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CYBER: Risk managers, insurers mull need for backstop to cover big data breaches - PAGE 5
JANUARY 2023
DATA &
RANKINGS
BI’s exclusive rankings
of industry players and more
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PRESIDENT
Steve Acunto
(Greenwich)
sa@businessinsurance.com
DATA &
CHIEF OPERATING OFFICER
Stephen Acunto
(Princeton)
RANKINGS
stephen@businessinsurance.com The annual data issue of
Business Insurance provides
PUBLISHER
Keith Kenner highlights from our proprietary
(Chicago) research released over the
kkenner@businessinsurance.com
past year and other rankings.
EDITOR
Included are broker, captive,
Gavin Souter
(Chicago) surplus lines and third-party
gsouter@businessinsurance.com administrator rankings, as
DEPUTY EDITOR well as rankings of specialty
Claire Wilkinson
(New York)
segments such as cyber risk
cwilkinson@businessinsurance.com and medical malpractice
ASSISTANT EDITOR insurers. PAGE 16
Louise Esola
(New Orleans)
lesola@businessinsurance.com
NEWS EDITOR
John Obrecht
(Chicago)
jobrecht@businessinsurance.com
INSIDE
SENIOR REPORTER
Judy Greenwald CYBER BACKSTOP
(San Jose) While RIMS strongly endorses a federal cyber insurance
jgreenwald@businessinsurance.com
backstop, other groups say more study is needed. PAGE 5
REPORTER
Jon Campisi
(Philadelphia) WORKER RECLASSIFICATION
jcampisi@businessinsurance.com
A U.S. Department of Labor proposal could put more
REPORTER
Matthew Lerner
NEWS ANALYSIS independent contractors in the employee category. PAGE 7
(New York)
FOR BREAKING NEWS
mlerner@businessinsurance.com DATA PRIVACY
COVERAGE, VISIT
COPY EDITOR Privacy laws taking effect this year in five states
Brian Gaynor businessinsurance.com
(Portland)
expand employers’ data liability. PAGE 9
bgaynor@businessinsurance.com
ART DIRECTOR OSHA CHALLENGES
Jeremy Werling A decline in the ranks of OSHA inspectors is hampering the
(Cincinnati)
jwerling@businessinsurance.com agency’s enforcement operations, observers say. PAGE 11
DIRECTOR OF RESEARCH,
PLANNING AND INSIGHTS INTERNATIONAL
Andy Toh
(Chicago) The Botswana insurance market is highly competitive,
atoh@businessinsurance.com with almost all premium rates under pressure. PAGE 12
MAJOR ACCOUNTS DIRECTOR -
NORTHEASTERN U.S. & INTERNATIONAL
Ron Kolgraf
(Boston)
rkolgraf@businessinsurance.com
HEAD OF EVENT SALES,
VIEW FROM
REPRINTS & LICENSING
Susan Stilwill
THE TOP
(Nashville)
sstilwill@businessinsurance.com
VICE PRESIDENT OF MARKETING ALEX SUN
Brian McGann
(Buffalo) OFF BEAT Alex Sun became CEO
bmcgann@businessinsurance.com Who says companies of San Diego-based
VICE PRESIDENT OF DIGITAL don’t have the right to Enlyte LLC in 2021,
MARKETING/COMMUNICATIONS when it was formed
Jen Jonasson
fire workers who fail to
(Chicago) be sufficiently “fun”? through the merger of
jjonasson@businessinsurance.com three companies in the
PAGE 29
DIGITAL AD OPERATIONS MANAGER
LEGAL BRIEFS workers compensation
Zeina Alwafai Recent court opinions PAGE 13 sector: Coventry
(Memphis)
zalwafai@businessinsurance.com Workers Comp
MARKET PULSE Services, Genex Services LLC and Mitchell International
DIRECTOR, CONFERENCES & EVENTS
Brittany Collins
Products, deals and more PAGE 27 Inc. Mr. Sun was formerly CEO of Mitchell, and prior to that
(Lafayette)
he spent a decade in the banking and financial services
bcollins@businessinsurance.com
PEOPLE industry. He discusses the benefits of the merger and
MARKETING COORDINATOR Insurance industry moves PAGE 28
Jessica Evangelista challenges in the workers compensation arena. PAGE 15
(Washington)
jevangelista@businessinsurance.com
BUSINESS INSURANCE (ISSN 0007-6864) Vol. 57, No. 1, Copyright © 2023 by Business Insurance Holdings, Inc. is published monthly by Business Insurance Holdings, Inc., 1030 Lake Avenue,
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BUSINESS INSURANCE JANUARY 2023 3
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NEWS ANALYSIS
Insurers weigh need for federal cyber backstop
BY MATTHEW LERNER Rice and was involved in drafting the
mlerner@businessinsurance.com Homeland Security Act after 9/11.
He suggested the Terrorism Risk
T
he biggest U.S. risk management Insurance Act of 2002, which provided
organization supports the creation federal reinsurance coverage for insurers
of a federal cyber insurance backstop, providing property/casualty coverage,
but several prominent insurer groups say could serve as a reference point because
more time is needed to determine wheth- the language of the law has survived five
er government support is needed. reauthorizations and the program was
Proponents of federal support for the successful in achieving its goal of stabi-
market say the terrorism backstop formed lizing property markets after the attacks.
after the Sept. 11, 2001, terrorism attacks The trigger for TRIA coverage began at
could serve as a basic model for a cyber $50 billion and rose to $200 billion at its
backstop, but factors such as funding most recent reauthorization, in 2019.
and the structure of coverage need to be Lynn Haley Pilarski, chair of RIMS’
addressed. external affairs committee and senior risk
The discussions come after a surge in manager at General Motors Co., said
ransomware-related cyber liability insur- TRIA fulfilled its mandate of stabilizing
ance claims over the past two years and commercial property insurance markets
huge increases in the cost of coverage. in the wake of the 9/11 devastation and
In November, the Risk & Insurance Casualty Insurance Association, the of Insurance Commissioners report on that “risk managers are always looking for
Management Society Inc. sent a com- Council of Insurance Agents and Bro- cyber insurance, and “reinsurance is read- ways to improve coverage terms, increase
ment letter to the U.S. Treasury Depart- kers, CyberAcuView — a cyber insurance ily available and new carriers continue to capacity and stabilize insurance markets.”
ment’s Federal Insurance Office saying group — and the Wholesale & Specialty enter the market,” the letter said. Both Mr. Cunningham and Ms. Pilarski
its members “overwhelmingly supported” Insurance Association sent a joint letter to The letter acknowledged that “a study said attention should be paid to the defi-
the creation of a federal cyber insurance Steven E. Seitz, director of the FIO, say- on the potential impacts of protection nition of war in any backstop, especially
backstop. ing that it was too early to assess whether gaps, and whether and to what extent as it pertains to coverage language and
a federal backstop was needed. gaps exist, will be helpful,” and called the exclusions. The definition should not be so
“We believe the federal government The letter said the insurance industry, review process “a unique opportunity to broad as to allow overly broad or restrictive
business community and government have proactively evaluate and discuss how the exclusionary coverage language, they said.
should invest in cyber-risk shared interests in encouraging stronger federal government could assist through Dale Porfilio, chief insurance officer
cybersecurity and preventing cyberattacks public-private partnership, if eventually for the Insurance Information Institute
mitigation of national and and cybercrime but added the cyber insur- needed.” in New York, said the organization
ance market is “nascent” and more time is Bryan Cunningham, executive director “considers cyber to be one of the most
community infrastructure as well as needed to determine “whether a federal of the Cybersecurity Policy & Research significant risks facing society and the
preventing cyberattacks by nation response is appropriate.” Institute at the University of California, insurance industry, and is concerned
“Historically, federal insurance respons- Irvine, said in an interview he supports about a catastrophic cyber event on the
states and terrorist groups.” es have been constructed when there has some role for the federal government in scale of natural catastrophes like hurri-
been clear evidence of a market failure the management of catastrophic cyber canes and earthquakes.” He said events
Dale Porfilio, Insurance Information Institute within a specific peril or line that led to exposures. “I think we have to have that,” such as the Colonial Pipeline shutdown
deleterious impacts. This is not the sce- he said. Details of the thresholds, funding in 2021, in which an energy provider was
nario for the cyber insurance market,” the and other considerations are “yet to be hit by a ransomware attack, showed the
The letter was in response to a Sept. letter stated. determined, but it should be there,” he said. potential risk for “bad actors or nation
29 notice from the Treasury seeking The current market is expected to dou- Mr. Cunningham served as deputy states to attack major infrastructure like
comments “on questions related to ble in size every three years, according national security adviser in the George W. the U.S. power grid.”
cyber insurance and catastrophic cyber to the most recent National Association Bush administration under Condoleezza A significant attack on infrastructure
incidents.” The initial deadline to sub- “could far exceed current private market
mit comments was Nov. 14, which was PREMIUM CHANGE FOR CYBER (Q4 2016-Q3 2022) cyber coverage,” Mr. Porfilio said. “We
extended to Dec. 15. 37.5%
believe the federal government should
“Cyber insurance is a significant 34.3% invest in cyber-risk mitigation of national
risk-transfer mechanism, and the insur- 32.5% and community infrastructure as well as
ance industry has an important role to play 27.5%
25.5% preventing cyberattacks by nation states
in strengthening cyber hygiene and build- and terrorist groups.”
22.5%
ing resiliency,” the Treasury notice said. Mr. Porfilio said “the potential benefit
The notice followed a June report from 17.5% 20.3%
of a federal cyber insurance program like
the Government Accountability Office TRIA depends greatly on how it is struc-
12.5% 7.7%
recommending that FIO and the Depart- tured and funded. We would not want it
ment of Homeland Security’s Cybersecu- 7.5% 4.4% to replace or inhibit growth of the private
rity and Infrastructure Security Agency 2.5% 0.4% 1.2% cyber insurance and reinsurance market.”
conduct a joint assessment to determine A program like TRIA could be ben-
“the extent to which risks to critical infra- -2.5% eficial if it provided “umbrella coverage
-1.4%
structure from catastrophic cyber incidents -7.5% above the private market without adding
and potential financial exposures warrant a undue cost or administrative burdens for
Q4 16
Q1 17
Q2 17
Q3 17
Q4 17
Q1 18
Q2 18
Q3 18
Q4 18
Q1 19
Q2 19
Q3 19
Q4 19
Q1 20
Q2 20
Q3 20
Q4 20
Q1 21
Q2 21
Q3 21
Q4 21
Q1 22
Q2 22
Q3 22
federal insurance response.” policyholders and insurance carriers,” Mr.
Last month, the American Property Source: Council of Insurance Agents & Brokers Porfilio said.
BUSINESS INSURANCE JANUARY 2023 5
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NEWS ANALYSIS
Gig worker proposal could raise comp costs
BY LOUISE ESOLA they are classifying their workers in line
lesola@businessinsurance.com with current state regulations, which have
shifted in some cases.
A
U.S. Department of Labor proposal California has tightened rules on who
that could put more independent con- is considered an employee, and Vermont
tractors in the employee category has and Rhode Island considered measures
the potential to shake up business models, in 2022 that would have changed the
workers compensation experts say. definition. More states could continue
“This can be a really big deal, especially to push for clarification on the issue,
in the gig, shared economy,” said Ben the National Council on Compensation
Powers, Atlanta-based executive vice Insurance reported, naming the issue a
president and head of large and complex major legislative trend.
casualty for the Southeast region at Willis
Towers Watson PLC.
“O verall, the employee/employer
“There is a fine and sometimes
relationship versus that principal/inde-
pendent contractor relationship impacts
difficult-to-discern line
our clients in a lot of big ways,” as workers between employee status and
compensation coverage would be among
the largest mandated insurance require- independent contractor.”
ments for companies forced to reclassify nomics of their business model,” said Will he said. “Each state, and in some cases Will Brauer, Marsh LLC
workers, he said. Brauer, Marsh LLC’s sharing economy municipality, define these requirements
The DOL’s proposed rule, introduced and mobility casualty leader in Chicago. differently, but most have some common
Oct. 13 and closed to public comment on “There is a fine and sometimes diffi- elements.”
Dec. 13, would apply a narrow “economic cult-to-discern line between employee While many companies that rely on According to the NCCI, three states
realities test” to determine whether a status and independent contractor,” independent contractors have general lia- passed laws in 2022 affecting gig workers.
worker is an independent contractor. bility policies to protect assets in the event S.B. 150 in Alabama excluded certain
It would assess six conditions to deter- FATAL OCCUPATIONAL of a contractor injury — if the worker contractors working for marketplace
mine whether workers are economically INJURIES alleges and can prove negligence on behalf platforms, such as Uber and food delivery
dependent on employers or are in busi- of the company — workers compensation platform Grubhub, from the definition of
Self-employed workers, which include
ness for themselves. independent contractors, represented is a wider net, a guarantee of benefits in employee and deemed them independent
The DOL has stated its intention to 17% of fatal occupational injuries in most cases, and would increase insurance contractors. H.B. 118 in South Dakota
rein in companies that rely heavily on 2021. The latest data, released last costs dramatically, said Paul Primavera, clarified when a worker is an indepen-
independent contractors, who lack access month, showed numbers in line with the Washington-based executive vice pres- dent contractor of a delivery facilitation
to such protections as workers compen- four previous years, when between 900 ident and practice leader, national risk platform, and H.B. 2076 in Washington
sation and wage and hour laws. A DOL and 1,093 self-employed workers died control group, at Lockton Cos. LLC. addressed workers compensation cover-
official recently named the independent as a result of occupational injuries: Conversely, the risk could be greater age for transportation network company
contractors issue among the top troubling under general liability, as workers comp is drivers under certain conditions.
5,190 Total workplace deaths
comp trends (see related story). the exclusive remedy and is safeguarded by Hanging over the issue is the DOL’s
Comp experts say that, depending on 906 Self-employed workers regulations, he said. proposal, experts say.
the type of company, a move to reclassify “Certainly one could argue that a “This is a key issue to continue to
independent contractors as employees third-party claim could result in more watch,” said Greg McKenna, Rolling
would force many businesses to rebalance exposure to an organization than a work- Meadows, Illinois-based national practice
their risk profile. 4,284 Wage and salary workers ers compensation claim simply because leader for the public sector at Gallagher
If the proposed rule “forces employers there are no limits on wages and pain and Bassett Services Inc. “It would be good
to reclassify independent contractors as suffering,” he said. advice for employers to continue to see
employees, there is a significant effect on With potential federal changes looming, how the federal government is going to
workers comp and on the overall eco- Source: U.S. Bureau of Labor Statistics experts say companies also need to ensure take action on this.”
WORKER MISCLASSIFICATION AMONG ‘TROUBLING’ TRENDS IN INSURANCE INDUSTRY
W orkers misclassified as independent
contractors, reductions in benefits,
and states looking to make workers
compensation protections optional
for employers are three “troubling”
the National Academy of Social Insurance,
wrote that the number of U.S. workers
covered by workers compensation
has decreased and that workers
misclassified as independent contractors
states,” he wrote, adding that COVID-19
“was a big factor in this decline,
but total benefits paid was already
decreasing in 21 states pre-pandemic.”
He described declining benefits as
make workers compensation optional.
South Dakota, Texas and Wyoming have
already made workers compensation
fully or partially optional for at least
some occupations, Mr. Godfrey wrote,
trends for the insurance industry, a U.S. “continue to lack the economic a decades-long trend stemming from adding that “in the last decade, legislative
Department of Labor official wrote in a security” of workplace protections. several factors, including changes to state proposals in Arkansas, Oklahoma,
recent blog post on the agency’s website. Another issue, Mr. Godfrey wrote in the workers compensation laws and policies. South Carolina and Tennessee proposed
Christopher Godfrey, director of the Nov. 18 post, is that most states are paying “Today, there are considerable alternative workers compensation
DOL’s Office of Workers’ Compensation fewer total benefits to injured workers. cross-state differences in benefits schemes or options for employers to
Programs and a member of the Study “From 2016-2020, total benefits paid for injured workers,” he wrote. opt out” of coverage for workers.
Panel on Workers’ Compensation Data at to injured workers decreased in 40 Another trend is states working to Louise Esola
BUSINESS INSURANCE JANUARY 2023 7
Ad Template.indd 4 5/23/22 8:22 AM
NEWS ANALYSIS
States expand data liability for employers
BY JUDY GREENWALD
jgreenwald@businessinsurance.com
CALIFORNIA
PRIVACY LAW
A TAKES EFFECT
privacy law that took effect in Califor-
nia on Jan. 1 is one of five such laws that
have taken effect, or are scheduled to,
in various states this year that will tighten
regulation of online data.
Virginia’s law also went into effect at the
T he California Privacy Rights
Act, which was approved
by voters in a November
2020 ballot measure and went
start of the year; those in Colorado, Con- into effect on Jan. 1 of this year,
necticut and Utah will become effective amends the California Consumer
later in the year. Privacy Act of 2018 and retains
More states are expected to pass similar many of its provisions while
legislation, as the issue of consumer privacy adding new requirements.
garners more attention. The California Privacy
The California Privacy Rights Act, which Rights Act:
was approved by voters in a 2020 ballot
Extends
n the earlier
measure, amends the California Consumer
law’s consumer privacy
Privacy Act, which took effect Jan. 1, 2020.
rights to employees,
Like the earlier act, which was influenced
job applicants and
by the European Union’s 2018 General
independent contractors.
Data Protection Regulation, the new law ply with the law, said Brian McGinnis, a Dan Burke, San Francisco-based national
grants consumers a private right of action if partner with Barnes & Thornburg LLP in cyber practice leader for Woodruff Sawyer Gives
n consumers and
there is a data breach. Indianapolis. & Co., said, “It’s hard to say if others will go employees the right to know
But it expands on the earlier law by “It is highly likely, if not certain that even as far as California, but certainly, we’ll have the personal information
including protections for employees, job companies that have done a lot of work with some more comprehensive consumer pri- a business has collected,
applicants and independent contractors. the CCPA still have work to do,” said Odia vacy laws” in more states in the near future. correct or delete it, and
The law also eliminates a 30-day period Kagan, a partner with Fox & Rothschild “Obviously, many U.S. businesses have opt out of its sale.
permitting companies to “cure” violations LLP in Philadelphia. connections to California, so they have to Applies
n to businesses to
before government enforcement actions Sean P. Nalty, a shareholder with Ogletree, cope with the California statute, and so, which any of the following
are taken. Deakins, Nash, Smoak & Stewart P.C. in unless the Congress surprises us and there apply: report more than
The California Privacy Protection Agen- San Francisco, said employers may face is a national privacy law, California’s will $25 million in gross revenue;
cy, which was created by the 2020 law, more legal issues because of the new law’s remain the most stringent,” said Jarno alone or in combination;
will enforce the new law. The California applicability to employees, “particularly if Vanto, a partner with King & Spalding LLP buy, receive, sell or share
attorney general still retains enforcement disgruntled employees were to try to use the in New York. for commercial purposes
powers, too. law” to frustrate their employers. Within a few years more states will adopt personal information of at
The law applies to organizations with at “But if you put a good procedure in place privacy controls, and even states whose least 100,000 consumers,
least $25 million in annual gross revenue, and train your people appropriately, by and impending laws are now milder than Cal- households or devices in
those that deal in the personal data or large it will be something that employers ifornia’s will eventually make theirs more the state; derives at least
information of 100,000 or more California will be able to comply with,” he said. stringent, said Joshua Gold, a shareholder 50% of its annual revenue
with Anderson Kill P.C. in New York. from selling consumers’
“Obviously, many U.S. businesses have connections to California, so they have to Employers will have coverage available
for liabilities that arise under cyber liability
personal information. It
does not include nonprofits
cope with the California statute, and so, unless the Congress surprises us and there insurance policies, experts say.
However, Tamara Snowdon, New York-
or government entities.
Applies to business-to-
is a national privacy law, California’s will remain the most stringent.” based senior vice president and cyber
n
business transactions.
coverage leader for Marsh LLC’s U.S.
Jarno Vanto, King & Spalding LLP Requires
n businesses that
and Canada cyber practice, said that while
cyber policies provide “robust coverage” for collect personal information
data breaches and disclosure of sensitive to disclose it and inform
residents, or those that derive at least 50% Experts predict there will be more personal information, coverage for privacy individuals whether the
of their annual revenue from selling con- enforcement than under the earlier law issues really depends on clients’ negotiating information is sold or shared.
sumers’ personal information. because that function will be led by a ded- power and the level of sophistication they Government
n enforcement
Enforcement of its provisions is slated to icated agency. can demonstrate. is to begin July 1.
begin July 1, but experts warn companies Initially, enforcement will likely focus Coverage varies, said Deborah Hirschorn, Eliminates
n the CCPA’s
may still be found liable for failure to on data brokers that collect large amounts Kansas City, Missouri-based managing 30-day “cure” period to
comply with its requirements before the of information and use it for commercial director for U.S. cyber and technology address violations before
implementation date. purposes before expanding to egregious errors and omissions claims at Lockton Cos. government enforcement
The measure in California is “a bit closer violations by other organizations and those LLC. “Some (policy) forms are very broad actions are taken.
to what we see in Europe with the GDPR,” “who do nothing at all or window dressing,” and talk about managing and controlling
Only
n provides individuals
said Jenny L. Holmes, counsel with Nixon said Philip L. Gordon, a shareholder with personal information,” she said. Others’
with a “private right
Peabody in Rochester, New York. Littler Mendelson P.C. in Denver. policy language is stricter.
of action” to sue in
Companies should analyze the personal Experts predict additional states will Furthermore, “it is yet to be determined”
data breach cases.
information they have collected and update adopt similar laws, although they will not whether fines under privacy laws, including
or adopt policies and procedures to com- necessarily be as restrictive as California’s. GDPR, are insurable, Ms. Hirschorn said. Source: Attorney analyses
BUSINESS INSURANCE JANUARY 2023 9
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NEWS ANALYSIS
Decline in number of inspectors hampers OSHA
BY LOUISE ESOLA “There has been a major brain drain in
lesola@businessinsurance.com the past few years caused by the retirement
of many seasoned inspectors,” Melissa
P
andemic workplace safety duties cou- Peters, Walnut Creek, California-based
pled with a steady drop in the number shareholder with Littler Mendelson,
of Occupational Safety and Health wrote in an email. “Certified safety and
Administration inspectors since 2014 have health officers who were considering
challenged the agency, legal experts say. retiring early were likely pushed to do so
“It’s objectively true that OSHA has after the pandemic. I imagine the pressure
been shrinking, and the staff has been placed on inspectors since 2020 … has
shrinking year over year for a while — been enormous.”
really going back to the (2013) seques- “Like any profession, it takes time for an
tration and some government shutdowns inspector to know what they are doing,”
during the Obama administration,” said Ms. Peters wrote. “Even OSHA offices
Eric Conn, Washington-based founding that have hired inspectors likely won’t
partner of Conn Maciel Carey LLP. feel relief for several years. The increase
Mr. Conn referred to a Dec. 13 report by in employee awareness of safety in the
the U.S. Department of Labor’s Office of workplace since the pandemic is chal-
Inspector General on the department’s top lenging. An increase in complaints means
management and performance challenges more site inspections. One inspector can
that found the decline in inspectors from The OIG report also found that OSHA California, office. accomplish only so much in one day.”
a high of 860 in 2014 to 750 in 2021 had has been challenged in protecting work- “It takes a new administration some time And inexperienced inspectors can
made it difficult for OSHA to protect ers who report potential worksite safety to shape itself,” she said. “And with the pan- introduce more problems for employers
workers at an estimated 8 million worksites. violations due to failure in some cases to demic… I think that hinders their ability to facing inspections, according to Adam
The annual report followed one in complete subsequent whistleblower inves- really go out and do a lot of enforcement.” Young, Chicago-based partner at Seyfarth
November in which the OIG said OSHA tigations within the statutory requirement The latest report noted that it can take Shaw LLP.
“did not sufficiently protect workers of 30, 60 or 90 days. up to five years for an inspector to be “For employers, OSHA’s staffing con-
from COVID-19 health hazards” during “The pandemic caused a significant fully trained and that more money in the cerns and use of new compliance officers
the pandemic. increase in the number of whistleblower agency’s budget in 2022 did not correct often mean that the compliance officer
Jessica E. Martinez, Los Angeles-based complaints OSHA received, while the the issue. conducting the inspection does not have
co-executive director of the National number of full-time equivalent (FTE)
Council for Occupational Safety and
Health, said there “is an urgent need for
employees, including inspectors within
OSHA’s W histleblower Protection
“There has been a major brain drain in the past few years
OSHA to add more inspectors, more
whistleblower investigators and more
Program, decreased,” the report said.
During the early months of the pandemic,
caused by the retirement of many seasoned inspectors.”
staff throughout the agency to effectively from February through May 2020, the Melissa Peters, Littler Mendelson P.C.
enforce our safety laws and prevent unnec- whistleblower program received 4,101
essary injuries, illnesses and fatalities.” complaints, a 30% increase from the
The U.S. Bureau of Labor Statistics year-earlier period, the report said. “Even though OSHA’s budget request industry knowledge and is less familiar
on Dec. 16 released its annual Census of OSHA did not respond to requests for included the hiring of 155 new inspectors with the relevant requirements,” he said.
Fatal Occupational Injuries, finding “that comment. in FY 2022, the current lack of available “They also may not yet be familiar with
a worker dies every 101 minutes from a In addition to the pandemic, a switch in inspectors and time lag for an inspector OSHA’s Field Operations Manual or
preventable incident at work,” she said. presidential administrations may have played to become fully trained can lead to less other standard OSHA procedures,” he
“So, every day of delay in getting more a role, according to Alka Ramchandani- inspections, diminished enforcement said. “This can lead to attempts to expand
OSHA inspectors on the job to identify Raj, shareholder and co-chair of the of high-risk industries, and, ultimately, inspections for which OSHA has no legal
and reduce workplace hazards can cost an workplace safety & health practice group greater risk of injuries or compromised basis and inappropriate questions during
additional 14 lives.” in Littler Mendelson P.C.’s Walnut Creek, health for workers,” the report said. employee interviews.”
SAFETY REGULATORS EXPECTED TO WIDEN SCOPE AS COVID CONCERNS WANE
M uch is expected from the
Occupational Safety and Health
Administration in 2023, as COVID-19
concerns appear to be waning, according
to experts who say changes to record-
care standard for COVID-19 prevention in
health care settings would be a priority.
In a long-awaited move, OSHA on
Dec. 8 announced that it had filed a
draft of the health care COVID-19 rule
enforcement, directed almost exclusively
to health care employers, effectively
lost all traction once the administration
declared the pandemic was over.”
Mr. Brought added: “OSHA never got
particularly in cases involving injuries.”
Fines over $100,000 are also increasing,
said Eric Conn, Washington-based founding
partner of Conn Maciel Carey LLP, who
said he tells clients to expect a “resurgence
keeping, the introduction of a heat illness with the Office of Management and around to issuing a heat-hazard proposed of the OSHA enforcement machine.”
and prevention rule, and a focus on Budget’s Office of Information and rule in 2022 but did issue an enforcement Inspections, while limited in number,
repeat offenders are taking center stage. Regulatory Affairs. The document was not emphasis program for heat hazards that are expanding in scope, Mr. Conn said.
The agency said little throughout 2022 immediately available for public viewing. appears to have had marginal results,” Inspectors under the Biden administration
regarding COVID-19 — it last updated its “OSHA was pulled in multiple directions he said. “OSHA was, however, very are “digging deeper, expanding the
recommendations concerning the disease in 2022,” said Andrew Brought, a focused on repeat offenders and really scope of inspections, and doing much
on its website in August 2021 — despite Kansas City, Missouri-based attorney ratcheted up inspection and penalties more involved inspections,” he said.
earlier stating that a permanent health with Spencer Fane LLP. “COVID on employers with prior citations, Louise Esola
BUSINESS INSURANCE JANUARY 2023 11INTERNATIONAL
PROFILE: BOTSWANA
MARKET
DEVELOPMENTS
Updated November 2022
■ The Botswana economy was
initially hit by COVID-19
restrictions halting mining
111
activity and tourism, but the
Botswana is a small market in terms of the number economy made a strong recovery
of people with the financial capability to obtain in 2021 with GDP up over 12%
insurance. Its proximity to the much larger and in real terms. Insurers had little
more advanced South African economy affects the business interruption exposure,
market, with insurers from that nation establishing as policies generally required a
operations and importing their products and physical loss to trigger coverage.
practices. Botswana Insurance Co., the market
leader in 2022 and the oldest insurer in the market, ■ The two main insurance classes,
has seen an ebb and flow of business with the property and auto, accounted for
arrival of new competitors. This has led to a highly 63.4% of gross written premium
competitive market with almost all premium income in the nonlife market
rates under pressure. The combined effects of the in 2020. Liability cover, which
GLOBAL COVID-19 pandemic and the Russian invasion of includes mandatory workers
P/C MARKET Ukraine have resulted in prices generally increasing compensation, is also a significant
RANKING at the fastest rate in several years. AREA class, but its growth potential
224,607
is limited by the low overall
formal employment rate.
■ Small brokers have noted
MARKET SHARE that increased compliance
PROPERTY
SURETY, BONDS 32.7% square miles requirements, together with
& CREDIT substantial fines for infringements,
2.0% are causing problems. Market
sources say the Non-Bank Financial
MARINE, AUTO
30.7% Institutions Regulatory Authority
AVIATION has disallowed the operation of
& TRANSIT POPULATION corporate sub-agencies in the
4.0%
2.38
market. Sub-agents, many of them
PA & HEALTH banks, were previously tied to a
CARE WRITTEN broker, which enabled them to be
LIABILITY
BY NONLIFE 14.9% remunerated for insurance lead
COMPANIES generation. It is understood that
5.0% million sub-agencies are now required
to obtain their own license.
CONSTRUCTION MISC.
& ENGINEERING 5.9% ■ Aon Botswana, the brokerage
5.0% market leader in the country, was
acquired by Minet Group and Africa
MARKET CONCENTRATION Lighthouse Capital on June 1, 2021.
87.8%
MARKET GROWTH The company was subsequently
In millions, U.S. dollars renamed Minet Botswana.
Life Nonlife PA & Health
$400
market share of top five insurers
$300
$200
2022 GDP CHANGE
(PROJECTED)
4.25%
$100
$0
2016 2017 2018 2019 2020
Source: Axco Global Statistics/Industry Associations and Regulatory Bodies
COMPULSORY INSURANCE NONADMITTED INTERMEDIARIES MARKET PRACTICE
■ Auto third-party bodily injury (state scheme) Nonadmitted insurance is not Brokers and agents are required Local expertise and capacity are
permitted because the law provides to be authorized to do insurance limited, and certain types of risk
■ Workers compensation
that insurance must be purchased business in Botswana. They are — including safari camps, aviation,
■ Professional indemnity for insurance from locally licensed insurers. not permitted to place business mining projects and marine hulls
brokers, insurance agents and auditors There are no exceptions specified with nonadmitted insurers — are insured abroad, mainly
■ Security (insurance or bank other than that permission may without permission from the in the South African market.
guarantee) for brokers handling be sought from the regulator Non-Bank Financial Institutions
premiums on behalf of insurers to make such a placement. Regulatory Authority.
■ Fidelity insurance for retirement
fund administrators Information provided by Axco.
■ Aviation liability For free trial access to
global insurance intelligence,
visit axcoinfo.com.
12 JANUARY 2023 BUSINESS INSURANCELEGAL BRIEFS
pump on a chemical production line in
Calhoun County, South Carolina. East-
man Chemical Co., owner of the line,
of Appeals in Boston in Motorists Com-
mercial Mutual Insurance Co. v. Roger
Hartwell; Lynnway Auto Auction Inc.
DOCKET
contracted with DAK, which in turn In May 2017, while the Jeep was being
contracted with another maintenance put up for auction inside Lynnway’s Bil-
company, Mundy Maintenance Service lerica facility, it accelerated into a crowd,
and Operations LLC. killing five people and causing multiple
In attempting to remove the pump serious injuries, according to the ruling.
without draining it first, the three workers The victims and their estates filed a
Chubb must cover loosened the bolts securing it; an explo-
sion occurred in which molten liquid
series of lawsuits in Massachusetts state
court against Lynnway, associated entities
LOUIS VUITTON FACES
BIOMETRIC LAWSUIT
ransomware loss killed Mr. Zeigler and severely burned
Mr. Jackson and Mr. Vann.
and Mr. Hartwell, a Lynnway employee
who was in the driver’s seat at the time of
A federal district court in New
York refused to dismiss a putative
n A federal district court ruled against In April 2017, the two workers and the accident. class-action lawsuit filed under
a Chubb Ltd. unit and held that a Port- Mr. Zeigler’s wife filed separate personal Dealership insurer Motorist Commer- Illinois’ Biometric Privacy Act
land, Oregon, beverages and sauces man- injury actions against Eastman and cial, based in Columbus, Ohio, filed suit against fashion designer Louis
ufacturer is entitled to the more than Mundy in federal district court, alleging in U.S. District Court in Boston, seeking Vuitton in connection with its
$107,000 it reimbursed its president after that Eastman’s employees “were negli- a declaration its policies did not cover the website’s eyeglass “Virtual Try-On”
he made a ransomware payment out of his gent in their management of the retained auctioneer or Mr. Hartwell. The district feature. Illinois residents Paula
personal cryptocurrency funds. line, and that Mundy’s employees were court ruled in the insurer’s favor and was Theriot and Cheryl Doyle charged
Yoshida Foods International LLC negligent in their attempt to unclog the affirmed by a unanimous three-judge that the Paris-based luxury fashion
purchased insurance from Chubb unit drainpipe prior to the explosion,” accord- appeals court panel. designer, whose U.S. headquarters
Federal Insurance Co. that included ing to case No. 19-1643, consolidated by A policy exclusion excepted from the is in New York, violated the act
computer fraud coverage under the crime the 4th U.S. Circuit Court of Appeals in definition of insureds a third party that is by collecting customers’ “facial
coverage part of its policy, according to Richmond, Virginia. in the business of selling the dealership’s geometry” information via its try-on
the ruling by the U.S. District Court in Eastman moved to dismiss the suits, autos, the ruling said. tool without providing them with
Portland in Yoshida Foods International contending that the contractors qualified “No reasonable insured that procured a written notice of the collection,
LLC v. Federal Insurance Co. as Eastman’s “statutory employees” under the policy would ordinarily have any its purpose and its length of time.
In March 2021, an anonymous hacker the South Carolina Workers’ Compensa- interest in paying for a policy that provid-
gained unauthorized access to Yoshida’s tion Law and that workers compensation ed coverage for another person who works WALMART SETTLES
computer system and used malware to was their exclusive remedy, and that the for another unrelated seller of autos,” the PRESCRIPTION CASE
encrypt data in its storage devices, ren- courts lacked jurisdiction to hear their ruling said. Walmart Inc. agreed to a $500,000
dering the system unusable, according to claims. The district court agreed and settlement with Massachusetts
the ruling.
Yoshida President Junki Yoshida used
dismissed the lawsuits.
In overturning that decision and Pro-policyholder for allegedly violating the state’s
prescription pricing procedures
his personal cryptocurrency funds to pay
$107,074 for the four decryption keys
remanding the case, the appeals court
cited a 2019 ruling by the South Carolina
COVID ruling upheld designed to keep workers
compensation costs down.
needed, for which he was later reimbursed Supreme Court in Keene v. CNA Holdings n A Pennsylvania appeals court upheld The retailer did not admit any
by the company. LLC, saying that “when an employer a lower court ruling in favor of a dental wrongdoing in connection with the
Federal denied coverage, arguing the makes a ‘legitimate business decision’ office that sued CNA Financial Corp. for settlement. Massachusetts sets
company did not sustain a “direct loss” to outsource a portion of its work, the COVID-19-related business interruption limits on the costs of medications
from computer fraud, with its only loss contractors it hires to perform that work coverage. prescribed to injured workers
occurring when it reimbursed the com- are not ‘statutory employees’ for workers Last year, in Timothy A. Ungarean d/b/a and mandates that companies
pany president, who was not personally compensation purposes.” Smile Savers Dentistry P.C. v. CNA and validate prices against specific
insured under the policy. Valley Forge Insurance Co., the Court of regulatory benchmarks before
The court disagreed, saying, “There was Common Pleas of Allegheny County processing charges. The state
no intervening occurrence between the granted summary judgment to Dr. earlier reached similar settlements
ransomware attacks, the ransom payment, Ungarean. with Express Scripts Inc., Optum
and the reimbursement to Mr. Yoshida, CNA had argued that business inter- Rx Inc., Stop & Shop Supermarket
which were all part of an unbroken ruption coverage should only be triggered Co. LLC, United Pharmacy
sequence of events.” if there was damage to the property. Services LLC and Walgreens Co.
Whether Mr. Yoshida made the ransom- Among other things, the policy stated
ware payment, or the company reimbursed that business interruption coverage was TINA TURNER MUSICAL
DUE COVID COVERAGE
him, was “irrelevant,” the court said, in
granting Yoshida summary judgment. Insurer off hook triggered “by direct physical loss of or
damage to property at the described prem- A Broadway musical based on
in crash litigation ises” and the lower court ruled that the use the life and music of Tina Turner
Fatal explosion n The insurer of a car dealership that
of the word “or” showed that the concepts
of “loss” and “damage” were separate. Loss
that was canceled because of
COVID-19 is entitled to coverage
suits can proceed owned a car that suddenly accelerated
into a group of attendees at an auction,
could be interpreted to include loss of pos-
session, such as via COVID-19-related
from a Chubb Ltd. unit, a New
York state appeals court ruled in
n A U.S. appeals court ruled that law- killing five people, does not have to pro- lockdowns that forced numerous business- affirming a lower court ruling. A
suits filed by the wife of a worker who vide coverage in the subsequent litigation, es to close offices or suspend operations. three-judge panel of the New York
was killed and by two workers who were a federal appeals court ruled in affirming The Superior Court of Pennsylvania in Supreme Court, appellate division,
injured in a chemical accident can pro- a lower court decision. Harrisburg upheld the lower court ruling, first judicial department, affirmed
ceed, reversing a lower court’s decision Merrimack, New Hampshire-based saying that “based primarily on the trial the decision that a communicable
that barred the litigation on workers com- Nashua Automotive LLC received a court’s thoughtful opinion, we affirm the disease exclusion in coverage
pensation exclusive remedy grounds. 2006 Jeep Grand Cherokee in a 2017 court’s order granting summary judgment provided by Chubb unit Chubb
In December 2016, Alton Zeigler, trade-in and arranged for Billerica, Mas- and declaring that coverage is owed to Insurance Co. of Europe SE did
Jacob Jackson and Kevin Vann — main- sachusetts-based Lynnway Auto Auction Ungarean for his COVID-related busi- not apply to the production of
tenance employees of DAK Americas Inc. to auction the vehicle, according to ness losses under the specific terms of the “TINA: The Tina Turner Musical.”
LLC — attempted to remove a faulty the ruling by the 1st U.S. Circuit Court CNA Policy.”
BUSINESS INSURANCE JANUARY 2023 13FEBRUARY 1-3, 2023
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Alex Sun
ENLYTE
Q Enlyte is a company formed
from three companies.
What is the vision now?
making sure that we have a vibrant
workforce, but I think that given the
pandemic and the Great Resignation,
A We’re focused on trying to help
an injured party navigate this
system through a focus on the whole
that the challenges increased, be it on person. I think that’s what we’ve seen.
A Our principal mission is to assist
our clients and help them restore
the lives of their customers after a
clinical staff, claims adjusting teams, or
certainly anything involving technology.
I think there are a lot of ways that we’ve
Particularly in the last year, there’s
been a focus on mental health and
other things that may not be directly
challenging event. We’ve defined that all learned to address the challenges. related to the physical expression
as trying to have the greatest impact First, we learned during the first period of an injury but something that may
on claims outcomes. So, part of that of the COVID pandemic, when everybody be in the background. It could be
was making sure that we had leading went into remote work environments, everything, including diet and medical
capabilities across all solutions that that a transition to a remote workforce conditions related to where you live,
Alex Sun took the helm as CEO help address the medical claims ultimately became a capability that we and whether you have ready access
of San Diego-based Enlyte LLC in cost side of the equation, as well as all became pretty comfortable with. to basic medical services. All of that
services that focus on the injured becomes part of helping someone
2021, when it was formed through worker and getting them back to work. navigate their treatments and getting
the merger of three companies We’re about having maximum medical back to work as quickly as possible.
in the workers compensation improvement. So really the vision for
sector: Coventry Workers Comp
the parent company of Mitchell, Genex,
and Coventry was bringing the leading Q How does the company best
balance its objectives along
Services, Genex Services LLC providers of technology, clinical and with caring for injured workers?
network solutions all together in one
and Mitchell International Inc.
Mr. Sun was formerly CEO of
organization where if we do our jobs
we will leverage the intersections to
create better outcomes for our clients.
A Caring for injured workers is
central to our mission. We focus
both on the injured worker through
Mitchell, which he joined in 2001.
clinical services as well as trying to
Prior to that, he spent a decade
in the banking and financial Q How do mergers such as
this help clients best?
drive greater efficiency and accuracy
in the claims-handling process,
services industry. He spoke with so that there is a focus on total
Assistant Editor Louise Esola
about the benefits of combining
A As we look out into the future, it is
important to be a skilled provider.
So, it’s making sure that you have all And as we continue to all strive to be
cost of claims. Obviously, there’s
a very deep focus on the injured
worker and making sure that they
the operations and challenges the right infrastructure, the information employers of choice, I think we are now get back to work because that’s
security investments, and product adjusting our workplace strategies to an important aspect of controlling
in the workers compensation and service quality. A deep focus on be more accommodated to the needs of claims costs, including the medical
arena. Edited excerpts follow. the customer and a strong analytics employees so that we can remain that claims cost side of the equation.
platform are part and parcel of being an employer of choice. So, many of us are
excellent provider. What we were also
trying to do on top of that is identify
trying to be more flexible just to save
on commutes, or to improve work-life Q What do you like
about what you do?
where there’s connectivity between balance, because this is an industry
software solutions, clinical solutions and
network solutions, and take advantage
that demands a lot from people.
A I’ve always wanted to be part of
something special — a community
of those connections to try to deliver
better outcomes to our customers, be Q What are top
trends to watch?
of people with a shared purpose.
And I wanted that purpose to be
it greater efficiency or claims handling. meaningful. And so we take our
We want a better ability to serve the
injured worker efficiently with high
levels of communication quality,
A A dynamic legislative and
regulatory environment. Inflation
is also something that we have to
mission very seriously, which is to
provide support to our customers as
they try to restore the lives of their
and to also optimize the process. contend with — medical inflation clients after a challenging event. To
or the inflation associated with me that is very, very important work.
Q What are some of the challenges
facing the industry?
repairing a vehicle. Lastly, there
continues to be a challenging liability
Insurance is woven deep into the
fabric of society, and so we in our
environment and nuclear verdicts. small way can help deliver on the
A Probably one that almost seems to
be universally discussed in the last
year has been the challenging labor Q A trend we have been following
is the advocacy model for
promise of the insurance industry.
It’s a very personal thing for myself
and the nearly 6,000 associates that
environment. P&C insurance has always treating injured workers. How has we have here at Enlyte. And I think it’s
had some challenges with respect to this evolved in recent years? a very important part of our culture.
Particularly in the last year, there’s been a focus on mental health and other things that may not be directly
related to the physical expression of an injury but something that may be in the background.
BUSINESS INSURANCE JANUARY 2023 15You can also read
