure to supervise people in the motor vehicle.
– Trusting the insured’s motor vehicle to anyone else.

Due to these circumstances, a home insurance policy will not cover the liability. However, a personal auto policy might cover them. Liability insurance for the policy covers the people who are named on the policy as well as residents in the home who are relatives against bodily injury in accidents. Despite the parents not being the ones operating the vehicle that was in the accident, their policy will provide coverage for the liability. The auto policy is also extended to the car involved in the accident. If the owners’ policy does not apply or pays its maximum insurance limit, the hosts’ policy will step in.

If the guest portrayed in the previous scenario had drank the beer but a sober guest drove the individual home only for him to try to swim and drown, the parents of the deceased party guest may be able to sue the homeowners hosting the party on the grounds that their child was allowed to drink and leave with impaired judgment. If the case went in their favor, the home insurance policy would have to pay the damages. Since there was no vehicle involved in the incident, the auto policy would not pay.

One policy or the other might be applicable if there were a liquor liability claim, but the differences in amounts could be drastic. Personal liability coverage with a home insurance policy is usually at least $100,000 for each incident. Some policies have limits of $300,000 per incident, but others may have limits of $500,000 per incident.

Auto policies usually offer significantly less coverage. The majority of states have passed laws designating minimum amounts for liability coverage that auto policies can provide. However, those limits are usually small. If a teen is injured seriously or is killed, the damages could total well beyond these amounts. For this reason, it is important for parents to buy as much liability coverage as they can afford. In addition to this, they should consider purchasing an umbrella policy, which will pay for any damages beyond the limits up to a specified amount. Umbrella policies come in increments of millions. However, the best way to deal with this issue and prevent it is to supervise parties to ensure everyone has an enjoyable time and arrives home without injuries.

If you have any questions or would like to review your coverage, call ACBI at 203-259-7580 or visit our website.