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Tuesday, June 27 2017

The large-scale global ransomware cyber-attack over the weekend should serve as a wake-up call to many small and medium-sized businesses.

While the market for large corporations’ cyber insurance needs has significant penetration, small and medium-sized businesses take out far fewer cyber policies. But as the global ransomware attack illustrated: every business is potentially at risk from cyber criminals.

“I think this demonstrates the need for being insured, whether you’re a small or a large company,” NAS chief underwriter Mike Palotay said.

“This has been an indiscriminate attack. It’s not targeted,” he explained. “You don’t have a hacker behind each attack on each company – it’s really more of an automated thing. It’s basically just spray and pray, really. So you’ve got small companies who are experiencing outages and disruptions and having to pay extortions. And then you’ve got FedEx and the National Health Service [in the UK] and a bunch of much larger organizations experiencing problems.

“Small and medium-sized business are very, very underinsured. The last figures I saw for small businesses that buy cyber insurance were in the single digits. This might be a wake-up call.”

The number of companies attacked who have paid out – or claimed with insurers – is low. A UK company tracking ransom payments through Bitcoin (the cyber criminals’ payment choice in this attack) was only about $50,000 yesterday. The attack was launched on Friday.

However, the widespread attack also brought to the fore a potential problem in the way insurance is priced, Palotay said.

“It does speak to why underwriting large books of cyber insurance is so challenging,” he said. “The aggregation potential is certainly there, and there’s been a big focus on that in the last few years. And rightly so. There are big, big aggregate numbers out there for the leading insurers and when something like this happens I think it’s a big wake-up call to everyone that maybe rates are getting too low and maybe we should be more careful. Hopefully it’s a kind of come-to-Jesus moment.

“The market has been growing fast and rate pressures are getting pretty significant. I don’t think the rates are really taking into account the substantial aggregation exposure from something like this, where you’ve got an automated malicious-code attack that targets a widespread vulnerability. This is not about a hacker using a specific tool to attack a company, this is about a self-replicating virus that spreads throughout the internet targeting millions of computers. That kind of thing is what keeps me up at night.”

Thursday, June 22 2017

Davy Andrews is so adept at technology that he’s become the de facto IT troubleshooter in his office. But there’s one bit of tech he won’t touch: self-driving cars.

“I wouldn’t want to be the first to jump into something with that kind of risk,” said Andrews, 33, an administrative assistant at a New York investment firm. “I would have to see enough evidence that it is safer, considerably safer. From where we are right now, it’s hard to imagine getting to that point.”

Autonomous autos are advancing so rapidly that companies like Uber Technologies Inc. and Alphabet Inc.’s Waymo are beginning to offer robot rides to everyday consumers. But it turns out the traveling public may not be ready. A recent survey by the American Automobile Association found that more than three-quarters of Americans are afraid to ride in a self-driving car. And it’s not just Baby Boomers growing increasingly fearful of giving up the wheel to a computer, a J.D. Power study shows — it’s almost every generation.

“One of the greatest deterrents to progress in this field is consumer acceptance,” U.S. Transportation Secretary Elaine Chao told Bloomberg News last week at a department-sponsored conference in Detroit. “If there’s public concern about safety, security and privacy, we will be limited in our ability to help advance this technology.”

Most commuters don’t have access to a self-driving car, so Chao has called on Silicon Valley to ” step up” and explain how they work. She and other regulators advocate for autonomy as a solution for curbing the hundreds of horrific collisions that happen every day in regular automobiles. Among those that end up being fatal, 94 percent are caused by human error, according to U.S. authorities.

Consumers will only become comfortable with driverless cars after they ride in them, Mary Barra, the chief executive officer of General Motors Co., said this week. The largest U.S. automaker is testing 180 self-driving Chevrolet Bolts and ultimately plans to put them in ride-hailing fleets, though it won’t say when.

“You can talk about it, but until you experience it,” self-driving cars are hard to comprehend, Barra told reporters at the GM factory building the Bolts north of Detroit. “Once you’re in the vehicle and you see the technology, you understand how it works.”

The opportunity for autonomy to make a meaningful impact on public safety is immense. Last year, 40,200 people died in motor-vehicle accidents on U.S. roads, the National Safety Council estimates. That was up 6 percent from the year before.

“Forty thousand people a year is unacceptable,” Alex Epstein, the council’s senior director of digital strategy, said during a panel discussion at the TU-Automotive technology conference in Detroit last week. “It’s a jumbo jet going down every couple days.”

Dangerous as it may be to operate cars themselves, many drivers are anxious about autonomous technology because they associate it with the fragility of electronic devices. Laptops crash and calls drop with nagging regularity. The consequence of a computerized car crash is much greater.

“While it might be convenient to have a car drive for you, driving is a very high-stakes pursuit,” said Andrews, who has no interest in letting a robot take the wheel of his Volvo. “When things go wrong, it’s not the same as a normal computer error.”

Another culprit killing consumer confidence has been automakers over-hyping the capabilities of today’s driver-assist technologies. That’s led some drivers to drop their hands from the wheel even with systems built to require constant attention of the traffic environment, as was the case with the fatal crash last year of a driver in a Tesla operating in the semi-autonomous Autopilot mode.

Respondents to J.D. Power’s survey made mention of Tesla crash and recognized vehicles with autonomous features can still get into accidents, said Kristin Kolodge, executive director of J.D. Power’s driver-interaction research.

“When you’re not in control and the vehicle is in control, now you’re in this dark space where you wonder ‘What actually happens if the technology fails?”‘ she said. “This fear of failure is the major reason” consumers are wary. 

Regulators investigated the Tesla crash and cleared the company’s Autopilot system of fault in January. And the company hasn’t been the only one to come under scrutiny — Daimler AG last year pulled Mercedes-Benz ads that consumer groups complained had wrongly suggested its E-Class sedan with driver-assist features was fully autonomous.

The television spot showed the driver removing his hands from the wheel, even though the automaker’s Drive Pilot system requires resuming control every 30 seconds.

“The fastest way to make sure the public does not accept these technologies is to over-promise and then have some horrific crash because the consumer believed the capability was higher than it actually was,” Epstein said.

Another impediment to consumer acceptance may arise from semi-autonomous features, which should inspire confidence and instead feel unnatural and annoying, said Lukas Kuhn, chief technology officer at Tourmaline Labs Inc., a California company that analyzes driving behavior for insurance and ride-sharing companies.

Driver-assist features like adaptive cruise control, which adjusts speed to the flow of traffic and lane keeping that steers a car back into the lines, can feel intrusive rather than intuitive.

“In order to make the user buy into the feature, we have to make it feel more natural,” Kuhn said. “If I can drive this car way better than the machine, why should I take my hands off the wheel?”

Wednesday, June 21 2017

Homeowners in South Florida, as well as in many other parts of the state, should expect additional rate increases next year from the state-run insurer of last resort.

Citizens Board of Governors approved recommended rates and policy changes for 2018 that the company said reflect rising nonweather water losses, abuse of a policyholder right referred to as assignment of benefits (AOB) and out-of-control litigation that, left unchecked, will force rate hikes for years to come.

By unanimous vote, board members recommended a 5.3 percent statewide increase for personal lines policyholders – homeowners, condominium unit owners and renters – with most increases concentrated in three South Florida counties where, according to Citizens data, water losses, AOB abuse and litigation are disproportionately severe.

Board members also approved a series of policy changes that the insurer hopes to implement to reduce claims costs for nonweather water losses that it says have been pushing rates higher for South Florida customers over the last few years. If approved by the Florida Office of Insurance Regulation (OIR), the changes would take effect in February 2018.

Among the major policy changes is a $10,000 cap on water loss repairs for customers who decide not to participate in the Citizens Managed Repair Program, which links customers with a network of vetted contractors. The voluntary managed repair program, coupled with a free emergency water removal service, will become available to new Citizens policyholders after July 1, 2017, and for existing customers when their policies renew.

Other policy changes include expanding obligations to third parties that accept an assignment of benefits. Currently, contractors who accept an assignment are not bound by the same obligations, including allowing Citizens adjusters to inspect a claim in a timely manner or providing proof that a loss has occurred.

“These proposed rate increases and product changes are critical for Citizens’ efforts to bring some relief to a market that is being made increasingly expensive by unnecessary litigation and out-of-control water loss claims,” said Chris Gardner, chairman of the Citizens Board of Governors. “Unfortunately, we are making it more expensive for many of our customers to own a home.”

The 2017 legislative session concluded in May without making significant changes to state law regarding assignment of benefits and the “one-way attorney fee” statute that many stakeholders agree are driving up costs that must be paid through higher premiums. Citizens joined other insurers, business and consumer groups pushing for reform.

“It’s ironic that our rates for wind coverage are coming down, but Citizens policyholders in South Florida still must brace themselves for continued rate increases,” Gardner said. “We don’t want to raise premiums, but Citizens is obligated by statute to set actuarially sound rates.”

The 2018 rate proposal continues a recent trend in Miami-Dade, Broward and Palm Beach counties. Homeowners with multiperil coverage in Miami Dade County, for example, will see an average increase of 10.5 percent, or $359, from 2017 premiums. Broward and Palm Beach county homeowners will see rates increase by 10.4 percent and 9.3 percent respectively.

Outside of the Tricounty area, many policyholders will see rates decrease or remain flat. Citizens’ homeowners policyholders in 56 of 67 counties will see average rates decrease under the set of proposed rates.

Proposed rates and policy changes must be approved by OIR, which oversees all Florida property insurers. Both the new rates and policy changes would take effect in February 2018.

“We were hoping for legislative change and a surgical solution,” said Barry Gilway, Citizens president/CEO and executive director. “Given that this did not occur in 2017, we cannot wait for the trends to worsen and take no corrective action.”

The full rate kit can be viewed on Citizens website.

Thursday, June 15 2017

Almost five years after Superstorm Sandy, one third of homeowners in several coastal states are still unaware of hurricane deductibles and how they work, new insurance research has found.

Not only did 33 percent of respondents say they had never heard of these deductibles or were not sure what they were, one quarter of respondents lacked an understanding of deductibles in general.

The Insurance Research Council (IRC) released its poll results as the National Oceanic and Atmospheric Administration projects two to four major hurricanes this hurricane season, which lasts from June 1 through November 1.

Homeowners in New Jersey, North Carolina, South Carolina, Florida and Texas were asked whether they were familiar with hurricane deductibles, which is a higher deductible found in homeowners insurance policies that applies when a hurricane occurs.

“The findings from this survey suggest that ample room exists for educating homeowners about a key feature of every homeowners insurance policy—deductibles,” said Elizabeth Sprinkel, senior vice president of the IRC. “The need is especially acute as the 2017 hurricane season gets underway and insurers hope to minimize post-event misunderstandings with their policyholders regarding deductibles.”

Hurricane deductibles were a prominent issue in 2012, with misunderstanding and confusion due to the fact that Sandy did not make landfall as a hurricane. These deductibles, which became more common after insurers suffered heavy losses from Hurricane Andrew in 1992, are often calculated as a percentage of the insured value of a home — another concept the IRC survey found unfamiliar to homeowners.

One in three respondents with percentage-based hurricane deductibles did not know or were unsure of the percentage applicable to their deductible, and four in 10 did not understand the basis for calculating the deductible. One in four respondents incorrectly thought the percentage was applied to the total amount of their claim.

The survey also found that the level of understanding of hurricane deductibles varied across the five states studied. Compared with respondents in the other states, New Jersey respondents demonstrated the lowest level of awareness and understanding of several hurricane deductible issues, despite the fact that about 346,000 homes in New Jersey were damaged or destroyed by Sandy.

The report, “Public Understanding of Hurricane Deductibles, Need for Consumer Education Persists,” is based on an online survey conducted by GfK Public Affairs & Corporate Communications on behalf of the IRC. A total of 1,047 homeowners were surveyed – 200 or more in each of the five states studied. Only homeowners living in selected counties where the home involved was their primary residence and with insurance coverage purchased exclusively from private insurance companies were included in the survey.

Monday, June 12 2017

Storm Tracker

Tower Hill's interactive Storm Tracker provides current tropical forecasts and conditions for the Atlantic Basin, as well as local storm and weather warnings from NOAA and the National Weather Service.

Monday, June 12 2017

Tower Hill President Don Matz fills us in on what we need to know for the 2017 hurricane season.

This weekend is a good time to stock up on hurricane supplies such as batteries, flashlights, tarps, etc., as the Florida Legislature has designated June 2-4 as a sales tax holiday for hurricane preparedness items.  For further details on which items are tax exempt, visit the Florida Department of Revenue.

For details on developing a hurricane survival plan and up-to-the minute storm forecasts throughout hurricane season, visit Within the next few days, we’ll be releasing an updated and improved site with a cleaner, streamlined appearance that is also mobile-friendly.  In addition to the traditional features such as making premium payments, printing your policy, and learning more about relevant property insurance issues, you can file a claim online and track its progress 24/7/365.

During Hurricane Matthew in October 2016, more than 10% of our customers with a claim took advantage of this convenience.  Online claim submission is not limited to hurricane claims – any claim may be filed in this manner from either your desktop, laptop, tablet, or smartphone.  Of course, you can always report your claim to Tower Hill by contacting us at 800.342.3407 or by calling your agent.

Pre-season forecasts vary somewhat from a slightly below-average hurricane season to a slightly above-average hurricane season, based on both the number of storms and the number of major (Category 3-5) storms predicted.  It seems the determining factor will be the potential development (strength and timing) of “El Niño” conditions — a warming of equatorial ocean temperatures in the Pacific off the coast of Peru.  El Niño conditions tend to create strong trade winds from west to east that have the ability to “shear” Atlantic hurricanes in their development stage.  Further details and the most recent hurricane season forecast can be found at

Remember, regardless of any forecasts, it only takes one hurricane to cause major damage!  Tower Hill is prepared and ready for Hurricane Season 2017 – are you?  We hope this season is ultimately uneventful, but we are here for you if it isn’t.  Good luck to all of us!

Monday, June 12 2017

Hurricane Information

Weathering A Hurricane

Hurricanes are not strangers to homeowners in the Southeast. Knowing what to do can make the difference when it comes to protecting yourself and your home.

Before Hurricane Season Begins

  • Plan an escape route.
  • Have a stockpile of emergency supplies on hand (drinking water, canned goods, non-perishable foods, manual can opener, flashlights, batteries, candles, first aid kit, essential medications, matches in waterproof containers, portable radio, etc.)
  • Develop an emergency communication plan in case you’re separated from loved ones.
  • Hurricane shutters are your best protection. If you do not have them, you can use marine plywood panels cut to fit your windows. Pre-drill holes every 18 inches for screws and mark which board fits which window.
  • Keep trees free of weak or dead branches.
  • Have a video or photographic inventory of your possessions stored in a safe place away from your home. If your home’s damaged it will be invaluable in settling the claim.
  • Review your homeowners insurance to ensure it is adequate. Remember, flooding is generally not covered by a homeowners policy. So if you do not have flood insurance, you may want to talk to your agent.

During A Hurricane Watch And Warning

  • Pay close attention to progress reports.
  • Protect windows.
  • Check emergency supplies, make sure you have a full tank of gas in your car and review your evacuation plan.
  • Bring outdoor furniture, etc. inside. Anchor items that can not be brought in.
  • Set your freezer and refrigerator at the highest setting in case you lose power. (If power is lost, turn off major appliances to avoid power surge.)
  • If you are in a surge zone, elevate your furniture to protect it.
  • Store valuables and papers in a watertight container at the highest level of your home.
  • If evacuation is necessary, unplug appliances, turn off electricity and the main water valve and leave as quickly as possible.

After The Hurricane

  • If you evacuated, return home only after authorities say that it is safe. Stay away from flooded roads and washed-out bridges.
  • Avoid dangling power lines and report them immediately to the power company, police or fire department.
  • Enter your home cautiously. Sometimes snakes, insects and animals are driven to higher ground by flood water.
  • Open windows and doors to ventilate and dry your home.
  • If your home has been damaged, check for gas leaks (open a window, leave and call the gas company if you find one), obvious electrical problems and sewer and water line damage.
  • Take pictures of the damage – inside and out. You will need it for your insurance company.
Friday, June 02 2017

The First District Court of Appeal in Tallahassee has upheld the 14.5% rate increase in Florida workers’ compensation rates that was approved by the Office of Insurance Regulation (OIR) in October of last year.­ The rate increase, which took effect for all new and renewal policies starting December 1, 2016, had been challenged in court but will now remain in effect as a result of the Court’s order.­

The District Court of Appeal overturned and reversed a Leon County Circuit judge who had ruled that NCCI’s rate filing and the Insurance Commissioner’s subsequent rate order approving the 14.5% increase was invalid because the process violated Florida’s Sunshine Law.­ In a lengthy opinion, the Court ruled that both NCCI and OIR had properly complied with the laws governing rate-making for workers’ compensation insurance in Florida.

The effect of the Court’s Order is that the 14.5% rate increase that has been in effect since December 1, 2016, will remain in effect.

Friday, June 02 2017

It goes without saying that June 1 has a special meaning to Floridians: the start of the Atlantic Hurricane Season. Last fall, Florida's 10-year hurricane-free streak was broken as Hurricane Hermine made landfall near the coast of St. Marks. About one month later, Hurricane Matthew made landfall over Haiti as a Category 4 hurricane, later embarking on a three-day journey up Florida's east coast and into Georgia and the Carolinas, causing damage that exceeded $729 million generated by 112,000 insurance claims. In total, Floridians last year filed nearly 130,000 insurance claims totaling roughly $800 million in losses. The question now is: If a storm were to reach Florida's shores next week, would you be prepared?

Last year's hurricane season affected a large majority of our state, leaving many of us with wind-damaged property, flooded homes and one big headache. As some of us learned, sandbags and boarded windows will only get you so far. In some ways, our destiny will be defined by Mother Nature, regardless of what may lay in her path. Experts are predicting that the United States should prepare for another active season with an estimated 11-14 named storms and four to seven hurricanes, with two to three of those storms growing to category 3 or higher. But remember, it only takes one.

With the start of the 2017 Hurricane Season quickly approaching, it is up to you to make sure your emergency preparedness efforts reach beyond bottled water and batteries and include being financially prepared for a hurricane event. I encourage all Floridians to start putting together an insurance and financial packet that you can easily take with you should you need to leave your home in a hurry. Be sure to include documentation associated with property and health insurance policies as well as financial account information and contact information for banks and insurance companies. Having these documents put together ahead of time allows you to have ready access to all of the information necessary to file an insurance claim during an emergency evacuation.

If you need a hand getting your insurance-related preparation underway -- no problem. We've created a simple, easy-to-use financial preparedness toolkit to assist with this process. Our toolkit provides a single place to jot down and keep track of all of your insurance information. In the event that a storm directly affects you and your family, this toolkit can help you keep a list of adjuster contacts, emergency service contacts such as the Red Cross, FEMA and the Department's consumer helpline, as well as a log of any calls you've made to insurance companies or agents about claims you may have to file.

Our toolkit can be downloaded in ENGLISH, SPANISH and CREOLE and serves as an essential tool to supplement your preparation efforts. To learn more, please visit our website for additional tips and tools at

Take a minute and dust off your preparation materials and ensure you and your family will be financially prepared for this year's hurricane season.

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