Data Breach Damages Quickly Mount

Sharon Dold

There has been much discussion in the cyber insurance marketplace about third party damages from a data breach. A hospital in California recently agreed to pay over $240 to each patient who was affected by the breach. Although the breach was relatively small with only 33,000 people impacted, the damages quickly mount.

St. Joseph Health to pay $7.5M | Becker’s Hospital Review

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Healthcare Industry Struggling with Frequent Cyber Attacks

Chad Chaffin

Healthcare organizations are facing almost one cyber attack per month. About 48% of healthcare IT and IT security practitioners have said they had a breach involving loss or exposure of patient information in the past year. According to a report from the Ponemon Institute, organizations are struggling to find successful security strategies. 

Some of the most notable threats come from:
  • System failures
  • Unsecured medical devices
  • Identity thieves
  • Unsecured mobile devices
On average, organizations have an advanced persistent threat (APT) incident every three months. The fallout of this includes IT downtime, an inability to provide services, and for forty-four percent of respondents, these incidents resulted in the theft of personal information.

To find out more information go to: 

Healthcare cyberattacks occur almost monthly | FierceHealth IT
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2015 Professional Liability Conference Great Success

Sharon Dold

The 2015 Professional Liability Conference was a great success. The focus was on cybersecurity. With several large breaches at health insurers over the past year, cyber insurance has risen to the top of most Blue Plan risk managers’ priorities.

Conference speakers covered a range of topics. The meeting kicked off with greetings by Mr. Scott Serota, President and CEO of the BCBSA and by Mr. Scott Beacham, President and CEO of BCS.

From there, we shifted quickly to cyber risks. Simon Barker of Blue Moon Consulting spoke about reputational risks. One of BCS’s reinsurance representatives, Tom Draper, spoke about developments in cyber insurance. Later that day, we worked through a table top exercise with Ted Kobus of BakerHostetler, which gave risk managers an idea of the questions and issues that arise during a breach. Chris DiIenno of Lewis Brisbois addressed legal and regulatory trends related to cyber breaches.

The next day, the focus was on the cyber program, since named CyberBlue 2016, that Plans and BCS are jointly creating. The risk manager work groups presented an update of their activities and reinsurance representatives provided more details on the inner workings of the  program. 

We had a great discussions with lots of input from the conference attendees. We hope to see you again next year!

For more information visit:
Professional Liability | BCS Insurance Company

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D&O and Professional Liability 2013 Review

Sharon Dold

Directors and Officers Liability and Professional Liability insurers continue to see a significant volume of claims.  The law firm of Troutman Sanders prepared this summary of a selection of 2013 court decisions. They have categorized the claims by issues such as timely notice, prior knowledge, prior acts, dishonesty exclusions, and insured versus insured exclusions.  Policy forms vary from insurer to insurer.  Laws also vary from state to state.  With those points in mind and with the wide variety of cases discussed, we found this paper to be an interesting read.

D&O and Professional Liability 2013 | Troutman Sanders
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BHI Database Provides Insight Into Large Claim Diagnoses

Craig Irvine

In a review of the BHI data, BCS’s initial findings reveal the top ten high cost diagnoses. These top 10 diagnoses comprise about 40% of all large claims costs and represent about $9.2 billion in ground up claims. Large claims are defined as total paid claims over $500K per member per year. In addition to total claim dollars, the chart below includes the frequency rate per 100,000 members, average severity of each claim, and the highest cost single claim amount. Stay tuned for our next blog post that will examine the 10 most expensive claims incurred within a one year period.

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Agent E&O Coverage Integral to Risk Management Strategy

Craig Irvine

An Interview with Chuck Campbell

PPACA is changing our industry significantly. While healthcare reform can provide great economic opportunity for BCBS agents, it will likely increase the risk and frequency of issues and liability claims. For over 15 years, BCS has offered an Errors and Omissions program to BCBS independent agents. We recently interviewed Chuck Campbell, Vice President–Agency Sales, Blue Cross Blue Shield of South Carolina on the role Agent E&O plays in his risk management program.

BCS Financial:  Chuck, can you tell us how many years have you have been with BCBSSC and what your responsibilities are?
Chuck Campbell:  I have been with the Plan for 20 years. I’m responsible for all agent driven product sales and retention efforts for groups of 2-100 lives, plus all individual products including U65, Medicare Supplements, Medicare Advantage and Part D, and Short Term Health. Additionally, we market and sell a host of ancillary products to attach to our group offerings.

BCS:  I’m sure you’ve spent a good deal of time analyzing the risk impact of PPACA on your Plan, but it must also present new challenges for your agents.
CC:  Absolutely. It seems to me that the health insurance market has never before been faced with such complexity. Agents must deal with the challenges of navigating clients through this new world. Agents need to understand the regulations and help their customers make appropriate decisions. The Insurance Exchanges are new marketplaces for individuals and small businesses. Agents must be knowledgeable and have strong communication skills to help their customers understand their options.

BCS:  Tell us about your agent oversight in the changing healthcare world.
CC:  Well, we have always been diligent with agent oversight. All of our agents have background checks, vector one and go through the appropriate licensing procedures. We monitor them closely and if there are any DOI complaints, license issues or liability claims, we are typically notified. One of the most important features of our agent oversight is that we require all agents and agencies to maintain at least $1,000,000 in Errors and Omissions coverage. From our perspective Agent E&O coverage provides a layer of liability protection for all parties involved: our customers, our agents and the Plan.

BCS:  BCBSSC has sponsored BCS’s Agent E&O program for a number of years. Can you tell us the background?
CC:  This program started in 2006. It has been a very successful value added benefit for our agents. We are pleased that we can make a cost effective option that has quality coverage available to our agents. And we’re pleased to be one of the top Blue plans nationally in agent enrollment in the BCS program administered by MGA.

BCS:  Many carriers have the requirement but only confirm coverage at the time of original appointment. From what we hear, confirming coverage on an annual basis is an administrative headache.
CC:  Well, I can confirm that it does present an administrative challenge. But the good news is that we partner with the BCBS E&ampO plan administrator MGA Insurance Services to assist our annual enforcement. MGA manages the entire process from sending notifications 90 days ahead of the E&O renewal to collecting and confirming credible coverage. We work closely with them through a weekly web-based reporting process.

BCS:  Is the agent E&O requirement an outcome of healthcare reform or have you always had that requirement in your contracts?
CC:  We have strongly supported having an E&O insurance requirement for many years. BCBSSC distributes products through hundreds of independent agents. Because the agents are contractors, there is an inherent exposure to the Plan that is outside of the Plan’s control. If agents are negligent, they should be held accountable and the loss should be applied to the appropriate policy. And with all of the changes in healthcare and the movement to more independence among agents, I can’t imagine a Healthcare insurer not requiring E&O coverage.

BCS:  Do you see the role of agents as changing?
CC:  The role of agents appears to be changing from pure product salesperson to being more of an advisor/consultant. As I mentioned before, there has never more complexity to the sales process. We believe that Agent education and training is critically important. But as we move through 2014 and as agents assist clients with the decision making process, the agents will certainly have increased potential for issues that could lead to claims.

BCS:  Thank you, Chuck, for sharing your perspectives on Agent E&O insurance.

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2013 Cyber Liability & Data Breach Insurance Claims study

Sharon Dold

While we read much in the press about cyber attacks and privacy breaches, we hear little from the insurance companies who are paying the claims. The third annual Cyber Liability & Data Breach Insurance Claims study, by NetDiligence® examines 145 actual data breach insurance claims. NetDiligence® has summarized its findings in a report that looks at costs, types of data exposed, and causes of loss to help risk management professionals better understand and plan for the risks of data insecurity.

Cyber Liability & Data Breach Insurance Claims
NetDiligence: Continuing to Shed Light on Cyber Claim Costs

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