ISO Releases National Building Code Assessment Report

(Jersey City, N.J. Insurance News 360) – On March 19, ISO released the National Building Code Assessment Report, ( https://www.verisk.com/insurance/campaigns/get-the-latest-information-on-building-code-enforcement-nationwide/)  which examines code enforcement efforts by more than 25,000 building departments across the U.S. It offers key insights into how building codes can help prevent losses from disasters.

“We have seen heightened incidents of natural disasters during the past few years that have put the nation’s building codes to the test,” said Robert Andrews, vice president and chief field operations officer, ISO Community Hazard Mitigation. “Hurricanes, flood, and wildfire have caused billions of dollars in losses across multiple states. Our new report provides valuable insights about building codes throughout the country and how well they are enforced, which is vital information for communities, municipalities, and insurers.”

The report was developed by the ISO Building Code Effectiveness Grading Schedule team. The report also features analyses of natural hazards and catastrophes in each state and diverse perspectives on catastrophe mitigation from the federal government, nonprofit organizations, and academia.

Source: Verisk.

The 55+ Housing Market still strong in second quarter

(Washington, DC – Insurance News 360) – According to release by National Association of Home Builders’ (NAHB) 55+ Housing Market Index (HMI) the single-family housing market edged down from 72 to 71 in the second quarter keeping the builder’s confidence solid.

Single-family and multifamily condominiums are the two segments measured by HMI 55+ housing market. The survey measures builder’ sentiment inquiring if recent sales, potential traffic of buyers and expected sales of 6 months are good, average or poor  for traffic.

“Although the single-family HMI fell slightly, builder sentiment remains strong for this segment of the market,” said Karen Schroeder, chair of NAHB’s 55+ Housing Industry Council and vice president of Mayberry Homes in East Lansing, Mich. “The reading of 71 is just one point off from the all-time high of 72 from the previous quarter. We expect the 55+ housing market to continue on a positive path moving forward.”

For 55+ single-family HMI’s three index components, current sales remained unchanged at 76, one point raise in anticipated sales for the next six months at 78 and potential buyers traffic dropped five points to 56.

There’s an increase of two points to 59   in HMI of the multifamily condo. There’s raise in two out of three index components as compared to last quarter. Current sales increased three points to 61 and forecasted sales for the next 6 months rose to three points at 65. However, traffic of prospective buyers dropped two points and fell at 50.

There is an increase from the first quarter  in all four components of the 55+ multifamily rental market: Current production and future anticipated production both rose six points at 64, while current demand increased  12 points to 73 and future expected demand increased 10 points to 73

“Demand for 55+ housing remains solid, as demonstrated in the surge for 55+ rental demand,” said NAHB Chief Economist Robert Dietz. “Builder sentiment for the for-sale 55+ housing market also remains in positive territory, supported by low inventory of existing homes. However, it is being constrained by development costs and their impact on affordability.”

Source: National Association of Home Builders.

Pending Home Sales Dip 1.0 Percent in February

(Washington, WA – Insurance News 360) – On March 28, the National Association of Realtors announced that pending home sales dropped by one percent during the month of February.

The forward-looking Pending Home Sales Index dropped from 102.9 in January to 101.9 in February, marking the 14th straight month of annual decreases, as year-over-year contract signings dropped 4.9 percent.

“In January, pending contracts were up close to 5 percent, so this month’s 1 percent drop is not a significant concern,” said Lawrence Yun, NAR Chief Economist. “As a whole, these numbers indicate that a cyclical low in sales is in the past but activity is not matching the frenzied pace of last spring.”

Although there has been growth in the West region, current sales are well below where they were in 2018. He attributes this to a lack of inventory and prices that have risen too quickly.

Denver-Aurora-Lakewood, Colo., Seattle-Tacoma-Bellevue, Wash., San Diego-Carlsbad, Calif., Portland-Vancouver-Hillsboro, Ore.-Wash., and Nashville-Davidson-Murfreesboro-Franklin, Tenn., saw the largest increase in active listings in February compared to a year ago.

“If there is a change at all [in interest rates], I would say the Fed will lower interest rates in 2019 or 2020. That would stimulate the economy and the housing market,” he said. “But the expectation is no change at all in the current monetary policy, which will help mortgage rates stay at attractive levels.”

Yun expects existing home sales to decline to 5.3 million, while the national median existing home price is expected to increase by 2.7 percent.

In the Northeast the Pending Home Sales Index declined 0.8 percent to 92.1, and is now 2.6 percent lower than it was in 2018. In the Midwest the PHSI dropped 7.2 percent and is 6.1 percent lower than February 2018.

Unlike the regions already mentioned pending homes sales in the South and in the West experienced increases. In the southern region, the index crept up 1.7 percent to 121.8, although this is still 2.9 percent lower than February 2018. In the west, the index increased by .5 percent, but is 9.6 percent below February 2018.

Source: National Association of Realtors®

Lloyds reports 2018 aggregated market results

(London – Insurance News 360) – On March 27, Lloyd’s released the 2018 annual report, which announced an aggregated market loss of 1.0bn for 2018, which is half of what the aggregated market loss was in 2017.

Other key figures to note are:

  • An increase of £1.9bn in gross written premiums in 2018 (£35.5bn in 2018, compared to £33.6bn in 2017)
  • A reduction of net incurred claims in 2018: £16.4bn compared to £18.3bn in 2017
  • A reduction of net investment return in 2018: £0.5bn compared to 1.8bn in 2017

Several natural disasters in 2018, including Hurricane Florence and Hurricane Michael, Typhoon Jebi in Japan and California’s wildfires led to major claims that cost the Lloyd’s market £2.9bn. This is significantly higher than the long term average of £1.9bn. This contributed to a combined ratio of 104.5% in 2018.

In spite of substantial claims, Lloyd’s is in a stronger financial position. The company added 9% to its total assets, bringing that figure to £118.0bn. Lloyd’s net resources increased to £28.2bn. Lloyd’s central assets also saw growth to £3.2bn.

A rigorous business planning process for 2019 removed almost £3.0bn of poorly performing business from the market and remediation plans were implemented across all review classes of business. Four new syndicates started trading in 2018 demonstrating Lloyd’s enduring appeal and the market’s continuous focus on innovation.

Lloyd’s is also ready for Brexit through its new Brussels subsidiary, which is fully operational and writing risks. This provides certainty for our customers in the European Economic Area (EEA) that they can continue to access Lloyd’s insurance products, services and expertise. The market also made good progress on modernization in 2018, evidenced by a substantial increase in adoption of technology solutions, including electronic placement.

“The market’s aggregated 2018 results report a combined ratio of 104.5%, and a £1.0bn loss. This performance is not of the standard that we would expect of a market that has both the heritage and quality of Lloyd’s. We have implemented stronger performance management measures which will remain an enduring feature of how we go about our business. We expect these actions to deliver progressive performance improvement across the market beginning in 2019 and in the years to come,” said John Neal, Lloyd’s Chief Executive Officer.  “We are determined to show decisive leadership across three fronts: to address the performance gap; to secure Lloyd’s future success; and, following our announcement yesterday, to tackle all forms of inappropriate behavior with robust actions to create a more inclusive working environment.”

Source: LLOYD’S

Lloyds of London commits to creation of safe, inclusive work environment.

(London – Insurance News 360) – On March 26, executives at Lloyds announced a robust plan of action to handle reports of sexual harassment in the market and create an inclusive working environment where employees feel safe.

Working with the Lloyds Market Association, and the London and International Insurance Brokers Association, the Lloyd’s Board and Council developed the wide ranging plan, which includes the following:

  • Provision of an independently managed, confidential and market-wide access point for reporting inappropriate behaviors.
  • Confirmation that, where investigations conclude that individuals have a case to answer, they will be subject to sanctions from their own companies and also from Lloyd’s. They may be banned from entering Lloyd’s for a fixed period and potentially for life.
  • Undertaking an independent and market-wide culture survey to identify the scale and scope of the issue, and to inform further action.
  • A comprehensive review of policies and practices across the Lloyd’s market, with a view to identifying and sharing best practice.
  • Provision of training focused on prevention, as well as reporting and supporting those who have been subjected to inappropriate behavior.

This is in addition to the company’s commitment to hearing accounts of women who spoke to Bloomberg, in a safe and confidential space; and making changes to Lloyd’s Nominations Committee to improve diversity. Fiona Luck and Vicky Carter will join the committee immediately, succeeding Sir David Manning and Charles Franks.

“It has been distressing to hear about the experiences of women in the Lloyd’s market. No one should be subjected to this sort of behavior, and if it does happen, everyone has the right to be heard and for those responsible to be held to account,” said John Neal, CEO of Lloyd’s. “I am pleased that the market has given its full support for a strong set of actions, and I am determined that Lloyd’s offers a safe and inclusive working environment for everyone.”

Source: LLOYD’S

Two whistleblowers receive $50 million from SEC

(Washington D.C. – Insurance News 360) – On March 26, the Securities Exchange Commission announced $50 million in awards to two whistleblowers. One individual received the third largest award to date – $37 million. The second received a $13 million reward.

“Whistleblowers like those being awarded today may be the source of ‘smoking gun’ evidence and indispensable assistance that strengthens the agency’s ability to protect investors and the capital markets,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower.  “These awards show how critically important whistleblowers can be to the agency’s investigation and ability to bring a case to successful and efficient resolution.”

Since 2012, when the first whistleblower award was given, the SEC has awarded more than $375 million to 61 different individuals. Payments for these awards come from an investor protection fund financed through the monetary sanctions paid to the SEC by those who violate securities laws. None of the award money has come from investors who were harmed by violators.

The SEC protects the confidentiality of whistleblowers and does not disclose information that could reveal a whistleblower’s identity as required by the Dodd-Frank Act.

For more information about the whistleblower program and how to report a tip, visit www.sec.gov/whistleblower.

Source: U.S. Securities and Exchange Commission.

HHS releases voluntary cybersecurity practices for health industry

(Washington, DC – Insurance News 360) – On Dec. 28, the Department of Health and Human Services (HHS) released the “Health Industry Cybersecurity Practices (HICP): Managing Threats and Protecting Patients” publication. The four volume publication, aims to provide voluntary cybersecurity practices to healthcare organizations of all types and sizes, ranging from local clinics to large hospital systems.

This was report came from a mandate to develop practical cybersecurity guidelines to reduce risks for the industry, as part of the Cybersecurity Act of 2015 Section 405(d). The publication is an end of a two-year effort bringing together over 150 cybersecurity and healthcare experts from industry and the government under the Healthcare and Public Health (HPH) Sector Critical Infrastructure Security and Resilience Public-Private Partnership. It was the result of a true public-private partnership to better secure the nation’s health systems.

“Cybersecurity is everyone’s responsibility.  It is the responsibility of every organization working in healthcare and public health.  In all of our efforts, we must recognize and leverage the value of partnerships among government and industry stakeholders to tackle the shared problems collaboratively,” said Janet Vogel, HHS Acting Chief Information Security Officer.

Technologies that are vital to the healthcare industry and help provide life-saving treatments and improve patient care are also susceptible to attacks. They can be exploited for personal data or to shut down entire hospital systems.

“The healthcare industry is truly a varied digital ecosystem. We heard loud and clear through this process that providers need actionable and practical advice, tailored to their needs, to manage modern cyber threats. That is exactly what this resource delivers; recommendations stratified by the size of the organization, written for both the clinician as well as the IT subject matter expert.” said Erik Decker, industry co-lead and Chief Information Security and Privacy Officer for the University of Chicago Medicine.

The HICP publication aims to provide cybersecurity practices for this sector to improve the security and safety of patients. It recommends 10 Cybersecurity Practices to help mitigate these threats. It also lays out a call to action for all industry stakeholders, from C-suite executives and healthcare practitioners to IT security professionals, that protective and preventive measures must be taken now.

For more information on this effort and to download a copy of the publication, please visit the 405(d) website at www.phe.gov/405d.

Source: U.S. Department of Health and Human Services (HHS).

U.S. Department of Labor recovers $49,269 for employees after investigating overtime violations by Jacksonville, FL Company

(Jacksonville, FL – Insurance News 360) – Following an investigation by the U.S. Department of Labor Jacksonville-based Stone World Imports and Manufacturing, Inc. paid $49,269 in back wages to 21 employees. The investigation revealed that the company paid only straight time rates to employees, not overtime when warranted. The failure to pay time-and-a-half for hours worked above 40 in a work week is a violation of the Fair Labor Standards Act.

“The Fair Labor Standards Act requires employers to maintain accurate records of the number of hours employees work, and pay proper overtime when they work more than 40 hours in a workweek,” said Wage and Hour Division District Director Daniel White, in Jacksonville. “The Wage and Hour Division works to ensure that employees receive the wages they rightfully earned, and that employers compete on a level playing field. We encourage all employers to reach out to us and to use the wide variety of tools we offer to help them understand their responsibilities.”

For more information about the FLSA and other laws enforced by the Wage and Hour Division, contact the toll-free helpline at 866-4US-WAGE (487-9243). Employers who discover overtime or minimum wage violations may self-report and resolve those violations without litigation through the PAID program. Information is also available at https://www.dol.gov/whd.

Source: U.S. Department of Labor.

Edgar hacking case ends in charges by SEC

(Washington, DC – Insurance News 360) – On Jan. 15, the Securities and Exchange Commission charged nine individuals participating in a previously-disclosed scheme to hack the SEC’s EDGAR system to get non-public information for illegal trading.

Those charged are an Ukranian hacker, six individuals in California, Ukraine, Russia and two entities.

According to the SEC complaint, Ukrainian hacker Oleksandr Ieremenko hacked newswires, then turned his attention to EDGAR and, using deceptive hacking techniques, gained access in 2016. He extracted files containing non-public earnings results and passed the information to individuals who used it to trade before companies released info to the public. In total, the traders traded before at least 157 earnings releases from May to October 2016 and generated at least $4.1 million in illegal profits.

“International computer hacking schemes like the one we charged today pose an ever-present risk to organizations that possess valuable information,” said Enforcement Division Co-Director Stephanie Avakian. “Today’s action shows the SEC’s commitment and ability to unravel these schemes and identify the perpetrators even when they operate from outside our borders.”

The SEC’s complaint alleges that the following traders received and traded on the basis of the hacked EDGAR information:

• Sungjin Cho, Los Angeles, California
• David Kwon, Los Angeles, California
• Igor Sabodakha, Ukraine
• Victoria Vorochek, Ukraine
• Ivan Olefir, Ukraine
• Andrey Sarafanov, Russia
• Capyield Systems, Ltd. (owned by Olefir)
• Spirit Trade Ltd.

In a parallel action, the U.S. Attorney’s Office for the District of New Jersey also announced related criminal charges.

Source: U.S. Securities and Exchange Commission.

Audit firm, partners charged for deficient audits

(Washington, DC – Insurance News 360) – On Dec. 21, the Securities and Exchange Commission filed settled charges against national audit firm Crowe LLP, two of its partners, and two partners of a now-defunct audit firm for their significant failures in audits of Corporate Resource Services Inc., which went bankrupt in 2015 after the discovery of approximately $100 million in unpaid federal payroll tax liabilities.

The SEC’s order against Crowe finds that its audit team identified pervasive fraud risks in connection with its 2013 audit of Corporate Resource Services yet failed to:

Include procedures designed to detect the company’s undisclosed payroll tax obligations;

Properly identify and audit the company’s related-party transactions;

Obtain sufficient appropriate audit evidence to respond to these fraud risks, support recognition of revenue, and otherwise support the audit opinion;

Evaluate substantial doubt about the company’s ability to continue as a going concern; and

Conduct a proper engagement quality review.

According to the order, Crowe was not independent, because of an ongoing direct business relationship with Corporate Resource Services. Audit deficiencies occurred despite the involvement of Crowe’s national office, which was aware of the high-risk nature of the engagement and the inability to obtain appropriate evidence. The order also finds that Crowe’s engagement partner, Joseph C. Macina, and engagement quality reviewer, Kevin V. Wydra, caused Crowe’s audit failures.

A related order finds that Mitchell J. Rubin and Michael Bernstein, former partners at Rosen, Seymour, Shapps, Martin & Co., LLP, engaged in fraud and performed a highly deficient audit of Corporate Resource Services’ 2012 financial statements, which amounted to no audit at all, and that Bernstein caused the firm to lack the required independence when he failed to comply with partner rotation requirements.

“The audit standards are designed to ensure that public accounting firms have reasonable procedures to identify and respond to illegality and issues that pose material risks to the integrity of an issuer’s financial statements,” said Anita B. Bandy, Associate Director in the Division of Enforcement. “As set out in our order, the pervasive audit failures of Crowe and these accountants left investors with a misleading picture of Corporate Resource Services’ financial condition.”

Crowe will pay a $1.5 million penalty, be censured, and retain an independent compliance consultant to review its audit policies and procedures. Macina, Rubin, and Bernstein each agreed to pay a $250,000 penalty. Wydra will pay a $15,000 penalty. Macina, Wydra, Rubin, and Bernstein are suspended from appearing and practicing before the SEC as an accountant, which includes not participating in the financial reporting or audits of public companies. The SEC’s order permits Macina and Wydra to apply for reinstatement after three years and one year, respectively. Crowe, Macina, Wydra, Rubin, and Bernstein, who settled without admitting or denying the findings, also were ordered to cease and desist from future violations.

The SEC’s investigation continues and has been conducted by Sharan K.S. Custer, Ernesto Amparo, Regina Barrett, and Kam Lee, and supervised by Ms. Bandy and Kristen Dieter.

Source: U.S. Securities and Exchange Commission.