Sony is still awaiting the final tally for losses related to its data breaches earlier this year. At last count, it had 100 million compromised customer accounts, and Sony anticipated the debacle would cost $200 million. With 58 class-action suits in the works, that may be wishful thinking.

But what about Sony’s insurance coverage?

In a lawsuit filed in July, Sony’s insurer, the Zurich American Insurance Company, said the company did not have a cyber insurance policy. It said Sony’s policy only covered tangible losses like property damage, not cyber incidents.

Jim Kennedy, a Sony spokesman, said that Sony has coverage for “significant portions” of the losses from the data breaches. “Sony’s coverage includes multiple cyber insurance policies for operations around the world, traditional general liability policies, and property insurance policies that contain express provisions covering damage or disruption to electronic data,” Mr. Kennedy said in a statement. “Sony has already received payments from some of its insurers, and is actively pursuing claims for additional payments.”

But despite high-profile cyber attacks at Sony, Google, Epsilon, RSA and others this year, only a third of companies surveyed by Advisen, a research group, say they have purchased a cyber insurance policy.

“That’s cyber insurance in a nut shell,” said Jacob Olcott, a principal with Good Harbor Consulting’s cybersecurity team. “Everybody needs it, and most companies don’t realize they don’t have it until it’s too late.”

Experts say that more companies will buy policies in the coming year because of new Security and Exchange Commission requirements. Last October, the S.E.C. issued a new guidance requiring that companies disclose “material” cyber attacks and their costs to shareholders. The guidance specifically requires companies to disclose a “description of relevant insurance coverage.”

for the full article in the New York Times please link HERE

Diversified Insurance Group is expert at providing advice and coverage options for technology companies to cover their cyber risks. We have been providing risk management solutions to technology companies for nearly 20 years.

Josh is a great guy and very deserving of the MountainWest Capital Network’s Entrepreneur of the year award. We at Diversified are proud to count Josh as a client and are pleased to support him in sponsoring the Entrepreneur of the year event.

Domo is doing some exciting things with data visualization and Josh’s leadership and ability to attract good, smart venture capital dollars will help them as they grow as a company.

Silicon Slopes

by Dennis H. Pillsbury
Diversified Insurance Group, Salt Lake City, has a very lofty goal. “We want to be the best professional service provider for each of our clients,” says Managing Partner Spencer D. Hoole, ARM, CIC. Not the best agency, but the best professional service organization. To accomplish that goal, the agency does much more than just sell insurance. Its goal is, quite simply, to protect the assets and shareholder value of each of its clients and business partners. Insurance is just one of the tools the agency uses to help clients manage risk.

Celebrating its 10-year anniversary this year, the agency was created when Spencer D. Hoole, ARM, CIC, and Joe Henriod, ARM, AAI, acquired the business of Aon Risk Services of Utah. Spence and Joe were running the Aon office up until the acquisition.

“Our hope was to combine the best of two worlds—the world of the small, independent agent, with its autonomy, entrepreneurial spirit and close ties with customers; and the world of the large broker, with its huge resources and professionalism,” Spence comments. Clearly, the agency did not have the financial resources of the large brokers, so it could not be all things to all people, but “we could emulate the large brokerage expertise by focusing on certain niche areas and becoming experts in those fields,” he continues. “Both Joe and I had extensive experience with technology companies, so that was clearly one area where we would focus our efforts.” Spence had helped develop and run Aon Technology Group and Joe had spent 15 years with ITA Insurance, a specialist in the information technology industry, until it was acquired by Aon in 1996.

One step better

Spence adds that the agency was able to be even better than the big brokers because of its structure. “Being privately held lets us focus on client needs first. We don’t have to worry about satisfying stockholder appetites for continuous increases in quarterly results. We are able to take a long view and focus strictly on the best way to serve our clients. We don’t have the name recognition of the large brokers, so we have to provide the deliverables. And we do . . . every day.”

The result has been that the agency has produced growth that would be the envy of major brokers everywhere. It started business with about $30 million in premium and has seen that amount quintuple in its first 10 years to reach more than $150 million in premium this year. Property/casualty premiums account for about 75% of the total, with most of that coming from commercial lines, although personal lines for high net worth individuals represents an important niche area. In addition, the agency entered the employee benefits field a few years after its founding. That now accounts for about 25% of premiums.

“We are highly specialized and very technically oriented in certain niches,” Spence points out. “And it is this focus that allows us to outperform the market in terms of service. We measure our success in one very important way—retention— and our retention with our client base is extremely high.”

The horizontal model

“Our agency’s model is that each one of the 50 people who work here is an equal,” Spence points out. “This flat model allows us to innovate quickly, since everyone is involved in finding solutions for our clients. That’s been one of the biggest parts of our culture and one that has allowed us to be more efficient, which allows us the time to be more consultative with our clients.

“We were able to emphasize this advantage to our clients back in 2005 when we decided to send out a holiday gift that would differentiate us from our competition,” Spence remembers. “We decided to send a book of the year. The requirements for the book are that it needed to have been published in that year and had to be a book that would help our clients perform better in their business. The first book, by happy coincidence, was The World Is Flat by Thomas Friedman. In it, he emphasized that flat, legacy-free companies can compete better because of their ability to innovate more quickly. Each year, since then, we have picked a new book to send to clients.”

The agency targets fairly large risks, which puts it in direct competition with the large brokers, so “we need to be better in those niche areas so our clients and prospects can choose us,” Spence points out. “Oftentimes, the easy route for the risk manager or treasurer or whoever is responsible for risk transfer decisions is to place the business with a known commodity, an entity that will be known in the C-suite. Our job is to provide an alternative that is so attractive that they will give us an opportunity and then, once we are their broker, to perform so well that they never want to leave.

“And, as we grow and become better known, our ultimate goal is to become the first choice of companies in the technology and life science fields, as well as other niche areas on which we focus,” Spence continues. “We are primarily dealing with companies that are scaling rapidly, doing lots of transactions, including venture capitalists, portfolio managers and so on. We have to be nimble to keep up with the constantly changing environment in which they operate. We can’t just sit back and say, “This is the coverage you need.” We have to get to know them intimately, so we can put together a unique program for their needs. And our success is evidenced by the fact that of the last 18 IPO companies in Utah, we insured 16. That shows that we are indeed becoming the agency of choice for these growing companies and that they are recommending us to their friends and business associates.”

E3 – Educate, entertain and evangelize

“We practice an E3 approach to client relationships. We want to educate them about our business and share important information that will help them succeed in a user-friendly format. We want to entertain them by being fun people to deal with, so they look forward to seeing us, not chagrined that we are coming. And we want to evangelize on their behalf so that they succeed and, in the process, turn them into evangelizers for our agency. We have experience in large claims and have turned many clients from lukewarm supporters to raving fans after they see us in action. Most of our business comes through referrals.”

While education is part of what each person in the agency does every day when they meet with clients or prospects, it also is provided through seminars sponsored by the agency on a variety of subjects. And, of course, the books of the year are part of this effort. The agency also has been a sponsor of The Summit Director and Officer Training Conference, for which Diversified is a founding member, along with a number of other professional service organizations. The conference will be held December 1 and 2 at Utah’s St. Regis Deer Valley Resort Hotel.

In addition, in its most recent educational innovation, the agency has partnered with several professionals in law and accounting to offer an entrepreneurial marketing course to C-suite individuals in conjunction with the BYU Marriott School of Management. It is a five-week course with classes every Thursday morning at one of the sponsors’ offices. “We’ve put together a good curriculum in an entertaining manner,” Spence says. “The course will introduce C-suite individuals to high level entrepreneurial marketing techniques as well as provide them with an opportunity to network with their peers in other companies. We’ve had great response to this effort. This is a continuation of our ongoing effort to try to take things to a different level.”

Industry and community involvement

Diversified is a member of TechAssure, a nonprofit organization of independent agencies that specialize in the technology, life sciences, digital media, and venture capital industries. Each member represents a specific region. The organization gives members global reach and coordinated training. “Our clients benefit from the fact that we can draw on the collective intellectual property, experience and risk management tools of the professionals in this group,” Spence points out. “Our own capabilities have been expanded by our interaction with other members of the group who share best practices, benchmarking and purchasing clout.”

The agency also supports numerous community organizations that make the Salt Lake City region a better place to live, as well as increasing opportunities for businesses to grow and prosper. The agency is an active member of the Employers’ Council and the MountainWest Capital Network. It also sponsors the Ernst & Young Entrepreneur of the Year Award, the National Association of Corporate Directors Utah Chapter, the Utah Technology Council and the Wayne Brown Institute. Agency employees also sit on the Guadalupe School’s Board of Directors and support the school through donations of time and money to help fight poverty through education.

“We are constantly evaluating where we are and how we got here,” Spence concludes. “We look at our strategic advantages and base our growth plans in those areas. At the same time, we stay away from those areas where we don’t have a competitive advantage.” It’s a formula that clearly is working and why we at Rough Notes magazine are proud to recognize Diversified Insurance Group as our Marketing Agency of the Month.

reprinted with permission by Rough Notes Magazine
Original article can be found HERE

Please click above.

Political risks happen very quickly and without much notice. Contributing to the problem is social networking, which seems to be accelerating the pace and level of sophistication of these uprisings. Political activists are able to mobilize people faster and spread news that was previously tightly controlled by repressive regimes. Even security services of the various Western governments have been caught off guard.

Insurance policies are available to provide protection against some of the common political risk exposures such as:

• damage or destruction of physical assets due to political violence such as revolution, insurrection, civil unrest, terrorism or war
• expropriation or confiscation of assets by government authorities
• governmental frustration or repudiation of contracts
• business interruption associated with political uprisings
• currency inconvertibility or the inability to repatriate funds
• credit risk

Most comprehensive credit insurance policies also include coverage for the risk of “War, revolution, insurrection and civil strife or commotion.” The recent situations in Egypt, Tunisia and Libya definitely fall into this last category. This coverage relates to circumstances where the exporter’s contract is frustrated because the goods that have been shipped can’t be delivered or the financial system is in turmoil to the extent that payments cannot be processed.

Civil strife in the form of a General Strike is a definite risk in a country where the population is protesting austerity measures that have been adopted by the government. Such events, which can frustrate a contract, may also take place in developed countries.

The risks identified above are just the very obvious events that can trigger losses during times of political unrest. Other political and commercial risks can impact buyers as well. Businesses may have to close. A new regime may cancel signed contracts. A new regime may confiscate foreign investments or impose foreign exchange restrictions.

Export risk management must take into account all risks, not just the buyer credit risk, but also all of the risks that are outside the control of both the buyer and the exporter. If a company has a large export component to its sales or it has a concentration of buyers in one country or region, political events can create a major cash flow problem overnight.

Services companies with equipment abroad and companies with foreign investments are even more exposed because their assets are harder to extricate from the country when problems occur.

Current geo-political and economic trends require that companies develop a comprehensive risk strategy that encompasses all identifiable risks, before they become apparent. A TechAssure broker can help you assess your international risk exposures and develop a plan to mitigate your exposure to such risks.

Contributed by Ron Doyle for TechAssure
Ron is Vice President, Millennium CreditRisk Management Limited, Ottawa, Canada

The Ernst & Young LLP Entrepreneur Of The Year 2011 Award winners are:

• Paul Morrell, President, AI-Morrell Development, LLC
• David Dangerfield, President and CEO, Avalon Health Care, Inc.
• David Jenkins, President/CEO, Conservice, LLC
• Corbin Church, CEO, Miche Bag LLC
• William Haberstock, CEO, Million Air – Salt Lake City
• Blake Roney, Chairman, Nu Skin Enterprises, Inc.
• Orville Thompson, CEO, Scentsy, Inc.
• Heidi Thompson, President, Scentsy, Inc.
• Allan Ainsworth, PhD, Executive Director, Wasatch Homeless Health Care/Fourth Street Clinic
• Robert Mendenhall, President, Western Governors University

The Entrepreneur Of The Year Program honors entrepreneurs regionally in June, leading up to the
national awards in November. Additionally, venture-backed companies that win an Entrepreneur Of
The Year Award regionally are also eligible for the Entrepreneur Of The Year Venture Capital Award
of Excellence on a national level. The overall National us winner then moves on to compete for the
Ernst & Young World Entrepreneur Of The Year Award in June.

This year, the Entrepreneur Of The Year Program celebrates its 25th anniversary. The program
has expanded to recognize business leaders in more than 140 cities and more than 50 countries
throughout the world. Awards are given to entrepreneurs who demonstrate excellence and
extraordinary success in such areas as innovation, financial performance and personal
commitment to their businesses and communities.

“Phishing” scams make it easier than ever for criminals to access your assets. Web-based commercial EFT origination applications are being targeted by malicious software, including Trojan Horse programs, key loggers and other spoofing techniques designed to circumvent online authentication methods. These attacks could result in monetary losses to financial institutions and their customers if not detected quickly.

Consider these examples:

A company’s finance director opened an email with an attached zip file that contained a virus. The virus obtained the user ID and password to the company’s bank account. Immediately thereafter, a fraudulent electronic wire transfer initiated by unknown persons caused $147,000 to be wired from the company’s bank account to an unknown account.

A company’s website was hacked by an employee of one of its customers who changed her employer’s bank routing code on the website to her own. When the company paid her employer for services rendered, the money went directly into her bank account.

While internal controls are extremely important to guard against these threats, they are not foolproof. Crime insurance is an effective backstop if you expand the policy to include Computer Fraud and Funds Transfer Fraud coverage. It is recommended to have limits equivalent to employee dishonesty limits sufficient enough to protect against a catastrophic attack.

Post by Brian Sandy for TechAssure

TechAssure Association, Inc., is a non-profit organization founded in 2001 for insurance and risk management professionals dedicated to serving clients in the Technology, Life Sciences, Digital Media, and Venture Capital industries.

The New York Times had an interesting piece on 401K fees and whether and when they put the plan fiduciaries at risk:

Employers are supposed to act as a fiduciary when running a retirement plan, which is a legal way of saying that they are supposed to put your interests first. But in the context of fees, they must only keep them “reasonable.”

And there aren’t many specific definitions of what is unreasonable, for a couple of reasons. Benchmarking against other plans has traditionally been difficult, given that employers themselves often don’t know exactly what their plan costs. “If you don’t know what everyone else is paying, there is no way to know what is reasonable,” says Mike Alfred, BrightScope’s co-founder and chief executive, whose team has gathered information on 47,000 plans so far and sorted it by peer group.
. . .
DISCLOSING FEES Thankfully, the basic question of what fees you’re paying in your 401(k) or 403(b) is about to become easier to answer. Starting in 2012, according to new Labor Department guidelines, investment and other companies like Fidelity, which is a party to the ABB lawsuit, will need to be more clear with employers about how they are charging them.

Employers, in turn, will have to itemize more information on plan fees and expenses on account statements. In addition, they will need to display the costs of each mutual fund or other investment in a way that makes it easier for employees to compare their choices.

While it’s not yet clear how all of this will work in practice, there is real potential here for employers, especially executives at smaller ones for whom managing the retirement plan is one of dozens of duties, to get a harsh wake-up call about the size of their annual bill. And even if they don’t, their employees may see a menu of high-cost funds staring them in the face and begin to ask for a better plan.

To read more of this article in the New York Times go HERE

Over the past few weeks, America’s colleges have sent another class of graduates off into the world. They enter a bad job market, the hangover from decades of excessive borrowing. They inherit a ruinous federal debt.

This year’s graduates are members of the most supervised generation in American history. Through their childhoods and teenage years, they have been monitored, tutored, coached and honed to an unprecedented degree. Yet upon graduation they will enter a world that is unprecedentedly wide open and unstructured. Most of them will not quickly get married, buy a home and have kids, as previous generations did. Instead, they will confront amazingly diverse job markets, social landscapes and lifestyle niches. Most will spend a decade wandering from job to job and clique to clique, searching for a role.

No one would design a system of extreme supervision to prepare people for a decade of extreme openness. But this is exactly what has emerged in modern America. College students are raised in an environment that demands one set of navigational skills, and they are then cast out into a different environment requiring a different set of skills, which they have to figure out on their own.

. . .

But, of course, this mantra misleads on nearly every front.

College grads are often sent out into the world amid rapturous talk of limitless possibilities. But this talk is of no help to the central business of adulthood, finding serious things to tie yourself down to. The successful young adult is beginning to make sacred commitments — to a spouse, a community and calling — yet mostly hears about freedom and autonomy.

. . .

Most successful young people don’t look inside and then plan a life. They look outside and find a problem, which summons their life. A relative suffers from Alzheimer’s and a young woman feels called to help cure that disease. A young man works under a miserable boss and must develop management skills so his department can function. Another young woman finds herself confronted by an opportunity she never thought of in a job category she never imagined. This wasn’t in her plans, but this is where she can make her contribution.

Most people don’t form a self and then lead a life. They are called by a problem, and the self is constructed gradually by their calling.

. . . When you read a biography of someone you admire, it’s rarely the things that made them happy that compel your admiration. It’s the things they did to court unhappiness — the things they did that were arduous and miserable, which sometimes cost them friends and aroused hatred. It’s excellence, not happiness, that we admire most.

. . .

Today’s grads enter a cultural climate that preaches the self as the center of a life. But, of course, as they age, they’ll discover that the tasks of a life are at the center. Fulfillment is a byproduct of how people engage their tasks, and can’t be pursued directly. . . . It’s nonetheless true that life comes to a point only in those moments when the self dissolves into some task. The purpose in life is not to find yourself. It’s to lose yourself.

To read the entire op-ed article by David Brooks please go to the New York Times HERE

1. Time and place. Recreational games scheduled during work hours on company premises are usually found to be work-related. Even when only the first of these four elements is present, the Utah Supreme Court has found that with regard to time and place “the case has made a strong start.” Id. at Sec. 22.24(b). Where games are scheduled off premises and after hours, the burden of proving a work connection falls heavily on the other three factors set out immediately below.
2. Degree of employer initiative, promotion, and sponsorship. When sufficiently present, these elements clearly point toward sufficient control to identify the activity with the employment. Though not decisive, presence of these elements tends to support compensability.
3. Financial support and equipment furnished by employer. Standing alone, these elements are not sufficient to make the recreational activity work related, but will weigh in the aggregate.
4. Employer benefit. This factor plays a supporting rather than an independently decisive role as well. Intangible values, such as increased work efficiency and morale, are insufficient to link the activity to the employment.

Applying these tests is highly subjective. Where the employer or workers compensation carrier might see no coverage, it is always possible that an administrative (labor) law judge will feel otherwise.

Courts in a number of states have formulated similar tests. Although there are similarities, there can be substantial differences. In fact, a number of states specifically exclude coverage for injuries suffered while the employee was participating in voluntary recreational activities, provided that participation was not a job requirement.

Important note: the foregoing discussion must not be viewed as legal advice. We always recommend that this issue be discussed thoroughly with in-house counsel or a labor attorney.