The Toll of Social Inflation on the Insurance Industry

 Social inflation is one of the latest buzzwords in insurance. It is used by insurers to describe the rising costs of insurance claims resulting from things like increasing litigation, broader definitions of liability, more plaintiff-friendly legal decisions, and larger compensatory jury awards. While the key components driving social inflation have been evident for some time, their impacts on the insurance industry have only started to come to the surface within the past couple of years. Because of this, the industry is seeing an increase in both frequency and severity of liability claims, impacting insurers as they try to cover the growing losses. Social inflation is not only driving up the cost of claims, but also contributing to rate increases across the board.

Social inflation has primarily affected commercial liability lines including commercial auto, medical malpractice, general liability, product liability, and umbrella and excess liability. Consumer-facing industries including retail, healthcare, automotive, insurance, pharmaceutical, and financial services are the most impacted by social inflation, but any industry is susceptible. This is a versatile issue and is certain to be influenced by the coronavirus pandemic and continued societal changes. Key factors influencing social inflation include:

1. Jurors Perspective: A main driver of social inflation is the anti-corporate position dating back to the 2008 financial crisis. These new outlooks mean that injured parties are more likely to bring a lawsuit against companies — and win. Jurors today are often biased toward the plaintiff in the name of social justice.
2. Litigation Funding: More and more we are seeing claimants receiving help from outside investors to bring their cases to court. These investors pay legal fees and expenses in exchange for a share in potential awards and settlements.
3. Plaintiff’s’ Bar: The bar is a well-organized and refined group willing to invest in advertising, social media, technology, and expert resources to drive damage awards.
4. Normalization of Nuclear Verdicts: Across the country, state courts are raising or eliminating caps on punitive damages and damages for pain and suffering. This breaks the ceiling on what plaintiffs can ask for and be awarded.

Social Inflation is insurers’ problem in the short term but will ultimately become a much bigger problem for policyholders. Therefore, it is good practice to understand what is driving up rates and explore risk mitigation strategies such as effective safety programs, good maintenance of property, leases that properly transfer risk to other parties, and sufficient security. These are crucial to make your business a best-in-class risk when presented to insurance companies. We may also experience a temporary pause in nuclear verdicts while the juries are out, due to COVID-19 causing a backlog in court proceedings. Many plaintiffs realize that it could be years before their case sees a trial and are taking the settlement amounts offered by the defendant. However, given how uncertain the market and economy are, it is unknown what to expect long-term. Social inflation could get worse before it gets better.

Partnering with a broker who understands your organizations unique risk profile is essential for surviving this hardening market. Hawley & Associates’ specialized brokers apply innovative and tailored solutions to each situation, along with a deep understanding of the market and long-term relationships with insurers, ensuring our clients are fully prepared for any outcome. Contact us today to protect your organization against the emerging risk of social inflation.

Check out Hawley & Associates' 2nd Quarter Newsletter!

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Hurricane Safety and Preparedness

The hurricane season officially starts on June 1^st and ends on November 30^th. The 2020 North Atlantic hurricane season is off to a historically fast start with already three named storms by early June.  This year will mark the sixth consecutive year that a named storm has preceded the official start of hurricane season. The 30-year average number of named storms is 13.  This year experts predict 17 named storms.


According to The Weather Channel, they have seen 5 unusual events so far this season:

• Three named storms have already formed in the 2020 Atlantic hurricane season (none of these became a hurricane).
• Cristobal was the earliest "C" storm (or third named storm) on record and its remnants tracked to Wisconsin.
• Bertha made landfall one hour after it formed.
• All three storms brought impact to the U.S.

Below are some helpful resources to assist you in creating a clear hurricane plan that can help your company minimize injuries and property damage and get back in business quickly following a storm:

FEMA Hurricane Tool Kit
FEMA – "Every Business Should Have A Plan"


Hawley & Associates wishes everyone safety this hurricane season. If you have questions about your insurance coverage or would like an insurance policy review, please contact us!

The Gift of Art: 10-Year-Old Girl Gives 1,500 Art Kits to Kids in Foster Care and Homeless Shelters During Pandemic

A 10-year-old girl is solely responsible for giving the gift of art and smiles to more than 1,500 kids in foster care and homeless shelters during the Covid-19 shutdowns. The brains behind Chelsea’s Charity – a nonprofit started in August 2019 for the purpose of donating art kits to at-risk children – is Chelsea Phaire, a vibrant sixth grader from Danbury, Connecticut, who started this organization with her parents as part of her 10th birthday present.

“Since she was seven, she was begging me and her dad to start a charity,” Candace Phaire, Chelsea’s mom, told CNN. “She was so persistent, every couple of months she would ask, ‘Are we starting Chelsea’s Charity yet?’ When she was turning 10, she asked us again, and we decided it was time to go for it.”

Chelsea asked people to give her art supplies instead of birthday gifts as a way of commencing the charity on her birthday. After the first round of donations helped to supply several dozen art kits for children in need, Chelsea pushed on and set up her charity’s Amazon Wishlist as a way to collect supplies for the kits. Since then, Chelsea’s Charity has donated hundreds of art kits to women’s shelters, schools, and homeless shelters impacted by gun violence in 12 US States. Each kit contains crayons, gel pens, coloring books, paper, and colored pencils. Although stay-at-home orders have prevented her from personally delivering the kits like she normally would, she has still managed to send an additional 1,500 art kits since quarantine started.

Chelsea believes art is a healing remedy, which is why her mission is to help as many traumatized kids as she possibly can through art. Despite her tenacity and zest for life, she herself is no stranger to trauma. When Chelsea was just 8, someone considered part of her family lost their life to gun violence. This was the point that art went from being a hobby to the perfect therapy. Knowing that there are other children out there also dealing with trauma is what motivated Chelsea to help make art more accessible to kids in need and to help them cope with their emotions.

Candace Phaire, who is a professor of early-childhood education at Central Connecticut State University, believes art plays an important role in the emotional development of children. “Art therapy is being prescribed a lot more to support the mental health of young kids, especially those with social and emotional deficiencies,” Phaire told CNN. “Now with Covid-19, a lot of kids in shelters and also children in foster homes might not have access to art supplies they usually find in school. It is also mental health awareness month, so that’s definitely motivating us to ramp it up and send even more kits.”

While she may have had to alter her in-person delivery service to accommodate social distancing, it won’t stop Chelsea from bringing smiles and hope to children all over the country. During such unprecedented times we are all experiencing, it’s restorative to see such selfless action taken to spread joy and wonderment throughout our communities. All of us here at Hawley and Associates commend Chelsea and her willingness to serve others and we have been truly inspired by the message behind Chelsea’s Charity.

A Big Drop in Child Abuse Reports in L.A. Leaves Advocates Worried, Not Relieved.

Reports of suspected child abuse in L.A. County have taken a nose-dive in recent weeks. That news may sound incredible during normal times, but in a COVID-19 world, that drop has advocates very concerned. According to a statement by DCFS Director Bobby Cagle, since the middle of March, L.A. county has seen a 40%-60% decrease in the number of suspected child abuse reports from the public.

Numbers like these leave child advocates feeling uneasy. People who are mandated to report suspected child abuse, like teachers, cannot flag what they do not see when kids are out of school. These children are out of sight, and that’s very frightening. DCFS usually sees a large increase in the number of reports after kids come back from summer break, which is something expected to happen when children start to return to school. The increase could be more striking than they have seen historically. In order to brace for the possible escalation of cases, the agency is recruiting additional foster families who can step in under those circumstances.

Meanwhile, advocates are worried about how the coronavirus is affecting current foster families. Older foster youth who are now providing for themselves are also feeling the effects of a catering economy, as many have been laid off. Situations like this can really send these children into a difficult situation where they don’t have a safe place to live and are not able to meet their very basic needs like food.

Nonprofits that provide housing, mental health therapy, legal assistance and other services for abused kids are struggling amidst the crisis, with fundraising events cancelled and other donations dwindling. Yet despite all the challenges they are faced with, there are still people doing what they can. Social workers are still responding to emergency calls and going into the community. Attorneys and judges are working together to hold some hearings virtually. And volunteers are working with nonprofits to get iPad’s and laptops to foster kids who need them to keep up with their schoolwork.

On April 13^th, California Governor Gavin Newsom announced a $42 million in funding for children who are at greater risk for abuse or neglect because of the pandemic. This funding includes almost seven million dollars for social worker overtime and additional outreach and nearly two million to extend poster care payments for the roughly 200 youth who age out of the system every month.

IF YOU SUSPECT CHILD ABUSE OR NEGLECT:

• LA County Child Protection Hotline: 1-(800) 540-4000
• Alliance for Children’s Rights
• Childhelp National Abuse Hotline: 1-(800) 422-4453

Pandemic Trend "Zoom Bombing"

Just to add to the already stressful times were are all living in, there is yet another avenue in which hackers are trying to take advantage of online users during the current pandemic.

As we continue to use Zoom video conferencing, it has come to light that there is a new trend called,  ‘Zoom Bombing’.  Just like any other Phishing or Hacking tactic, there is an easy way to avoid any potential disruptions.  Please know, this is not Zoom being hacked directly, but, people accessing your meeting information through other means.

Review the following Zoom blog addressing how they gain access and the best way to protect yourself:
https://blog.zoom.us/wordpress/2020/03/20/keep-uninvited-guests-out-of-your-zoom-event/

Be safe out there!

Sex Abuse Claim Laws Have Changed in 15 States

According to The Insurance Journal, dated December 4th, 2019, fifteen states have revised their laws in the past two years extending or suspending statute of limitations to allow child sex abuse claims stretching back decades, unleashing potentially thousands of new lawsuits against the U.S. Roman Catholic Church.

Click here for the full story.

Hawley & Associates' 4th Quarter Newsletter - Why Businesses Should Prepare Now For A Hardening Insurance Market

Please enjoy Hawley & Associates' 4th Quarter Newsletter.  This edition has some important information on changes in the insurance marketplace in 2020, that may affect your organization.

Please click link:  https://conta.cc/2Sf8PIS

Happy Thanksgiving from Hawley & Associates - Gobble Gobble!

All of us at Hawley & Associates would like to wish everyone a wonderful Thanksgiving!

Our Holiday Office Hours Are As Follows:

Wednesday, November 27th, 2019 - Closing at 2 pm (PST)

Thursday, November 28th, 2019 - Closed

The Hardening Insurance Market – Three Things to Get You Through The Storm

Because insurance carriers are experiencing higher than expected losses, a hardening insurance market is rearing its ugly head. A hardening market means increased premiums and tighter underwriting requirements for many lines of coverage, including; commercial property, E&O, D&O, Auto and EPL. The 2017 hurricane season and the 2018 California wildfires resulted in a combined insured loss of more than 212 billion dollars and are major contributors in this turn.

One area being hit particularly hard is the adoption & foster care sector. Due to increased litigation, settlements and judgments, some carriers are now reluctant to offer broad coverage with high limits. Some carriers are even exiting these markets all together, making it much harder for some brokers to have access to carriers that are willing to write these risks, let alone even to provide a quote.

In a hardening market, there are three things that can help you ride out the storm:

1. Specialty Broker:  Having a broker that specializes in your line of business and knows your unique risks and exposures is imperative in positively representing your best interest to the insurance carriers. Their specialty allows them stronger relationships with underwriters, greater negotiating power to lower premiums and access to more carriers than that of a generalist broker.  Remember, an insurance broker (vs. an agent) works for YOU, not the insurance carrier.

2. Risk Management: A clean loss history is always more favorable than a poor loss history.  A poor loss history tells the carrier that you are a bad risk.  This can result in even higher premiums or worse yet a non-renewal notice. By designing and implementing a strong risk management plan, your broker can paint a positive picture to the insurance carrier and show that you are proactive in helping to eliminate or reduce your risk.

3. Don’t Hop Around: Believe it or not, jumping from carrier to carrier every year looking for the lowest price can cost you more in the long run. Carriers have been known not to quote simply for the fact that the insured is not loyal to any one carrier. Showing stability and loyalty (even if you have a loss and premiums increase) is a positive indicator in the eyes of the carrier.

Even in this hardening market, Hawley & Associates continues to exclusively serve the nonprofit and social service community.  Our specialty allows us broad access specialty markets & programs, including programs for hard-to-place risks, such as adoption & foster care.  Let our mission empower your mission!

Honoring All Who Served

Veteran's Day was November 11th, so I am a little late in writing this post.  But, it is never too late to thank and honor all the men and women who have served in the United States Armed Forces. We are forever grateful for your service and sacrifice.

2019 Wayne Hawley Giving Grant Winners Announced!

The Wayne Hawley Giving Grant is exclusive to H&A clients, and has helped support programs, projects and organizations whose focus is to benefit children, families and our communities.

We would like to thank everyone who applied for the grant in 2019.  We had a record number of applicants and it was so difficult to make our selection!  Everyone was so deserving! Thank you to all our clients for the amazing things they are doing to help make the world a better place for so many. 
Please click here for information on this year's recipients.

Agent vs. Broker - What Is The Difference?

The terms Agent and Broker are sometimes used in the same context, but in reality, they are quite different.  Both do act as a liaison between the insured and the insurance company, but the main difference is who they represent.

AGENT:

An insurance agent works for the insurance company.  They can represent one or more insurance companies and acts as an extension of those companies. They are authorized to bind or initiate coverage on behalf of the insured.

There are two types agents: Captive and Independent. A Captive agent sells insurance for one specific insurance company.  An Independent agent sells insurance for multiple insurance companies.  In essence, they do the ‘shopping’ for you.

      

BROKER:   

An insurance broker works for their clients.  They are an advocate and work in the best interest of their client, not the insurance company.

There are typically two types of brokers: Generalists and Specialists.  Generalists do not restrict themselves to certain industries or lines of business and sometimes consider themselves as a “one stop shop”.  They can insure gas stations, restaurants and even nonprofits.  With their book of business being so broad, it may be difficult for them to have the necessary knowledge and expertise into a particular industry or business, especially ones that are complex or have high risk factors.

A specialty broker does just that; they specialize or have a niche in a particular line of business or industry. They have access to a variety of markets, comparing multiple programs side by side. They generally have stronger relationships with underwriters and have a unique ability to negotiate for better terms and premiums. They will also have a better understanding of the exposures and various risks associated with a particular industry or business and can better recommend the specialized insurance solutions needed.

10 Steps To Minimize Risk When Employees Work Remotely

Many organizations are embracing a remote working lifestyle and this trend is only rising. Nearly 3% of the US workforce works remotely in some capacity.  This is a 115 percent increase from 2005.

For all the benefits it may bring, it is opening your business up to an increased risk of a serious data breach.  There are many factors that can contribute to your business becoming the next victim of a cyber attack:

•           Inability to enforce security protocols
•          Remote workers risky behavior
•          Not adhering to security best practices
•           Sharing devices with family and friends
•           Not recognizing suspicious behavior

So, what can you do?

Cyber threats will always be a part of our reality, and cyber security has a hard time keeping up in this ever-changing environment.  If you have employees that work remotely, now is the time to take another hard look at the security of your data.  Here are 10 steps you can take to help minimize your risks:

1. Establish written company security protocols 
2. Restrict or limit the use of public Wi-Fi
3. Use a Virtual Private Network (VPN)
4. Raise awareness by educating workers on how to recognize suspicious behavior
5. Monitor company issued devices (check your state statutes)
6. Apply cloud services
7. Enable data protection software on all devices
8. Restrict employees use the internet and not to use device for personal reasons
9. Proper password management
10. Do not share devices with friends or family

Contact Hawley& Associates today for information on Commercial Cyber Insurance and how it can protect your organization in the event of a data breach.

To Those Affected By Hurricane Dorian

Our thoughts and prayers go out to all those in the path hurricane Dorian and the subsequent tropical storm.  Our sincere wish is for everyone's well-being and safety.

We talked to a client who was in an evacuation zone.  They were in surprisingly good spirits and had already moved their residential clients to a safe place.  We do stand in awe of the resilience of our clients who live and work in these affected areas and their continued commitment to serve and care for others.

If your agency is impacted by the storm, please be assured we are here for you every step of the way. We are just a phone call or email away.  If you need assistance after-hours, please don't hesitate to call our emergency claims/service line at (425) 577-4957.

On behalf of everyone at Hawley & Associates, we wish everyone strength and safety during this difficult time.
 

Wayne Hawley Giving Grant - Don't Miss Out!

The Wayne Hawley Giving Grant is exclusive to H&A clients that serve the social service and nonprofit community.

The grant is named in loving memory of Phil Hawley's father, Wayne Hawley, who was instrumental in the formation of Hawley & Associates, and a guiding force in making our agency the strong, dedicated and caring company it is today.

The grant is comprised of two individual grants in the amount of $5,000.00 each.

Click here for more information!

Deadline for applications is September 30, 2019!

Food Safety Tips for An Amazing Summer!

Food-borne illnesses are most common in summer. With higher temps and sometimes ‘not so ideal’ conditions, such as camping or a maybe a long road trip, bacteria growth reigns supreme.

Here are some great tips to keep your summer plans on track and most importantly safe!

1. Use separate cutting boards for raw meat and vegetables to reduce the chance of cross-contamination. Harmful bacteria present in raw meat and poultry can contaminate even cooked food.

2. Keep perishable food cold until ready to use. 

3. Never use tongs or utensils that have touched raw meat or poultry to serve cooked food.

4. Camping – Keeps foods cold!  A block of ice last longer than ice cubes.  Empty milk cartons filled with water and then frozen are a great alternative to ice cubes or purchasing block ice in the store.  Also, fuller coolers tend to stay cooler longer.

5. Put cold drinks in a separate cooler.  This will help minimize the number of times the cooler is opened, thus keeping the food cooler colder longer.

6. Don’t reuse marinades.  This will prevent raw meat juices getting onto your cooked food. 

7. Cook food thoroughly.  Using a thermometer gives you the best results in determining whether your meat is under or overcooked.

8. Throw out leftovers.  Perishable items left out for two or more hours should not be consumed.

9. Thaw and marinade food in the refrigerator.

10. Keep things clean, including your hands!

Customer Satisfaction Is Our #1 Goal!

Foster Parent Liability Insurance

Being a foster parent today can be more challenging than ever, as many foster children come into the system already abused or neglected.  Allegations of abuse in the foster care system are not uncommon. In 2016, approximately 4.1 million allegations of child abuse and neglect were made to child protective service agencies.

According to the National Foster Parent Association, adoptive parents have a 1 in 8 chance of being falsely accused of abuse or neglect.  Lawsuits can be brought by the biological parent, the child, or others arising out of the foster parent/child relationship.

Every responsible foster parent should consider Foster Parent Liability Insurance, which defends foster parents from allegations of abuse. Attorney fees, defense costs and award judgments can rack up thousands of dollars, even if they are unsubstantiated.

For more information on this important coverage, please contact Hawley & Associates.

Happy Spring From Hawley & Associates!

          Spring: A lovely reminder of how beautiful change can truly be.