Wyndham last year vowed to fight the charges alleged by the FTC and is now asking the judge in the case to throw out the agency’s complaint, saying the lawsuit amounts to an “unprecedented power grab in which the FTC is seeking to hold businesses responsible for hacking, rather than the hackers themselves”.

“This is the Internet equivalent of punishing the local furniture store because it was robbed and its files raided,” Wyndham said in a recent court filing.

Additionally, according to Wyndham the FTC brought the case without ever providing companies with any guidance on what security practices they should adopt. In fact, Congress has yet to provide any Washington agency explicit authority to regulate corporate cyber security in general or order companies to beef up the security of their systems. Instead, the FTC, citing its long-standing power to protect consumers, has stepped into the breach. The agency based this case and other similar ones on its authority under Section 5 of the Federal Trade Commission Act, a broadly written law first enacted in 1914 that authorizes the commission to act against a company that harms consumers by taking unfair or deceptive action.

We’ll keep you posted on the progress of this case and others in the hospitality industry. Cyber security is an issue for all industries, especially hospitality, which deals with personal customer data in its multitude of transactions. According to a 2012 Verizon Communications Report, the accommodation and food service industries accounted for half of all breaches. Moreover, the risk of a data breach is not one that only large operations face; smaller, independent enterprises are also vulnerable because hackers feel they can easily get into the systems as they are not as secured.

Our breadth and depth of experience in insurance hotels and resorts provides us with the specialty needed to fully understand the exposures hotels and resorts face regarding cyber security and privacy issues. At IPOAUSA, we have an exclusive Hotel Insurance Program with Lloyd’s for limited and full-service hotels offering Data Breach coverage. Written through Beazley, this coverage includes breach notification and credit monitoring services with separate coverage limits for third party claims; breach response coverage for forensic and legal assistance, and notification costs; bureau credit monitoring services; crisis management sublimit for public relations and extraordinary notification expense; a separate limit of liability for privacy, network security and media claims; and more. There is a $100,00 PCI restriction.

For more information about our hospitality insurance program and our Data Breach coverage for limited and full-service hotels, please call Stefan Burkey at 877.653.IPOA (4762).

Source: WSJ

Texas makes sense, with snowbirders looking for a change and milder winters. What’s more, there’s no state income tax. According to the article, more than one in ten Lone Star State inhabitants is 65 or older, accounting for 10.5% of the population. While that’s beneath national average of 13.3%, developers say “they’re seeing an influx of boomers thanks to some of the state’s retirement-friendly attributes.”

When it comes to the Phoenix/Scottsdale area, while the recovery process there may be slow, the market demographics are still very much in the senior living industry’s favor: The median age for residents of Maricopa County, which encompasses Phoenix, Scottsdale, and nearby Sun City, was 73.4 years old as of 2010, compared to Arizona’s median age of 37.1 years and the national median age of 36.8 years. The area attracts a lot of younger retirees with its temperate climate and low property taxes, among other features. And although a survey of baby boomers conducted in 2012 showed higher variation in retirement destinations among pre-retirees, Arizona still continues to be a “top destination” for the 55+ crowd.

The Carolinas may be the new kid in town in terms of senior living development if favorable demographics, lower barriers to entry, and growing consumer preference are any indication. The Carolinas are two states with fairly healthy economic conditions and good demand, according to Charles Bissell, MAI, of Integra Realty Resources’ Seniors Housing & Health Care Specialty Practice. “We’re hearing a lot of developers talking about projects in the Winston-Salem, Raleigh-Durham, and Charlotte metro areas,” he says. In 2011, in fact, SmartMoney.com named North Carolina as an optimal place to retire due to its living costs that are 6% lower than the national average. And while the cost of living in retirement-friendly South Carolina cities like Bluffton and Charleston is slightly higher than the national average, the state’s low taxes are considered a major plus for retiring seniors. 

The Sunshine State has always been a magnet for retirees and after some challenging economic times, developers are looking at South Florida again. “We will continue to look to develop in the Florida market,” says Kevin Maddron, senior vice president of fund management for the healthcare sector at CNL Financial Group, which sponsors CNL Healthcare Trust. ”We do see a lot of demand in the Florida market, and particularly where we see a lot of demand being generated is in major markets: Tampa, Orlando, and the West Palm Beach area.”

Atlanta, Georgia is also heating up as a hotspot for senior living. Its temperate climate coupled with moderate living costs make the state attractive to seniors on fixed incomes. All major Georgia cities—including Atlanta—fall below the national average for cost of living, according to the 2010 American Chamber of Commerce Research Association.

IPOAUSA can help you tap into this growing industry, providing insurance programs for Senior Living housing in new or re-energized hotspots that are catering to retirees. We offer a Senior Living insurance program that insured by Lloyd’s of London (non-admitted), providing quotes for everything from property policies with wind, package x-wind, package. Give Stefan Burkey a call at 877-653-IPOA (4762) for more information.

 In addition, the senior living sector can include high-rise apartments, called NORCs (Naturally Occurring Retirement Communities), which are often found in city apartment buildings/older neighborhoods. And, you have Continuing Care Retirement Communities (CCRCs), which have been developed throughout the country in the last several years. CCRCs are designed around the concept of aging in place, whereby an individual lives at an independent living-type facility. If necessary, he or she can progress to an assisted living environment and eventually to skilled care as needed. CCRCs offer seniors a housing option with independence, amenities, a social scene, and the security that  assisted living and nursing home care will be available if needed.

What’s more, with the baby boom generation retiring over the next two decades, the senior living industry will continue to expand and evolve to meet a new generation’s needs. Recent statistics show that about 10,000 boomers reach Medicare age every day, and the over-65 crowd is predicted to grow 36% by the end of this decade, to 54.8 million —up from 40 million in 2010. By 2030, the total will top 72 million. And this generation wants control over their living environment, with more housing options and services offered. For example, a fairly new trend is the 55+ Communities, also known as active adult communities, which are comprised of apartments, condominiums, duplexes, or single-family homes on one property or campus. They may be privately or corporately owned and operated, or part of a larger provider’s spectrum of senior care and housing options. Residents must be 55 or older, and they often choose a setting based on location preferences (urban, rural, suburban) and income level (what they can afford versus what the apartment/home costs).

Where Are Boomers Going?

Of course, you have many communities throughout Florida, Arizona, and California, which have been typical locations that retirees and seniors flock into. But the Boomer generation is also looking at alternatives. One new trend sees retirees heading for college towns. They get to be near young people, enjoy watching college-level sports, and choose milder climates that may be more conducive to what they are looking for.

Another trend involves luxury facilities for those who can afford to retire to communities that  offer full-size gyms, chefs trained at top cooking schools, professionally decorated interiors and an endless activity list. In a recent article in the Wall Street Journal, two facilities were featured (one in Newport, California; the other in Portland, Oregon), in which multi-million communities have been built to accommodate the wants and needs of this new generation of seniors. “This group tends to embrace an active retirement, with many boomers planning a move to age-focused communities while they can still enjoy themselves instead of waiting until it is medically necessary,” said the article. “Today’s 55-and-older communities boast everything from entertainment areas with video games and computers to state-of-the-art gyms with personal trainers and activities like age-modified Zumba and belly-dancing classes.”

With the senior living industry continuing to grow, particularly with new communities designed for the baby boomers, IPOAUSA, is poised to help you tap into this niche and provide the insurance and risk management programs communities need to adequately protect themselves against a myriad of exposures. Our Senior Living program is insured by Lloyd’s of London (non-admitted), and we can quote everything from property policies with wind, package x-wind, to package. For more information, call Stefan Burkey at 877-653-IPOA (4762).

In fact, for 2012, according to a recent Swiss Re sigma study, natural catastrophes and man-made disasters worldwide caused economic losses of $186 billion with approximately 14,000 lives lost. Large-scale weather events in the U.S. pushed the total insured claims for the year to $77 billion, which is the third most expensive year on record. Furthermore, Hurricane Sandy, which hit the Northeast and Mid-Atlantic coast, was the most expensive event for the year both in terms of economic and insured losses. The hurricane caused an estimated total of $70 billion in economic losses, making it the second most damaging hurricane on record after Hurricane Katrina in 2005. The National Flood Insurance Program incurred the remaining insured losses, according to Swiss Re. Losses stemmed from the largest ever wind span recorded for a North Atlantic hurricane, and from the ensuing massive storm surge that caused damaging flooding in a densely populated area on the East Coast. It also led to the worst power outage caused by a natural catastrophe in the history of the U.S.

Matthias Weber, Swiss Re’s Group Chief Underwriting Officer, says: “Sandy challenged the industry with its combination of record wind field and storm surge. The possibility that such events could increase in frequency and strike densely populated regions such as the Northeast means that extreme storm-surges need to be more thoroughly understood.”

What’s more, the head of Federal Emergency Management Agency (FEMA), Craig Fugate, at the National Hurricane Conference on Tuesday, March 26, said that people who buy federal flood insurance need to plan for big rate hikes. According to his comments, individuals paying hundreds of dollars a year could wind up paying thousands because Congress says the program must at least pay for itself. The increases will be phased in over three to four years. Additionally, the National Hurricane Center is working on providing storm surge watches and warnings, with plans to roll them out in 2015.

The impact of extreme weather conditions on our coastal communities is also challenging the insurance industry and its forecasting and modeling, rating and capacity, as we discussed in our February blog.  Homes along the coast, especially in the Northeast, are vulnerable to winds that can generate storm surge and waves that cause even greater damage than hurricanes.  

Moreover, in addition to extensive physical damage to their property, a growing risk for businesses is the increased likelihood of interruption in the supply of essential resources and services resulting in the inability for operations to continue. During and after Hurricane Sandy, many companies shut down and/or suspended their operations in the affected areas. These business interruptions obviously resulted in income losses for directly affected companies. Also, some business shutdowns, as well as transportation delays and power shortages, led to business income losses for other companies operating outside areas directly damaged in the storm.

As our coastlines are being further developed and increasingly populated many issues are challenging communities, legislators and insurance carriers to help mitigate losses and protect against increased exposures. At IPOAUSA, we provide insurance products through our admitted, surplus lines and programs divisions, including excess flood insurance, monoline windstorm, and wind-buy backs. We also provide insurance products for coastal and earthquake exposed risks. Give us call to see how we can help your business insureds located along our coastlines. Call Stefan Burkey at 877-653-IPOA (4762).

Sources: NOAA, Swiss Re, NAMIC

When looking at the results from MarketScout, the Dallas-based electronic insurance exchange, for February 2013, the commercial insurance rate index was up 4% as compared to a year earlier. The manufacturing, service and habitational industries led the February industry rate increases at plus 6%. MarketScout showed property insurance leading the coverage pack with a rate increase of plus 6%, and general liability insurance considerably more competitive with rates up 4% opposed to up 6% in the previous month.

The overall trend from both these surveys shows that pricing is continually to firm at a steady pace, although not as quickly as we’ve seen since the beginning of 2011.

When it comes to habitational risks, a few factors are influencing the rise in pricing, including what’s impacting the industry in general; i.e, lack of investment yield, shrinking reserves, poor loss performance, and pressure to generate more earnings with greater underwriting profitability and rate increases. Coupled with weather catastrophes (Hurricane Irene, Superstorm Sandy) especially in coastal areas, you begin to see a perfect storm for rising rates for domestic properties.

What’s more, as a result of Sandy flooding will pose more of a concern moving forward in the Northeast. An estimated 35,000 buildings have been added to flood zones in parts of New York City, and FEMA’s advisory flood maps increased the areas falling into 100-year flood zones.  Consequently, there has been a significant rise in monoline flood submissions. Additionally, it’s estimated that in the Northeast there will be more opportunity in the market for standalone excess flood carve outs as markets reduce Flood Zone A coverage from $25M to $10M. 

 At IPOAUSA, we work with admitted and non-admitted carriers and programs to place coverage for niche markets including condo & apartments, hotels & resorts, historic properties, coastal properties, among others. We will work with you to get competitive pricing while also providing the scope of coverage needed and balancing the need for underwriting profitability so that your insureds continue to be well protected in an environment that is shifting in certain classes of business and coverage lines.

In the aftermath of Hurricane Sandy and with losses still tallying up, some providers are talking about the potential for firmer pricing as the demand for Excess Flood coverage has increased and the extent of storm losses has broadened. For example, typically the demand for excess flood coverage occurs before the start of hurricane season and lasts through October, but after Sandy and due to heightened awareness, demand for this product has gained traction, especially on the East Coast. Furthermore, because excess flood insurance is typically written as surplus lines, it’s difficult to quantify the size of the market and the availability to potential insured’s – contributing to the potential for increased rates.

Florida and coastal South Carolina have been heavy consumers of the excess flood product and will most likely continue to be, even with an uptick in demand in the Northeast, according to A.M. Best. Yet in addition to these areas and the Gulf Coast states, the need for coverage has also slowly migrated to the Midwest and West. Individuals and businesses are realizing the devastating damage that can occur from flooding – even if they are not considered to be located in a high-risk area.

At IPOAUSA, our Surplus Lines division focuses on several niches including providing Excess Flood insurance coverage. We have the experience and market capacity to help you place coverage for your insured’s. Give us a call at 877-653-IPOA (4762).

Source: A.M. Best

Sandy is just the latest in extreme weather conditions that is challenging the insurance industry and its forecasting and modeling. A report released in September 2012, “Stormy Future for U.S. Property/Casualty Insurers: The Growing Costs and Risks of Extreme Weather Events,” highlights how local governments and taxpayers would face growing financial risks if insurers withdraw from high-risk regions. “The report makes clear that extreme weather losses are escalating and pose enormous challenges for U.S. insurers that they should pay far more attention to,” said Mindy Lubber, president of Ceres, a nonprofit group advocating for sustainability leadership from businesses and investors. “A small number of insurers have stepped to the plate in mobilizing a response to this global threat, but far broader engagement and action from the industry is needed.”

In a recent article [February 5, 2013] in industry publication PropertyCasualty 360 where more than 30 executives, including carriers, agents/brokers, reinsurers, risk managers, were interviewed about climate change, there was agreement that “severe weather events already are increasing in frequency and severity and that this trend is going to worsen. This raw reality requires any organization involved with insurance in any capacity to start taking decisive action now.”

“Push politics aside. To us it is very clear: The risk of climate change is very real, and it has a real potential to be disruptive to our business,” says Chris Lewis, the senior vice president of insurance risk management at The Hartford.

Will insurance rates go up?

 All in all it’s estimated there will be industry losses of up to $25 billion from Sandy in the regions affected. As of yet, however, Sandy’s affect on Property rates is still not known. Richard Kerr, CEO of MarketScout, feels Property rates may further pick up particularly for Catastrophe Exposed Property. Dr. Robert Hartwig, president of the Insurance Information Institute (I.I.I.), believes the size of rate increases for personal and commercial properties won’t change post-Sandy. A Marsh broker, according to PropertyCasualty360, sees “Sandy’s full impact on Property insurance markets likely to be felt in the first half of 2013, with insurers expected to be less agreeable to rate decreases and to tighten policy wordings around flood, storm surge and windstorm.”

At least one insurer, Chubb, when it comes to homeowners coverage does plan to seek higher rates in the Northeast following Sandy. The storm set records for the insurer in terms of claims and net catastrophe loss—$882 million pretax. Dino Robusto, president of personal lines, explained during an earnings conference call, “We plan to file for rate increases up to the low teens in some areas of the Northeast.” About 90% Sandy claims came from New York, New Jersey and Connecticut, he says. About 53% of the losses were from Chubb’s commercial segment. The balance was from its personal lines segment.

IPOAUSA offers markets and products for their industries in three distinct areas: Standard Markets, Surplus Lines, and Programs. Our Surplus Lines division focuses niche industries that includes: Large Layered Property Programs, Coastal & Earthquake exposed risks, Monoline Windstorm, Wind-buy Backs, Excess Flood, and Builders Risk. Give Stefan Burkey a call at 877-653-IPOA (4762) to help you place your insureds’ coverages.

Sources: Reuters, Huffington Post, PropertyCasualty360, Ceres

This is all good news for the hotel industry. But, as your hotel clients look to renovate and expand, be sure they have the proper project management in place to help mitigate claim disputes and losses. This includes: choosing an experienced project manager, creating a detailed scope of work, assessing cost estimates and timelines, documenting the budget, and hiring the appropriate contractors.

In addition, be sure company-approved contract forms are established to maintain control over contractual risks being documented. Very often, the underlying cause of construction claims and disputes is because companies do not have approved contract forms. Various project managers are using and negotiating different company forms or responding to forms produced by third parties, and therefore don’t have effective control over the contract documents used by the company and the contractual risks being documented.

Other processes that should be in place include:

• establishing procedures for oversight of completed contracts;
• ensuring early contract negotiation and execution so that important provisions with architects and contractors don’t have to be worked out at the last minute resulting in extra costs and delays;
• having provisions in the construction contract that address the coordination/conduct issues for hotels to be occupied during the renovation, such as constraints on working hours, worker conduct, construction access issues, storage and staging of materials, and coordination with on-site hotel management; and
• prohibiting verbal change orders without documentation in contracts to avoid disputes, among other critical steps.

What’s more, review all insurance policies to ensure appropriate coverage is in place for both the hotel and the general contractor and his subcontractors, including Liability, Property, Builder’s Risk, Excess Liability/Umbrella, Wrap-Ups, Professional Liability, EPLI, Workers Compensation, and other key coverages.

Insurance Programs Of America delivers markets and products for the hospitality industry in three distinct areas: Standard Markets, Surplus Lines, and Programs. Give us a call at to find out more about our programs at 877-653-IPOA (4762). 

In fact, in New York, Governor Cuomo appointed a “storm” commission to evaluate the impact of Sandy on the State and what needs to be done to protect its citizens, property and infrastructure in the event of another natural catastrophe. The commission’s recommendations include: turning some of the state’s industrial shoreline back into oyster beds, hardening the electric and natural gas systems, and improving the scope and availability of insurance coverage. In terms of insurance, the recommendation is specifically having the state authorize private insurers to sell policies beyond wind, mold and flood damage, to include the risk of business interruption.

Other issues have also surfaced as a result of Sandy, including the fact that when looking to rebuild as quickly as possible, companies are using employees around the clock to get things done. What these businesses need to remember is that even in a crisis mode, it’s critical that normal safeguards and policies are maintained in order to ensure accurate calculation of work time and overtime.

In addition to wage-and-hour concerns, all employers, including those in the hotel and restaurant sectors, should have employment policies in place to address the unique concerns that arise when businesses are shuttered or employees are unable to work due to inclement weather. Some of these include:

• Payment for absences as a result of weather: Under federal law, employers are only obliged to pay nonexempt workers for actual hours worked. If inclement weather shuts down a place of employment, the employer is typically not required to pay any wages to nonexempt employees, absent a contractual agreement. Exempt employees, however, must be paid for their entire workweek if they perform any work during the week and they are prevented from working through no fault of their own.
• Working at a different location/working at home: Exempt employees who are paid a salary can be required to work wherever and whenever the company requires. If an exempt employee is required to work at a different location or to log extraordinary hours during a natural disaster, no additional payment is required other than the customary salary. Nonexempt employees must be paid for all hours worked. For example, if a nonexempt employee works from home because his or her work site is damaged, this is compensable time and must be tracked. Similarly, nonexempt employees who perform out of the ordinary tasks for the benefit of the employer (like cleanup or repairs) must be paid for this time. An employee typically cannot volunteer to perform work for the benefit of his or her own employer.
• On-time payments:  A lot of states impose deadlines for providing paychecks to employees, and they typically do not make exceptions for natural disasters. Some states have a financial penalty for each day a paycheck is late. Accordingly, every employer should have a backup payroll strategy in the event the primary method is unavailable due to weather.

It’s important that every company has a contingency plan in place to continue its operations in should a natural disaster occur. A facet of that plan should include ensuring the company continues to comply with all wage and hour laws during emergencies, and procedures are in place to continue timely payroll payments.

IPOASUA, a niche wholesaler, provides insurance programs for a number of industries, including hospitality – hotels/motels, resorts, and restaurants. For more information, call Stefan Burkey at 877-653-IPOA (4762).

What’s more, many segments of the hospitality industry have rewards programs that encourage customers to frequent a particular establishment or chain. These programs store personal and financial information required in order to facilitate reservations, billing and payment and benefit awards.

With all of advanced technology comes the high exposure for data security breaches. In fact, according to a 2012 Verizon Communications Report, the accommodation and food service industries accounted for half of all breaches. Furthermore, a common misconception, according to the Verizon Report, is that only large companies have to worry about protecting against data breaches. But two-thirds of the 855 investigated incidents in the Report occurred at businesses with 11 to 100 employees, typical for many hospitality enterprises. However, no hospitality organization is immune to a data breach. Smaller, independent enterprises are vulnerable because of their size and may have systems that are easily breached. Franchise operations, on the other hand, often share a regional, national, or international data system that, once breached, can affect all or most of the individual franchisees.

In our July blog, we wrote about Wyndham Hotel Group, which over the last two years had three breaches that affected more than half a million customers. The group was later hit with a lawsuit from the Federal Trade Commission (FTC) for allegedly misrepresenting the security measures in place that were supposed to have prevented the hacker intrusions.

A security breach for a hotel, as with any other type of operation, can bring significant consequences. In the event of a potential breach of security, state laws in most jurisdictions require the business to notify all potentially impacted persons of the breach, the cost of which can be high. If the information causes damages, the hotel operation could face liability claims for failing to protect the data by maintaining reasonable safeguards. The business may also face additional costs such as purchasing credit-monitoring services, hiring a forensic team to determine the cause of the breach and take corrective measures, and in some cases hiring a public relations firm to help manage communications with customers and repair its reputation.

At IPOAUSA’s exclusive Hotel Insurance Program with Lloyd’s for limited and full-service hotels offer Data Breach coverage through Beazley for limited service hotels, which is normally only available to large resorts. This coverage includes breach notification and credit monitoring services with separate coverage limits for third party claims; breach response coverage for forensic and legal assistance, and notification costs; bureau credit monitoring services; crisis management sublimit for public relations and extraordinary notification expense; a separate limit of liability for privacy, network security and media claims; and more. There is a $100,00 PCI restriction.

For more information about our hotel insurance program, please call Stefan Burkey at 877.653.IPOA (4762).