Daily Market Update - August 13, 2014

Crime agency begins cyber crime campaign… 2 million at risk of losing Obamacare cover… Flood risk is not the only story for coastal cities… And riots could result in seven-figure claims…

Risk Management News

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Crime agency starts campaign on cyber crime
The UK’s equivalent of the FBI has launched a campaign to promote better awareness of cyber risk. The National Crime Agency (NCA) has released figures that show that 40 per cent of adults have no security protection on their devices. An immediate concern for businesses is how that could impact on their own systems if employees are allowed to bring their own devices into the workplace. It should be remembered that even if a device is not being used for work it could still pose a threat; connecting to a network or even charging a phone via USB connected to a business PC could be a risk. The UK government has pledged to make the country one of the safest in the world to go online and Organized Crime minister Karen Bradley says: “The Internet has radically changed the way we work and socialise, but cyber crime now poses a serious threat to the UK, and the Government has taken action to transform the way we respond.” The best way to encourage staff to take security on devices seriously is to relate it to their own personal vulnerability and to this end the NCA has highlighted the risks using a Buzzfeed post.

Healthcare policyholders could lose subsidies unless they act fast
The US government has warned that many people who have signed up for affordable healthcare cover may lose their subsidies if they don’t act fast to confirm their immigration or citizenship status. The warning yesterday will affect as many as 2 million of those who believe they are covered but are not until questions about their status are satisfied. Many of the 8 million who have signed up for Obamacare are from ethnic groups that have traditionally had little or no healthcare but despite efforts to engage with those at risk of losing cover, the government is finding it hard to get responses. Those who have been contacted about their status have until 5th September to upload their documents through the HealthCare.gov website or their cover will stop at the end of September.

Flood risk is the headline but there’s another story behind it
With more heavy rain sweeping parts of the world in the wake of Hurricane Bertha the risk of flooding is in the headlines again but in many coastal regions there is another, underlying threat. A report by Lloyds says that some of our coastal towns and cities are sinking faster than water is rising. Subsidence is the issue and the report says that in some places the risk is ten times greater than that of flooding. There are multiple reasons for the threat, and it depends on local circumstances. In Los Angeles the extraction of oil and gas is a factor, in New Orleans it’s building on soft soil which compacts and sinks, in Tokyo the extraction of groundwater has caused sinking in the past. With the ground sinking and the water rising this is real risk which could cost insurers dearly. 

Ferguson riots – are businesses covered?
The riots in the city of Ferguson, St Louis have highlighted the need for businesses to ensure that they are fully covered for even the most unlikely risks. The city with a 21,000 population has never been considered a riot risk; even during the civil rights era in the 60s it stayed calm. The shooting of a young man by police at the weekend changed that and riots erupted causing serious damage to businesses. Most insurance policies will cover riots but definitions can be ambiguous and the level of cover will be important. While damage to property may be fully covered, theft of merchandise during riots and loss of income while the business recovers will also need to be factored in. In the case of the Ferguson riot, the damage was to about a dozen businesses but claims are expected to run to seven figures.
 

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