I was training a broker in Business Interruption insurance last week and it was of course impossible not to discuss the business interruption implications of the Wanna Cry virus. It is clear that obtaining coverage is not without its hurdles.

Cyber policies provide Business Interruption in different ways.  All are subject to waiting periods some restrict coverage for attacks specifically targeted at the insured.  Some only cover damage during the restoration period others will cover loss of business income after systems are restored.

Brokers need to check the policy carefully.  This is a checklist I prepared after the workshop.  I hope it helps

I attended an excellent  Insurance  Institute of London lecture recently “Accelerated learning and memory techniques” given by Rob Murray of Lane, Clark & Peacock. Cii members can check the out the podcast.

Rob talked about how imagery helps us remember things, which is very useful for the CII’s multiple choice examinations.  In this article though I want to tell you about how can help make our Advanced Diploma coursework written assignments stand out and score higher marks easily by including pictures, tables and diagrams.

Any one embarking on their Advanced Diploma assignments should read the CII Coursework assessment tips  and be aware of the marking scheme. 

You will see that 50% of the mark is for analysis 10% for logical structure.

It also states that you need to produce an assignment that you would be

“happy to give to senior management within your company”

This assignment looks like a school essay:

Whilst this one contains the same content but will score more highly both for analysis and logical structure and is beginning to look like a senior management report.

But there are also pros and cons to spending the time to making your advanced diploma assignment look like a management report.

So how can you make your assignment look more like a business report quickly and easily?

1. Use bullets, sub heading and short paragraphs – easy enough
2. Use tables - great analytical comparison tools – again easy
3. Finally if appropriate add a few charts – take more time to plan and execute

If you are like me and don’t think visually and are struggling for chart ideas then here are a few sources I use which may save you time.

1. Powerpoint SmartArt

For those of you familiar with Powerpoint the SmartArt feature will turn a bulleted list in quickly in to various graphics – not brilliant but quick and easy.

2. diagrammer.com 

Nancy Duarte has taught some of the great presenters how to present more visually and at www.diagrammer.com you can download different diagrams in Powerpoint quickly and easily.

3. Andrew Abela’s Diagram Chooser

There is a big debate in the data visualisation world about the usefulness Dr. Abela’s data visualisation chart chooser but his slide chooser here has some great ideas for different charts.

http://extremepresentation.typepad.com/.a/6a00d8341bfd2e53ef01b8d0bfb4ec970c-pi

 Do you have any tips you would share with other candidates?

Neil

It’s 11.30 am on a Monday morning - suddenly your mobile rings loudly –it’s a very worried manager of a local design firm - Lydia. 

“Someone has stolen all our money ” she shouts, “Please tell me we are insured!”

Eventually she calms down, and slowly you uncover what has happened.

The previous Friday, Lydia had been congratulating herself about how much cash she had collected that week, when she received an email from her bank asking her to update her security details. Being busy, she had quickly responded to the email, but when she checked the company’s bank balance on the Monday morning all £30,000 of the newly collected money had disappeared!

Lydia and her company had been scammed they were a victim of a classic phishing attack or social engineering fraud.

So what’s your answer to her question?

• “Yes, social engineering fraud is covered under your cyber insurance.”
• “Yes, social engineering fraud is covered under your crime insurance.”
• “Yes social engineering fraud is covered under both your crime and cyber insurance.”
• “I don’t know.”
• “You don’t buy either cyber or crime insurance I am afraid you are not insured.”

If it’s the last two Lydia is going to remain unhappy. If she is lucky, her bank may reimburse the company for the fraud but depending on its nature they may not.

A lot of businesses, charities, clubs and associations do not purchase crime insurance often because they don’t believe their employees will steal their money.  Even when it is purchased, a standard crime policy usually will not respond to a fraud like this one. At the same time cyber insurance policies will cover cyber extortion losses but often not social engineering fraud.

 We worked on this at one of my recent cyber insurance workshops and were happy with our pretty Venn diagram but concerned that many clients may not be aware they have no insurance.

 Some crime insurers may extend cover to include social engineering fraud (usually with a sub limit and for an additional premium).  A cyber insurance policy may also cover social engineering fraud so the policies can overlap but more often there will be a gap or no insurance at all.

 According to this BBC article in 2016 global social engineering fraud totalled nearly $1 billion.  Often we don’t get tricked but the fraudsters are clever and can sometimes catch us unawares when we are busy – just like Lydia.

http://www.bbc.co.uk/news/business-35201188

I think for a commercial broker in 2017 it’s a risk our clients may choose not to insure but it’s not a risk that they or we can ignore – what do you think?

Many of you will have heard a lot about the Insurance Act 2015, which comes in to force in August 2016.

There are many changes in the Act, the majority of which are to the benefit of commercial customers.

One in particular is that insurers can no longer void the policy if the insured fails to make a “fair presentation”, if the insured’s failure is neither deliberate or reckless.

If the insurers can prove they would have charged a higher premium if they had been aware of all the material circumstances then the remedy in the Act states that that they can proportion down claim payments accordingly.

Thus if the original premium was £10,000 and insurers can demonstrate that they would have charged £20,000 if they had been aware of all material circumstances then insurers can reduce claim payments proportionately.

If there is a £500,000 claim the insurers could thus only pay £250,000.

I can see why this might act as a better deterrent to misrepresentation than only providing insurers with the remedy to increase their premium retrospectively,

I can also see how it can work on a property damage or other first party claim – it’s a bit like average if you are as old as me and remember average!

However, the remedy must pose practical issues on liability claims when insurers often make claim payments to the claimant or lawyers not to the insured.

 Perhaps this is one reason why insurers such as Zurich are adopting an additional premium approach rather than adopting the proportionate reduction in claim remedy under the Act. See below.

 https://web.zurich.co.uk/Assets/Lists/Anonymous%20Content/ZM/news/718974001%20INTERACTIVE.pdf

 Obviously the Insurance Act 2015 is an important change taking place in the U.K. in 2016 and in all my technical insurance training workshops I address its implications.

Brokers who solicitors as clients will be well aware of the risk of Friday afternoon frauds. Cyber criminals pose as customers on email and deceive the solicitor in to sending their client’s money to the criminal’s bank account.

https://www.pindrop.com/phone-scam-breakdown-the-friday-afternoon-scam/

Such deceptions are not, restricted to solicitors and could happen to other businesses who might be deceived in to sending goods to the wrong address as well as money to the wrong bank.

So are your client’s covered for:

• their liability to compensate clients who have lost money due to their deception?
•  their own losses?

Solicitors’ professional indemnity insurers have paid the majority of the Friday afternoon fraud losses against solicitors as the client’s money has been stolen but would not usually cover theft of the solicitor’s own money.

Theft coverage under a property policy will not of course apply.

If the client purchases a Crime policy it is possible that it has an extension to cover such frauds but many customers do not purchase Crime coverage and a standard Crime policy will usually not provide appropriate protection.

Some Cyber insurance policies may cover such deceptions but many do not and again many commercial customers do not purchase the product.

It is thus advisable for brokers to bring to their clients’ attention that this is an increasingly common fraud for which they have no insurance protection.

If the client is concerned, then they will need to take appropriate security steps to mitigate the risk. Some are outlined here by Legal Business.

http://www.legalbusiness.co.uk/index.php/co-publishing/4621-beating-friday-afternoon-fraud

Brokers will then need to see how they can purchase appropriate Cyber, Crime or Professional Indemnity insurance to mitigate the client’s exposures.

It’s a tricky area and one I cover in my Intermediate Professional Indemnity, Crime and Cyber technical insurance training workshops.

The Insurance Act 2015 will have a significant impact on both the placement of commercial insurances and the handling of the commercial insurance claims when it comes in to force on 12thAugust 2016 and both brokers and insurers should begin preparing for it now.

In terms of placement the fact that Act replaces insured’s duty of utmost good faith with a duty of “fair presentation” and introduces proportionate remedies for non disclosure will probably mean that:

• insurers will need to ask more questions and so will adapt their proposal forms, statements of facts and questionnaires to ensure they enquire more specifically about material facts of a risk
• the Act also allows insurers to contract out of some of the changes of the Act (subject to transparency requirements) so insurers may also change their policy wordings
• brokers will have to ensure both they are aware of any such changes to insurers information requirements and policy wordings. They will need to be alert to the fact that insurers may use the policy wordings to contract out of the changes and also brief clients appropriately agreeing them what information they need to provide at inception
• both brokers and insurers are also aware that currently they have a duty to explain to insured's that the insurance contract is subject to a duty of utmost good faith and explain the consequences if they breach this duty. Often client documentation contains this explanation. Client facing staff are going to need to be trained in the change to the duty and client documentation changed accordingly

In terms of claims, the Act not only changes the law of disclosure but bans the use of “basis of contract” clauses and more importantly changes the law with respect to warranties so breach of a warranty only allows the insurer to suspend coverage rather than void the policy as a whole.

• Although insurers may contract out of some of the changes their policy defences for both non disclosure and breach of warranty will be reduced
• Brokers negotiating claims will need to be aware of the changes in law and any resultant policy wording changes 

I attach a link to a briefing by Thomas Cooper on the Act but brokers and insurers should keep up to date with how market practice changes as a result.

http://www.thomascooperlaw.com/insurance-act-2015-2/

The British Insurance Brokers Association is issuing a comprehensive guide for brokers at their conference on 13th May 2015.

In my negotiation skills workshop I get lots of questions and a common one is “should you make the first offer?”

In reply to this I tell them the story of my mother and the Portuguese tablecloth salesman.

Many years ago now, we were on holiday sitting outside when we were approached by a smart looking Portuguese man in a white suit selling a selection of lovely hand made table cloths.  My mother asked him the price to which he responded 2000 escudos (it was a long time ago!).

After much haggling my mother managed to buy the table cloth for 1,500 escudos and was very pleased with her negotiating skills until she saw the same table cloth for sale for 1,000 escudos in a shop the next day.

The salesman had successfully used his understanding of the psychological principle of “anchoring” in that the other negotiating party will often change their perception of what is a good deal solely based on the other side’s first offer.

Clearly if my mother had wanted to save money she should have done some research on the price of Portuguese table cloths and having done so ignored any first offer from the salesman which was just that an offer.

Next time you are in a negotiation think could I benefit from anchoring by making the first offer or if the other party makes the first offer be sure to ignore it and just focus on what you are prepared to pay.

If you want to read about the psychological research on anchoring read Thinking, fast and slow by Kahneman, D (2011) or take a look at this research article by Galinsky, A.D. and Mussweiler, T. (2001)

In April 2015 Business Insurance quoted Gabi Siboni, director of cyber security program at Israel’s Institute for National Studies as saying that hackers are targeting electric and nuclear power plants around the world.

This comes on top of news in January 2015 that German steel plant was on fire due to hacking attack.

Much of the demand for cyber insurance has been fuelled by the concern that organisations could be sued by customers as a result of a breach of network security – a risk covered under cyber policies usually.

It is however, possible that a cyber attack causes bodily injury or property damage e.g. in the case of the German steel mill.

Cyber policies do not usually cover claims for injury or damage but traditional policies which do such as property damage/business interruption and public policies often contain cyber exclusions.

This has given rise to the development of Cyber Gap insurance designed to cover this gap with insurers such as Aegis and Brit Insurance offering policies that cater for this gap.

All brokers need to be comfortably that their clients are protected against cyber risks.  You can click on this link to read the Marsh UK Cyber Security they wrote on behalf of HMG on The Role of Insurance in Managing and Mitigating Risk or email me for details of cyber workshops.

Many CII examination candidates when they get the text book arm themselves with a pen or highlighter open the book at Page 1 and start reading and highlighting or underlining the text.

It’s probably something we have been taught to do at school but does it work?

Well academic research tends to suggest that underlining is not a particularly effective studying strategy (see the work of Richard E, Mayer) this may be because we end up highlighting too much of the text or it may be because what of what is known as cognitive overload (our working memories can only do so much at once and if we are more focused on the activity of underlining than understanding what we are actually reading we don’t remember what we have read).

Starting a CII text book at Page 1 is rarely a good strategy: 

• as they are not novels
• some chapters are often more important than others
• our brains work much more successfully when we pose it questions

We need to use the structure of the book (e.g. look at the chapter summaries before you read the chapter to help you prioritise) and then attempt answer the questions at the end of the chapters. This helps you to psychologically process the information which is much more effective strategy and helps you recall the key concepts more readily than simply underlining the text.