April 2017

In This Issue

2017 Board Members
  
Robbie Maples - President
Cunningham Lindsey
770-828-0098

Marilyn Roberts - Vice President
Chubb
678-795-4293

Bill Cartwright - Treasurer
Eagle Adjustment Services
770-928-9686

Bob Murner - Secretary
Axis
678-296-0005

Brian Richey - Asst. Secretary/Treasury
Custard
678-602-9061
  
Executive Board
  
Lawson Thompson - Past President
Frontier
770-951-0044
  
Rick Brown - York
678-502-6938

Robbie Arnold - McLarens
770-596-5576

Griffin Rogers - Crawford & Company
404-300-1262
  
Gwendy Schulte - OneBeacon Insurance
781-332-8688

John Southall - Historian
FM Global - retired
770-331-8572
  
Joseph Hunnius- 
Financial Advisor
Matson Driscoll & Damico
404-252-0085
President's Message
     
  
"Someone's sitting in the shade today because someone planted a tree a long time ago." - Warren Buffet
 
Last month I hinted that Spring was right around the corner, but with the arrival of the "Yellow Blanket of Georgia", we can safely say that we are officially here. I can empathize with all my fellow pollen sufferers as I clear the daily coating of yellow off my vehicle. Despite our allergies and busted March Madness brackets, we can still enjoy longer days for outdoor family activities and we can look forward to the upcoming Masters Tournament that touts our Georgia beauty.
 
Thank you to Full Circle Restoration for speaking and sponsoring our March luncheon. Contents handing is part of what we deal with as property adjusters from time to time, and identifying the responsible party early in the process can simplify matters. Communicating early and often with the Insured and their contractor can benefit all parties involved and aide in claim resolution.
 
As promised, we now have a user friendly and interactive calendar updated on our website. www.southernloss.com   is now the host for insurance industry events in the Southeast Region with information and clickable links. In addition to adding a resource for our industry colleagues, we are also working to cross-promote our local sister organizations such as the Atlanta Claims Association and the Atlanta CPCU Society. If you are aware of any regional events or national events that we do not have posted, please notify an SLA Board Member or send an email to our general mailbox for consideration.

I am also pleased to announce we are now on board with multiple social media platforms. Please follow our LinkedIn Group "Southern Loss Association", on Twitter "@southern_loss", and on Instagram "@southern_loss_assoc".
 
For the month of April you are welcome to attend lunch at the North Point Diner, but you will have to dine alone! Instead, we are hosting the 2017 Larry Hart Memorial Spring Golf and Tennis Outing at Chateau Elan Golf Club on Thursday, April 20, 2017. A handful of sponsorships remain and there are a few tennis teams available. If you have been procrastinating, now is the time to act or you will miss out! Golf is now sold out.
 
We are also having a free "members only" happy hour tonight, but you must be current on your dues to attend. We can take payment online or at the event, but you will need to make arrangements in advance to ensure a spot at this exclusive event.
 
Kind Regards,
 
 
Robbie Maples

Quick Links

 Schedule of Events

  

04/05/17 - Members Only Event

 

04/20/17 - Spring Golf Outing

 

05/11/17 - May Luncheon

 

06/08/17 - June Luncheon

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The 2017 Larry Hart Memorial
Spring Golf and Tennis Outing
 Thursday, April 20, 2017
Chateau Elan Resort

Registration begins at 10:00 AM; Golf begins at 11:30 AM
Tennis begins at 1:00 PM; Dinner begins a 6:00 PM
 
Fees are as follows:
  Golf & Dinner       $125
Tennis & Dinner    $ 65
Dinner (per person) $ 45     

                Welcome to New Members

We'd like to congratulate all of the new members to our organization:

 

Full Membership:

Kerry Crawford - Endurance

Gregory Farve - Eberls Claim Services

Doug Metz - AS&G Claims Administration

 

Associate Membership:

Josh Robinson - BGA consultants LLC

 

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A Bit and a Byte About Cyber Losses
Richard Fowler, CPA, CMA, CBV, CFE, CFF
FAS Global
 
Cyber attacks have made major headlines in the news in recent years, targeting organizations ranging from Sony Pictures to the US Government. Growing awareness of this risk has made cyber insurance a hot topic in the insurance industry. The market for cyber insurance remains in its infancy, with global cyber premiums currently less than 0.5% of the estimated cost of cyber-crime.[1] However, industry analysts such as PricewaterhouseCoopers expect the cyber insurance market to triple in size over the next four years.[2]

The environment in which cyber policies operate is also changing rapidly. Governments around the globe are introducing laws which require data breaches to be reported to regulators. Recent examples include the Digital Privacy Act introduced by Canada in 2015 and the General Data Protection Regulation introduced across the EU last year. We expect these changes will increase awareness of the frequency and impact of cyber attacks and contribute to growth in both cyber policies and claim numbers in the coming years.

There are a variety of cyber policy wordings currently available in the market, and the coverage offered can vary considerably. However, in general there are three key areas where cyber policies frequently differ from property policies.

What is Insured?
The insured events which trigger a claim under a cyber policy can range from a mouse chewing through a computer's wiring, through to highly sophisticated deliberate hacking. [3] Unlike a property policy, there is generally no requirement for physical damage for the policy to be triggered.
 
Some, but not all, cyber policies will provide specific coverage for items such as public relations and credit/fraud monitoring expenses.  Other policies require the insurer's prior consent and approval for certain costs. The wide variety of policy wordings make it critical to understand the coverage in place at the very start of an assessment.

What is the Indemnity Period/Period of Restoration/Duration of Coverage?
Current cyber policies may have shorter indemnity periods than the 12 month maximum indemnity period typically offered under property insurance policies. The indemnity period may also be referred to by another name, such as a period of restoration. In some policies the indemnity period commences on the date of breach. Other policies define the indemnity period with reference to the date of discovery. For example the duration of coverage may end a maximum of 30 days after the date the breach was discovered (as opposed to after the date of the breach itself).

How is the Business Interruption Loss Calculated?
There are a variety of wordings in cyber policies, many of which differ from a typical business interruption wording seen in property policies. One common wording defines business interruption as the actual loss sustained of net income, but does not provide any guidance regarding the details or approach of the loss calculation. This leaves a lot of items open for interpretation, such as the treatment of saved expenses and payroll. One common interpretation is an "indemnity" approach, where all changes in income and expenses caused by the breach during the indemnity period are included in the loss calculation. However, there are numerous ways in which this policy wording could be interpreted.

Summary
Although cyber policies and claims still represent a very small segment in the insurance industry, the number of policies being written is increasing, and cyber claims are likely to become more frequent and more complex in coming years. Cyber policies are still relatively new and there is a wide variety of different wordings and definitions in existence. Engaging a forensic accountant with experience working with these policies can ensure the policy wordings are applied properly to the complex accounting issues on these claims, and that there is effective communication between relevant parties, especially for any items that are unclear and/or open to interpretation.  

For more information about this topic, please contact Mr. Fowler directly at 905-393-2300, e-mail him at rfowler@fas-ca.com or view their website at www.fas-global.com


[1] Claims Canada - December/January 2017: Cyber Risk - The Great Unknown by Emily Atkins. [2] Ibid 3 Ibid
  
  
This article was republished with the permission of FAS Global.  It was first published in the 10th edition of the FAS Focus, a newsletter published by FAS Global.

This newsletter is a publication of Southern Loss Association, Inc., P.O. Box 421564, Atlanta, GA 30342. The articles written in the newsletter are in a general format and are not intended to be legal advice applicable to any specific circumstances. Legal opinions may vary when based on subtle factual differences. All rights reserved.

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