WGA InsureBlog

Another front in the battle over Data Security and Privacy broke out this week when the United Arab Emirates (UAE) announced its intention to shut down mobile services over Blackberry smart phones made by Research in Motion (RIM). The UAE, concerned about security and looking for ways to intercept illegal and terrorist activity, threatened to shut down the popular email and text messaging services due to RIM’s practice of encrypting such communications. Other governments are seeking similar control and access over data.

Should RIM and other service providers agree to government access to data, however, they expose themselves to increased litigation from customers and third parties. Foreign government access to data may be misused for profit by rogue elements in governments. Data Security and Privacy insurers, in a nascent field, still have little way of quantifying such data risks. Nonetheless, insurance coverage for these types of risks to telecom and data providers is available with some limitations.

An article in today’s Wall Street Journal, ” ‘Objection!’ Older Lawyers Resist Forced Retirement”, points out the tip of an emerging iceberg. We have all heard those catchy phrases like “60 is the new 50″. Well, some of that thinking is coming to a courtroom near you. The article outlines ageism-related cases brought by partners at law firms who are routinely forced to give up their equity partner status upon achievement of a certain age. The newspaper also outlines that some large law firms have started to drop or amend their retirement policies thereby putting forced retirements into a case by case basis.

Lawyers, of course, often start legal trends. This one could really catch on fire. Lots of entities have mandatory retirement ages for officers, directors, partners and employees. Not just law firms, but churches, government entities, and other large employers. All of them susceptible to mass torts and class actions. It seems likely that age discrimination legal battles will increase. Underwriters of Employment Practices Liability Insurance need beware.

DAVID MORALES

Not everyone is familiar with the Massachusetts Division of Health Care Finance and Policy (DHCFP) as Commissioner David Morales readily admits. But, this state agency is trying to drive health care cost control reform as much as anyone in the state. Alongside Massachusetts Attorney General Martha Coakley and private industry studies such as the McKinsey study cited in earlier blogs, DHCFP is exposing the truth about rising health care costs: the biggest driver is that hospitals and doctors are getting paid much more money. Their prices have been escalating in part due to unfair competition according to AG Coakley as well as Insurance Commissioner Joseph Murphy. Read more…

As consultants and advocates for our clients, we want our clients to have a broader set of pro-active tools to reduce the cost of health insurance. One of those tools that still is mostly untapped is employer-sponsored Wellness initiatives at the worksite. Wellness is hardly a new concept. Many researchers have reported on the success of Wellness programs but they have been sparsely implemented. One of the biggest problems with Wellness programs is that only some of the gains in health care expense control are achieved in the near term. Many of the gains are not achieved until later in life as a result of decreases in the incidence of cancer, heart disease and diabetes. And given that the average employee changes jobs every seven years or so, many employers feel that the benefits are passed on to future employers. hat poses a problem. How do you incent businesses to pay for Wellness programs when they may not get many of the benefits? Read more…

Consider the dilemma facing the CEO of BP and the CEOs of other major deep-sea drilling companies in light of the disaster in the Gulf of Mexico as they contemplate possible securities and other liability litigation. Tony Hayward, BP’s CEO, needs to protect BP’s reputation in order to maintain loyalty for its consumer products like its gas station chain as well as maintain morale among its employees.  It does this by, among other things, taking a conciliatory note about the responsibility of BP to pay all types of reimbursements to the public arising out of the accident.  Meanwhile, securities litigation professional plaintiff firms are taking notes that will no doubt conclude that Hayward is not best protecting shareholders by making these concessions to pay all reasonable costs.

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I recently had a chance to catch up with Andrew Agnew, Chairman of Jardine Lloyd Thompson Limited (JLT Group) of London. He has almost 30 years in the insurance industry with experience in all areas of the marine and non-marine market. Our conversation was on the heels of the oil rig explosion Read more…

Yesterday’s New York Times describes possible harm to customers of biotechnology giant, Genzyme Corporation, arising out of the reduced availability of Genzyme’s products as a result of a plant shutdown caused by a virus contamination at Genzyme’s plant. The story relates that such a viral contamination is not uncommon in the production of biological products. The inability to supply life-saving drugs that have no easy replacement from other manufacturers, not surprisingly, may have led to adverse outcomes for Genzyme’s patients and this type of exposure to harm exists for many other drug and device manufacturers. Read more…

The $75 million theft of pharmaceuticals from an Eli Lilly warehouse on Sunday in Connecticut is just the latest in a series increasingly large thefts of prescription drugs. Authorities say the thieves lowered themselves from the roof of the warehouse after cutting a hole in it. According to Freight Watch International, a supply cain security consultant, the number of prescription drug shipment thefts quadrupled over the past four years. Read more…

Lawyers are reporting that the Securities and Exchange Commission (SEC) is increasing the expectations that publicly-traded companies should outline climate change related issues. As a sample description of this trend, see this Advisory to from Sullivan and Worcester.

Failure to notify shareholders of the impact of operations on climate change may leave management exposed to extensive securities litigation with little ability to offer a strong defense. Directors & Officers ( D & O) Liability Insurers are still studying these SEC developments but it would not be surprising to see more emphasis on these issues at upcoming renewals.

Austin, Texas, Police Chief Art Acevedo stopped short of calling the crashing of a small plane into a commercial office building in northwest Austin on Feb. 18 a terrorist act, but U.S. Representative Mike McCaul said he wasn’t so sure it couldn’t be considered one.

The Piper Cherokee PA-28 piloted by Joseph Andrew Stack, 53, crashed into a multi-story office building that housed a U.S. Internal Revenue Services office with 190 employees shortly before 10 a.m. on Feb. 18.

While this may just seem a matter of semantics for journalists, but this is a critical question in insurance.

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