1. Protecting the Balance Sheet Cyber and Management Liability Insurance Solutions

2. Sandra K. Carroll, Esq. Vice President Strategic Risk Advisor – Executive Risk Hylant Group Herb Churchill Vice President Client Executive Hylant Group

3. Agenda Introduction Cyber Crime Directors and Officers Liability
Employment Practices Liability
Fiduciary Liability
Questions
This is intended merely for informational purposes and is in no way to be considered to be a grant or offer of coverage.

4. Cyber - Event Costs First Party Costs Response Cost
Business Interruption & Extra Expense
Data Recovery Costs
Extortion – Ransomware
Lost Business
Third Party Liabilities
Privacy Liability
Regulatory Proceedings
Data Privacy – GDPR, CCPA, HIPAA
State Breach Notice Laws
Media Liability
This is intended merely for informational purposes and is in no way to be considered to be a grant or offer of coverage.

5. Cyber - Insurance Coverages
First Party
Breach Response
Extortion
Business Interruption
Dependent Business Interruption
Data Recovery Costs
Reputational Harm
Third Party
Network Security and Privacy Liability
Regulatory Fines and Penalties*
PCI Fines and Penalties
Media Liability
eCrime
Social Engineering Fraud (SEF)*
Telecommunications Fraud
Funds Transfer Fraud*
This is intended merely for informational purposes and is in no way to be considered to be a grant or offer of coverage.

6. Cyber - Market Market Pricing & Trends
Rates are generally stable and competitive due to the over $1 billion of capacity with 80+ insurers.
Increase in underwriting sophistication is providing more beneficial for customers who invest in cyber security measures and procedures.
Coverage Trends
Dependent business interruption sublimits are going up with various new levels of underwriting scrutiny.
Coverage solutions addressing the insurability of fines/penalties continue to evolve. Examples include the new Zurich cyber policy affirmatively covering GDPR fines/penalties, though the legality of insuring those fines and penalties in the various EU jurisdictions is yet to be tested.
Industry Issues & Considerations
2018 saw 6,515 breaches (3.2% decrease) and 5 billion records exposed (35.9% decrease); 74% of the records exposed were due to 12 large breaches (Source: Risk Based Security, Inc. – Feb 2019).
The EU General Data Protection Regulation (GDPR) went into effect in May For organizations doing business in California, the California Consumer Privacy Act (CCPA) goes into effect on 1/1/2020.
Recent settlements include a $16 million HIPAA penalty against Anthem following their previous class action settlement of $115 million; a Yahoo data breach following a D&O litigation settlement of $80 million, plus another $35 million fine to the SEC for late reporting.
This is intended merely for informational purposes and is in no way to be considered to be a grant or offer of coverage.

7. Cyber – Value Add Beyond Insurance
Fact Finding & Risk Profiling
Exposure Quantification
Risk Modeling – Privacy and Business Interruption
Insurance Procurement & Negotiations
Cyber Risk Readiness
Incident Response Planning – Vendor Vetting
Assessment and Tabletop Planning and Selection
This is intended merely for informational purposes and is in no way to be considered to be a grant or offer of coverage.

8. Crime/Employee Theft Provides protection for
Theft by employees of money, securities and property of the organization.
Special consideration – precious metals and valuable papers
Theft by employees of customer’s money, securities and property
Wire transfer fraud
Computer fraud
Social engineering fraud – manipulation of employees resulting in theft of organization assets
This is intended merely for informational purposes and is in no way to be considered to be a grant or offer of coverage.

9. Directors and Officer Liability
Directors and officers of public, private and non-profit organizations owe a duty of care, loyalty and obedience to their organization and its shareholders. They can be held personally liable for their actions under a myriad of federal, state and local statutes or common law or the laws of other countries.
Sources of suits
Shareholders and other Investors – direct or derivatively
Regulators/Attorneys General
Employees
Customers
Competitors
Creditors
Family members
Donors
This is intended merely for informational purposes and is in no way to be considered to be a grant or offer of coverage.

10. Directors and Officer Liability
D&O Coverage
Organization balance sheet protection
An organization can be held liable separately from its directors and officers. In addition, the organization is obligation by law to provide indemnification and defense cost to its individual directors and officers in most circumstances.
The D&O policy protects the balance sheet by covering defense costs, settlement amounts or judgments.
Individual protection – A D&O policy also protects individuals for those situations in which the organization cannot indemnify them either because it is by law prohibited from doing so or it cannot due so due to financial insolvency.
In the absence of D&O policy, the individuals would have to pay loss out of their own pockets.
This is intended merely for informational purposes and is in no way to be considered to be a grant or offer of coverage.

11. Directors and Officer Liability
Key considerations
Publicly held organizations
Largest threat is from shareholders
Privately held organizations
Largest threats are from employees and shareholders
Not-for- profit organizations
Largest threats are from employees and donors
The D&O market is in the midst of a correction with significant upward pressure on premium rates and retentions.
This is especially true for publicly traded companies and those going through an IPO.
This is intended merely for informational purposes and is in no way to be considered to be a grant or offer of coverage.

12. Employment Practices Liability
Employment Practices Liability policies have evolved dramatically over the 27 years since the coverage was first introduced. It provides protection for the organization and its directors, officers and employees and pays defense costs and settlement and judgment amounts.
Coverage
Current Trends
Wrongful termination
Sexual and other types of harassment
Unlawful discrimination
Wrongful discipline
Wrongful failure to employ or promote
Negligent employee evaluation
Retaliation
Third party discrimination/ harassment by your employees against non-employees
#MeToo
Social media recruiting
Wage and hour will continue
Complex employment relationships
Joint employer liability
Gender identity/sexual orientation discrimination
Religious discrimination
Employer wellness programs
EEOC regulations under ADA
Website accessibility litigation is gaining momentum and will continue as a developing opportunity for the plaintiff’s bar. Number of claims increased from 814 in to 2,258 in 2018 (Source: Seyfarth Shaw LLP).
This is intended merely for informational purposes and is in no way to be considered to be a grant or offer of coverage.

13. Employment Practices Liability
Organization balance sheet protection
The majority of EPL claims are corporate obligations. A well constructed EPL policy will protect the organization by providing defense costs coverage as well as coverage for settlements and judgments.
Value Add Services –
Access to risk management data base
Legal advice
Potential coverage for therapeutics
This is intended merely for informational purposes and is in no way to be considered to be a grant or offer of coverage.

14. Fiduciary Liability
ERISA established standards of conduct for fiduciaries of employee benefit plans. Anyone who exercises discretionary management or administrative control over sponsored welfare (e.g., health, dental, vision, etc.) or retirement (e.g., defined contribution and defined benefit) plans can be held personally liable.
Decisions to create, modify or terminate a plan are outside the scope of ERISA and are known as “settlor” functions. A well constructed Fiduciary Liability policy should include coverage for defense costs arising out of such decisions.
ERISA coverage protects the organization, its sponsored plans as as well as the individual fiduciaries such as
Plan administrators
Trustees
Directors or officers
Human resources staff
Other clerical staff
Fiduciary policies do not satisfy the ERISA bonding requirement; such coverage is found in crime policies
This is intended merely for informational purposes and is in no way to be considered to be a grant or offer of coverage.

15. Fiduciary Liability Litigation Trends and Examples Denial of benefits
Benefits due provision
Administrative errors and omissions
Negligent selection of advisor/provider
Imprudent investments
This is intended merely for informational purposes and is in no way to be considered to be a grant or offer of coverage.

16. Questions