Thinking outside the Web
As online exposures grow at warp speed, the seasoned pros at ThinkRisk "think ahead" to craft E&O
By Elisabeth Boone, CPCU
Do you remember when mobile phones were strictly for making calls, with no camera, Internet access, storage capacity, or e-mail?
How about those clunky beige desktop computers with fuzzy green screens and 10-megabyte hard drives? Or waiting to get online through a slow, screechy dial-up connection?
Fast forward to 2012, when losing your smartphone would be worse than having your car stolen…when a seemingly minor mistake in a client's blog or online advertisement triggers a lawsuit…and when each day brings fresh news about the theft of confidential customer data stored online or the tweeting of malicious misinformation.
The power, speed, and capacity of today's Internet are awesome—and so are the risks inherent in using it to advertise, market, communicate, and transmit and store business data. A common approach to insuring these exposures has been to add coverage to existing policies via endorsements that provide protection for some exposures related to "cyber liability," a term that has no uniform or consistent definition in the marketplace. The result can be unpleasant surprises, not only for the insured but also for the agent or broker after a loss occurs.
Rethinking the risks
The leadership team at ThinkRisk Underwriting Agency, LLC, believes it's time to rethink traditional approaches to managing the errors and omissions liability exposures that are proliferating in the online environment, particularly those associated with data security and privacy. In their view, cyber liability has become a catchall phrase for a body of exposures that is constantly growing and changing, and the risk environment of 2012 bears little resemblance to that of the 1990s when the phrase was coined.
Established in 2009 by Ryan Specialty Group (RSG), ThinkRisk is a managing general underwriting agency that specializes in arranging E&O insurance in the converging areas of media, advertising, technology, privacy, and network security.
ThinkRisk offers comprehensive coverage and risk management services to address Internet-related exposures that include the creation and distribution of content, storage of confidential data, creative Internet advertising and marketing strategies, and similar business activities.
Since retired Aon founder Patrick Ryan established Ryan Specialty Group, he has spearheaded the acquisition and creation of specialty MGAs and MGUs in niche markets where he believes RSG can bring what he calls "differentiating creativity and differentiating expertise." The leaders of ThinkRisk embody Ryan's core values and bring both depth of experience and fresh perspectives to their challenging specialty.
Serving as president is Nicole Haggerty, RPLU, who is responsible for expanding ThinkRisk's platform of products, programs, and services. For most of her 20-year insurance career, Haggerty has focused on the professional lines sector and has extensive experience in underwriting, product development, and program management. Before joining ThinkRisk in October 2011, Haggerty was senior vice president and national E&O practice lead for Allied World U.S.
ThinkRisk's executive vice president is Reza Khan, CPCU, who worked closely with Haggerty at Allied World U.S. Like Haggerty, Khan has a strong background in the professional lines sector; his career encompasses 29 years in specialty E&O underwriting, business development, sales, and marketing.
Another key member of the ThinkRisk leadership team is Laura Corogenes, who is senior vice president of underwriting and Kansas City branch manager. Corogenes joined the agency in February 2012, bringing with her more than 30 years of experience in developing, underwriting, and marketing specialty E&O products with a focus on media-related risks.
Culture of opportunity
Haggerty and Khan came to ThinkRisk as partners, and both are enthusiastic about becoming part of Ryan Specialty Group.
"The primary attraction for us was the opportunity to build customized professional liability solutions that address various exposures, including those that involve data privacy and network security," Haggerty says. "We enjoy the freedom to create innovative products and use various multi-level distribution platforms without any legacy issues. We're excited about joining Pat Ryan and his talented management team, and about the opportunity to draw on their expertise and relationships in our business segment."
Adds Khan: "Despite its impressive growth over a fairly short period of time, RSG remains a relatively flat organization. Another advantage for us is Pat Ryan's long-standing commitment to the MGA model, especially in professional lines. The opportunity to help lead and grow RSG's professional lines division was one that we couldn't pass up."
Pointing to the massive volume of state and federal privacy regulation and the speed with which the law changes, Khan says, "We approach the business from the perspective of delivering client-focused insurance coverage, as opposed to reacting to what's going on in the regulatory environment. It's impossible to stay ahead of a myriad of regulations that seem to change every week; instead we focus on designing innovative coverages that will stand the test of time."
ThinkRisk's initial product offering, which addresses media, technology-related E&O, and data security and privacy exposures, reflects the view that these exposures are converging risks and must be treated that way in coverage design.
The Converging Risk Liability Policy is underwritten by members of the Great American Insurance Group, rated A by A.M. Best. The product provides comprehensive coverage in a single policy that can be made up of one or more of the following modules:
• Content Liability—This module covers claims that arise from the creation and distribution of content, and it is available in two alternative versions. The first version is designed for traditional media companies like publishers and broadcasters. Limits up to $10 million are available, and coverage can be written on either an occurrence or a claims-made basis. The second coverage part is designed to fill the gaps in general liability coverage that are faced by non-media "Main Street" companies that create and distribute advertising and other content and use e-mail, blogs, and social networks in their business. This coverage part is written on a claims-made basis and offers limits up to $10 million. Optional design coverage can be added by endorsement to either of the two coverage parts to address exposures that arise out of product design.
• Professional and Technology Services—This module covers errors and omissions for the providers of professional services, including technology-related services. Coverage is worldwide and is written on a claims-made basis with limits up to $10 million. Eligible classes include consultants, PR firms, Web site designers, and software developers. This module is not available for licensed professionals such as doctors, lawyers, accountants, and architects/engineers.
• Privacy and Network Security Liability—This module consists of two coverage parts that are sold together. The first part covers third-party claims that arise from breaches of network security, and the second part covers first-party costs incurred by the insured in connection with security breaches. Coverage is worldwide and applies to all forms of data whether online or offline, electronic or paper. Limits up to $10 million are available for third-party coverage and $5 million for first-party coverage.
A key element of ThinkRisk's Converging Risk Liability strategy is risk management support to help insureds prevent and mitigate claims that may arise out of media and technology activities. Upon policy issuance, each insured is given access to the ThinkRisk Management portal. Policyholders also receive a quarterly newsletter, Data Security News. A weekly posting called ThinkFriday, issued each Friday afternoon and available free on the ThinkRisk Web site, presents current news, trends, and opinions on items of interest to the media, technology, and network security insurance community.
That was then; this is now
Remember all the panic about Y2K and the experts who warned us that the apocalypse would arrive when the curtain rang down on 1999? Fear of massive computer crashes and loss of data fueled a new growth industry in seminars, conferences, and consulting services to help insurance carriers and producers prepare for the looming disaster.
On New Year's Eve 1999, the world held its breath…and when midnight came and went, not a thing had changed except the numbers on the clock.
To everyone's relief, the dire predictions never came to pass and the panic was for naught. Few experts, however, foresaw many of the risks that now attend the use of media and technology.
"Today, all sorts of businesses, from local floral shops to publicly traded Fortune 500 companies, use media technology to maximize their interaction with the public, to increase their revenue, and to expand their reach to customers and prospects," Haggerty observes. "With that should come a heightened awareness among business owners and consumers of the exposures they face in this full-blown electronic age."
Adds Khan: "In our business, we often say: 'Everybody's a publisher.' Years ago, before the advent of Facebook, it was unimaginable that someone could be sued for something he or she said about another person on a social networking site. Today there's a documented electronic trail of everything that is posted, and increasingly we're seeing the repercussions in high-profile cases where the stakes are enormous."
Haggerty comments, "The availability of information and the way people transmit it, combined with the constantly changing privacy laws and regulations, are creating daunting challenges."
People around the globe now use tiny mobile devices to do everything from transacting business and making dinner reservations to organizing flash mobs and fomenting the overthrow of governments. Every day, thousands of these amazing devices are lost, stolen, or meet their demise under the wheels of a truck or the toy hammer of a three-year-old. The resulting loss or destruction of data can have severe and costly consequences.
Understanding and addressing the rapidly proliferating exposures that arise from the use of media and technology is indeed a daunting challenge—and one on which the seasoned professionals at ThinkRisk clearly thrive.
New Agents E&O Program
ThinkRisk Underwriting Agency and OneBeacon Professional Insurance have announced the launch of a new insurance agents and brokers errors and omissions program. The program is designed for property and casualty agencies with $15 million or more in annual gross written premium, wholesalers, MGAs, program administrators, hybrid organizations including third-party administrators, and agencies with prior loss experience.
Highlights of the new program include:
• $10 million capacity
• Primary or follow form excess
• Defense outside limits
• No carrier insolvency exclusion
• Third-party network security coverage
• First-party data compromise expense coverage
• Employed lawyers coverage
• Outside directorship not-for-profit D&O coverage
• Side "A" excess D&O coverage for network security liability
• Advertising and communication liability coverage
• Disciplinary/governmental proceeding and time off work expense coverage (with supplemental limits)
Paul Romano, president of OneBeacon Professional Insurance, is enthusiastic about the new program and about his company's relationship with ThinkRisk.
"We believe the insurance agents segment is the first of many opportunities we may have to work together," Romano says. "The track record and experience of the ThinkRisk management team give us a great deal of confidence in the success of this program. Their expertise in developing coverages targeted to specific industries—combined with our commitment to providing an unparalleled level of service—will result in an outstanding suite of E&O solutions for insurance agents."
For more information:
ThinkRisk Underwriting Agency
Web site: www.thinkriskins.com