FUTURE LEADERS - SPECIAL REPORTS PANDEMIC RISK MANAGEMENT - Business Insurance

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FUTURE LEADERS - SPECIAL REPORTS PANDEMIC RISK MANAGEMENT - Business Insurance
VACCINE MANDATES: Employers consider compulsory COVID-19 shots - PAGE 4

                                                                    JUNE 2021

SPECIAL REPORTS
PANDEMIC RISK
MANAGEMENT
PAGE 27
WORKERS COMP
PAGE 31
PROPERTY
INSURANCE
PAGE 35

                                                    FUTURE
                                                   LEADERS
                                                         INTERVIEWS WITH
                                                            ALL 40 AWARD
                                                         WINNERS OF 2021
                                                                    PAGE 14
FUTURE LEADERS - SPECIAL REPORTS PANDEMIC RISK MANAGEMENT - Business Insurance
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FUTURE LEADERS - SPECIAL REPORTS PANDEMIC RISK MANAGEMENT - Business Insurance
PRESIDENT
Steve Acunto
(Greenwich)
sa@businessinsurance.com

PUBLISHER
Keith Kenner
(Chicago)
kkenner@businessinsurance.com
                                                                                                                                                                                       COVER STORY
EDITOR                                                                                                                                                                                 Business Insurance profiles
Gavin Souter
(Chicago)
                                                                                                                                                                                       the winners of its 2021
gsouter@businessinsurance.com                                                                                                                                                          Break Out Awards, which
DEPUTY EDITOR                                                                                                                                                                          honor potential future leaders
Claire Wilkinson                                                                                                                                                                       in the U.S. insurance industry.
(New York)
cwilkinson@businessinsurance.com                                                                                                                                                       The 40 honorees from across
                                                                                                                                                                                       the country represent some of
ASSISTANT EDITOR
Louise Esola                                                                                                                                                                           the most promising individuals
(New Orleans)                                                                                                                                                                          working in insurance and risk
lesola@businessinsurance.com
                                                                                                                                                                                       management. PAGE 14
SENIOR REPORTER
Judy Greenwald
(San Jose)
jgreenwald@businessinsurance.com

REPORTER
Angela Childers
(Chicago)
                                                        INSIDE
achilders@businessinsurance.com

REPORTER
Matthew Lerner
(New York)
                                                                                                           SPECIAL REPORT: PANDEMIC RISK MANAGEMENT
mlerner@businessinsurance.com                                                                              In response to high-profile event cancellations due to the pandemic, contingency
COPY CHIEF
                                                                                                           insurers have cut capacity and raised rates. Meanwhile, the hard-hit restaurant sector
John Obrecht                                                                                               has adopted new ways of doing business, creating new exposures. PAGE 27
(Chicago)
jobrecht@businessinsurance.com

COPY EDITOR
Brian Gaynor
(Portland)
                                                                                                           SPECIAL REPORT: WORKERS COMPENSATION
bgaynor@businessinsurance.com                                                                              Employers and insurers increasingly are realizing that physical injuries often include
ART DIRECTOR
                                                                                                           a mental component that can lead to prolonged claims and higher costs; early
Jeremy Werling                                                                                             intervention and treatment are key. PAGE 31
(Cincinnati)
jwerling@businessinsurance.com

DIRECTOR OF RESEARCH,
PLANNING AND INSIGHTS
                                                                                                              NEWS ANALYSIS                        WORKERS COMP
                                                                                                                                                   More employers are considering mandating COVID-19
Andy Toh
(Chicago)                                                                                                   FOR BREAKING NEWS                      vaccinations for returning workers. PAGE 4
atoh@businessinsurance.com
                                                                                                              COVERAGE, VISIT
MAJOR ACCOUNTS DIRECTOR -
NORTHEASTERN U.S. & INTERNATIONAL
                                                                                                           businessinsurance.com                   RISK MANAGEMENT
Ron Kolgraf                                                                                                                                        Non-fungible tokens pose unique risk management
(Boston)                                                                                                                                           questions for art dealers. PAGE 6
rkolgraf@businessinsurance.com

SENIOR VICE PRESIDENT,
BUSINESS DEVELOPMENT                                        PERSPECTIVES                                                                           INTERNATIONAL
Stephen Acunto                                                                                                                                     Uruguay’s state insurance company dominates the nonlife
(Princeton)
                                                            Artificial intelligence has
                                                                                                                                                   market, requiring innovation from competitors that want
stephen@businessinsurance.com                               made identifying and
                                                                                                                                                   to boost their market share. PAGE 11
HEAD OF SALES, EVENTS                                       preventing ergonomic risks
& REPRINT SALES MANAGER                                     much easier, write Timothy
Susan Stilwill
(Nashville)                                                 Lohrmann and Marcus
sstilwill@businessinsurance.com                             Fichtel of Chubb Global
VICE PRESIDENT OF MARKETING                                 Risk Advisors. PAGE 39                                                                           VIEW FROM
Brian McGann
(Buffalo)                                                                                                 OFF BEAT                                             THE TOP
bmcgann@businessinsurance.com                                                                             Some doctors are
DIGITAL AD OPERATIONS MANAGER              LEGAL BRIEFS                                                   having a cow over
Jordan Kilty
(Raleigh)                                  Recent court opinions PAGE 12                                  the USDA’s latest                        MITCH BLASER
jkilty@businessinsurance.com                                                                              recommended daily                        Mitch Blaser founded
DIGITAL MARKETING MANAGER                  OPINIONS                                                       allowance of dairy                       private equity-backed
Jen Jonasson
                                           Vaccine promotion strategies; insights                         products. PAGE 42                        Mosaic Insurance
(Chicago)
jjonasson@businessinsurance.com            from award winners. PAGE 38                                                                             Holdings Inc. in Bermuda
MARKETING & EVENTS MANAGER
                                                                                                                                                   in February to focus on
Brittany Collins                           MARKET PULSE                                                                                            specialty risks. His long
(Lafayette)
                                           Products, deals and more PAGE 40                                                                        career has included nearly
bcollins@businessinsurance.com
                                                                                                                                                   30 years at Marsh & McLennan Cos. Inc. Mr. Blaser, who
MARKETING & EVENTS SPECIALIST
Beth Wojdyla                               PEOPLE                                                                                                  also worked at Swiss Re Ltd. and Ironshore Inc., discusses
(Chicago)                                  Insurance industry moves PAGE 41                                                                        the strategy behind Mosaic. PAGE 13
bwojdyla@businessinsurance.com

SUBSCRIPTIONS & SINGLE COPY SALES   BUSINESS INSURANCE (ISSN 0007-6864) Vol. 55, No. 7, Copyright © 2021 by Business Insurance Holdings, Inc. is published monthly by Business Insurance Holdings, Inc., 1030 Lake Avenue,
membership@businessinsurance.com    Greenwich, CT 06831. Accounting, business, circulation and editorial offices: PO Box 1010, Greenwich, CT 06836. Call 954-449-0736 to subscribe. Periodicals postage is paid at Greenwich, CT.
954-449-0736                        Printed in the USA. POSTMASTER: Send address changes to Business Insurance at PO Box 1010, Greenwich, CT 06836.

                                                                                                                                                                      BUSINESS INSURANCE                       JUNE 2021            3
FUTURE LEADERS - SPECIAL REPORTS PANDEMIC RISK MANAGEMENT - Business Insurance
NEWS ANALYSIS
                                                                                                                                                                         PROTECTION

Employers lean toward mandatory shots
                                                                                                                                                                         PROTOCOLS
                                                                                                                                                                         Nine out of 10
                                                                                                                                                                         employers in the
                                                                                                                                                                         U.S. and United
                                                                                                                                                                         Kingdom plan to
                                                                                                                                                                         require or strongly
            BY ANGELA CHILDERS                                                                                                                                           encourage workers
        achilders@businessinsurance.com                                                                                                                                  to be vaccinated
                                                                                                                                                                         for COVID-19,

T
     he demand for COVID-19 vaccines has                                                                                                                                 according to a
                                                                                                                                                                         survey conducted
     declined, and with only about 40% of the                                                                                                                            in March by Arizona
     U.S. population fully inoculated as of late                                                                                                                         State University’s
last month, employers are taking another look at                                                                                                                         College of Health
whether to mandate workers get vaccinated.                                                                                                                               Solutions and funded
                                                                                                                                                                         by The Rockefeller
  But such mandates can leave employers on the                                                                                                                           Foundation.
hook for lost workdays and injuries stemming
                                                                                                                                                                         Researchers polled
from vaccine reactions and create additional com-                                                                                                                        nearly 1,400
munications, tracking and recording challenges.                                                                                                                          employers — 71%
  As of late May, 49% of 18- to 65-year-old indi-                                                                                                                        of which were
viduals in the U.S. were fully vaccinated — far less                                                                                                                     U.S.-based, with
than the 70% needed to achieve herd immunity,                                                                                                                            the remaining 24%
                                                                                                                                                                         based in the U.K.
according to the U.S. Centers for Disease Control                                                                                                                        — reporting that:
and Prevention.
  “A lot of employers thought, as soon as (vaccines)    vaccination rates. … After much deliberation,         and not significant,” she said. “If there is a sig-
became available, that people were going to jump
in and get them,” said Michele Tucker, Sacramento,
California-based vice president of enterprise oper-
ations at third-party administrator CorVel Corp.
                                                        MUSC Health has decided to make it an expec-
                                                        tation that all care team members be vaccinated
                                                        against COVID-19.”
                                                          Many employers had been wary of forcing vac-
                                                                                                              nificant reaction, it’s likely to be work-related.
                                                                                                              It’s certainly not worse than a COVID claim at
                                                                                                              this point.”
                                                                                                                Employers who opted for a mandatory vaccine
                                                                                                                                                                         90%
                                                                                                                                                                         will require or
                                                                                                                                                                         encourage COVID-19
“They’re feeling somewhat compelled to move             cinations, given the potential for side effects and   policy previously needed to worry about record-            vaccination.
toward mandatory requirement of the vaccine.”           that the U.S. Food and Drug Administration            ing any serious adverse reactions on their Occu-
  After first leaving the decision up to employees      has approved the vaccines only on an emergency        pational Safety and Health Administration logs.
and offering an incentive, the Houston Methodist
hospital system recently said it would require its
26,000 employees to be vaccinated for COVID-19
                                                        use basis.
                                                          However, some countries are implementing vac-
                                                        cination mandates for health care workers. On
                                                                                                              However, the agency switched gears in late May,
                                                                                                              declaring on its questions and answers section that
                                                                                                              it “does not wish to disincentivize employers’ vac-
                                                                                                                                                                         59%
                                                                                                                                                                         will incentivize
                                                                                                                                                                         employees to be
or be subject to suspension and/or termination.         April 1, Italy approved an emergency decree that      cination efforts” and would not enforce recording
                                                                                                                                                                         vaccinated.
The Medical University of South Carolina imple-         all health professionals must be vaccinated for the   requirements related to worker side effects from
mented a similar mandate.                               coronavirus. Those who refused had the option to      COVID-19 vaccinations through May 2022.

                                                                                                                                                                         60%
  “I have spoken to countless hospital leaders across   be transferred to non-patient-facing duties or be       The change, “might encourage an employer to
the country who plan to mandate COVID-19                suspended without pay for up to a year, according     go mandatory because that’s one less downside
vaccination soon,” said Dr. Marc Boom, Houston          to the British Medical Journal.                       they would have to worry about,” said Brent Clark,
                                                                                                                                                                         will require proof
Methodist’s president and CEO, in an email to all         “Health care and front-line employers have been     partner in the Chicago office of Seyfarth Shaw             of vaccination
employees dated April 23 that was forwarded by          “a little bit more aggressive” with their vaccine     LLP. “But I tend to think it wasn’t recordability          from employees.
a spokeswoman to Business Insurance. Dr. Boom           efforts, finding “much more of a need for man-        that is causing hesitancy (in mandating vaccines).
also said he expects nearby Memorial Hermann            dating or strongly encouraging” vaccinations, said    It more is a function of the employer’s desire to
Health System and Baylor College of Medicine to
issue their own coronavirus vaccination mandates.
A former registered nurse at Houston Methodist
recently went public with her decision to leave her
                                                        Adam Kemper, Fort Lauderdale, Florida-based
                                                        partner with law firm Kelley Kronenberg P.A.
                                                          Ms. Tucker, who works with a number of hos-
                                                        pital systems and medical centers in the U.S., has
                                                                                                              give the employees choice.”
                                                                                                                Regardless of whether an employer mandates
                                                                                                              or merely encourages vaccinations, it’s crucial
                                                                                                              to communicate with employees, said Kathryn
                                                                                                                                                                         84%
                                                                                                                                                                         would allow
                                                                                                                                                                         COVID-19
job rather than get the vaccine.                        seen several more clients move toward mandatory       Bakich, Washington-based senior vice president             vaccinations to be
  “For us to optimize patient safety, we must have      vaccines recently after fewer employees than antic-   and national director of health care compliance at         administered to their
                                                                                                                                                                         employees at their
higher vaccination rates across MUSC Health,” a         ipated opted to be vaccinated.                        employee benefits consultancy Segal Co.                    facility if supplies
spokeswoman for MUSC said in an email. “Large             She has also seen a few vaccine-related workers       “Having a very clear and understandable set of           were available.
numbers of patients are not coming to health care       comp claims in the past month as a result of the      policies and explaining those up front is really           Source: The Rockefeller
facilities because of our care team members’ lower      mandates, but they’re “very small, not expensive      important,” she said.                                      Foundation

           COMPULSORY VACCINE POLICIES RAISE WORKER CONFIDENTIALITY CONCERNS

    E    mployers that mandate COVID-19
         vaccinations for their workforce
         need to be prepared to verify
    inoculation, keep track of boosters and
    ensure they’re complying with relevant
                                                 president and national director of health
                                                 care compliance at employee benefits
                                                 consultancy Segal Co. “We’re getting a
                                                 lot of questions about what has to be
                                                 kept confidential, who can see it, who
                                                                                              as a disability or sincerely held religious
                                                                                              belief, that could violate federal law,
                                                                                              according to the Equal Employment
                                                                                              Opportunity Commission.
                                                                                                While employers tend to push these
                                                                                                                                             inoculation, but also boosters, said Michele
                                                                                                                                             Tucker, Sacramento, California-based
                                                                                                                                             vice president of enterprise operations at
                                                                                                                                             third-party administrator CorVel Corp.
                                                                                                                                               “Shot records are going to be
    privacy laws, experts say.                   cannot see it … You don’t want it in a       types of tasks to human resources, Ms.         important,” she said. “If (employers)
      “(Companies) have to decide how            personnel file.”                             Bakich said it’s much better to create         make it mandatory, they’re going to
    to protect the confidentiality of the          Simply recording a “yes” or “no” for       a secure intake to track vaccinations —        have to monitor the boosters. It’s
    information” they’re collecting, consider    vaccination status is not protected,         such as a secure online portal — or have       probably going to have to be an ongoing
    what kind of proof of vaccination            according to the U.S. Centers for Disease    everyone email one single person who is        vaccination program with new strains
    they will require and how they will          Control and Prevention. But if employers     trained in confidentiality procedures.         coming out — like getting the flu shot
    maintain confidentiality, said Kathryn       ask follow-up questions or include             They also need to be sure they’re tracking   every year, but a little different.”
    Bakich, Washington-based senior vice         reasons for vaccine declinations, such       not only the initial one- or two-dose                                         Angela Childers

4     JUNE 2021      BUSINESS INSURANCE
FUTURE LEADERS - SPECIAL REPORTS PANDEMIC RISK MANAGEMENT - Business Insurance
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FUTURE LEADERS - SPECIAL REPORTS PANDEMIC RISK MANAGEMENT - Business Insurance
NEWS ANALYSIS

       Digital artwork creates new risks                                                                                                                                       REGULATORS
                                                                                                                                                                               EYE TOKENS
                                                                                                                                                                                AS ASSETS
            BY MATTHEW LERNER

                                                                                                                                                                              T    he regulatory status of

                                                                                                                                                          Christie’s/Beeple
      mlerner@businessinsurance.com                                                                                                                                                non-fungible tokens,
                                                                                                                                                                                   which is being considered

T
     he sale of digital artwork represented                                                                                                                                   by the U.S. Securities and
     by non-fungible tokens — essentially a                                                                                                                                   Exchange Commission,
     point on a digital ledger or blockchain                                                                                                                                  could have implications
that confirms ownership of an original —                                                                                                                                      for insurance coverage
is gaining traction in the art world, attract-                                                                                                                                related to the tokens.
ing the attention of regulators and posing                                                                                                                                      In an April 12 letter to
unique risk management questions for auc-                                                                                                                                     the SEC, Arkonis Capital
tion houses, dealers and others involved in                                                                                                                                   LLC, a broker-dealer that
the transactions.                                                                                                                                                             says it is “very familiar with
  In March, Christie’s auction house sold the                                                                                                                                 blockchain technology and
digital artwork “Everydays: The First 5000                                                                                                                                    digital assets,” said the SEC
Days,” by Mike Winkelmann, who goes by                                                                                                                                        “needs to provide regulatory
the name Beeple, for an eye-popping $69                                                                                                                                       clarity with respect to the
million. The sale heightened the profile of                                                                                                                                   regulation of a new form of
the emerging art format.                                                                                                                                                      digital assets —non-fungible
  Other NF T art includes videos and                                                                                                                                          tokens.” Arkonis said, “We
recordings. The assets are often bought and                                                                                                                                   believe in certain instances
sold using the cryptocurrency ether on the                                                                                                                                    NFTs may be securities.”
Ethereum blockchain.                                                                                                                                                            Should NFTs be viewed as
  Uncertainties concerning the commercial                                                                                                                                     financial instruments, “that
exposures created by such digital art sales are                                                                                                                               will have big implications”
rapidly becoming the subject of discussions                                                                                                                                   for their regulation, said Paul
in the insurance industry.                                                                                                                                                    King, senior vice president,
  “I’ve been having discussions with one of                                                                                                                                   executive and professional
our clients on NFTs and what that entails,”                                                                                                                                   risk solutions national
said David Ktshozyan, a Los Angeles-based                                                                                                                                     advisor, for USI Insurance
senior associate with law firm Clyde & Co.                                                                                                                                    Services Inc. in Dallas.
  “One of the things that really spurred                                                                                                                                        Uncertainty about the
interest in it was the $69 million sale in           The digital work “Everydays: The First 5000 Days,” by Beeple, sold for $69 million at Christie’s.                        classification of NFTs “opens
March at Christie’s,” said Mr. Ktshozyan,                                                                                                                                     questions about regulation
who represents insurers.                             “a handful” of inquiries from customers seek-      president and CEO, Huntington T. Block                                and what potential risk
  Traditional art and auction houses face            ing to insure digital assets, including NFTs       Insurance Agency Inc., a Washington-based                             transfer some may need to
very different risks than are present with           and bitcoin collections.                           fine art unit of Aon PLC. It could be “a bit                          contemplate,” said Jackie
digital art, he said.                                  Ms. Schipf said the specie segment of            of a stretch to come up with a hypothetical                             Quintal, who heads up
  “Typically, in a traditional art setting, one is   Axa XL’s business includes cryptocurren-           claim scenario to which a tradition-                                            Marsh LLC’s U.S.
worried about physical damage to a physical          cies and a bit of cold storage involving bit-      al fine art insurance policy would                                                digital asset group
piece of art,” in transit, at auction, possibly      coin, “things that are not art-related but are     favorably respond,” he said.                                                      in New York.
from mishandling, Mr. Ktshozyan said.                more like valuable commodities.” Coverage            For example, if a collector lost                                                  Ms. Quintal
  With NFTs “you don’t have those same               for NFTs may ultimately involve some sort          the encryption key or the pass-                                                   cited the anti-
concerns and you don’t have those same               of hybrid product with cyber, fine art and         word to a hard drive containing                                                   money laundering
risks because everything is on the internet,”        potentially other components, she said.            the NFT artwork, the digital file                                                 concerns
he said.                                               Fine art insurance policies are designed to      would still exist and the loss would                                              of regulators
  Jennifer Schipf, global chief underwriting         cover physical loss or damage only. If a work      therefore be financial and not physical,                                     as also potentially
officer of fine art and specie in New York for       of art, such as an NFT, has no physical form,      Mr. Dunn said.                                                         relevant to NFT sales,
Axa XL, a unit of Axa SA, said she has had           it cannot suffer such damage, said Joe Dunn,         There may, however, be significant risk                             depending on the ultimate
                                                                                                        management concerns for those involved in                             classification and regulation
RECENT NFT SALES: SKYROCKETING PRICES                                                                   the sale of NFTs.                                                     of NFTs.
                                                                                                          “The first place you’re going to look, but                            Such regulation and
 Asset                                                       Date of sale     Adjusted price (USD)      not the only place, is your errors and omis-                          scrutiny could also
                                                                                                        sions insurance — is there anything from a                            potentially create a directors
 Everydays: The First 5000 Days                           March 11, 2021                   $69.3M       coverage exclusion standpoint that would                              and officers liability
                                                                                                        preclude coverage?” said Paul King, senior                            exposure, Mr. King said,
                                                                                                        vice president, executive and profession-                             potentially touching on lines
 Cryptopunk #7804                                         March 10, 2021                     $7.6M
                                                                                                        al risk solutions national advisor, for USI                           such as Foreign Corrupt
                                                                                                        Insurance Services Inc., based in Dallas.                             Practices Act coverage
 Beeple’s CROSSROAD                                         Feb. 25, 2021                    $6.6M        “I think there’s certainly an E&O com-                                The discussion of NFT
                                                                                                        ponent to it,” but policyholders should                               regulation, even extending
 1st tweet of Twitter CEO Jack Dorsey                     March 22, 2021                     $2.9M      confirm if their existing policy language is                          to money laundering, is
                                                                                                        broad enough or doesn’t directly or indirectly                        “pretty wide ranging, but
                                                                                                        exclude advising on the sale of digital assets,                       that intersection is a real
 Cryptopunk #6965                                           Feb. 19, 2021                    $1.6M
                                                                                                        said Jackie Quintal, who heads up Marsh                               thing,” Mr. King said.
Source: News reports                                                                                    LLC’s U.S. digital asset group in New York.                                           Matthew Lerner

6      JUNE 2021       BUSINESS INSURANCE
FUTURE LEADERS - SPECIAL REPORTS PANDEMIC RISK MANAGEMENT - Business Insurance
Pandemic fuels rise in attacks on health staff
       BY ANGELA CHILDERS                                                                                                                         And while basics like surveillance cam-
  achilders@businessinsurance.com                                                                                                               eras, security guards and panic buttons are
                                                                                                                                                prevalent, only some health care employ-

V
    iolence against health care workers                                                                                                         ers provide training in de-escalation tac-
    has been on the rise in recent years,                                                                                                       tics and violence intervention and have a
    and the COVID-19 pandemic has                                                                                                               code system for violent incidents similar
made the risks even worse for doctors,                                                                                                          to those used for clinical emergencies, Mr.
nurses and support staff.                                                                                                                       Duncan said.
  Lawmakers at the federal level and in                                                                                                           Hospitals should conduct training at
more than a dozen states have introduced                                                                                                        a minimum every year, including active
legislation to mandate that health care                                                                                                         shooter drills, and senior leadership
employers implement violence preven-                                                                                                            should do tabletop exercises and review
tion programs, and experts say resources                                                                                                        their violence prevention plans annually,
and training are crucial to help mitigate                                                                                                       Ms. Elias said.
the problem.                                                                                                                                      If an incident does occur, the employer
  Violence against health care providers is                                                                                                     should use it as an opportunity to reeval-
the third-leading cause of serious work-                                                                                                        uate its violence prevention program, she
place injuries in the health care industry,                                                                                                     said. “If you had a workplace violence situ-
generating at least $540 million a year in                                                                                                      ation, you want to, after the incident, make
workers compensation costs, according to                                                                                                        sure you bring all those key players together
Liberty Mutual Holding Co. Inc.’s 2020           vention standards. “The best way to reduce    in different iterations for a long time,” the    and talk about what went well, what could
Workplace Safety Index.                          the probability and severity (of violence)    Occupational Health and Safety Admin-            we improve in the response,” she said.
  “COVID-19 certainly has both exac-             against health care workers is thoughtful     istration does not have a specific standard        Ms. Popp said simple, “almost main-
erbated existing sources of violence and         planning and mitigation techniques, facil-    related to violent incidents in health care      tenance-type” fixes should not be over-
opened up new areas of confrontation             ity design and robust reporting,” he said.    facilities, said Lisa Stand, senior policy       looked, such as ensuring all exterior doors
between health care providers, patient                                                         advisor for policy and government affairs        are secured at all times, lights that burn
families and the general public,” said Jeff                                                    at the Silver Spring, Maryland-based             out are replaced immediately, security
Duncan, Boston-based senior vice presi-          “COVID-19 certainly has both                  American Nurses Association.                     cameras are working, and safeguards are
dent and chief underwriting officer of the
health care practice at Liberty Mutual.
                                                 exacerbated existing sources of                 “OSHA has demonstrated that even
                                                                                               though there is no standard, they will use
                                                                                                                                                put in place if staff feels unsafe in certain
                                                                                                                                                areas of the premises.
  Violent incidents against health care
workers have been rising and extending
                                                 violence and opened up new areas of           the general duty clause” to cite health care
                                                                                               employers that fail to take steps to pro-
                                                                                                                                                  If neglected, “those are the things that
                                                                                                                                                allow violence to escalate sometimes
beyond the emergency room and hospital           confrontation between health care             tect workers, said James Sullivan, Wash-         without being identified” and should be
to non-acute settings, such as physician                                                       ington-based co-chair of the OSHA                addressed before adding more preventive
offices, said Pamela Popp, Denver-based          providers, patient families and the           and workplace safety practice at Cozen           measures, such as metal detectors, physi-
executive vice president and chief risk offi-                                                  O’Connor P.C. and former chairman                cal barriers and other security upgrades,
cer of GB Healthcare, a division of Galla-       general public.”                              of the Occupational Safety and Health            she said.
gher Bassett Services Inc.                       Jeff Duncan, Liberty Mutual                   Review Commission. “There is a real issue
  “We’re seeing an increase (in violence)                                                      with assaults on nurses. … It’s a recog-         PROPOSED LEGISLATION
across all of the health care settings, and                                                    nized problem, and that’s why you see the        Thirteen states have introduced legislation this
although it’s a little challenging to make a                                                   laundry list of unions and other employee        year that would require some type of prevention
                                                                                                                                                plan, committee or program to protect health
correlation right now, it does appear that         In February, federal lawmakers introduced   organizations pushing for (H.B. 1195).”          care workers from workplace violence:
the pandemic has made it worse,” she said.       H.B. 1195, which would require health care      Most large hospital systems have a                                                                 ME
  People are fearful and “have a feeling of a    employers across the country to create a      violence prevention program, but it’s           AK                                             VT NH
lack of control” due to the coronavirus, and     comprehensive program and processes to        not always effectively communicated to               WA MT ND MN WI                MI        NY MA RI
as a result are more likely to enter health      prevent violence against health care work-    supervisors, and training can be over-                    ID WY SD     IA    IL   IN   OH PA   NJ   CT
care facilities in an agitated state, Ms. Popp   ers. Thirteen states have also introduced     looked, said Renata Elias, Dallas-based              OR NV CO NE MO KY WV MD DE
said. This can cause what should be a calm       legislation that would create minimum         senior vice president in the consulting
                                                                                                                                                     CA     AZ   UT   KS    AR TN     VA NC    DC
conversation to escalate quickly to shoving      standards for health care workplace vio-      solutions practice of Marsh Advisory, a
                                                                                                                                                             NM OK         LA MS AL    SC
or other types of violence, she said.            lence prevention plans and training.          unit of Marsh LLC. “It’s great to have a
  Mr. Duncan said the industry lacks               While guidelines for preventing violence    plan or program in place, but it’s no good           HI                TX              GA

“broad, consistently followed” violence pre-     in health care settings have “been around     if you don’t train and exercise,” she said.                                             FL

   TRAINING, ANONYMOUS REPORTING SYSTEMS CAN HELP CURB WORKPLACE VIOLENCE

H    ealth care facilities can have robust
     violence prevention plans, but if
     employees fear being reprimanded for
calling security or are afraid they might be
overreacting, the measures are less likely
                                                 Advisory, a unit of Marsh LLC.
                                                   “The big concern from people is they
                                                 want to be anonymous … and feel like they
                                                 can make a phone call (to a hotline) when
                                                 they see something,” she said. “Having
                                                                                               Njoki Wamiti, senior vice president of
                                                                                               Ironshore Insurance, a Liberty Mutual
                                                                                               company. “They may think this is normal,
                                                                                               so there is no need to report it.”
                                                                                                 Employers need to train workers on
                                                                                                                                                show how the report and the solution
                                                                                                                                                helped improve security for all, she said.
                                                                                                                                                  “People are fearful of reporting because
                                                                                                                                                they don’t know what happens to the
                                                                                                                                                information once it’s shared,” Ms. Popp
to be effective, experts say.                    that open dialogue to let employees           situational awareness — being aware that         said. “As soon as you can, show them that
  Procedures must be in place for                know there is a safe place to speak out is    if a situation makes them uncomfortable          action is taken and that it’s a positive
recording incidents and near-misses, and         important.”                                   it’s time to ask for help, said Pamela Popp,     thing that they are reporting. Near-misses
staff need to feel comfortable making a            Health care staff can “almost get           Denver-based executive vice president            are the same type of thing. We have to get
report and know how to do so, said Renata        immune” to violent incidents, particularly    and chief risk officer of GB Healthcare, a       them to trust that we’re going to use the
Elias, Dallas-based senior vice president in     verbal abuse, because of how common           division of Gallagher Bassett Services Inc.      information to make things better.”
the consulting solutions practice of Marsh       they are in the health care setting, said       It’s equally important to follow up and                                      Angela Childers

                                                                                                                                               BUSINESS INSURANCE                     JUNE 2021     7
FUTURE LEADERS - SPECIAL REPORTS PANDEMIC RISK MANAGEMENT - Business Insurance
VIRTUAL EVENT JULY 15-16
   The Business Insurance Long-Term Care Virtual Conference, in partnership with the
   law firm of Wilson Elser Moskowitz Edelmen & Dicker L.L.P., will address the myriad
   risks inherent in the skilled nursing industry. Risk managers of the more than 15,000
   LTC facilities throughout the U.S. are charged with protecting the property, casualty
   and reputational risks associated with providing care to more than 1.4 million people,
   most over the age of 65. These run the gamut from safety risks affecting workers and
   residents to reputational risks stemming from the COVID-19 pandemic.

   Over the past several months, the coronavirus pandemic has adversely impacted
   nursing homes, with more than 260,000 confirmed COVID-19 cases and more than
   147,000 additional suspected cases, according to the Centers for Medicaid and
   Medicare Services. According to data curated by the New York Times, the death toll
   among residents and staff at these facilities exceeds 84,000, accounting for 38% of all
   COVID-19-related deaths in the U.S.

   In addition to COVID-19, conference sessions will cover:
        •    Slips & falls: The No. 1 injury claim
        •    Abuse and neglect
        •    Labor and employment issues including pre-employment screening
        •    Insurance coverage issues
        •    Litigation trends and trial experiences
        •    Cyber Risks for LTC facilities

LEARN MORE & NOMINATE >>
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                   HEAD OF SALES - EVENTS            events@businessinsurance.com
                   (312) 833-4099
                   sstilwill@businessinsurance.com
FUTURE LEADERS - SPECIAL REPORTS PANDEMIC RISK MANAGEMENT - Business Insurance
NEWS ANALYSIS

         New capacity enters D&0 sector                                                                                                                  CYBER
                                                                                                                                                        RANSOMS

          as prices, exposures increase
                                                                                                                                                      TEST MARKET

         BY JUDY GREENWALD
                                                                                                                                                      S   ecuritization could be in
                                                                                                                                                          cyber insurance’s future,
                                                                                                                                                          but for now policyholders
                                                                                                                                                      and insurers are grappling
                                                                                                                                                      with the challenges posed by
   jgreenwald@businessinsurance.com                                                                                                                   ransomware.
                                                                                                                                                        Those were among the

T
     he management liability marketplace                                                                                                              issues discussed during
     faces numerous challenges, including an                                                                                                          sessions of the Minneapolis-
     increase in fiduciary liability lawsuits, as                                                                                                     based Professional Liability
it braces for expected SPAC-related losses.                                                                                                           Underwriting Society’s 2021
  These were among the themes during this                                                                                                             cyber symposium, which
year’s Professional Liability Underwriting                                                                                                            was held virtually May 5-6.
Society’s annual directors and officers sym-                                                                                                            Joe Mann, CEO of
posium, which was held remotely April 28                                                                                                              Washington consulting
and 29.                                                                                                                                               firm Arete Advisors LLC,
  Even before the pandemic, the industry                                                                                                              said there are about 30
faced several challenges, including anticipat-                                                                                                        ransomware variants
ed hikes in premiums and retentions, as well                                                                                                          circulating, with more
as more class action derivative lawsuits, said                                                                                                        criminals threatening to
Christine Williams, New York-based CEO,                                                                                                               release exfiltrated data. “It
financial services group, at Aon PLC.                                                                                                                 just ratchets up the chaos
   “We’re continuing to see portfolio adjust-                                                                                                         and the crisis scenario
ments overall out of the gate,” and rates                                                                                                             that happens,” he said.
continue to experience upward pressure,             or SPACs, presents opportunities for the         objection claims, Ms. Barrett said. “There’s a     Criminals are more
she said.                                           D&O liability insurance market, insur-           lot there and we’re just kind of waiting and     sophisticated and persistent,
  However, there have been about a dozen            ers are approaching the issue cautiously,        watching.”                                       and activists, nation
new entrants into the management liability          speakers said.                                     Stephen Sills, CEO of New York-based           states and disgruntled
market in the United States and London,               SPACs, also called “blank check compa-         Bowhead Specialty Underwriters, said the         insiders continue to cause
Ms. Williams said. “It’s early days, but I          nies,” are shell companies formed for the        accelerated process in which companies           cybersecurity concerns, said
think they will be able to provide some             purpose of raising capital to acquire exist-     go public under SPACs “creates a lot of          Phil Venables, New York-
ample capacity,” she said.                          ing businesses and usually have two years to     problems.”                                       based chief information
  Chris Warrior, London-based head of               make an acquisition after their initial public     Typically, bringing a company public           security officer for Google
commercial management liability U.K. for            offering.                                        involves “a long baptism under fire and a lot    Cloud, a Google LLC unit.
Berkshire Hathaway Specialty Insurance                The structures allow the privately held        of training,” Mr. Sills said. Now, “you just       Insurance executives
Co., said the market is at a crossroads, with       businesses acquired to become listed with-       add water and instantaneously become a           said the cyber insurance
London insurers stepping up with an appe-           out going through a traditional initial public   public company,” he said, adding that he is      market may move toward
tite to provide new capacity.                       offering.                                        not sure all of the CEOs and managers of         securitization of cyber
                                                      SPACs unfold in stages, including the          these companies are used to the constraints      risk, although it will take
“There are a lot of SPACs out there                 pre-announcement stage before it has made
                                                    an acquisition; the point where it merges
                                                                                                     they must work under in that particular
                                                                                                     environment.
                                                                                                                                                      several years for that
                                                                                                                                                      market to develop.
looking for merger partners                         with the selected private company; and the
                                                    post-merger or “de-spac” stage, when there is
                                                                                                       There is also potentially a “huge aggrega-
                                                                                                     tion problem here” from a D&O liability
                                                                                                                                                        Andy Marcell, New York-
                                                                                                                                                      based CEO of Aon PLC
right now, with a lot of money and                  a combined company. Companies may seek           perspective, as SPACs go through their           unit Aon Reinsurance
                                                    D&O coverage at all of these stages.             stages, he said.                                 Solutions, said there are
lots of IPOs in the pipeline.”                        “There are a lot of SPACs out there look-        Insurers are concerned about aggrega-          some coverages that can be
                                                    ing for merger partners right now, with a lot    tion, with the possibility they can be hit by    isolated to create “discrete,
Kevin LaCroix, RT ProExec
                                                    of money and lots of IPOs in the pipeline,”      the same event multiple times, said Jaimie       bespoke coverages.”
                                                    said Kevin LaCroix, executive vice president     Hunter, Brooklyn-based senior vice presi-          “If we do our jobs
                                                    in Beachwood, Ohio, for RT ProExec, a            dent at Guy Carpenter & Co. LLC.                 correctly on the retail
  The reasons why so many of the new                division of R-T Specialty LLC.                     Change has already occurred in the once        side, the demand for the
entrants are in London or Bermuda rather              SPACs are an opportunity, but “at the same     “sleepy” fiduciary liability market because of   coverage will increase”
than the United States was also discussed.          time you know that you’re going to see losses    the growing number of excessive fee claims       and create the additional
  In the U.K., entities have the ability to get     just because of the sheer volume of activi-      lawsuits being filed, executives said.           capacity needed, he said.
up to speed fast, and freedom of rate and           ty,” said Allison H. Barrett, New York-based       The fiduciary space recently has taken “an       Mr. Marcell said insurance
form, while in the U.S., new markets are            head of North America financial lines for        abrupt and sudden turn” because of these         and reinsurance brokers
forced to go through individual states, “and        American International Group Inc.                claims, which are class actions brought          have to be able to provide
there is a lot of work that has to be done to         “There’s some risk inherent in these trans-    against defined contribution plans in con-       some underlying data with
get the entity’s paper ready to go,” said Jack      actions,” she said. Clearly, the SEC is “look-   nection with allegations that recordkeep-        regard to outcomes against
Kuhn, CEO, insurance, at Vantage Risk Ltd.          ing to slow down the process but not stop        ing and other expenses that they charge are      a set of deterministic
in Berkeley Heights, New Jersey, whose par-         it,” she said.                                   unnecessary or unreasonable, said Alison         scenarios. “I think we will
ent company is Bermuda-based.                         There are questions as to what happens         Martin, Pittsburgh-based fiduciary prod-         get there as an industry,
  Meanwhile, although the explosive growth          when SPACs de-spac. “That’s candidly             uct manager and senior vice president at         hopefully,” he said.
in special purpose acquisition companies,           where we see a lot of risk,” including merger    Chubb Ltd.                                                      Judy Greenwald

                                                                                                                                           BUSINESS INSURANCE       JUNE 2021    9
FUTURE LEADERS - SPECIAL REPORTS PANDEMIC RISK MANAGEMENT - Business Insurance
NEWS ANALYSIS

                      Cannabis insurance options shifting
        BY MATTHEW LERNER                                                                                                                                      coverage, including D&O and errors and
     mlerner@businessinsurance.com                                                                                                                             omissions insurance, have been particularly
                                                                                                                                                               difficult and could benefit from expansion,

T
     he insurance climate for cannabis oper-                                                                                                                   he said.
     ators and related companies remains                                                                                                                         The best way to describe cannabis D&O
     cloudy, but it is improving and should                                                                                                                    is “a hard market within a hard market
continue to do so.                                                                                                                                             — very firm and difficult to operate in.
  Developments ranging from the prospect                                                                                                                       It’s very difficult to buy limits up to and
of looser federal restrictions to improving                                                                                                                    above $10 million,” said Ben Sibthorpe,
policy language could benefit the industry.                                                                                                                    Denver-based vice president in the man-
  Capacity for cannabis operators and                                                                                                                          agement liability division of CannGen
related businesses remains constrained,                                                                                                                        Insurance Services. Fewer than 10 insur-
however, with some markets such as direc-                                                                                                                      ers currently write such coverage, he said.
tors and officers liability insurance partic-                                                                                                                    Sebastian Alia, New York-based depu-
ularly difficult.                                                                                                                                              ty general counsel at Hudson Insurance
  Two bills before the U.S Congress could                                                                                                                      Group, described the cannabis D&O
potentially remove some of the more sub-                                                                                                                       market as “a hard market on steroids.”
stantial barriers facing cannabis operators                                                                                                                    Cannabis “adds so many additional
when buying insurance (see related story).                                                                                                                     uncertainties” as a new industry with little
  Only four states have no laws relating                                                                                                                       available data and regulation that offers
to legal marijuana use — Idaho, Kansas,                                                                                                                        “so much gray area,” he said.
Nebraska and South Dakota, according to          a U.S. senator and vice president, and Mr.                   “the No. 1 ask” from cannabis operators            Matt Grimes, vice president of the can-
the National Conference of State Legisla-        Stewart spoke recently during a series of                    is still capacity, as many are not able to       nabis specialty group at Hub Internation-
tures. In all other states it is either legal-   webinars on the cannabis sector produced                     secure limits they desire, especially for        al Ltd. in Chicago, said the brokerage
ized, decriminalized, allowed for med-           by Business Insurance.                                       total insured values.                            is introducing a new D&O product for
ical use, or allowed for medical use and           Capacity constraints continue to create                      The Clarifying Law Around Insurance            the cannabis sector. Hub has created an
decriminalized.                                  problems for cannabis operators, accord-                     of Marijuana Act of 2021, which would            indemnity vehicle that “uses company-is-
  Ian Stewart, chair of the national canna-      ing to webinar series participants, with the                 provide a federal safe harbor for insurers       sued stock as collateral to provide for an
bis and hemp law practice at Wilson Elser        D&O sector being acutely tight.                              covering cannabis businesses where sale of       increased limit structure,” he said.
Moskowitz Edelman & Dicker LLP in                  Charles Pyfrom, Livermore, Cali-                           the drug is legal, could help broaden insur-       Meanwhile, policy wording standardiza-
Los Angeles, said there is a “domino             fornia-based chief marketing officer of                      ance markets for cannabis operators, Mr.         tion is expected to evolve along with the
effect” among states legalizing or fur-          CannGen Insurance Services LLC,                              Stewart said.                                    cannabis industry itself, and regulators are
ther legalizing cannabis in various forms,       which covers cannabis businesses, said                         The markets for management liability           helping play a role in the quest for stan-
including New York and Virginia which                                                                                                                          dardized policy language.
recently acted, with New York choosing               CONTROL OF LEGISLATURES                                      LEGAL MARIJUANA USE                            “We’ve found the departments of insur-
full recreational adult use.                                                                                                                                   ance have been incredibly flexible in our
                                                             n Democratic n Republican                        n Recreational and medical use n Medical use
  “At the state level, things are not slowing              n Split n Unicameral/nonpartisan                     n CBD/Low THC product law n No laws
                                                                                                                                                               conversations and filings,” said Joseph
down,” he said.                                                                                                                                                Jonas, product manager, commercial
  The drug remains illegal, however, at                                                                                                                        lines, in Northwood, New Hampshire for
the federal level. Cannabis is classified as                                                                                                                   the American Association of Insurance
a Schedule I narcotic by the U.S. Drug                                                                                                                         Services.
Enforcement Administration. Schedule I                                                                                                                           From a claims perspective, some stan-
drugs, substances or chemicals are defined                                                                                                                     dardization of terms would be welcome,
as drugs with no currently accepted medi-                                                                                                                      said Gerrit Nagarwalla, claims manager
cal use and a high potential for abuse.                                                                                                                        at Canopius Group Ltd. in St. Charles,
  There have been “some encourag-                                                                                                                              Illinois.
ing signs” for the cannabis sector, said                                                                                                                         More standardization of policy language
Andrew Kline, senior counsel for Perkins                                                                                                                       as the insurance market for cannabis
Coie LLP in Denver. Mr. Kline, who                                                                                                                             matures would be beneficial, especially to
worked for President Biden when he was           Source: National Conference of State Legislatures (via AP)                                                    claims people, Mr. Nagarwalla said.

           FEDERAL CANNABIS LEGISLATION COULD CLEAR AIR FOR HESITANT INSURERS

  T    he difficult but improving insurance
       market for cannabis operators in
       the United States may get a boost
  from two pieces of legislation before
  Congress, one of which has already
                                                  after passing the House in 2019.
                                                    The Clarifying Law Around Insurance
                                                  of Marijuana Act of 2021, introduced
                                                  in the House in March, would provide
                                                  a federal safe harbor for insurers
                                                                                                              Banking Act, said Ian Stewart, chair of the
                                                                                                              national cannabis and hemp law practice
                                                                                                              at Wilson Elser Moskowitz Edelman
                                                                                                              & Dicker LLP in Los Angeles, during
                                                                                                              a series of webinars on the cannabis
                                                                                                                                                              of state and federal agendas. “Once
                                                                                                                                                              members of Congress have a vested
                                                                                                                                                              interest, this becomes a bit of a different
                                                                                                                                                              issue,” she said during the webinar series.
                                                                                                                                                                The proposed laws are also
  passed the House of Representatives.            covering cannabis businesses in states                      sector produced by Business Insurance.          garnering support from insurance
    The Secure and Fair Enforcement               where sale of the drug is legal.                              “There is very much a ‘trickle up’ effect,”   industry organizations, including the
  Banking Act of 2021, or SAFE Banking              Senators and representatives from                         said Michelle Rutter Friberg, deputy            American Property Casualty Insurance
  Act, in April passed the House with             states that have legalized cannabis could                   director of government relations at the         Association and the Reinsurance
  more than 100 co-sponsors and                   be more supportive than previously of                       National Cannabis Industry Association in       Association of America.
  must clear the Senate, where it died            federal legislation such as the SAFE                        Washington, referring to the dovetailing                                   Matthew Lerner

10     JUNE 2021      BUSINESS INSURANCE
INTERNATIONAL

PROFILE: URUGUAY
                                                                                                                                                                        MARKET
                                                                                                                                                                        DEVELOPMENTS
                                                                                                                                                                        Updated May 2021
                                                                                                                                                                        n	The coronavirus was officially
                                                                                                                                                                          confirmed to have reached
                                                                                                                                                                          Uruguay on March 13, 2020,
                                  Uruguay’s nonlife insurance market is relatively small,

63
                                                                                                                                                                          and the full impact of the
                                  generating $868.19 million in premiums in 2019.
                                                                                                                                                                          COVID-19 pandemic will not
                                  Market penetration per capita remains fairly modest
                                                                                                                                                                          be known for some time.
                                  although comparable with neighboring countries, and
                                  any potential increase in the immediate future is likely                                                                              n	During late 2020 there were
                                  to be moderate. Auto insurance dominates the nonlife                                                                                    16 insurance companies
                                  sector; the second most significant class is workers                                                                                    registered to operate in the
                                  compensation insurance, which is obligatory for most                                                                                    nonlife sector, dominated
                                  employers. There is unlikely to be any major change to                                                                                  by the state-owned Banco
                                  nonlife premium distribution in the foreseeable future.                                                                                 de Seguros del Estado,
                                  The market will continue to be dominated by Banco                                                                                       which in 2019 held a 63.14%
                                  de Seguros del Estado, the state insurance company,                                                                                     share of total premiums.
                                  and competing insurers will require greater innovation                                                                                n	Auto continues to form the
  GLOBAL                          to increase their market share. Auto and property                                                                                       largest class of business
P/C MARKET                        will continue to be the main lines of business for                                                                                      for the nonlife portfolio,
 RANKING                          private insurers, and competition for new and existing                         AREA                                                     representing over 37%

                                                                                                                 68,037
                                  business will continue to intensify.                                                                                                    of market premiums
                                                                                                                                                                          in 2019. BSE leads the
                                                                                                                                                                          account, holding over 45%
  MARKET SHARE                                                        PROPERTY                                                                                            of motor premiums.
                                                                        14.7%
    CONSTRUCTION                                                                                                 square miles                                           n	Competition for new and
    & ENGINEERING                                                                                                                                                         existing business across
         1.1%                                                                                                                                                             most lines continues to be
                                                                                                                                                                          strong. Despite this, rates
     LIABILITY
        2.4%                                                                                                                                                              have generally remained
                                                                                                                                                                          stable or shown only a small
   MARINE,
                                                                                                                 POPULATION                                               decline. Market participants

                                                                                                                 3.4
  AVIATION &                                                                                    AUTO                                                                      suggest that dramatic rate
   TRANSIT                                                                                      37.4%                                                                     cutting for new business
     3.2%                                                                                                                                                                 does occur, particularly
                                                                                                                                                                          in property classes.
        MISC.
        4.1%                                                                                                     million                                                n	There continues to be interest
                                                                                WORKERS                                                                                   in the market from new
    SURETY, BONDS                                                                                                                                                         entrants and several have
                                                                              COMPENSATION
      & CREDITS                                                                  32.8%                                                                                    approached the regulatory
         4.2%                                                                                                                                                             authority, including a number
                                                                                                                                                                          from neighboring Argentina.
                                                                                                                 MARKET CONCENTRATION

                                                                                                                 80.3%
  MARKET GROWTH                                                                                                                                                         n	Public-private partnership
  In millions, U.S. dollars                                                                                                                                               projects may present
                                                                                  Life       Nonlife                                                                      opportunities for the
    1,000                                                                                                                                                                 construction sector and
                                                                                                                                                                          ultimately those insurers
                                                                                                                 market share of top three insurers                       that underwrite the class.
      800
                                                                                                                                                                        n	Companies have expressed a
                                                                                                                                                                          need for adequate legislation
      600                                                                                                                                                                 for the sector, such as
                                                                                                                                                                          framework regulations to
                                                                                                                 2021 GDP CHANGE                                          govern intermediation.
      400
                                                                                                                 (PROJECTED)
      200

         0
                 2015              2016              2017             2018
     Source: Axco Global Statistics/Industry Associations and Regulatory Bodies
                                                                                         2019
                                                                                                                 3.0%
         COMPULSORY INSURANCE                                                             NONADMITTED                           INTERMEDIARIES                          MARKET PRACTICE
         n	Auto third-party                   n	Professional indemnity                  Nonadmitted insurance is not          Intermediaries do not have to be        The Superintendency of Financial
             liability cover                       (errors and omissions)                 permitted in Uruguay because          authorized to do insurance business     Services is aware that some nonlife
                                                   cover for foreign                      the law provides that insurance       in Uruguay. They are allowed to         insurance business is illegally placed
         n	Workers compensation
                                                   reinsurance brokers                    must be purchased from local          place business with nonadmitted         overseas, but the volume is not
         n	Aviation hull (where                                                          authorized insurers, with             insurers in the classes for which       believed to be significant. There
             the maximum take-off
                                               n	Liability insurance for
                                                                                          some exceptions. Among the            such placements are permitted.          have been no recent reports of
                                                   companies operating
             weight exceeds six                                                           exceptions is insurance on the        Brokers involved in nonadmitted         any unauthorized insurers illegally
                                                   within ports
             tons), third party, crew                                                     international transport of goods.     placements do not have to warn          selling insurance in Uruguay.
             and passenger liability           n	Shipowners liability for                                                      buyers that their insurer is not
                                                   marine oil pollution                                                         subject to local supervision.
         n	Personal accident
                                                   (financial guarantee                                                                                               Information provided by Axco.
             cover for public
                                                   or insurance)
             transport passengers                                                                                                                                         For free trial access to
                                                                                                                                                                      global insurance intelligence,
                                                                                                                                                                           visit axcoinfo.com.

                                                                                                                                                               BUSINESS INSURANCE               JUNE 2021        11
LEGAL BRIEFS
                                                Court of Appeals in Cincinnati last year,
                                                Knoxville, Tennessee-based CIC sued to
                                                stop an IRS reporting requirement for
                                                                                                in Noelle Lee v. Robert J. Fisher et al. Mr.
                                                                                                Fisher is the San Francisco-based compa-
                                                                                                ny’s chairman.
                                                                                                                                                        DOCKET
                                                microcaptives, which are also known as            The complaint charged the company
                                                831(b) captives.                                with breach of fiduciary duty, aiding and
                                                  Over the past several years, the IRS          abetting breach of fiduciary duty, abuse of
                                                has won several court rulings in which          control, unjust enrichment, and violation
                                                it alleged that microcaptives are not           of securities law and regulation.
                                                engaged in insurance and are instead used         The court held the company’s exclusive
                                                by wealthy individuals and family busi-         forum provision is valid. “Plaintiff does      CONTRACTOR ADMITS
                                                nesses to avoid taxes. As part of its inves-    not point to any statute or judicial deci-     TO OSHA VIOLATION
                                                tigations into microcaptives, in 2016 the       sion that clearly states that enforcing the    A New Jersey general contractor
                                                IRS imposed rigorous reporting require-         forum selection clause would contravene        admitted in federal court to wilfully

Restaurants’ case                               ments on captive managers involved with
                                                microcaptives that it suspected might
                                                                                                a strong public policy,” the court said in
                                                                                                dismissing the case.
                                                                                                                                               violating Occupational Safety and
                                                                                                                                               Health Administration standards in
avoids dismissal                                be used for tax evasion. Managers that
                                                did not meet the reporting requirements
                                                                                                  Other companies have been charged in
                                                                                                similar diversity suits, including Face-
                                                                                                                                               the death of a roofing worker in a
                                                                                                                                               fall, the U.S. Department of Justice
n Physical damage is not necessarily            faced stiff penalties.                          book Inc. Another San Francisco judge          reported. Derico Ferreira, owner
visible to the eye, a federal district court      CIC sued the IRS alleging that the            dismissed the Facebook case, Natalie           of Newark-based Trustworthy LLC,
said in refusing to dismiss a COVID-            reporting requirements violated the             Ocegueda v. Mark Zuckerberg, et al., citing    pleaded guilty to one count of
19 business interruption lawsuit filed by       Administrative Procedure Act and the            the company’s Delaware forum selection         willful violation of OSHA standards
Alabama restaurants.                            Congressional Review Act and that it            clause as among her reasons for doing so.      by failing to provide fall protection
  Three restaurant companies, including         required congressional review before              Under A.B. 979, which was signed into        to employees installing a roof on
North Birmingham-based Serendipitous            going into effect.                              law by California Gov. Gavin Newsom            a two-story house. The company
LLC, had argued that the terms concern-           The IRS countersued, arguing that             last year, publicly traded companies in        did not have a guardrail installed
ing “loss” under Cincinnati Insurance           CIC’s suit was barred by the Anti-In-           the state must have at least one minority      and provided no personal fall
Co.’s coverage were ambiguous, according        junction Act. That law requires taxpayers       director by Dec. 31, 2021.                     protection to its workers on the
to the ruling by the U.S. District Court in     to pay a disputed tax and then sue for a                                                       roof, according to court documents.
Birmingham in Serendipitous LLC/Melt et
al. v. Cincinnati Insurance Co.
                                                refund if it is later deemed invalid.
                                                  Writing for a unanimous Supreme               Sompo files suit                               UNDER ARMOUR AGREES
  The insurer had argued the restaurants
had not identified the physical loss or
                                                Court, Associate Justice Elena Kagan
                                                said: “A reporting requirement is not a
                                                                                                in Bryant crash                                TO SEC SETTLEMENT
                                                                                                                                               Sports apparel manufacturer Under
damage to property needed to trigger            tax; and a suit brought to set aside such a     n A Sompo International Holdings Ltd.          Armour Inc. has agreed to pay $9
coverage, according to the ruling.              rule is not one to enjoin a tax’s assessment    unit has filed suit seeking a declaration      million to settle U.S. Securities
  “The restaurants have alleged facts that,     or collection. That is so even if the report-   it is not obligated to indemnify the heli-     and Exchange Commission charges
if proven, constitute actual physical loss of   ing rule will help the IRS bring in future      copter company that allegedly arranged         it misled investors. The SEC said
their buildings and furniture during the        tax revenue — here, by identifying sham         the flight in which basketball star Kobe       the Baltimore-based company
pandemic,” the ruling said.                     insurance transactions.”                        Bryant was killed last year.                   misled investors as to the bases
  “The fact that the COVID-19 virus               The case was remanded for further pro-          Nine people, including Mr. Bry-              of its revenue growth and failed
has not physically altered the restaurants’     ceedings.                                       ant, his daughter Gianna and the pilot,        to disclose known uncertainties
property does not mean that coverage nec-                                                       were killed on Jan. 26, 2020, when their       about its future revenue prospects.
essarily is not available for impacts to the                                                    Sikorsky helicopter crashed en route from      The SEC said that by the second
property that are invisible to the naked eye.                                                   John Wayne Airport in Santa Ana, Cali-         half of 2015, Under Amour’s
  “The policy language indicates that                                                           fornia, to Camarillo Airport.                  internal revenue and revenue
the insurer understands that an insured                                                           Santa Ana-based OC Helicopters,              growth forecasts for the third
may suffer physical loss without physical                                                       which allegedly had provided flight oper-      and fourth quarters of that year
alteration of property because the policy                                                       ations for Mr. Bryant, his family and his      began to indicate shortfalls from
excludes from coverage some expenses                                                            businesses, was named as a defendant in        analysts’ revenue estimates.
incurred because of invisible substances                                                        four lawsuits filed by Mr. Bryant’s widow
like vapor and fumes,” it said. “Cincinnati                                                     and others in the crash, according to the      UTAH SECURITY FIRM
could have excluded invisible substances                                                        lawsuit, Endurance Assurance Corp. vs. OC      SETTLES FTC CHARGES
like viruses but did not,” the ruling said,                                                     Helicopters LLC, which was filed in U.S.       A Utah home security and
in denying Cincinnati Insurance’s motion                                                        District Court in Santa Ana.                   monitoring company has agreed to
to dismiss the case.                                                                              Sompo unit Endurance Assurance,              pay $20 million to settle Federal
  A Cincinnati spokeswoman said in a
statement, “Our commercial property             Diversity suit against                          which provided a policy with a $10 mil-
                                                                                                lion limit for bodily injury and property
                                                                                                                                               Trade Commission charges it
                                                                                                                                               misused credit reports to help
insurance policies require direct physi-
cal loss or damage to property and do not
                                                The Gap dismissed                               damage to OC Helicopters, has defended
                                                                                                the company subject to a reservation of
                                                                                                                                               unqualified customers obtain
                                                                                                                                               financing for the company’s
provide coverage in this case.”                 n A federal district court dismissed a          rights, according to the lawsuit.              products and services. The
                                                diversity lawsuit filed against The Gap           The lawsuit says Endurance is not obli-      agency said Provo-based Vivint

High court reverses                             Inc., citing the company’s bylaws, which
                                                designate the Delaware Court of Chan-
                                                                                                gated to provide insurance coverage to the
                                                                                                company under the non-owned aircraft
                                                                                                                                               Smart Homes Inc. had agreed
                                                                                                                                               to pay a $15 million civil penalty
microcaptives ruling                            cery as the exclusive forum for claims.
                                                  Plaintiff Noelle Lee alleged in the deriv-
                                                                                                liability endorsement in its policy that
                                                                                                excludes “rotowing” aircraft, which would
                                                                                                                                               and an additional $5 million to
                                                                                                                                               compensate injured customers. The
n The U.S. Supreme Court ruled that a           ative lawsuit, which was filed in U.S. Dis-     include the Sikorsky helicopter.               FTC charged that Vivint violated
captive manager’s challenge to a report-        trict Court in San Francisco in September         Endurance is seeking a declaration from      the Fair Credit Reporting Act by
ing requirement for microcaptives is not        2020, that the clothing retailer had failed     the court that the claims asserted against     improperly obtaining credit reports
barred by federal law, reversing a federal      to create any “true racial or ethnic diver-     OC Helicopters do not fall within the          to qualify potential customers
appeals court ruling in the case.               sity” on its board or in its top leadership     scope of its coverage and that it does not     for financing for its smarthome
  In CIC Services LLC v. Internal Revenue       roles despite its written proclamations to      have a duty to defend or indemnify OC          monitoring and security products.
Service, which was heard by the 6th U.S.        the contrary, according to the complaint        Helicopters or reimburse defense costs.

12    JUNE 2021      BUSINESS INSURANCE
VIEW FROM THE TOP
                                                                                    Mitch Blaser
                                                                                      MOSAIC INSURANCE

                                    Q   What are the challenges of starting
                                        up multinational operations                 Q   What are the lines of business
                                                                                        you are starting with?
                                                                                                                                      and they are usually noncorrelated
                                                                                                                                      risks. These are typically more isolated
                                    in the middle of a pandemic?                                                                      activities and events and our reinsurance

                                    A    Some are the obvious ones of just
                                         not being able to sit around a table
                                                                                    A    We are focused on seven lines
                                                                                         of business and these are highly
                                                                                    specialized. They are really difficult lines
                                                                                                                                      program takes the top off our exposure.
                                                                                                                                      So you have less frequency and you
                                                                                                                                      can control the severity in these lines
                                    — especially with Lloyd’s, which is 300         to be in, they require a high technical           of business. It also comes back to the
                                    years old and it started in a coffee            knowledge to write the business, they             technicalities in the underwriting, too.
                                    shop so everything’s been face-to-face.         are very relevant in terms of today’s
                                    But the world has done a great job
                                    adapting. It’s not that the office is dead
                                                                                    economies and we expect they will be
                                                                                    critical to the new economies going               Q   Are you looking to expand the
                                                                                                                                          number of classes of business?
                                    and we’ve lost what we had before, it’s         forward so the demand and risk will grow.

                                                                                                                                      A
Mitch Blaser founded private        more about we’ve gained the ability to            Cyber is an example; it’s a tough line               We will be opportunistic. If a
equity-backed Mosaic Insurance      operate in a virtual environment. We            but if you have the right people who                   business opportunity is there — we’ve
                                    now know how to get together, coalesce          know how to support the line and you              already looked at a few and there may
Holdings Inc. in Bermuda in         around ideas and make things happen             are able to build that business, you would        be one that we follow up on — that
February to focus on specialty      virtually that we just didn’t do before.        think of it not only being relevant today         fits our model, that has a niche area
risks. The company’s main             I found the biggest disadvantage              but it’s not going away anytime soon.             of focus, that requires really technical
                                    was more on the admin side, when                                                                  underwriting and talent capability, we
underwriting vehicle is a Lloyd’s   you need signatures and the actual                                                                have an opportunistic model for those
of London syndicate, but it also    documentation for what you’ve already                                                             situations. That does not mean we are
                                    agreed to. People have started having                                                             looking for x, y or z, but if x, y or z shows
plans to partner with third-party
                                    to create legal documents behind the                                                              up and it fits the model, we’ll pull the
capital providers. Mr. Blaser’s     documents to support the fact that                                                                trigger. It comes down to people.
long career in insurance has        you don’t have a wet signature. We
included nearly 30 years at
                                    found ways to get it done but it slows
                                    you down a bit on the admin side.                                                                 Q   People look at private equity-backed
                                                                                                                                          companies and think they’ll last
Marsh & McLennan Cos. Inc.                                                                                                            about five years before there’s a recap
After some time at Swiss Re
Ltd., he joined Ironshore Inc.
                                    Q   You have about 45 people on staff,
                                        but how many have you actually met?
                                                                                                                                      or a sale or an IPO. What’s the story
                                                                                                                                      with your private equity backing?

in 2007, where he also worked
with his co-CEO at Mosaic,          A   When you’re focusing on starting a new
                                        company you think about the people
                                    you know, so I’ve met about three-quarters
                                                                                                                                      A   With Golden Gate Capital, we have
                                                                                                                                          a perpetual fund structure, so they
                                                                                                                                      are long-term holders. It’s so hard to
Mark Wheeler. He recently           of the team at some point in my career.                                                           predict what the future will bring, but
spoke with Business Insurance                                                                                                         the ability to have that flexibility is huge
Editor Gavin Souter about the
concept behind Mosaic and its
                                    Q   Now that you have operations up
                                        and running, what’s your strategy?
                                                                                      Political violence is another one.
                                                                                    Who would have thought a year ago
                                                                                                                                      so we can monetize if that becomes
                                                                                                                                      a critical opportunity for some reason
                                                                                    that the U.S. would be a big market for           or they can hold for up to 20 years. So
strategy. Edited excerpts follow.
                                    A   The underpinning of our hybrid model
                                        is the talent that we are able to attract
                                    and hire, in parallel with the building of
                                                                                    political violence coverage? The world
                                                                                    is changing dramatically. Political risk,
                                                                                    which is basically governments behaving
                                                                                                                                      we have a ton of flexibility in how we
                                                                                                                                      work together, in how we build the
                                                                                                                                      company and eventually monetize.
                                    our technology platform. Not having a           badly, faces the same kind of issue.
                                    legacy infrastructure is almost as important
                                    as not having a legacy balance sheet.
                                                                                      For transactional liability, each month
                                                                                    seems to set a record for mergers and             Q Most companies have one
                                                                                                                                        CEO, but you have co-CEOs.
                                      The centerpiece of our model is our           acquisitions, so that will probably be our        What’s the thinking behind that?
                                    Lloyd’s syndicate, so getting that up and       biggest line. We’ll also be in financial
                                    running was absolutely critical and that’s
                                    been one of the time-consuming things
                                    that we’ve done on a virtual basis. In terms
                                                                                    institution lines and professional liability.
                                                                                      Another way to think about these lines
                                                                                    of business is that they are lines that
                                                                                                                                      A   We worked together for years. One
                                                                                                                                          of the hats I wore at Ironshore was
                                                                                                                                      CFO, and I got to know Mark really well
                                    of the initial focus those are the key boxes    brokers typically have problems placing.          that way. We worked together building
                                    that we want to be able to tick, so that                                                          the international franchise of Ironshore.
                                    we can get our underwriters underwriting
                                    and align our partners on the capital side.     Q  Isn’t there something to be
                                                                                       said for balancing a book of
                                                                                                                                      We have a very close friendship as well
                                                                                                                                      as a partnership, and we seem to be able
                                      We are talking to different types of          business with less volatile lines?                to leverage each other’s strengths — he
                                    capital to support us, between consortiums                                                        can focus a lot on the underwriting side,
                                    and trade capital, and we’ll also have some
                                    less traditional capital supporting us.         A   There is a degree of volatility in these
                                                                                        lines, but there’s not the frequency,
                                                                                                                                      and I can focus on the running of the
                                                                                                                                      business side. It’s a great complement.

                                        Who would have thought a year ago that the U.S. would be a big market for political violence coverage? The world is
                                        changing dramatically. Political risk, which is basically governments behaving badly, faces the same kind of issue.
                                                                                                                                    BUSINESS INSURANCE            JUNE 2021          13
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