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Unlike traditional brokers, we use data to help drive our client's decisions... read more

We consider our client's risk transfer options from all angles, making the process easy and efficient... read more

We've employed techniques from a variety of industries to bring our clients an unobstructed view of risk transfer options that is not available elsewhere... read more

Companies can be in business for decades or for sale tomorrow. Their strategy should adapt as their path changes... read more

Running a business means making decisions with limited capital. We fit risk transfer decisions into a company's financial framework... read more

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Information is critical to anyone charged with risk management. Below is a listing of relevant, real time industry insights we have complied. Follow us to stay up to date on what we are reading and thinking.

Election is Over, Here Comes the M&A

The election is over, but for managers of risk this doesn’t solve a lot of issues.  Health care reform, unsustainable interest rates and uncertain regulations all plague those trying to predict the future.

One thing is almost certain – taxes are going up at the end of the year. The rise in tax rates is causing an unprecedented surge in mergers and acquisitions activity looking to close by year end. With M&A comes a number of risks. When looking to an insurance broker to assist in M&A activity there are several issues they can assist with.

Due Diligence – For those purchasing companies, understanding the risk you are assuming is important and buying insurance retroactively is difficult and expensive. For those selling a company, it is in your best interest to understand and explain the risks your company manages. Outsourcing insurance due diligence is common activity most funds use when looking to acquire a business.

Directors and Officers suits – Minority shareholders and debt holders often bring suits against the management of companies who sell, especially if they are distressed. Purchasing run-off D&O insurance is imperative. M&A is one of the biggest triggers of D&O suits.

Regulatory concerns – Insurance is available to cover anti-trust and other regulatory exposures. Especially in highly regulated industries like healthcare, the exposure is great.

Shareholder actions – Historically the bulk of M&A exposures, shareholder suits were the premium driver. A drop in public filings has lessened the risk. Although still an issue, it is not the foremost concern for privately held companies looking to sell by year end.

Transaction insurance – Traditionally transaction insurance has been cost prohibitive.  Today, it is increasing viable with ever-competitive insurance market pricing. Insurance can be purchased to cover representations and warranties, tax concerns and any potential liability or contingency.

Contact Calculated Risk Advisors today to discuss any plans for merger or acquisition activity, the more time you have to prepare the better you can use insurance to extract excess value from a transaction.

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Why You Should Worry if Your Insurer Fails

A CFO Magazine article this month perpetuates a widely held belief – if your insurance company fails the state will bail you out. In many cases, especially for our professional liability clients, this is not true.

1) The Limits are Not Enough
State Guarantee Funds generally provide $300k-$500k of coverage for claims made under policies of insolvent carriers and a small (generally $10,000) return premium if the carrier fails mid-policy term. This works for homeowners and small businesses, but not for large or specialty insurance policies.

2) Not Everyone Has Access to State Funds
In many cases the Guarantee Funds are not available to begin with. Many professional liability insureds have “non-admitted” coverage which is not insured by these state funds. In the event that a non-admitted insurance company goes under, the policy holders are without a back-stop.

3) Firms May be Assessed for Past Policies
Large or sophisticated companies may find insurance through Captives, Risk Retention Groups or other pooling programs not regulated by the states. If one of these entities lacks adequate capital, they have the right to assess insureds retroactively if the pooling company fails, magnifying the risk.

Contact Calculated Risk Advisors today to discuss the financial protection your insurance policy is providing. Carrier solvency is an important factor when buying an insurance policy that many insureds ignore.

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PCAOB Considers Ending the Registration of 870 Accounting Firms

In a speech given by Jeanette Franzel – a board member of the Public Company Accounting Oversight Board (PCAOB) – to the University of Tennessee, she outlined two important items facing the Board.  The first is their investigation of 19 accounting firms for deficiencies in their audits of public companies.  Unable to divulge specifics, Franzel does outline that professional skepticism, tone at the top, and supervision were the most common findings for these 19 firms.  The second important item in consideration at the PCAOB is the termination the registration of 870 firms.  These 870 firms do not engage in the audits of public companies or broker-dealers, so their registration is serving no purpose, Franzel explained.

For accounting firms, the auditing of public companies represents the highest risk activity a firm can engage in.  The frequency and severity of a public audit claim is considerably higher than any other type of claim.  Calculated Risk Advisors explains that this is taken into account by the underwriters and is reflected in the premium an account pays for their accounting firm professional liability insurance.  It is important to proactively state the firm’s expertise and risk control practices to underwriters in order to obtain the most favorable pricing.  Contact a licensed broker today to discuss how to best position your firm for a favorable renewal.




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Hidden risks: Vicarious and Contingent Liability

Several recent highly publicized issues show the need to review contracts, insurance requirements for business partners and the insurance your organization carries.

A widely publicized recall of contaminated steroids highlights many professional liability exposures and possible coverage gaps facing professional organizations. A compounding pharmacy in Massachusetts has distributed enough contaminated injections to possibly infect 13,000 people. According to the CDC 76 facilities in 23 states are exposed. The facilities receiving and dispensing the drugs will likely be named in the coming lawsuits, even though the compounding pharmacy is the likely the source of the negligence.

The Jerry Sandusky fallout is also pulling in unsuspecting parties, a PA psychiatric center who referred a teen to Sandusky’s summer camp is being sued for malpractice for making the referral.

Calculated Risk Advisors works with professional service firms to better protect against allegations of malpractice and negligence, helping them think through their contingent liability exposures.

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New Study Shows Data Breach Costs up 54%

A benchmark report out of risk management provider NetDiligence shows costs of an average data breach incident rose 54% from 2010 to 2011, placing the total expense at $3.7M.

 Calculated Risk Advisors works with organizations to insure against the costs of losing customers data, contact them today to discuss better protection for your organization.

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Paper on IP Threats to Startups

A working paper out of Santa Clara University examines the cost of “patent trolls” on tech start-ups. Legal costs to large companies have been heavily publicized but the toll on young firms is often overlooked.  The rise in both amount of patents filed and number of lawsuits over said patents has grown exponentially. A well worn example of the grown in patents is Microsoft. They filed five patents in the 1980s, 1,116 during the 1990s and a whopping 12,330 during the first ten years of this century. The number of legal actions has kept pace with the growth in filings.

Amazon sued Barnes and Noble over their ridiculously broad “one click checkout” patent in an apparent effort to deliver a knock out blow to their ailing competitor. As tech giants grow their intellectual property stockpile and see languishing growth prospects, we expect an explosion in suits against nimble up-start competitors.

Contact Calculated Risk Advisors today to discuss better protecting your company from the costs of intellectual property litigation costs.

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WI Court Rules that E&O Insurance does not cover D&O Claim

Court finds that Errors and Omissions insurance is not directors and officer’s insurance.In 2011, plaintiff Jane Kelley sued the law firm of Tina M. Dahle S.C. over a $300,000 loan made by Kelley to Dahle. The exact terms of the loan were not agreed upon prior to the loan being made and Kelley alleged that the loan was not being paid off properly. The lawsuit also named the professional liability insurance company Dahle used. Recently, however, a Wisconsin court awarded summary judgment to the insurance company – effectively dismissing the insurance company from any duty to defend or indemnify the matter. This decision was based on the fact that the claim was made against the lawyer’s professional liability policy, but the lawsuit involved a business loan. The court explained that a law firm’s debts and loan activities were never meant to be covered under this type of insurance.

Calculated Risk Advisors explains that there are two main reasons why insurance does not cover a situation. It is either uninsurable (such as punitive damages in many states), or else it is better covered under another type of insurance (car insurance not covering medical payments for yourself). In this case, the court’s reason falls in line with the latter – debt covenants and failure to repay a loan falls under a different type of insurance – namely Directors and Officer’s coverage and would excluded under an Legal Errors and Omissions policy.
• Errors and Omissions (E&O) insurance protects against claims made against a firm for their mistakes, inaccuracies, oversights and lapses while performing a professional service.
• Directors and Officers (D&O) insurance protects against the errors and mistakes an officer of a company may make regarding the actions of the firm.

These two insurance policies go hand-in-hand and many firms purchase both – realizing there are exposures and risks that require both to be covered. If you would like to discuss whether your firm has need of these types of insurance policies, contact us today.

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Hospital settles with EEOC in largest language-discrimination case

Delano Regional Medical Center in California has agreed to pay nearly $1mm to settle a lawsuit brought by the EEOC.  The lawsuit was on behalf of Filipino hospital workers and claimed that management singled out their ethnicity when enforcing the hospital’s rule to speak only English while at work.  The medical center must also institute protocols and policies to prevent such discrimination from happening in the future.

Calculated Risk Advisors explains that it is important to have policies and procedures in place to prevent a single class of people from being singled out in an adverse action.  Age, ethnicity, gender and various additional characteristics are specifically protected by employment law.  A firm’s policies also needs to be supported by training, hotlines, and management support.  Contact us today to discuss how to better protect your firm from employment-related errors.













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CA Probes Healthcare Consolidation

California’s Attorney General Kamala Harris has started a prob of increasing consolidation of mergers and consolidation of hospitals and physician groups. With healthcare reform encouraging mergers and formations of Accountable Care Organizations (ACOs). the state is probing whether this is increasing costs for consumers.

This comes at a time when the FTC has fought several recent non-profit hospital mergers aggressively.

Contact Calculated Risk Advisors today to discuss better protecting your healthcare organization against changes in regulations and the costs associated with complying with regulatory challenges.

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NYT Article on Hedge Funds and Reinsurance

A New York Times Dealbook article addresses an issue that has been growing for years – hedge funds investing in offshore reinsurers.

The float of insurance companies has long been valued by investors like Warren Buffet, it provides stable and cheap cash to invest. However, there is growing concern about hedge funds using the float of reinsurance companies. Unlike a domestic insurance company, offshore reinsurers are more volatile, less regulated and more important to the financial system.

Calculated Risk Advisors works with clients to address issues of carrier solvency and provides financial analysis of prospective insureds.

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