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Why It May Be a Good Time to “Top Off” Cyber and D&O Limits
When cyber and D&O insurance premiums soared, businesses may have felt it necessary to reduce coverage. Now, rates have declined, so it may be a good time to “top off” your cyber and D&O limits – especially because, unlike premiums, risks are not falling.
Cyber and D&O Premium Trends
Both cyber and D&O insurance have seen substantial swings in recent years.
Cyber insurance premiums skyrocketed between 2020 and 2022. According to CIAB, rates were up 34.3% in the fourth quarter of 2021. After that, rate hikes began to moderate, although double-digit increases were still the norm for a while. By the second half of 2023, rate hikes were only up 3.6%. In the second quarter of 2024, CIAB says rates were actually down 1.7%.
D&O insurance has shown a similar pattern. Rate increases started to climb around 2019 and 2020. CIAB says D&O insurance rates were up 16.8% in the second quarter of 2020 and 16.1% in the third quarter. However, the hard market did not last forever. In the second quarter of 2024, D&O premiums were down 1.0%.
Falling Rates Won’t Last Forever
Don’t take falling rates for granted. Although rates are down now, this trend could reverse in the near future.
According to CIAB, competition has helped keep cyber insurance rates down. Likewise, increased capacity has helped D&O insurance prices to moderate. These market conditions are great for policyholders, but they won’t last forever.
Claims are still high and loss trends are troubling. For example, ransomware attacks have increased in both frequency and severity – a 2024 report from Black Kite shows that ransomware attacks nearly doubled in 2023 compared to 2022, whereas Chainalysis says ransomware payments surged to a new record high in excess of $1 billion in 2023.
To explain the increase, the World Economic Forum points to advances in AI as well as an increase in mobile connected devices. As AI tools become more sophisticated and easier to obtain over the next two years, the National Cyber Security Centre warns that global ransomware attacks are likely to increase.
D&O risks are also a looming threat. Board members may face lawsuits over cyberattacks as well as many other hot-topic issues, including controversial DEI and environmental strategies. When lawsuits occur, they may be increasingly expensive thanks to social inflation and nuclear verdicts.
According to Business Insurance, securities class-action activity also rose in 2023. Experts predict that D&O rates will stabilize as increases in securities class-action filings and claims offset the increased capacity. Fitch Ratings has gone so far as to call the D&O insurance profit levels of the first half of 2023 unsustainable in light of pricing.
Should You Increase Your D&O and Cyber Limits?
By increasing limits now, you can take advantage of lower insurance costs, while also protecting your business against rising risks.
A D&O or cyber event could cost more expensive than you expect. For example, according to IBM, the average cost of a data breach surged by 10% in 2024, reaching $4.88 million.
To determine if you should increase cyber or D&O coverage levels, discuss these questions with your Heffernan insurance advisor:
- Did you previously settle for lower limits than you would have liked? When capacity was limited and rates were high, some businesses may have accepted limits that were not ideal. Now is a good time to shore up coverage levels.
- Does your business have adequate protection? As liability and cyber losses increase, it may be hard to say how much insurance is enough. However, by looking at recent verdicts in your industry, you can establish ballpark exposure ranges.
- Have your exposures grown or evolved? As businesses grow, and their product/service offerings evolve, so do their exposures. Discuss your current insurance profile with your agent.
Heffernan Insurance Brokers can help you assess your insurance needs to determine whether higher D&O and cyber limits make sense, and our team can help you negotiate an optimal insurance package. Contact us.
Heffernan Insurance Brokers Debuts New Website
WALNUT CREEK, CA., April 24, 2024 - Heffernan Insurance Brokers, one of the largest full-service, independent insurance brokerage firms in the United States, is thrilled to unveil its newly redesigned website. Boasting a contemporary look, upgraded functionality, and an immersive user experience, the revamped site ensures seamless navigation and effortless access to essential information.
As a dedicated independent insurance brokerage firm, Heffernan Insurance Brokers remains steadfast in its mission to deliver customized insurance solutions tailored to the distinct needs of individuals, families, and businesses across a wide array of industries. The redesigned website exemplifies this commitment by simplifying the process for visitors to discover the precise insurance coverage they require in today's fast-paced and ever-changing market landscape.
Highlighted features of the enhanced website include a user-friendly interface, seamless navigation, and improved search capabilities. Visitors can easily locate valuable resources such as informative blog posts, industry news updates, and convenient access to dedicated client portals, streamlining their experience and providing quick access to essential information.
"We are excited to launch our new website, which reflects Heffernan Insurance Brokers' commitment to innovation and exceptional service," said Jackie Pitchford, Senior Vice President of Marketing and Communications. "The fresh design and intuitive functionality align with our goal of providing an outstanding online experience for our clients. This is more than just a website redesign; it's a step forward in how we connect with and serve our clients in the digital age."
To see the site's refreshed and streamlined look and connect with a member of the Heffernan team, visit the new website at heffins.com.
About Heffernan Insurance Brokers
Heffernan Insurance Brokers, founded in 1988, is one of the largest independent insurance brokerage firms in the United States providing comprehensive business insurance, personal insurance, employee benefits and financial services solutions to a wide range of businesses and individuals. Headquartered in Walnut Creek, Calif., Heffernan has a nationwide presence specializing in customized solutions to serve its clients' unique needs in every industry.
Heffernan has been named on the insurance industry's 'Best Agency to Work For' list, and consistently named a 'Top Corporate Philanthropist.'
For more information, visit www.heffins.com. License #0564249
Wildfire Protection Equipment for the Wildfire Season
Cal/OSHA Maximum Penalties Nearly Doubled
New penalties for workplace safety infractions in California took effect on Sept. 14, nearly doubling the maximum fines that Cal/OSHA can levy on employers who are cited.
California was required to increase its penalties in response to penalty hikes implemented by Fed-OSHA last year. All new fines have a cost-of-living component that will entail annual increases starting Jan. 1, 2018.
Meanwhile, the maximum penalty for serious violations remains unchanged at $25,000.
At the same time, the fixed statutory penalty of $2,000 for serious tower crane and carcinogen-use violations has been repealed and replaced by a new maximum of $25,000.
Could Your Staff Respond to a Medical Emergency?
If one of your employees or a customer had a serious medical emergency while at work, would your staff know how to respond?
Unfortunately, most workers are not prepared to handle cardiac emergencies in the workplace because they lack training in CPR and first aid, according to a new survey by the American Heart Association.
The AHA found that most employers don’t train their workers in CPR and first aid, and half of workers could not locate an automated external defibrillator at work.
The findings reflect the poor preparation many people have for dealing with a medical emergency.
The AHA interviewed corporate safety managers, who pointed out the need for more frequent training. The survey found that:
- 33% of safety managers said that first aid, CPR and defibrillator training only became important and was offered after an incident demonstrated the need.
- 33% of safety managers said lives had been saved at home and at the workplace as a result of training provided at work.
- 75% of safety managers said injuries or medical conditions had been treated in the workplace with this training.
- 36% of safety managers felt it would be valuable to offer training more frequently than every two years (the current requirement).
Have at Least One Person on Every Shift Who Knows CPR
Employers can contact organizations such as the American Red Cross or a local private institution for training.
OSHA does not require that you have staff who know CPR and how to use a defibrillator, but it’s a good idea to have someone trained.
OSHA recommends CPR and defibrillator training as a best practice but doesn’t require it, except for a few high-hazard industries.
The AHA recommends that all employers offer first aid, CPR and defibrillator training because it can save lives.
If someone suffers a heart attack at work they have only a 5 to 7% chance of surviving while waiting for emergency medical services to arrive. Workers who receive immediate defibrillation, however, have up to a 60% survival rate one year after cardiac arrest, according to the AHA.
Safety experts recommend having at least one person on every shift that is trained in CPR and how to use a defibrillator. In fact, the more employees who are trained, the better.
All employees should know who on staff is trained so they can fetch them in case of an emergency.
The best approach is to have a full staff training manual on first aid, CPR and defibrillator use, which you should consider keeping in your office.
Everyone in your organization should know where the nearest defibrillator is located. It should be in a conspicuous place, like hanging on a wall.
DOL Pulls Guidance on Independent Contractors
The Trump administration has withdrawn guidance issued by the Department of Labor under President Obama that had tightened restrictions on joint employment and independent contractors.
The move may give only the semblance of respite though, because the enabling regulations are still in place and so is established case law on the subject. The move only affects guidance that the DOL had issued to clarify regulations that were also codified during the last administration.
In other words, for now the regulations remain in place and if the administration wants to tackle those, it would have to start from scratch in the rule-making process.
What It Changed
The guidance that the DOL removed from its website did two things:
- Defined in strict terms the situations in which a worker is considered an employee under an “economic realities” test; and
- Expanded the joint employer doctrine. It did this by saying it would consider “whether, as a matter of economic reality, the employee [was] economically dependent on the potential joint employer.” This mostly concerns franchise operators and the franchising company.
Under now-withdrawn Jan. 20, 2016 guidance, joint employment can be “horizontal” or “vertical”:
Horizontal employment: When an employee is employed by two or more “technically separate but related or overlapping employers,” such as separate restaurants that share economic ties.
Vertical employment: Staffing agency arrangements or similar operations where the “employee of the intermediary employer is also employed by another employer.”
The guidance said factors to be considered under the test include:
- The extent to which work performance is an integral part of the employer’s business.
- Workers’ opportunity for profit or loss depending on their managerial skills.
- The extent of the investments of the employer and the worker.
- Whether the work requires special skills and initiatives.
- How permanent the relationship is.
- The degree of control exercised or retained by the employee.
How It Affects Employers
Courts have been using this guidance when considering cases centering on independent contractors and rescinding the guidance may not have an impact on future litigation.
Also, many states have adopted their own version of the regulations which will typically supersede the Federal rules since they are most likely to be applied locally.
However, going forward, investigations into complaints made to the Fair Labor Standards Board that touch on these issues would likely no longer rely on the repealed language when determining whether action should be taken against an employer.
Workplace Safety: Creating a Strong Safety Program for Fleet Drivers
While most businesses with an automotive or trucking fleet focus on safety, few businesses are actually monitoring their drivers to make sure they are adhering to the company’s rules, a new study has found.
Many companies only pull reports on their drivers’ records on an annual basis, which means they miss important developments like a DUI or a few moving violations that will increase the cost of insuring them.
In fact, 70% of companies with fleets do not even monitor their drivers and 60% don’t have a safety program in place, according to the study by SambaSafety, a firm that provides background screening and driver safety records for companies.
The key to having a successful driver safety program in place requires management buy-in and a company-wide culture focused on safety that encompasses not only a company’s fleet drivers, but also anybody in the operation that may drive their personal vehicles on occasional company business.
SambaSafety recommends:
Motivating staff to be safer – The company advises against just issuing warnings like “slow down” and “put away the phone,” and instead focusing on what’s at stake if they don’t. Instead of numbers and checklists, make a presentation that lets them think in terms of their well-being, or even loss of life, for the best response.
Providing strong safety leadership – Creating a safety culture requires leadership to model the behaviors that all employees should adopt.
Not just focusing on fleet drivers – Any employees that use their vehicles for work must also be part of the training and they should know that you expect the same safe behavior of anybody you employ that drives.
Drive home the point that an employer can be responsible for anything that happens when employees are conducting company business, even if they are running to the office supply store for you.
Being consistent – Just because you have a safety policy, it may not be enough to get you off the hook if one of your drivers causes an accident. Companies can be held responsible if they do not have proactive intervention policies and detailed documentation.
Using data to your advantage — Collecting data on your employees’ driving habits can greatly improve your ability to make sure you have a safe fleet of drivers. And the best way to do that is through continuous driver monitoring.
“The right data can help employers accurately reward those who are doing well, too, and securely keep up with disciplinary actions toward those who are missing the mark,” SambaSafety says in its report.
Vintners and Growers: 5 Robust Risks
In the United States, wine is big business. According to the February 2016 issue of Wine Business Monthly, there are 8,702 wineries in the United States, an increase of 415 from the previous year. All this wine comes with significant risk. Wineries face specific exposures and require the right insurance policies to protect them.
Exposure #1: Damage or destruction of inventory due to perils such as earthquake or fire.
On August 24, 2014, a magnitude 6.0 earthquake shook California’s Napa Valley. The quake did significant damage to the areas many wineries. According to researchers at the University of California Agricultural Issues Center, in a presentation made to the Alfred E. Alquist Seismic Safety Commission, the wine industry suffered $70 to $100 million in damage due to the earthquake. Infrastructure was damaged, irrigation systems broke and 330,000 gallons of wine leaked.
The damage would have been even worse if the quake had occurred after harvest, when the tanks and barrels would have been full, or during business hours, when workers and visitors would have been present.
Earthquakes, fires and other catastrophes pose a serious risk to wineries. The right coverage can provide protection, but it’s important to examine the details of the policy.
- Here are some important questions to ask BEFORE a loss, from the International Risk Management Institute:
- What is your insurer’s definition of wine stock? Does it include raw materials or finished goods?
- What will be covered if your inventory is damaged by earthquake or fire?
- Does your policy cover stock only in your care, custody and control? What if inventory is stored elsewhere?
- What if the loss occurs while your inventory is in transit?
- What is your insurer’s method of valuation for lost wine stock? Will they pay the price the wine could have been sold for, or will they pay the market price of replaceable bulk wine of like kind and quality?
Exposure 2: Wine Leakage
The 2014 Napa Valley earthquake caused hundreds of thousands of gallons of wine to leak, but smaller wine leaks can occur for a variety of reason. Old or improperly maintained equipment could break. An employee could damage a tank or barrel. Other accidents could occur.
Whatever the cause, each drop leaked equals a loss in product and profits. According to the International Risk Management Institute, a stripped wing nut can lead to a leakage claim as high as $240,000.
To make sure your claims will be fully paid, examine your insurance policy carefully.
What you need to know:
- What is your insurance policy’s definition of wine leakage? Does it include losses due to accidental damage, vessel failure or human error?
- What is the maximum value payable per gallon lost?
Exposure #3: Wine Stock Contamination
Wines can be contaminated in several ways. In 2016, Moms Across America released evidence of glyphosate, an ingredient in pesticides, in wines from California, including wines that were supposed to be organic and therefore chemical-free. Other substances, from arsenic to fungus, can also contaminate wine.
Contamination can decrease the value of your stock. To make sure you’re covered, check your policy.
What you need to know:
- What is your policy’s definition of contamination?
- Does the coverage include contamination by human error and cleaning agents?
Exposure #4: Business Interruption
When a catastrophe like the 2014 Napa Valley earthquake strikes, getting back to business as usual can take a while. Buildings may be unsafe for occupation, equipment may need to be repaired, and a combination of leaked wine and delayed harvests can result in there being less product to sell.
To make sure your winery is protected against business interruption, review your policy.
What you need to know:
- What happens if you must interrupt business operations due to fire, earthquake or other disaster? Which losses are covered?
- How does your policy respond to losses resulting from off-premises power failure?
Exposure #5: Liability
When alcohol is involved, the liability risk is high.
Wineries that have tasting rooms face the same liability issues as bars. If employees break laws regarding serving minors or inebriated individuals, legal action may follow, especially if an accident occurs as a result.
Wineries may also be held liable for injuries that occur on the premises or for damage that arises from the product. For example, in 2015, a lawsuit was filed against multiple California wineries over allegations of high arsenic levels.
Make sure your winery has full liability coverage.
What you need to know:
What are your commercial general liability policy limits?
- Do you have an umbrella policy?
- Do you have liquor liability coverage?
- Are there any coverage exclusions for off-site activities or special events (such as concerts and weddings)?
Your Heffernan Insurance team is a great resource in navigating these and other exposures. Our Vintners and Growers insurance program is specifically tailored for your industry. Learn more here.
OSHA Pulls the Plug on Electronic Reporting Rules
Federal OSHA has suspended its much anticipated and dreaded electronic filing rules for workplace injury and illness records. 
The rules, put in place during the Obama administration, would have required organizations with 250 or more employees to submit electronically information from OSHA Forms 300 (Log of WorkRelated Injuries and Illnesses), 300A (Summary of Work-Related Injuries and Illnesses), and 301 (Injury and Illness Incident Report).
The same rules would also apply to employers with between 20 and 249 employees in certain industries, including agriculture, construction, manufacturing, retail and transportation.
A major thrust of the rules was to name and shame employers with poor workplace safety histories, and the latest move will essentially keep these records from being published. The requirement was to be phased in over two years.
This year, all covered establishments had until July 1 to turn in their 2016 forms electronically, but OSHA never launched the website for companies to submit the information.
The employer community, particularly the construction industry, had heavily lobbied the Trump administration to jettison the new rules, saying that if injury records were publicized they could unfairly hurt the reputation of employers.
The new rules were supposed to be an extension of an OSHA requirement between 1995 and 2012 that required some 180,000 establishments in high-hazard industries to submit their 300A forms by mail.
The program lapsed in anticipation of the now extinguished new rules.
Then in May, OSHA wrote on its website that it “is not accepting electronic submissions of injury and illness logs at this time, and intends to propose extending the July 1, 2017 date by which certain employers are required to submit the information.”
As a result, the existing rules for the forms remain in place – and particularly that employers post Form 300A in a conspicuous place in the workplace every year starting Feb. 1 for three months.
While employers are not required to send their completed forms to OSHA, they must retain the forms at their establishments for five years after the reference year of the records.
REDUCING INJURIES
ONE OF THE keys to instituting a good safety program is to get management buy-in.
You need their support and belief in the system if you are to convince your employees to embrace your safety regimen.
If your managers don’t believe in the safety plans you have put together, it will show through when they try to sell them to your staff.
If you don’t have buy-in from your managers, the chances are slim to none that your employees will embrace the changes you are proposing. 
If you are serious about preventing injuries and want to keep your workers’ comp X-Mod low, the role of your management team is crucial.
You will often encounter a few different personality types among your managers and they need to be convinced of the importance of workplace safety in different ways.
You’ll need a different approach with each personality type to get them to embrace the concept.
Once they do, they can effectively convey the urgency and importance of workplace safety to the rank and file.
Constructor Magazine has these recommendations for getting management buy-in:
Select the Right Leaders
Choose managers who are firm, yet fair with a passion for the safety of the workforce. They should have a track record of success so that they can be an inspiration to their teams. Also, they should not be afraid to get their hands dirty to make a point or demonstrate how something is done.
Address Every Aspect of Your Operation with Management
Take a holistic approach Every facet of your operation needs to be addressed if you want a comprehensive risk management culture to exist.
Extend discussions about risk management beyond the worksite to help managers see the bigger picture of why safety matters.
Assessing risks associated with every task, purchase order, estimate or piece of equipment used will reinforce the notion that risk management is a company-wide function.
Make Periodic Site Visits
Leadership should visit departments to watch workflows and reinforce the importance of safety to the workers. Make the visits with the manager who has been put in charge of safety for that department.
Leadership’s role should be to start conversations with workers about safety challenges and asking for ideas for improving safety.
Use these visits to celebrate successes and challenge the team to always look for issues that could lead to injuries.
If you have any questions regarding your coverage or our products, please call us at one of our offices:Walnut Creek, Petaluma, San Francisco, Los Angeles, Menlo Park, Orange County, Portland, New York, St. Louis
Sales: 877-731-7905 Service: 800-234-6787
About
For over 35 years, Heffernan Insurance Brokers has been an integral part of the wine industry's fabric, evolving in tandem with our cherished wine country community. Our enduring dedication and robust partnerships with leading insurance carriers have established us as the premier choice for wineries and vineyard operators.
Our Expertise:
- Access to all prominent insurance providers in the wine sector
- Exclusive, top-tier insurance programs tailored for wineries and vineyards
- Expert Workers' Compensation Claims Management
- Comprehensive Loss Control services
- A specialized team committed to wine industry insurance solutions
Our Coverage Solutions (for a comprehensive list, please visit the Products & Services tab):
- Workers' Compensation
- Crop Insurance
- General Liability
- Wine Leakage and Contamination Coverage
- Commercial Auto Insurance
At Heffernan Insurance Brokers, we're not just in the business of insurance; we're part of the wine industry's ongoing story of excellence and resilience.
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| Title | Name | Phone | Extension | |
|---|---|---|---|---|
| Debra Costa | debrac@heffins.com | (707) 789-3051 | ||
| Katie Olsson | kateo@heffins.com | 707-789-3044 | ||
| Rene Sprague | renes@heffins.com | 707-789-3058 |
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| Locations | Address | State | Country | Zip Code |
|---|---|---|---|---|
| Heffernan Insurance Brokers | 101 2nd Street, Suite 120, Petaluma | CA | United States of America | 94952 |
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