Dan M. Molyneaux, Jr., CPCU, ARM, CRIS
Chief Executive Officer
Many of our clients, regardless of industry, are being impacted by market changes in the insurance market. A clean loss record may help mitigate some of the impact, but it does not spare clients from these market actions.
This is a big picture trend in the insurance industry.
Allow me to explain what is happening.
Linda is a junior partner in a law firm and drives a car that the firm owns and insures. The firm's auto insurance covers her as a partner and she doesn't own another car, so she sees no need to have her own policy.
Most of the time, this is not a problem. However, spring break comes and she decides takes her kids to an amusement part. She rents a car at the airport and never gives a thought to whether her firm's insurance will cover her if she has an accident with the rental. In this case, a phone conversation with the firm's insurance agent would have been a great idea.
While driving to her hotel one night, Linda rear-ends another car. The damage to the other car is extensive; Linda looks to her firm's auto liability coverage for the cost of repairing it.
The Business Auto Policy covers the person or organization shown in the policy declarations (the information page at the beginning.) In this case, the name shown in the policy Declarations is the name of Linda's firm.
The policy goes on to say that, for liability insurance, the firm is an insured and so is anyone else using, with the firm's permission, a covered auto the firm owns, hires or borrows, with some exceptions.
Nonprofits usually have a certain demographic that they serve. Often the allure of a nonprofit organization is that it attracts like-minded individuals that have a passion for the cause that the nonprofit works on. And the most passionate of these individuals often become board members.
At that point, they also enter a world of new liability should they be sued for malfeasance or making a decision that ends up affecting a third party or constituent of the organization. Any number of circumstances can lead to legal action that threatens both their financial security as well as that of the not-for-profit organization they work for.
It's a nightmare scenario for business owners. Employees log in to their workstations and attempt to access the usual systems, expecting to find customer reports. Instead, they find a message demanding money.
If the business wants to regain access to its software and data, it will have to pay a ransom. Until then, it is locked out. The business has become the latest victim of ransomware.
Ransomware is malicious software that hackers introduce into an organization's computer network to encrypt its data. The hackers hold the data hostage until their demands are met.