Bancassurance

In the United States, Bancassurance was banned until the repeal of the Glass Steagall Act in 1999.  It has not caught on as a practice for most forms of insurance.

There is no simple way of entering into bancassurance which is “best” for every insurer and every bank. The goals of the company have to be clear. They should be concise before a strategic plan is agreed upon.

The simplest form of bancassurance is that one party’s distribution channel can have access to the clients of the other organisation. When a bank and the insurance company enter into a distribution agreement,  the bank automatically passes on its ‘warm leads’.  This is from its client base to a competent, friendly insurance company.  A very profitable relationship can result from such an agreement.

Using the bank’s sales channel, the insurance company uses the bank’s sales channel to sell insurance products. Bank staff and bank employees, even tellers become the point of contact and sales to the bank’s clients. Commission is shared between the bank and the insurance companies, however, the policies are managed by the different insurance companies.

Insurance companies ensure that the staff in the banks involved in the sales of insurance products are provided with product information, sales training and marketing campaigns and the BIM model has shown to be a very effective distribution channel.

Many feel that banks have too great a control over the financial industry as well as creating too much competition with existing insurance companies.

In China, bancassurance products have exploded across several product lines. However, in certain countries, bank insurance is largely prohibited. Most sales in U.S. Banks are life insurance, property insurance and mortgage insurance.

Traditional Insurance models (TIM) have to have larger sales teams and also work with third party agents and brokers. BIM (known as the Bank Insurance Model), is very popular in European countries such as Spain, France and Austria,and is also crossed with TIM for what is known as HIM (Hybrid Insurance Model). HIM is a combination of TIM and BIM.

Privatbank Assurance is pioneered by Lombard International Assurance which is a globally used wealth management company. This concept combines private banking and investment management services. Lombard applies expertise to create innovative wealth structuring solutions to meet the unique needs of high net worth clients using life assurance in conjunction with sophisticated financial planning.

Insurance activity in a bank is integrated with the usual bank processes and is referred to as “Integrated Models”. The bank collects the premium, normally by a direct debit order from the client’s bank account at that particular bank.

The workflows are automated between the bank and the insurance companies. The bank receives a commission for these transactions. For more sophisticated products, the bank’s staff has the support of specialised insurance advisors.

Certain life insurance products can only be sold by financial advisors who have obtained a minimal qualification and this is referred to as “Non-Integrated Model” so due to these rules, branch staff have been limited by regulatory constraints. Banks set up a team of financial advisors who are authorised to sell regulated insurance products. Mailing and telesales is the means by which the advisors target the bank’s clients. These financial planners are employed by the bank and they usually receive a salary plus commission from the bank.

Good reasons for banks to enter into bancassurance:

Due to the intense competition between banks, there is an increase in administration and marketing costs. As well as shrinking interest margins, there are limited profit margins in traditional banking products. New products such as bancassurance can increase production and therefore enhance profitability

Income that is generated is increased in the form of commissions from the insurance company.

The bank’s fixed costs are spread with the help of the insurance company bearing some of the costs.

The bank staff have more products to offer clients so this increases the productivity of the staff and in turn the efficiency of the bank.

The return on traditional deposit accounts has been of such a nature that customer preferences are changing and they are regarding insurance products and mutual funds in a more favourable light with regard to medium-term and long-term investment.

The main core of profitability for banks has been savings held as deposits for clients. By entering the life insurance business, the banks have found a way to offset some of their losses.

Favourable tax treatment of life insurance which is there to encourage private provision for protection and retirement planning make the purchase of insurance products more attractive to clients, thereby assisting the banks to increase profitability.

For example, the client wants to fund future education costs. He/she takes out permanent assurance. Simultaneously the policyholder can take out a mortgage loan and the bank can have the client assign the policy to the bank as beneficiary which results in a more widely based relationship with the customer.

The benefits of bancassurance for insurance companies:

Source of new business – previously unreached clients.

Source of new business – wide range of products (including banking products).

Both bank and insurers get exposure to the other’s distinctive management style and thus the great opportunity to learn and make improvements in their own operations.

Distracted driving

Researchers analysed data from more than 900 crashes. Researchers found that distracted driving is on the increase.

Distraction, error, impairment and fatigue caused ninety percent of accidents

Drivers who committed the following errors were considered dangerous: –

Reading or writing while driving;
A driver reaching for an item (increased risk by nine times);
Any driver reaching for a cellphone (increased risk by six times);
Some drivers browsing on the phone or reading emails (increased risk by three times);
The driver dialling increased the risk by twelve times.

Distracted driving caused 2,955 accidents in 2014. 431,000 people were injured. 404 people died in fatal crashes that involved the use of cellphones.

Cellphone companies are considering developing preventive technology. This technology aims to stop people from receiving calls and texting while driving. The technology is intended to limit dangerous distractions. It interrupts service so that people do not answer their phones when they are behind the wheel.

One carrier has introduced a valuable service when a phone is detected in a moving car. This feature disables rings and alerts. It thereafter sends calls to voicemail.

Researchers at the University of Utah reached various conclusions about cellphone use. They concluded that talking on a cellphone while driving is as dangerous as driving drunk. Furthermore this applied even if the phone is hands-free. Motorists who talked on hands-free cellphones were 18 per cent slower in braking.  These drivers took 27 per cent longer to regain their speed when they had applied brakes.

Employers are concerned about employees using cellphones whist driving. They are worried that they may be held liable for accidents. Work-related conversations could be conducted by their employees whilst behind the wheel.

Many companies have created cellphone usage policies. Some companies  insist that employees pull over to the side of the road to conduct cellphone conversations. Other companies have completely banned the use of all wireless devices.

If one considers the amount of accidents caused by distracted driving, it should be up to cellphone manufacturers to issue warnings to owners of mobile phones.

Cyber insurers

The cyberattack called WannaCry started on Friday 12th May 2017.  Infection occurred within 24 hours. As a result, the virus spread to 230 00 computers.

The targeted computers ran on Microsoft Windows operating system.  The hackers encrypted the data.   In the result, they demanded ransom payments in Bitcoin.

The services in the United Kingdom provided were thus emergency-only.

A 22 year old web security researcher in England discovered an effective kill switch. He registered a domain name that he found in the code of the ransom ware. This therefore slowed down the spread of the infection.  New versions lack the kill switch.

Petya is a family of encrypting ransomware. Petya targets Microsoft Windows based systems. It prevents windows from booting and then demands payment in Bitcoin in order to regain access to the system. On 27 June 2017, a major global attack began utilising a new variant of Petya.

It is the opinion of Graeme Newman, chief innovation officer at CFC Underwriting that a combination of WannaCry’s wide reach and Petya’s destructive force could thus cost insurers about $2.5 billion in the near future.

Recently the manufacturers of Air Wick fresheners and Dettol cleaners had their manufacturing and distribution channels affected by a global attack.  The Dettol hygiene brand suffered a sales slowdown in India due to the cyber attack that crippled operations.

CFC underwrites approximately $100 million of cyber insurance premiums. It is therefore one of Europe’s biggest sellers of the product.

The global market for insurance then grew to about $3.4 billion in premiums in 2016.  Many businesses are unable to deal with cyber attacks. This is stated in a report from specialist insurers Hiscox. The report found 53% of the companies assessed were ill-prepared to deal with an attack.

In 2016 cyberattack cost the global economy over $450 billion and furthermore over 2 billion personal records were stolen. In the US alone, over 100 million Americans had their medical records stolen.

Homeowner’s Insurance

 

Homeowner’s insurance (HOI) is a type of property insurance that covers a private residence.  It is an insurance policy that combines various personal insurance protections.  It includes losses occurring to one’s home and its contents. Furthermore, it also includes loss of use (additional living expenses) or loss of other personal possessions.

The cost of Homeowner’s Insurance often depends on what it would cost to replace the house. Typically, claims due to floods or war are excluded from coverage.   Special insurance can be purchased for war and floods.

Homeowners should do annual comparisons on Homeowner’s Insurance policies.  Upgrades to your home improve the aesthetics of your residence but also increase its value.  Whenever an upgrade is done, you should contact your insurance company to ensure that you are not under-insured.  Items such as hot tubs, swimming pools and trampolines leave you more vulnerable to lawsuits.  These items will, therefore, increase your annual payment for Homeowner’s Insurance.

In every state except California, a low credit score can drive up the price of your Homeowner’s Insurance.  Someone with a credit score of 500 probably not only lets bills slip but also the general maintenance of a home which leads to claims.  Laura Adams, of insurancequotes.com, discourages clients from requesting a low deductible as this may encourage you to make frivolous claims.  In some instances, one claim can result in a 32% hike in premiums.

Insurance carriers give lots of discounts if, for example, your vehicle is insured with the same company as your residence.  Not smoking, being a retiree or living in a gated community can increase the number of discounts that you qualify for with the carrier.  When discounts expire, remembering to request new discounts can help save you money every month.

Many homeowners do not understand what exposures are covered under their home insurance policy. Furthermore, more than two in five Americans (41 percent) believe that a standard homeowner’s insurance policy protects against mould damage.   This misconception could prove extremely costly.  Mould remediation can cost tens of thousands of dollars.  It is often not covered by Homeowner’s Insurance, especially if it was caused by neglected maintenance such as a leaky pipe. http://www.insurancejournal.com/news/national/2013/05/14/291804.htm

The Insurance Services Offices has standardised the following homeowner’s insurance policy forms in general use:

HO0 – Dwelling Fire Form

A form that provides coverage on a home against fire, smoke, windstorms, hail, lightning, explosion, vehicles and civil unrest.  It does not cover your personal property, personal liability or medical expenses.

HO1 – Basic Form

This form provides coverage on a home against 11 listed perils. The perils include fire or lightning, windstorm or hail, vandalism or malicious mischief, theft, damage from vehicles and aircraft, explosion, riot or civil commotion, glass breakage, smoke, volcano eruptions, and personal liability.

Exceptions include floods, earthquakes.  Most states no longer offer this type of coverage.

HO2 – Broad Form

A more advanced form that provides coverage on a home against 16 listed perils (including 11 on the HO1).

HO3 – Special Form

The typical, most comprehensive form used for single-family homes.  The policy provides “all risk” coverage on the home with some perils excluded, such as earthquake and flood.

HO4 – Contents Broad Form
The contents Broad, is a form for renters.  It covers personal property against the same perils as the contents portion of the HO2 or HO3.  An HO4 generally also includes liability coverage for personal injury or property damages inflicted on others.

HO5 – Comprehensive Form

Covers the same as HO3 plus more.  The contents are covered on an open peril basis.  Thus as long as the cause of loss is not specifically excluded in the policy it will be covered for that cause of loss.

HO6 – Unit Owners Form

The form for condominium owners.  It insures your personal property, your walls, floor as well as the ceiling against all of the perils in the Broad Form.

HO8 – Modified Coverage Form

The form is for the owner-occupied older home whose replacement cost far exceeds the property’s market value.

Coverage Classification

For each policy, there are typically 5 claim classifications of coverage.  These are based on Standard Insurance Services office forms.

Section 1 – Property Coverage

Coverage A – Dwelling

Covers the value of the dwelling itself (not including the land).   This is in place to give a buffer against inflation.  HO4 (renters insurance)  typically has no coverage A, although it has additional coverages for improvements.

Coverage B – Other Structures

Typically limited at 10% to 20% of the Coverage A, with additional amounts available by endorsement.

Coverage C – Personal Property

Covers personal property, with limits for the theft and loss of particular classes of items.  (e. g. $200 for money, banknotes, bullion, coins, medals, etc.).   This has led to some calls for more choice.

Coverage D – Loss of use/Additional Living Expenses

Covers expenses associated with additional living expenses (i. e. rental expenses) and fair rental value, if part of the residence was rented, however only the rental income for the actual rent of the space, not services provided such as utilities.

Additional Coverage

Covers a variety of expenses such as debris removal, reasonable repairs,  as well as damage to trees and shrubs for certain named perils (excluding the most common causes of damage, wind and ice), fire department charges, removal of property, credit card/identity theft charges, loss assessment, collapse, landlord’s furnishing, and some building additions.  These vary depending upon the form.

Exclusions

These generally include earth movement, water damage, power failure, neglect, war, nuclear hazard, septic tank back-up expenses, intentional loss and concurrent causation (for HO3).

Floods

Flood coverage is available in the form of a separate policy both from National Flood Insurance Program and from a few private insurers.

Coverage E – Personal Liability

Covers damages which the insured is legally liable for and also provides a legal defence at the insurer’s own expense.   About a third of the losses for this coverage are from dog bites.

Claims process

Insurance policies typically require that the insurer is notified within a reasonable time period.   In addition, a claims adjuster will investigate the claim.

Filing a claim may also result in an increase in rates, or in non-renewal or cancellation.  In addition, insurers may share the claim data in an industry database (the two major ones are CLUE and A-PLUS) with Claim Loss Underwriting Exchange (CLUE) by Choice point receiving data from 98% of US Insurers.

 

 

 

 

 

 

 

 

 

 

 

 

 

Kidnap Insurance

 

 

Kidnap insurance is meant to guard people as well as companies operating in high-risk areas.  Locations most often named in kidnap policies include Mexico, Venezuela, Haiti and Nigeria, and certain other countries in Latin America.

Private corporations pay millions of dollars in ransom money every year.  Many insurance companies sell kidnap insurance policies.   An entire criminal industry surrounds the extortion of multinational corporations through kidnap for ransom.

Seventy-one percent of the kidnapping victims are male.  Sixty-nine percent of the victims are considered middle class.  These victims are shop owners, students and mid-level professionals.  Research into the kidnap industry in Mexico have found that organised crime groups are now targeting middle- class workers.  This is an attempt to expand the number of potential targets.

 The kidnappers charge a lower ransom demand, usually around $7, 669 (100, 000 Mexican Pesos). They are able to target a greater number of people.

Between 2007 and 2012 Senior military officers with the Eritrea’s military kidnapped  30, 000 children between the ages of 16 and 17.  Students in Eritrea serve at a military camp in order to graduate from high school.  The officers would call the victims’ family to demand a ransom payment of $7, 500 in order to release the victim.  If the family were unable to pay the ransom demand, the children would be sold to Bedouin traffickers.

Researchers studying kidnap and ransom at Tilburg University in the Netherlands estimated that about $600 million has been paid out in kidnap and ransom money to the military.

Kidnap and Ransom insurance policies cover the perils of kidnap, extortion, wrongful detention and hijacking.  Kidnap and Ransom policies are indemnity policies. They reimburse a loss incurred by the insured.  The policies do not pay ransom on the behalf of the insured.  Typically, the insured must first pay the ransom, thus incurring the loss, and then seek reimbursement under the policy.

Losses typically reimbursed by Kidnap and Ransom insurance include:

1.  Ransom monies – Money paid or lost due to kidnapping.

2.  Transit/Delivery – Loss due to destruction, disappearance, confiscation or wrongful appropriation of ransom monies being delivered to a covered kidnapping or extortion.

3.  Accidental Death or Dismemberment – Death or permanent physical disablement occurring during a kidnapping.

4.  Judgements and Legal Liability – Cost resulting from any claim or suit brought by an insured person against the insured.

5.  Additional expenses – Medical care, PR Counsel, wage and salary replacement, relocation and job retraining, and other expenses related to a kidnapping incident.

Intended Audience:

The policies cover high profile families, non-governmental organisations and multinational organisations.  Some policies include kidnap prevention training.

Underwriting Considerations:

Insurance underwriters weigh many factors when considering a kidnap policy.  They include the country of residence of the insured and the type of industry of the insured.  The revenue of the insured is also considered as well as the travel patterns of any employees who may be covered in the policy.

Problems with Kidnap and Ransom Insurance:

One of the known paradoxes of Kidnap and Ransom Insurance policies is that those who have them are often not aware.  It can be provided by an employer hoping to protect the company and its assets.  It is believed that an employee with knowledge of his K & R policy might begin to act differently, or even collude in his own kidnap for fraudulent purposes.

Kidnapping in the US;

The risk of kidnap in the US and Canada remains relatively low, and the incidents which do occur are largely a by-product of other crime, including robbery and spousal abuse, or child custody disputes.  The threat of kidnap in North America is heightened by the operations of the violent drug cartels in neighbouring Mexico.

In line with this, the US border states of Arizona, New Mexico, California and Texas are reported to be the most affected by the “spillover”. This is due to their geographical proximity as well as the fact that drugs are trafficked directly into these states.

Cartels facilitate their operations along the borders. The fracking boom is the latest area to be exploited.  According to reports, cartels are taking advantage of activity surrounding the Eagle Ford Shale Play by stealing lorries belonging to energy companies, bribing truck drivers and contractors and possibly even “cloning” vehicles to resemble company lorries, all used to transport drugs.

In addition to this, the new roads which have emerged along the oil and gas fields are “inadvertently” circumventing the US border patrol’s highway checkpoints.  Cartel operations in the vicinity of the US border have previously led to a surge in reports of kidnaps, as well as extortion, violent home invasion, and also murders, and with cartels moving further into Texas, there is a substantial risk that there will be a further increase in such criminal activity in the state.

 

 

Beehive theft

Insurance policies are costly for beehive theft.  Very few beekeepers are compensated for their losses. Beekeepers provide millions of hives to California almond tree growers between December and March each year.

Beehive thefts are on the rise. More than 2 million hives are needed to pollinate California almond trees. Experts believe that beekeepers are behind the thefts. They have the knowledge as well as the equipment to take the hives. Up to 200 hives are stolen in one go. The hives are generally unmarked, however, some beekeepers are putting GPS tracking units in their hives. Someone stealing the hives makes pure profit from the honey in the hives without any upfront work.

The problem of beehive theft is also prevalent across England and Wales. Certain strains of Queen bees can fetch up to 180 British pounds each. Bee mortality insurance is furthermore covered when bee losses occur due to “Colony Collapse Disorder” (CCD). The chief symptom is no or a low number of adult honey bees present but with a live queen and no dead honey bees in the hive. Researchers who are trying to find out the cause of CCD are focussing on the invasive Varroa mite. According to a 2007 article, the mite Varroa destructor remains the world’s most honeybee killer. It results in deformed wing virus and acute bee paralysis. The bees also suffer a compromised immune system. New studies are finding that a group of insecticides called Neonicotinoids are also the possible cause of CCD.

Other causes being considered are pesticides, fungi, the use of antibiotics and the long-distance transport of hives.
In addition, malnutrition, poor quality Queens and immunodeficiencies. The USDA is currently piloting two Apiculture insurance programs in various states across the USA. Broken Arrow Crop Insurance can also offer programs for beekeeping operations. These programs are sold via private insurance companies.

BOE Insurance

 Without BOE insurance, you might find yourself using personal funds or taking on debt to meet business expenses.

You might even be forced to close the business. With this coverage, you will be able to keep your business afloat, at least for a period of time. And if you decide to sell your business after becoming disabled, the benefits paid under such a policy can keep your business operating and give you some breathing space to find a suitable buyer.

Business overhead expense (BOE) disability insurance also known as Business Expense Insurance, pays the insured’s business overhead expenses if he or she becomes disabled. A BOE policy pays a monthly benefit based on actual expenses, not anticipated profits. It is designed for businesses that rely on a small number of people (or one person) to produce a revenue.

The owner is reimbursed for existing overhead expenses incurred while he/she is disabled, keeping the company up and running while the owner recovers.

The following business overheads are typically covered by a BOE disability policy:
Rent
Interest payments on some business debts
Utilities
Employee’s salaries and payroll taxes.
Postage and stationery
Equipment maintenance
Rentals, leases, or depreciation of office equipment
Taxes on the business property
Insurance premiums for Workers’ Compensation, employee medical and liability
Accounting fees
Professional membership and subscriptions

Policies do not typically cover the salary of a temporary employee hired to do the duties of the disabled, unless a substitute salary expense or similar rider is purchased with the policy. Income taxes and the cost of inventory are some expenses that are not covered.

Benefit periods: BOE insurance policies have short benefit periods that do not usually exceed two years.

Elimination period: BOE policies typically have short elimination periods; either 30, 60 or 90 days.

Maximum benefits: BOE insurance policies offer a maximum monthly benefit, but only reimburses the policyholder for actual overhead expenses incurred if they, are less than or equal to the maximum benefit. With some insurers, any unused benefit can be applied to increase future monthly maximums or to extend the benefit period.

Taxation: BOE insurance benefits are reportable as income and the premiums are tax deductible as a business expense.

Rates: BOE insurance rates are based on the insured’s age (at time of purchase), occupational duties, health status, optional riders selected, benefit period and elimination period.

Once BOE insurance is owned, coverage cannot be increased without providing evidence of medical insurability, unless a future increase option or similar rider is purchased at the time of policy issue.

You may apply for coverage if you are between ages 18 and 60.
The plan is non-cancelable until you reach the age of 65. After age 65, it is conditionally renewable, as long as you remain employed full-time (minimum of 30 hours per week) and are responsible for the expenses of maintaining an office or business.
Benefits can be paid over a period of time of either 15 or 24 months.
Benefits may start after as few as 15 days of disability.
Premiums may be tax deductible as a business expense.
Various options are available, including the ability to increase your coverage at a later date.
If appropriate, return to work assistance may be provided to support your transition back to work.

THE COST OF BOE INSURANCE

Cost of the insurance will be based on several variables, including your age, sex (women pay higher rates because statistically, they live longer but are more prone to become disabled). The risk category of your profession, your medical background, whether you smoke, and, of course, the coverage you need. Obviously, you will pay more for a policy that pays $15, 000 a month for two years than a policy that pays $5, 000 for six months. Your payments will rise as you age. The policy that is dirt cheap in your 30s could cost you a fortune in your 60s.

Premiums run between $2, 000 and $10, 000 a year, for coverage between $50, 000 and $75, 000 a year.

The best policies on the market are those that are noncancellable and guaranteed renewable. With that policy the carrier can never ever change any provision of the policy regardless of how many times an insured person files a claim. If the policy is only guaranteed renewable, you cannot be dropped, but the insurance company can raise the premium.

City Risk Index

The University of Cambridge has compiled City Risk Index research on behalf of Lloyds of London for the period 2015 – 2025. The analysis thereby pinpoints the GDP@Risk of 301 of the world’s major cities. The 18 threats identified are either manmade or natural.

The value of this detailed scrutiny of the City Risk Index lies in providing flexibility from upgraded infrastructure to additional insurance protection.

  •  10 Threats account for about 91% of the total GDP@Risk.
  •  Nearly half of the Total GDP@Risk is associated with Manmade threats, including Market crash, Cyber attack, Power outage and Nuclear accident.
  •  Cities with high asset values which are therefore the most financially exposed:
    Taipei
    Tokyo
    Seoul
    New York
    Hong Kong
    Shanghai
    London
  •  Our interconnected and technologically dependent world presents four Emerging threats, thereby representing one-fifth of the Total GDP@Risk.
  •  Market crash also represents nearly a quarter of all cities potential losses.
  •  Emerging economies such as Asia, Latin America and Africa collectively, 71.47% of the Total GDP@Risk have the most to lose.
  •  Earthquake risk represents more than 50% of the Total GDP@Risk in Lima and Tehran.
  •  The cities of New York and Paris face 60% of the Total GDP@Risk of Manmade threats. These are Market crash, Oil price stock and Cyber attack.

Across the globe a market crash is seen as the biggest global risk. It could therefore wipe off $1,05 trillion off the global map.

Johannesburg, South Africa’s biggest city  stands to lose the most GDP in monetary terms. (R93.5 billion).

Johannesburg faces two major threats. One is man-made and the other natural. 35% of GDP@Risk is in Johannesburg. This city is South Africa’s financial centre. The second major threat is HIV infection. This city has one of the highest rates of the infection globally. Cape Town, Pretoria, Durban, East Rand and Soweto similarly face these two threats. Being the financial centre, Johannesburg is especially relevant as it also has the additional likely risk of Cyberattack.

 

Tornado

Tornado Alley is where tornadoes cause severe damage. These areas include Oklahoma, South Dakota, Texas, Kansas and Nebraska. The National Weather Service received reports of 18 tornadoes across the south of the USA on 2nd May 2018. The largest is what chasers refer to as a wedge tornado. This implies that the tornado is as wide as it is tall.

Many insurance companies deny valid claims for tornado losses. Report the event immediately to your carrier. Resist the urge to clean up. Document as much as you can with photographs and videos. Call the insurance company to report a claim. Ask for an advance. Some companies make an immediate payment of $1500 to $5000 when the damage is significant. If your home in uninhabitable, ask if the insurance company will cover the expense your family may incur whilst residing elsewhere. Demand frequent updates after you have put in a claim.

These insurance claims are challenging. Roofs are torn off. Doors and windows are shattered. Therefore this results in both wind and water damage. Whichever type of damage has occurred can lead to disputes between homeowners and insurance companies. Water damage must be claimed separately. Flood water is a different peril. It may not be covered at all. Neighbourhoods far from where the tornado touched down may be affected. Thus owners of businesses and homes miles away from the tornado may need to submit damage claims.

Regarding tornadoes, many exclusions however may apply. Your policy may have mould exclusions. Mould will not be taken into account. Furthermore, if your roof is older than 20 years at the time of the tornado, the insurance company will take depreciation into account. Whilst most replacement cost policies will allow you to recover the depreciation, recent endorsements by the Insurance Services Office allow carriers to pay actual cash value on roofs older than 20 years. Cosmetic damage is excluded as well, therefore matching of shingles and undamaged portions of the roof will not be matched.

Government Health Program

The Federal Employees Health Benefits (FEHB) forms part of the Government Health Program. This is whereby employees health benefits are provided to:

Civilian Government employees and Annuitants of the United States Government.
The Government contributes 72% of the weighted average premium of all plans. Furthermore the FEHB program allows some insurance companies to offer health insurance plans to governmental employees.

In the Government Health Program, the employee will be fully covered in any plan he or she chooses without limitations regarding pre-existing conditions.  Changes may, however, be made upon a life-qualifying event. Thus this may occur even though open enrollment is closed.

The Military Healthcare system is part of the Government Health Program. It is the Military Health System that provides healthcare to active duty and retired U. S. Military Personnel and their dependents. Therefore its primary mission is to maintain the health of military personnel.  This, therefore, enables them to carry out their military missions. As a result, it delivers health care during wartime.

Part A of the Government Health Program  covers inpatient hospital stays including semi-private room, food and tests. The maximum length of stay is typically 90 days. The first 60 days would be paid by Medicare in full except for one copayment of $1, 216 at the beginning of the 60 days. Days 61-90 require a copayment of $304 per day.

Part B penalises hospitals for re-admission. Medicare will take back from the hospital these payments. Furthermore, there is a penalty of 4 to 18 times the initial payment. The highest penalties are charged after knee or hip replacements. For example, $265, 000 per excess readmission. The goal is to encourage better post-hospital care.
The beneficiary is also allocated “lifetime reserve days” that can be used after 90 days. Furthermore, these lifetime reserve days require a copayment of $592 per day

Part C covers a Medicare Advantage Plan and is a type of Medicare health plan offered by a private company that contracts with Medicare to provide you with all your Part A and Part B benefits. Medicare Advantage Plans include Health Maintenance Organisations, Preferred Provider Organisations, Private Fee-for-Service Plans, Special Needs Plans and Medicare Medical Savings Accounts Plans.

 

Pollution Insurance

Environmental pollution insurance policies are not just for oil industry giants and radioactive depositories anymore.  Further examples are airports, apartment complexes, pig farms and prisons.

According to Dan Persha, founder and director of Environmental Services Group (ESG),  a division of Insurance Concepts “ the market for pollution insurance is fluid and ever-changing”.

The market is fluctuating especially premiums.  In some areas, the market is firming. In other areas, it’s not.   There is not a lot of consistency in pollution insurance right now.   The division is expecting upward growth and increasing volumes.

 Transaction insurance environmental policies that provide coverage where a property is changing hands usually consists of pollution legal liability and cost cap coverage.

Real estate transactions are driving the market.  No one will buy a property unless it has had a Phase One or Phase Two inspection.  As those inspections are heavy, they tend to find problems.  Term lengths for transaction insurance are almost always more one year.  Three, five, seven and 10 year pollution policies are common for a “clean” site.

Although normally premiums run between $3,500 and $7,500 per year, some run less than that.  For a site with a known problem or a buyer or seller that needs pollution legal liability the premiums can start around $50 000.

According to Sheila Hailey, dry cleaners pollution policies “are a hot ticket right now”.  Although she also writes pollution coverage for USTs, Hailey said she gets an average of five calls per week for dry cleaning insurance and writes policies for about 95% of those calls.  The average bill for cleaning a spill from a dry cleaners is $50, 000 while the average clean-up from a gasoline station UST is $10,000.

Not only is Texas one of the largest states in terms of land mass, it also ranks highest in the nation for on-and-off site releases for toxic materials . These include traditionally heavy-polluting industries like oil and gas and chemical refineries.

Generally, environmental policies offered are:

Pollution Legal Liability

Insured are claims from unknown pollution conditions at covered locations specified in the policy.  Generally these policies cover both on-and off-site pollution conditions.  Furthermore they include claims for bodily injury, property damage and cleanup costs.   Pollution legal liability policies are modifiable to fit individual circumstances and many terms and coverages are negotiable.

Property Transfer

Similar to pollution legal liability policies, property transfer policies cover claims generating from a covered location for pre-existing, unknown contamination and known contamination below reportable levels.  In some cases it covers known contamination that may be at levels above regulatory limits but permitted by a governmental body and with a cap in place.  Like pollution legal liability insurance, these policies cover bodily injury, property damage and cleanup costs.  Limits, deductibles and exclusions are also similar to those found in pollution liability policies.

Cleanup Cost Cap or Stop Loss

Very specific policies that protect against cost overruns for remediation of individual projects.  Covered overruns may result from the discovery of additional amounts or newly discovered contaminants, or from charges in regulating requirements at a site.

Coverage is limited to cleanup costs, and claims for bodily injury;  property damage or other liability are not covered.  Also, commonly excluded are the costs of legal defense and governmental negotiations.  Other exclusions may include radioactive matter, asbestos, contractual liability, unknown conditions not disclosed to the insurance companies, and regulatory fines and penalties.

Other policies that may be obtained are:

  • Brownfields Restoration and Development
  • Secured Creditor
  • Professional and Contractor Environmental Liability
  • Transporter Insurance
  • Storage Tank Pollution Liability
  • Closure and Post Closure
  • Finite Risk

The cost for a pollution liability insurance policy will differ significantly from one business to the next.  A business that uses a lot of hazardous chemicals will have higher premiums than one that uses only a few.  Some factors that influence costs include:

The type of business being insured
The type of chemicals and hazardous materials used
The disposal method of hazardous waste
The proximity of the business to residential neighbourhoods

 

Alien Abduction Insurance

The term Alien Abduction describes “subjectively real memories of being taken secret against one’s will by apparently nonhuman entities and subjected to complex physical and psychological procedures.”

Abductees claim that they have been warned against environmental abuse as well as the damages of nuclear weapons.

The first alleged alien abduction claim to be widely publicised was the Betty and Barry Hill abduction in 1961.

An Alien Abduction Insurance policy is redeemed if the insured person is abducted by aliens.

A policy normally costs around $150 per $1.5 million in coverage. Policy offerings vary from $10, 000 to $10 million. Some companies offer policies for alien pregnancy, alien examination and death caused by aliens

More recently the Alien Abduction Insurance Corporation has launched the idea of abduction insurance certificates as a unique gift for a lifetime premium and sell it at $9.95.

The very first company to offer UFO abduction insurance was the St. Lawrence Agency in Altamonte Springs, Florida. The company says that it has paid out at least two claims under Alien Abduction Insurance when two people claimed that they have been bitten by vampires (they were actually bitten by a bat).

The company pays the claimant $1 per year until their death or for 1 million years whichever comes first. Over 20, 000 people have purchased the insurance. The insurance is normally purchased by the “feeble-minded”, according to Burgess, a former Lloyds of London Underwriter. Prominent policyholders have included Shirley Maclaine and a Harvard University professor who has written on aliens. Owner of St. Lawrence Agency read Whitley Streiber’s true-life novel Communion in 1987 and learned about the threat of alien abductions.

With the help of international investors, he added UFO abduction insurance to his existing agency. The $10 million policies offer payment for medical coverage, including psychiatric care, in the event of a physical abduction by alien aircraft. They pay $20 million if the policyholder has an alien child or is eaten by aliens.

In fact, the business is so good that several other companies have entered the market.  Policies offered range from $10, 000 to $10 million. Coverage varies from company to company. Smart shoppers will look for a company that has a good business record, a reasonable cost for coverage, and a wide range of benefits.

Heaven’s Gate Religious group purchased Alien Abduction Insurance from London Brokerage Goodfellow Rebecca Ingrams Pearson (GRIP) before committing a suicide. Just after this GRIP stopped issuing Alien Abduction Insurance Policies to their customers.

Heaven’s Gate Religious group purchased Alien Abduction Insurance from London Brokerage Goodfellow Rebecca Ingrams Pearson (GRIP) before committing suicide. Just after this issue, GRIP stopped issuing Alien Abduction Insurance Policies to their customers. Before this event, even they sold more than 4, 000 insurance policies of this type.

At a cost of roughly $155 a year, the GRIP policy would pay about $160, 000 to someone who could show that they had been abducted by a being who was not from Earth. The payment would double if the insured person was impregnated during the event. Men were also able to purchase the impregnation insurance for protection against the unknown capabilities of alien technology.

Celebrity Chefs

 

Chef Julia Child became a pop-culture icon and was one of the first true celebrity chefs.

She brought French Cuisine to the American Public.   Her debut cookbook was Mastering the Art of French Cooking.   As a result, Julia Child’s kitchen is a historic artefact. It is on display on the ground floor of the Smithsonian Institution’s National Museum of American History.  The kitchen is the actual kitchen used in several of her cooking shows.

Iron Chefs is a show produced by Food Network.  It also carried a dubbed version of the original Iron Chef.  Like the original Japanese program, the program is a culinary game show.  In each episode, a new challenger chef competes against one of the resident “Iron Chefs” in a one-hour cooking competition based on a secret ingredient or ingredients.

Celebrity Chefs are treated like rock stars.  Gordon Ramsay’s empire is reported to be worth $80 million.  His salary per episode is $225, 000.   He earns an additional $10 million per year from his media and restaurant empire.  Ramsay has opened a string of successful restaurants across the globe.  He also has a global partnership with WWRD (Waterford, Wedgwood, Royal Doulton) which offers quality home and lifestyle products.

Jamie Oliver is worth a whopping $243 million beating out Gordon Ramsay and Delia Smith. In 2000, Oliver became the face of the UK supermarket chain Sainsbury’ through an endorsement deal worth $2 million a year.  In 2005 Oliver suggested that home cooks grate nutmeg over spaghetti bolognese.  This led to the supermarket sell more than 9 tons of the spice.  The tie-up which lasted 11 years is over but has earned the chef over over £10 million.

The kitchen is quite a dangerous place for celebrity chefs:  knives are sharp, pans are hot, floors are slippery.

There is the specific timing involved in a television show.  What happens if a celebrity chef is ill or injured and therefore unable to perform?  How does this affect the overall brand and the businesses that rely on their names?

The response of investors and corporate risk managers is to secure large blocks of key person life insurance. This is to protect against the untimely death of celebrity chefs.   They recognise how dependent the franchises are on the brand of their celebrity chefs.  Many risk managers ignore the greater risk of injury and forgo disability coverage.

Key person life and key person disability insurance should be procured. This is in order to protect the company, the employees, the shareholders and the board of directors.  Production and merchandising partners need similar protection as well.  This insurance is typically available through traditional life markets.

Accidents and illnesses happen.  Alton Brown, a chef who is a known aviation and motorcycle enthusiast, broke his collarbone after crashing a motorcycle while filming an episode of Feasting on Asphalt for Food Network.  A few years earlier, he shattered his wrist.  This injury required eight screws and a titanium plate to repair.  This furthermore took months of recovery and rehabilitation before he could resume filming.

Lower-profile chefs need similar protection.  The Gotham Bar & Grill in New York enlisted the talent of Alfred Portale.  He has brought the cuisine to a new level.  Furthermore he continuously evolves the menu, dining room, service standard and art collection.  Chef Portale was named Outstanding Chef in the nation in 2006. If Chef Portale suffered a serious injury or illness, there is definite potential for Gothams to be negatively affected. 

Key person life and disability insurance is  important.  This is therefore to either reorganise and replace a fallen chef, or simply wind down a venture.

The value of ensuring that a brand or restaurant can continue to prosper if an executive chef is no longer able to perform, is big business.  Cooking shows like Iron Chef, Masterchef, Top Chef and Hell’s Kitchen promise to spawn new superstars that have strong brand crossover. Celebrity Chefs have ascended to a lofty perch once inhabited only by actors, athletes and rock stars and ensuring there are contingency plans in place makes good business sense

Bicycle Insurance

Bicycling has so many benefits such as enhanced health, decreased pollution and auto emissions. It helps in reducing obesity. Cycling also has positive economic impacts on the community. However, having bicycle insurance is very important.

However, there are certain risks you face when you share the road with automobiles.

1.  818 bicyclists were involved in fatal accidents in the US in 2016.
2. The above figures accounted for 2 percent of all auto/cyclist traffic fatalities.
3. 52,000 cyclists were injured in motor vehicle accidents.
4. 72 percent of all bicycling fatalities occurred in urban areas.  67 percent occurred somewhere other than an intersection.
5. In 2016, California and Florida ranked as the top 2 states in terms of cyclist casualties, with 99 and 83 respectively.

Bikes and other sporting equipment are fully covered under their Homeowner’s or Renter’s policies. Bicycle owners who fall victim to theft may be faced with much of the replacement cost of their bikes because of low coverage limits and high deductibles. A bicycle claim could cause a person’s Homeowner’s rates to go up. With a separate bicycle insurance policy, cyclists can protect their homeowner’s rates and protect their bikes from worst-case scenarios.

A Homeowner’s policy provides some bicycle insurance in the form of personal property coverage. The policy will cover damage to your bike to a certain extent. However, your bike’s replacement value may be much higher than the amount provided in a standard policy. As a general rule, you can expect to pay $7 – $20 per $1000 value of your bike per annum.

Under the following circumstances, it would be wise to purchase a bicycle insurance policy.

  1.  While the average bike costs a few hundred dollars, some enthusiasts do not think twice about spending $5, 000 – $10, 000 for top-of-the-line bikes. If you have a very expensive model, you may want to seriously consider buying comprehensive bicycle insurance.
  2. You regularly ride off road and want Mountain Bike insurance to cover you and your bike for damages and medical costs.
  3. Perhaps you participate in BMX Competitions or do stunt riding. Therefore you need bike insurance to cover your bike for damage and for your own medical costs.

In response to the insurance needs of bicycle riders nationwide, a company called Velosurance was formed by two avid cyclists. It provides multi-risk insurance policies for all types of cyclists. They have partnered up with an A.M. Best “A” rated Insurance Company, and have agreements with bike shops in most States, who can provide repair and/or replacement to a damaged bike. The locations of these bike shops is well presented on the Velosurance website.

When taking out a bike policy through Velosurance, you have the option of supplementing additional coverage to protect against multiple losses.  Your policy is customised to meet your individual needs. The bike will be insured for the value that you that you give them.  If the bike is damaged or lost, Velosurance will replace the old bike with a new one and they guarantee “no bike value depreciation”. Velosurance undertake to complete the whole process from claim to you being back pedalling on your bike in the shortest time possible.

Spoke Insurance is an insurance program designed exclusively for cyclists.  It covers:

Liability insurance up to $100, 000; uninsured and underinsured motorist liability with a limit of $25, 000 per occurrence $50, 000 Aggregate;  the value in the case of damage needing repair; roadside assistance (up to twice a year) within a 30 mile radius of your residence.  Spoke Insurance give members of the California Bicycle Coalition or affiliates discounts on cover.

Markel Insurance:  Their coverage includes all 50 states for those that bicycle tour and covers Canada, as well as offering coverage when your bike is in transit by land/air.

Factors to consider when searching for bike insurance quotes:

Value: The value of the bike is the main determinant when calculating the amount of coverage required. Additional items like tools, speedometers and panniers must be included. It is advisable to keep all receipts in case of a claim.

Type of Bike: A stunt bike is considered a bigger risk than a regular bike and will thus cost more to insure.

Use of bike: A bike used for commuting to work will not cost as much to ensure as a bike you use on mountain trails. Daily use needs more coverage than occasional riding.

Depreciation: Ascertain the insurance company’s policy on bike depreciation.

Limits and deductibles: With nearly all insurance plans, paying higher deductibles lowers your premium. However, a high deductible increases your out-of-pocket costs in the event of a loss.

Insurance for Collectables

If you have more than two of something, you have a collection.  You should therefore should obtain insurance for collectables. There are an estimated 90 million collectors in the United States.

Insurance for collectables policies used to ensure privately owned collections are referred to as “scheduled personal property floaters.”

Floater policies are offered through insurance companies that are classified as either: –

  1. Admitted”. These are insurance companies licensed by a state insurance department to conduct business in the particular state.  Generally, the coverage forms and rates are required to be submitted to the state insurance department for review and approval. (Your homeowner’s insurer is most likely an “admitted” insurance company).
  2. Non-Admitted” (also known as surplus lines) insurers are authorised by the state regulator to conduct business in the particular state, but the coverage forms and rates are not regulated. Because the coverage forms and rates are not regulated, these insurers have the flexibility to design insurance policies that can be used to cover unique or unusual types of property.

The difference between “admitted” and “nonadmitted” insurers: –

If an admitted insurer becomes financially impaired or insolvent, most state insurance departments have the authority to take over the operation of the company.    Most states have a guaranty fund in place to provide payments for covered claims to help minimise the financial loss to policyholders resulting from an insurer’s insolvency.

State insurance departments do not have the authority to take over the operation of a “non-admitted” insurer. The state’s guaranty fund does not respond to insolvencies of non-admitted insurers.

 The following items should be included in any insurance for collectables:-

  1. Specific coverage should include theft, vandalism, accidental breakage, fire, lightning, windstorm, flood, water damage, earthquake and shipping coverage.
  2. Additions to the collection should be automatically covered for a period of time until you can add them on.
  3. An inflation guard feature that automatically increases the value of your collection each year.
  4. A reasonable deductible.
  5. Replacement cost average, so that you will be paid the current market retail value of the loss.
  6. Affordable rate of premium to coverage value.
  7. Detailed inventories or professional appraisals should not be required.

In addition to the above, you may also wish to consider automatic travel and exhibit coverage and moving coverage.

Valuation, Appraisal and Inventory: For most collections, the insurer should not require a detailed inventory or any type of professional appraisal in order to obtain coverage. However, the company may require a list of single items with very high values. This is not uncommon.  It can be easily provided if you have kept receipts for your purchases.

An appraisal is one way of determining the value of your collection. This may be a good idea, particularly if you have no idea of its value. Generally, an appraiser will need to be physically present at the location of the collection, so that the collection can be viewed, measured, documented and photographed. The appraiser will then research your collection, and ultimately provide you with a written appraisal report. This report will contain information about the purpose and type of appraisal conducted.

The report should contain a complete description of each item, including size, markings, characteristics and value.

At a minimum, you should track the following information for each item:-

  1. Date of purchase
  2. Name of seller and location
  3. Category of item
  4. Good description of item, including shape, colour, markings and other unique features
  5. Size
  6. Purchase price
  7. Current value
  8. Picture of item (not required, but a good idea)

Antiques and Collectibles National Association require that only single items over $2500 need to be listed. The deductibles start at $250 per occurrence. They cover anything except jewellery, coin/currency, new guns and anything motorized.

(For collector automobile insurance, they recommend Hagerty Insurance Agency).

American Collectors offer broad coverage on your collectables which include damage caused by accident, fire, flood, theft, hurricane and earthquake. Scheduled items’ value over $2000 automatically will have increased coverage by 2% quarterly, and 8% annually at no extra cost.

Hagerty Classic Car Insurers use industry-leading tools to help you determine the true value of your classic car/s, then create an agreed value policy that covers it. Hagerty only insures collectable cars and therefore can provide coverage at a lower price than daily driver insurers.

The insurance for collectables will be customised to your needs whether you are travelling to a show or going out for lunch, or doing restorations on your car, you will be covered. In addition, they provide guaranteed flatbed roadside assistance when you need it.

Driving while high

Are you driving while high?

People are asking if it is ok? It is never ok to be caught driving while high. It is illegal!

Driving while high refers to alcohol toxication as well as other substances which interfere with your ability to drive. You can be charged even in a state that has legalized marijuana.

In order to define drugged driving is difficult. The reason is that there are many drugs which can impair driving ability. Furthermore, there is not a specific concentration that proves impairment.

State laws place the responsibility on law enforcement to decide if the driver is impaired whilst operating a vehicle. In addition, a drug recognition expert (DRE) may be called to the scene to check the driver for drug use.

Alternatively, the driver may be arrested immediately and then tested whilst in custody.

Driving under the while high results in unsafe driving habits and presents a higher risk for accidents. A DUI or DUID will result in higher auto insurance premiums. The premium could be increased by hundreds of dollars.

If found guilty of DUI or DUID you could be subject to:-
* Driver’s licence suspension
* Jail time
* Fines
* Reinstatement fees
* Mandatory driver’s training programs
* Alcohol and drug treatment programs
* DUI or DUID attorneys fees.

In certain instances, an auto policy could be cancelled. Finding vehicle insurance on the open market will be highly unlikely. You will need to join your state’s auto insurance plan, which usually costs more than the insurance in an open market.

Your driver’s licence may be suspended if you are stopped while driving high. In this instance, you will be required to file an SR-22 certificate in order to reinstate your licence.

This certificate is filed by your car insurance company on your behalf. It guarantees that you will hold insurance for a certain amount of time. (about 3 years). These certificates are expensive plus you will pay more for your car insurance.

Gun ownership

There have been several mass shootings in the country over the past 12 months. As a result, every aspect of gun ownership is being given closer scrutiny. Furthermore, this includes the responsibility and potential liability of owning a gun.

Insurance companies don’t typically take guns into consideration in home insurance premiums. Some companies do not need you to disclose gun ownership in an application for home cover.

Companies are not permitted to victimize gun owners when issuing homeowner’s policies. However, insurance companies will not cover every claim associated with gun ownership. You will be held liable for injury to another party if you own the gun. Claim payment is dependent upon the incident itself.

However, an accidental shooting in your home could result in the injured party filing a claim against the homeowner. Shootings outside the home also apply here. As long as the shooting is not classified as a crime, a claim will be considered by the insurance company.

The definition of a crime varies state by state. The storing of a gun where minors have access to it is considered a crime in some states. Accidents, where drugs and/or alcohol is involved, may also be regarded as a crime.

The above also depends upon the wording of the policy document. It is important to know the policy limits. If the limit is $150, 000, this may not be sufficient to cover legal and medical fees in the case of a lawsuit as a result of an accident.

Gun owners could obtain an umbrella policy could cover a higher limit than $150, 000. If you or a family member is shot, the cover is provided by your life assurance policy or medical cover.

Chubb, the insurance company, has stated that it will stop underwriting an insurance policy for gun owners called NRA Carry Guard. The NRA began selling this line of Carry Guard insurance last year. These policies help individuals who use firearms for self-defence cover their legal expenses.

Drone Safety

In recent years U. S. Aviation regulators hastily accepted commercial drone applications. This flurry has resulted in lax safety rules.

Over a period of 2 years, 5500 exemptions were approved. These drones are used for businesses from film-making to agriculture. However, limited training for safety inspectors was provided. In spite of this, these inspectors have had to cope with an enormous amount of new operators.

In its haste to grant approvals, the agency did not check whether applicants had pilots’ licences. The whereabouts of the Applicants operating were not recorded.  These inspections were almost impossible.

Over the last year, more than 500 000 people have registered unmanned aircraft. Safety incidents involving drones reached more than 100 per month.

A recently released government watchdog report stated that there is a lack of rigorous data.  This data reports and tracks system for drone movement. Furthermore, the report pointed out that the information available is fragmented.   It makes it difficult to interpret.

Recreational Drones

In 2012 Congress authorised the FAA to grant exemptions allowing commercial unmanned flights. This permission was for aircraft weighing less than 55 pounds. The agency proceeded to write formal regulations allowing such flights for hire. These regulations went into effect on 29 August 2012 and made provision exclusively for recreational users.

The FAA has now concentrated on educating ‘delinquent’ operators in safety rules rather than opening enforcement cases. Up until April, the agency has sent out 625 “Instructions for Operator” letters to drone users while only enforcing action against 30 for safety violations.

The agency has furthermore taken steps to improve compliance with drone operating rules. In addition, new training has been implemented for the education of its inspectors. A drone knowledge test has been compiled for commercial drone operators.

  •  Aviation authorities recommend flying below 400 feet or 121 meters AGL.  This is to avoid a collision with manned aircraft such as aeroplanes and helicopters.  AGL stands for “above ground level”
  • Maintain visual line of sight, i. e. always make sure you can see your drone at all times
  • Flights over people are not permitted.  This can include a group of people or even a single person
  • Abide by the rules of your city or town
  • If you’re flying within 5 miles of all airports you need to give notice to the airport.

In conclusion, the results of this government report will ensure the ongoing commitment of the FAA to minimise drone safety violations.

Event Cancellation

Event cancellation Insurance will cover any expenses or lost revenue that an event promoter might stand to lose if the event they are holding or attending is cancelled, abandoned or postponed for unforeseeable reasons beyond their control.

Types of events that may be covered

  • Sporting events and competitions
  • Trade shows, conferences and lectures
  • Festivals and fairs
  • Film, television and premiers
  • Concert tours
  • Corporate functions and community events
  • Weddings and other special family gatherings

The type of incidents that could endanger an event

  • Inclement weather
  • Natural catastrophes, such as earthquake, flood and fire
  • Structure damage
  • Utilities failure
  • Strike risks
  • Terrorism or threat of terrorism
  • The inability of speakers, performers, teams or exhibitors to appear
  • National Mourning – sometimes excluded
  • Communicable disease – sometimes excluded

In certain circumstances and when dealing with some insurance companies, there may be exclusions:

  1. Actual or threatened use of Biological/Chemical weapons
  2. Losses attributed to or arising from Severe Acute Respiratory Syndrome.
  3. Lack of sales, response or reduced attendance
  4. Variations in exchange rates or currency stability
  5. War and therefore civil commotion
  6. Losses resulting from National Mourning
  7. Financial Failure, insolvency or default, support or Withdrawal of support by any party
  8. Acts of Terrorism – a policy can be extended to include this cover.

Examples of possible major impacts:

National Concert Tour

The terrorist act of 9/11 resulted in the event cancellation of 1000s of functions including national touring groups.  The tour postponed 4 concerts but was able to make them up one month later.

These days with everyone downloading music, recording artists are having to tour more often to recoup losses.  They therefore have the high expense and risks associated with touring.

The reality of today’s music industry is that many recording artists have a very short window for top earnings, but when they tour, they are incredibly productive.  As a result, non-appearance coverage has become more popular, especially when a big act goes out on the road.  To make sure they are covered, the artist’s management has to figure out the potential income from tour guarantees plus percentages put up by the promoters.   They then factor in what the loss would be if the artist failed to complete all or part of the tour.

According to Pollstar, in 2012 the top 50 tours alone brought in a combined $3 billion.  Factors taken into account when assessing the risk is the artist’s prior non-appearance record.  In addition the tour schedule and where the artist is in their career financially.  There are however many aging rock stars (many over 50) touring these days.   Furthermore, the decades of screaming and back-stage indiscretions take their toll. This increases the chances of tour cancellation due to health problems.  Vocal hemorrhaging, vocal cord infections and inflammation.

Dr. Joseph Sugarman, one of the country’s leading ear, nose and throat specialists has assisted many recording artists over the years and says that the most common throat problems stem from upper respiratory infections, which cause the vocal cords to swell.  The fact is that performing with swollen vocal cords compounds the dangers.

Singers are at high risk as every time they use their vocal cords to sing or speak, one vocal cord vibrates against another.  The louder the voice is used, the more violent the collisions.  The higher the pitch, the more frequent the collisions.  Dr. Lee Akst, a laryngologist of the John Hopkins Voice Centre in Baltimore, explained that recording artists constantly on tour are at high risk to develop vocal cord problems.

Other physical problems can result in event cancellations and non-appearance.  According to Billboard, Lady Gaga, during her 2014 “This Way Ball” concert injured her hip resulting in the subsequent refund of tickets worth about $25 million.

A stadium tour like Lady Gaga’s employ well over 100 crew members.  They require local support staff and involves top-level partners like promoter Live Nation, which pays staggering upfront costs that it hopes to recoup over the course of the tour.  So what happens when the show cannot go on?

Travel delays may cause a major problem for touring recording artists.  During Madonna’s 2008-2009 “Sticky and Sweet” tour, she was traveling from Europe to the United States to South America with her four 747s full of cargo.  One of the planes was n’t cleared for flight from Mexico City to Buenos Aires and the show had to be postponed.

Physicians’ Group Annual Convention

Buying event cancellation insurance based on 100% of their gross profit potential also guarantees them continued year-round operations in the event of an interruption or cancellation of their event.

Film Production Company

Filming outdoor scenes in the Northeastern US in late April is chancy.  In addition, spring ice and snow storms can bring the production to a halt.  By ensuring the entire budget with event cancellation the production company is thus able to ensure against bad weather and cast non-appearance.

Circles Group expects demand for film insurance packages to increase in the next five years, as film budgets in Asia are increasing and co-productions with western producers.  Foreign investors are increasing.  This will drive demand for more sophisticated event insurance products which are tailored to local needs.

Major Golf Tournament

Faced with paying appearance fees to certain high profile players, the tournament organizers therefore want to make certain, in the event of cancellation, they are thus reimbursed their fees.  Concerned only in insuring their out of pocket expenses, they may also elect to buy a policy based on expenses only, not gross receipts, thereby significantly reducing the premium charged for the policy.

Car Insurance Fraud

The festive season requires extra monies for Christmas gifts and elaborate celebrations. Price hikes intensify in January. School fees, household and vehicle insurance increases. Therefore this makes car insurance fraud attractive to certain types of individuals.

Car insurance fraud is illegal in all 50 states in America. Insurance companies do all they can to investigate and expose car insurance fraud. The following are some ways these scams are committed: –

1. “Owner-give-up”, i. e. vehicle dumping where an owner disposes of the vehicle by leaving it somewhere, dumping it into a lake or river, burying it or even selling it. A claim of theft is then submitted to the insurance company, thus an owner committing car insurance fraud.

When the car is sold before a report of theft is made, the fraudster will claim that the vehicle was stolen and thus obtain funds from the insurance company. Extra monies too from the sale of the original vehicle.

2. Sometimes mechanics use shoddy parts to repair a vehicle. They also  present an over-exaggerated parts and/or labour claim to insurers. Some resort to fabricating the extent of the vehicle damage.

3. Another car repair scam involves the replacement of airbags after an accident. The repairers stuff the compartments with objects with items such as beer cans or pack in peanuts to keep the sensors activated. California passed a protective law against such practices and as a result the guilty party could face a year in prison plus a $5000 fine.

4. Fake traffic deaths or collisions staged by fraud rings may result in false or exaggerated claims. The group may consist of claims adjusters and dishonest officers who create bogus police reports to process claim application.

5. A well-known tactic swindlers use is to drive to a bustling junction or roundabout and apply brakes sharply therefore causing a motorist to collide with the back of the fraudster’s vehicle. Accusations of fast driving or tail-gating is labelled as the reason for the collision.
Claimants may use a “recruited” doctor to diagnose whiplash or other soft-tissue injuries. These are difficult to dispute later.

Many people do not realise that loss indicator insurance agents have “red flags” they look for in possible scams:

– A claimant who is totally unflustered after submitting a large claim.
– Hand-written receipts for repairs on a covered item.
– An insured who increases auto insurance coverage shortly before submitting a claim.

Many insurers have Special Investigation Units. Employees who work in SIUs generally have backgrounds as detectives, police officers and medical personnel. Insurers are now using social media on suspicious claims. Perhaps the claimant who said his car suffered hail damage will be bragging about his deception on Facebook or Twitter.

Car insurance fraud is not just a problem for insurance companies. It is your problem too. According to FBI statistics, non-health insurance fraud costs $40 billion annually, which you cover by paying annual premiums $400 to $700 higher than they would be if there were no fraud at all.

In 1993 The Coalition Against Insurance Fraud was founded. This organisation collects information on insurance fraud. Through its unique work it empowers consumers to fight back. It helps fraud fighters to detect this crime. The Coalition deters more people from committing fraud. It has information, research and data services and insight to help the anti-fraud community.