RISK & INSURANCE® Magazine is designed to provide
accurate and authoritative information in regard to the subject
matter covered. It is published with the understanding that
the publisher is not engaged in providing legal, accounting or
other professional services. If legal advice or other expertise
is required, the services of a competent professional person
should be sought. The publishers have taken all reasonable
steps to verify the accuracy and completeness of information
contained in RISK & INSURANCE. The publishers may not,
however, be held responsible for any inaccuracies or omission
of information in any article appearing in RISK & INSURANCE®.
Entire contents Copyright © 2017, RISK & INSURANCE®
Magazine. All rights reserved. Material in this publication may
not be reproduced in any form without written permission.
Authorization to photocopy items for non-academic use, or
the non-academic use of specific clients, is granted by LRP
Magazine Group, provided that the base fee of US$10.00 per
document, plus US$5.25 per page is paid directly to Copyright
Clearance Center, 222 Rosewood Drive, Danvers, MA 01923,
USA. For those organizations that have been granted a
photocopy license by CCC, a separate system of payment has
been arranged. The fee code for users of the Transactional
Reporting Service is : 1050-9232/16/$10.00 + $5.25.
Offices are located at 747 Dresher Rd., Suite 500, Horsham, PA, 19044, (215)
784-0910. For questions, contact: Editorial Dept., ext. 6320 or fax (215) 784-
0275; Advertising Dept., ext. 6214 or FAX (215) 784-0870; Subscription Dept.,
(800) 386-4176, e-mail firstname.lastname@example.org or fax (215) 784-0317. Reprints,
Kristie Flowers, email@example.com; List Rental Sales, Worldata, (561) 398-
8200 or (800) 331-8102, ext. 197. Send payments to: LRP Publications,
360 Hiatt Drive, Dept. 150F, Palm Beach Gardens, FL 33418. For
subscription-related written correspondence, send to: Customer Service
Dept., Risk & Insurance, P.O. Box 2133, Skokie, IL 60076.
FROM THE EDITOR
Compiled by staff from news and wire services.
The Price of Inaction
As we document in this year’s
coverage of the Most Dangerous
Emerging Risks, inaction is not an
Rising seas threaten our coastlines.
As the new administration envisions
the expenditure of hundreds of
billions on infrastructure, we must
think about how we can protect cities
like Miami, Norfolk, Atlantic City
and New York.
If we do nothing, we face a
degradation in coastal property
values and a coastal mortgage value
collapse that would hurt not only
homeowners but banks and insurers:
Domestic economic protectionism
threatens to cause substantial
disruption to many sectors, perhaps
chief among them technology and
Advocates may cheer the
building of a border wall and other
immigration restrictions, but the fact
is that graduates in engineering and
sciences from India and China dwarf
those from this country. What will an
economy starved for top-tier STEM
talent do if we can’t recruit it?
Attacks have already taken place
against the companies that manage
much of the infrastructure of the
internet. Cyber business interruption
is an exposure so massive that
underwriters look at it in fear.
Fear causes hesitancy, uncertainty.
Business hates uncertainty. It needs
to have confidence to invest where
We can’t let the size of these risks
freeze us into inaction. Daunting as
they are, let’s talk about them and
start devising solutions.
The price of inaction is too great.
THE GRAHAM COMPANY BECOMES
The Graham Company, one of the
Mid-Atlantic region’s largest insurance
and employee benefits brokers,
announced that it is now a 100 percent
employee-owned company through
an Employee Stock Ownership Plan
As an employee-owned company,
The Graham Company will continue
to operate under the same business
model and management structure.
By becoming completely ESOP-owned, all company stock is now held
in trust by the ESOP. The Graham
Company worked with consulting and
investment banking firm MarshBerry &
Company Inc. to implement an iCAP
solution. The iCAP solution combines
an ESOP with other structural features
to create a customized solution that
allows insurance brokers to remain
LLOYD’S OF LONDON INTRODUCES
Lloyd’s of London has introduced a
9 a.m. to 5 p.m. alcohol ban after an
analysis of grievance and disciplinary
cases over the last two years found
“roughly half” were related to alcohol
Employees who break the new rule
could be fired for gross misconduct.
It will apply to the corporation’s
800 employees, but not brokers or
underwriters from other firms based at
the insurance market on Lime Street.
Workers have called the new policy
“heavy-handed” and say they can drink
“responsibly” during work hours.
Commentators said the ban marked
a wider culture change among city
Lloyd’s of London workers may no longer
drink during the workday.
David Buik, a market commentator
at Panmure Gordon investment bank,
said there is more competition between
workers as banks and financial firms
look to cut back on staff, meaning
staying sober is more important than
COMMERCIAL P/C RATES CONTINUE
Commercial property/casualty (P/C)
rates declined in Q4 across small,
medium and large accounts for the
eighth straight quarter, according to
The Council of Agents & Brokers’
“Commercial P/C Market Survey.”
The average rate decrease was 3. 3
percent, which is consistent with the
third quarter’s 3.2 percent decrease.
Large accounts again saw the largest
decrease at 4. 9 percent, followed by
medium accounts at 3. 8 percent and
small accounts at just 1.3 percent.
“While premium rate decreases
TAXPAYERS MAY PAY FOR THE NEXT
have been steady throughout the past
two years, there is normalization in the
market across most lines of businesses,”
said Ken A. Crerar, president and CEO
of CIAB. “However, commercial auto
continues to harden and go against
Survey respondents also noted
that carriers were underwriting new
businesses very aggressively, often
putting incumbents at an inferior
position. Other carriers were writing
accounts with tough losses, leading to
more coverage across the board.
Under proposed legislation, NASA
would partially indemnify private
launch service providers from liability
for injury, death or property damage
for operations under contract with the
federal government. Losses would be
capped at $500 million for damage to
private property and at $100 million
for damage to government property.
SpaceX, Orbital and Sierra Nevada
Corp. all won contracts in January to
haul cargo to the International Space
Station under a NASA initiative to
privatize routine spaceflight. The U.S.
plans to fully utilize the ISS through at
Contractors now hold hundreds of
millions of dollars of program funding
to cover potential liability should the
government cancel the contracts,
making those funds unavailable
for productive purposes. A NASA
termination liability policy would allow
contractors to devote more funds to
OHIO EMPLOYERS GET BIG
WORKERS’ COMP REBATE
The Ohio Bureau of Workers’
Compensation (BWC) proposed
a $1 billion rebate for workers’
compensation costs, the third rebate
offered since 2013.
More than 200,000 employers
would get the rebate equal to two-thirds of premiums for the year ending
June 30, 2016. Private employers would
get an estimated $967 million, with the
remaining amount going toward public
employer taxing districts that pay into
the state’s workers’ compensation
BWC Administrator Sarah
Morrison said the rebate is possible
because of higher investment returns
and fiscal management.