20Jun

COVID-19 Common Liability Concerns for Businesses

While the vaccine rollout in Hong Kong is ongoing, COVID-19 still raises several liability concerns for customers or employees who may become sick due to alleged negligence by an organization.

For these types of concerns, it’s necessary to take the following insurance considerations into account:

– Commercial liability insurance— protects your business from financial loss should you be found liable for personal harm (like a customer getting sick) caused by your product or services, or due to business operations in the case of employees. This general liability insurance can cover costs correlated with bodily injuries, damage to third-party property, personal injuries, medical expenses, litigation and more.

In the time of COVID, commercial liability insurance should provide coverage and allow organizations to defend claims. For a claim to be valid, the claimant would have to claim that the virus was contracted due to the organization’s or business’ oversight and detail how, when and where they got sick—all of which may be difficult to prove.

– Directors and officers (D&O) insurance— Shareholders can sue a business in case there’s a failure to respond competently to COVID-19 concerns. Specifically, shareholders may dispute that Directors and Officers failed to plan for adequate contingency plans or detail how the pandemic could affect the company’s finances.

Here’s a recent blog we published with examples of D&O Claims.

It should be noted that most D&O insurance excludes cover for bodily harm but may offer some protection depending on specific accusations. That said, it’s important for businesses to examine the scope of their D&O insurance to verify that they are covered in the event of such events.

EMPLOYEE’S COMPENSATION INSURANCE

In events when an employee makes a claim that they contracted COVID-19 at work, a number of employee compensation factors come into play. For workplace illnesses, most policies only pay out benefits if the disease in question is occupational in nature. This may imply that communicable diseases are generally excluded from most employee compensation policies.

However, a policy may be triggered if the illness came about during the course of employment. Generally, these scenarios are reviewed on a case-by-case basis but could include instances for:

> Healthcare workers who contract COVID-19 at the hospital where they work.

> An airline employee contracts COVID-19 from a passenger.

> A hospitality employee gets COVID-19 that can be linked to a large event at their place of work.

Poor insurance cover or the lack of any type of cover that specifically addresses your business’ liability with COVID will deter you from making meaningful recovery this year. Although there is some positive outlook on financial recovery in Asia, this should not be the time to loosen one’s sense of cautiousness.

Need to update your company’s liability insurance? Get in touch with us today.

18Jun

What You Should Know About the Revised Compensation Items Under the Employee’s Compensation Ordinance in Hong Kong

A Resolution was passed at the Legislative Council meeting last March 17th, 2021 to change the levels of compensation of nine (9) compensation articles under the Employee’s Compensation Ordinance. This is a compulsory provision and all employers must comply.

Employers will have additional liability starting April 15, 2021.

What you should know:

> Your insurance provider will have to charge an additional premium estimated at around 2% of the initial cost up to the end of your Employee Compensation Insurance policy.

> Additional gross premium will be acquired.

> Additional gross premium less than HK$200 will be waived

> Employees’ Compensation Insurance Levies & Premium Levy (if applicable) will be charged on top of additional gross premium

Items under the Employees’ Compensation Ordinance

The increased levels of compensation will enhance the protection for employees injured at work or sufferers of occupational diseases as well as family members of deceased employees or persons who die of work injuries or occupational diseases.

For more information about how the new ordinance will affect your current policies, get in touch with us today.

15Jun

Cyber Insurance Outlook in the Next 5 Years

The need for cyber insurance has grown especially with the business shifts that occurred due to the pandemic. Remote work and the increasing technological and operational demands of businesses has also highlighted the importance of insurance for any type of business.

Given the current state of Asia (and the world), here are our predictions for the next five years for insurers as well as businesses in terms of managing cybersecurity.

Immense industry growth is ahead.

Most if not all businesses agree that there will be an increase in cyber insurance premiums. Standard & Poor’s Corp. stated that they foresee an increase of 20% to 30% per year on average in cybersecurity premiums.

The recent hacking at Colonial Pipeline resulting in a US$4.4 million ransom makes a strong case for companies to revisit and evaluate their current online security and the lack of infrastructure in place to protect them from such breaches.

A Standardized Cyber Insurance Cover

Cyber insurance covers differ in limits, features, and terms. At the moment, these variations are not fully intentional and is a normal part of the industry’s process of learning and adapting. Having said that, this current state also poses challenges for policyholders who may not understand which policy they need for their business. It also results in issues for reinsurers in evaluating their exposure to varied risks.

We see a more stable outlook in 2025 with the language and terms used for cyber insurance. As the market hardens, policy providers have already avoided ambiguous terms that may result in confusion for the insured.

In addition, regulations for cyber insurance will be more mature and regulatory bodies will enforce higher standards of information collection and will require regular reporting about cyber risk exposure.

Flexible Policies As the Norm

COVID-19 has taught many providers that rigidity and failure to adapt can do plenty of damage. As a solution to the current and very likely future events, we predict policies that offer monthly premiums or credit plans for add-on features based on regular reevaluated risks as well as incentives for taking preventative actions.

Cyber Insurance Providers Will Have Dedicated Cyber Risk-driven Models

Hackers will continuously find more and more ways to breach systems alongside the efforts to reduce cyber attacks. This means more complicated and highly dynamic risk assessment models for insurance providers in the foreseeable future.

A huge cyberattack is always impending and it can very well happen before 2025. Knowing this reality, we foresee providers investing in dedicated talents who specialize in cybersecurity to provide comprehensive risk models.

Companies worldwide have now been propelled to enter and quickly grasp a fast-moving and highly digitized facet of business transactions.

Alternative and cyber insurance products will become more interesting, flexible, and specialized. The task at hand for insurance providers is to innovate and design the right products to bridge market gaps that leave businesses exposed to the next attack.

Need help finding the right insurance plan for your business in Hong Kong? Contact us today.