Risk management takeaways for successful families

The most successful family enterprises, namely those with single family offices whose wealth results from the private ownership of a business, have managed to sustain significant holdings through multiple generations. This feat ­necessitates navigating many different risks over long periods of time which offers valuable risk management lessons for any successful family, enterprise or not. Recently, we conducted our Family Enterprise Risk Index, a landmark survey of 145 family enterprises across the country, to better understand their current outlook on risk, along with what risk management practices are in place. We compiled the findings for the most relevant lessons that can help you and the many successful families, who are not part of a family enterprise, better improve their risk resiliency. The learnings below are based on our comprehensive analysis and include best practices for risk management that all high-net-worth households should consider. Takeaway 1: The person who oversees risk management is too often not a risk management expert. Our index uncovered that most of the family enterprises surveyed do not employ a risk management specialist, despite the challenging and changing landscape. In fact, 70% put risk management in the hands of an executive who also provides services such as tax preparation, bookkeeping and administration, insurance purchasing, investment management, philanthropy and trustee services. While we certainly don’t expect you to hire a full-time risk manager, it is still important to note based on this finding, that whoever is working with your insurance broker, whether that is a family member or an advisor, likely has many other tasks on their plate as well. From our experience, that means things like annual reviews, scheduling collectibles and updating beneficiaries may be delayed or could be overlooked. The solution: We send out regular communications about risks and insurance matters to keep you informed and we also encourage setting up annual reviews with your insurance advisor. Having an expert that you rely on, and that you can consult regularly, is invaluable. Takeaway 2: Family risks and educating the rising generation are not necessarily priorities. Among the most concerning findings of our study: more than 76% of respondents had no systematic or regularly scheduled risk-review process for the family. Furthermore, 41% conducted reviews on an ad-hoc basis only, and another 30% failed to conduct them at all. This leaves the family (and the enterprise) vulnerable. Even more concerning, of those respondents that conduct either an ad-hoc or annual risk review, we found that 63% do not have an education process in place for the rising generations. And yet, as risk experts, we know that children, especially teenagers, bring specific challenges to the intergenerational table: problematic social media presences, unsupervised parties, car accidents, even issues related to apartments or hazing incidents in college. If such a lapse in focus occurs even in enterprises with the most to lose from it, we feel it is essential to remind every one of our clients to find time to discuss risk as a family. The solution: Rising generations need to be educated about risk and the potential impact of their indiscretions not only to their own lives but to your family’s well-being, too. In our experience, these conversations are the best way to improve risk resiliency. Families should meet each year to review coverage and make sure all is accounted for. (Your insurance advisor will always be happy to lead this conversation.) Likewise, parents should discuss with their children the various exposures they can, unwittingly, subject the family to, periodically at the dinner table and pointedly around life milestones, such as getting a driver’s license. Takeaway 3: Even when families do talk about risk, they often miss key vulnerabilities. Of the eight family-related risk areas surveyed, most respondents only had a plan in place for managing domestic staff. In fact, just around one-third of respondents had a plan in place for all other situations, which include concerns like travel emergency preparedness, emergency preparedness for natural disasters and family reputation management. These findings could potentially leave families within the enterprise vulnerable to a number of risks. The solution: When you are assessing your risk with family members or advisors, be sure you are looking holistically at all areas of risk. Additionally, confirm your insurance program adequately considers your current situation and covers all your exposures. Has your property become more susceptible to natural disasters? Have you sufficiently shielded yourselves from reputational damage? Are you covered if someone gets into trouble or falls ill while traveling abroad? These days, every successful family should understand that they are navigating a more diverse and complex set of risks due to the increase in natural disasters, cybercrimes, public health crises and the like. Even those who you would expect to be best positioned to deal with the evolving landscape, such as family enterprises, fall short in some areas. We can all learn a lot from their reality. Please contact us with any questions or concerns about your own risk management program. ...

Raising risk at the next family meeting

Risk management feels like trying to boil the ocean, so we must redo some of the thinking around it. We will never be able to fully risk-proof the family or company, but building resilience is the most powerful way to manage risk, because it allows us to handle the difficulties we haven’t predicted. – Family business owner We heard this prophetic quote at a conference a few years ago, well before the current pandemic. Even then, it struck a chord with us, family enterprise risk experts. Unfortunately, recent events have only reinforced the message: Successful families must discuss risk and resiliency. Fortunately, though, we are well versed in the ideal time for such conversations—the family meeting. Much like a traditional board meeting, many families who own substantial assets together, gather annually to connect and plan around issues like trusts, estates and wealth management planning. But that effort will fall short if risk, and the protection of that wealth, through a properly structured insurance program isn’t addressed too. Having helped families prepare for discussing risk at such gatherings, we created the following overview to both help family enterprise executives and family owners incorporate these elements into the agenda to raise awareness of commonly overlooked risks. Why families should talk about risk Family meetings are when everyone gathers, senior members and younger descendants alike, to discuss matters that impact the family across generations. Even during the current pandemic families are utilizing a virtual meeting format due to the importance of gathering annually. This helps head off potential communication problems while, most importantly, strengthening family bonds. It’s also the most optimal time for risk and insurance discussions – as this might not otherwise come up at more casual family gatherings. One way we’ve seen this done successfully is by canvassing the family about concerns or by bringing in an outside expert to speak about the specific risk or insurance area with the family. This ensures that risk management is not only a dedicated discussion topic, but also that all involved family members hear one coherent message. Why talking about risk is important Talking about risk is one of the keys to building family resilience due to families facing ever-more-diverse risks ranging from a global pandemic to hurricane season or even cyber incidents. Being open about risks at the annual gathering will help build awareness. Personal stories are the most effective tool during these initial discussions. For example, so that everyone may better understand the catastrophic potential of climate change, those individuals who have already had adverse experiences—having to evacuate a beloved home in a hurricane, or frantically rounding up horses in the wake of an encroaching wildfire—should be prompted to share. These discussions should then prompt talk about risk mitigation and appropriate proactive actions, like working with an insurance professional to assess relevant concerns and suggest proper protection. Commonly overlooked concerns Even vigilant families often glide past three distinct risk areas in their discussions. They are: 1. Liability inherent in roles and responsibilities: Family members who serve as director, officer or trustee—or are being groomed for such a role—are unaware of the legal obligations and potential liabilities placed upon them by the fiduciary standard. Those risks are not too different from those of counterparts in large corporations. 2. Education of younger generations: Many families have not instituted a process in which its younger members are educated about the risks that come from being part of their family. As families grow into new generations, risk exposures can lead to potential liabilities. We counsel families to speak with teens and young adults to outline risks and protocols, so they better understand the potential problems of posting on social media, for instance, or how to handle something as simple as a fender bender (which could lead to major liability claims). 3. Managing collections: While family estate planning often addresses ownership (or gifting) of family heirlooms or art and jewelry collections, we often see a disjointed approach to managing risks of these items. In some cases, appraisals have become outdated over time which leads to inaccurate values for insurance protection. We also see the number of items owned by the family has grown over time and the family loses sight of the overall collection – in which the risks and insurance protection of their investment is also impacted. Identifying and mitigating risk Any conversations pertaining to risk must ultimately lead to the development and maintenance of a holistic insurance solution that ensures that the family’s wealth is sufficiently protected. Every family needs to make this an action item, with someone in the family office charged with keeping the collective focused on it. Unfortunately, family members may well set and forget insurance policies, resulting in outdated coverage. It’s important that a risk professional review existing policies and procedures around every contingency, from flood concerns to art handling and transport. With open discussions about risk and proper mitigation guidance, family meetings can be a source of great development for family members and help nurture, as well as protect, the family legacy. As always, we are available to assist your family enterprise however we can, whether that means ideas on how to discuss risk for a first family meeting or making sure risk is properly addressed at the 20th gathering. ...

A guide to protecting your family office from a cyber breach

In the messy aftermath of the massive Equifax breach, which exposed the private information of nearly half of all American adults, many concerned family offices have inquired about what to do next to protect data security. And for good reason: criminals target and obtain wealthy individuals' information in order to open high-limit credit cards, borrow directly from banks or hack into the target’s email for nefarious purposes. That’s why we see an even greater need for family offices to systemically review their management of sensitive information and ensure that standard protections are in place. Because there is no one-size-fits-all fix—even with a cyber liability insurance policy in place—we believe peace of mind is best accomplished through a multi-pronged approach that incorporates education, risk mitigation and a judicious mix of coverage. Step one is to ensure that all family office staff and family members are trained to avoid clicking on so-called phishing emails (a.k.a. scams) that infect computers with malware or link to a page designed to steal private data. While this sounds simple, even the savviest fall prey. After all, phishing emails were responsible for the hacks at the Democratic National Convention and Sony Pictures, and a Gmail scam was so sophisticated that it fooled techies. Accordingly, we suggest hiring a reputable, white glove security firm to conduct a full review of both the family office staffs’ and family members’ devices and accounts, including social media networks. The best firms also provide in-depth training to any individuals who repeatedly engage with potentially harmful emails, and run educational sessions for the entire family. They’ll even make it fun for the know-it-all 8-14-year-olds, who are almost certainly not as careful as they should be. Meanwhile, family offices should update their own security processes. Regularly scheduled software reviews by an IT expert are, of course, a minimum requirement. Equally important, and sometimes overlooked, is instituting a process for the movement of cash. Currently, the best practices include creating a pre-established list of employees authorized to transfer funds or initiate payments, and implementing client identification methods. A callback confirmation provision, which is akin to the protocol typically employed by financial institutions, is one example. We’ve seen many cyber criminals use a family member’s hacked email account to send a fraudulent money wire request, and without a verification process that transaction is likely to go through. Formalizing protocol for voice and electronic transfer requests is essential, as insurance companies will require detailed explanations of these actions before issuing fidelity bonds and newer social engineering fraud coverage—both crucial. The fidelity bonds cover losses—property or financial—incurred through fraud, forgery and employee dishonesty. Social engineering fraud coverage is now considered a standard element in any private insurance policy and is specifically oriented to mass or targeted email hacking schemes. Although you might expect otherwise, these thefts are usually not covered by cyber policies. Family offices should still consider obtaining a cyber liability policy because it provides customized assistance should a hacker steal data or hold it hostage for ransom. A breach coach, usually a law or forensic accounting firm, move quickly to a) identify what happened; b) assess the impact to the server; c) restore or repair the network; and d) do what is required to make future attacks unlikely. Without such a policy, family office officials are left to find their own experts and answers, which is not easily done nor an ideal circumstance during a crisis. Unfortunately, those policies won’t protect the office, or family members, should the breach happen to a third party like Equifax. These companies generally have their own cyber policies and are prepared to notify those impacted, but these services were significantly overtaxed and thus unresponsive after the Equifax news. Because high-wealth (and especially high-profile) individuals often need to take immediate action, family offices should also consider obtaining identify theft coverage for each family member. Personal Insurance carriers offer a range of coverage as a supplement to homeowner’s insurance policies. Coverage features range from data restoration, cyber extortion, cyber bullying to crisis management and reputation restoration with a variety of coverage limits available. This specialty coverage can also include credit monitoring and credit freezing if—or more likely when—the next major breach happens. ...

Filing an insurance claim in today’s evolving market

As we continue to navigate this unprecedented insurance landscape alongside you, our consultative approach to handling your potential claim is more important than ever. With insurance carriers continuing to raise premiums or, worse, decline renewals of long-standing policies, we want you to better understand the broader shift around filing even the smallest claims, which can help safeguard your long-term insurability. As such, our recommendation is that you call us first to discuss any loss or possible claim. To state it as clearly as possible, we never want you to file a claim directly with your insurance carrier before speaking with your personal account executive or with our dedicated, 24/7 claims team (800-221-5830). As your risk management advisors, we will look holistically at your insurance program and offer guidance as to what we think is the best approach for your specific situation, and given the market, so that you can make the most informed decision. This discussion will also allow us to best support your choice and advocate on your behalf. To help you prepare for such a conversation, we have outlined the six key considerations we would explore together before you decide whether to file a claim: 1. Was the loss caused by a catastrophic event? When the answer is yes, our team will most likely advise you to file a claim. The industry codes for catastrophic events like wildfires, floods, major storms, and earthquakes, which allows carriers to isolate related losses and means they will likely not hold that claim against you when it comes time to renew your policy. 2. Was a third party involved? If someone is injured or another person’s property is damaged, we will most likely recommend that you file a claim to ensure your assets are protected. With that in mind, we encourage you not to pull out your checkbook at the scene of a crash in the hope of avoiding an insurance claim, nor should you ever volunteer to cover someone’s losses before consulting our claims team or your account executive. 3. If no catastrophic event or third party was involved, what is your tolerance for paying out of pocket? Our claims experts have begun to ask how much clients are willing to cover themselves. If the cost of replacing whatever you lost falls within this amount, they then generally suggest you do not file a claim. 4. How will filing this claim impact your risk management strategy going forward? Someone who files too many run-of-the-mill claims risks being deemed by insurance carriers as “no longer profitable.” In the end, carriers are businesses that need to earn money to ensure that they can pay out claims while being financially successful, and that has become increasingly difficult to achieve as weather-related events have increased in frequency and severity as well as costs of replacement and reinsurance have risen. Additionally, construction (material and labor) and auto repair costs continue to increase. So, when it comes time to renew, they are paying more attention to claims histories, especially for water damage and auto accidents. That’s all the more reason we might recommend you handle whatever you can on your own, thus preserving your insurance for catastrophic losses. 5. Is there any reason for you to choose not to file this claim? No doubt it is frustrating to pay for insurance and then choose not to use it for a covered claim. However, after our discussion, you may decide that it’s not worth filing the claim as it could impact your future insurability and once you lose coverage it is very hard and expensive to get it back. If that’s the case, we will recommend other adjustments that may help lower your premiums, such as increasing deductibles or assessing exposures and coverage to make sure you are paying only for what you need. 6. Can we help you be even more proactive about preventing future losses? As you no doubt know, an ounce of prevention can save you thousands in repairs. This is why we regularly educate our client’s around proper maintenance. It’s crucial for you or your caretaker to do things like caulk around windows, clear drains and gutters of debris and check that the sump pump is operational. Taking the time to walk around your home and find the spots where a small investment will prevent a loss that in turn will save you money and effort in the future. And we are happy to provide further guidance and best practices if there is anything we can do to help in this process. Our primary goal is always to protect you and your family's long-term interests. This is why we will work together to guide and advocate for you throughout the claims process. And it’s why we hope your first step will be a call to our team and not the carrier. We can advise on the steps required to handle your immediate loss and keep you insured long-term, as we have done for clients for more than a century. ...

Alliant's leaders discuss the unprecedented insurance market

The insurance market is going through significant changes, many of which we have mentioned before: more difficulty in securing insurance, higher premiums nationwide, even non-renewals. But the situation continues to evolve, and there are early signs that the market will stabilize. To give you a clearer idea of where things stand and what the future may hold, two members of our leadership team share their thoughts. Is the current market as tough as everyone says?   Cindy Zobian, EVP, Managing Director: Simply put, we have never seen market conditions like these before. In essence, it’s a capacity issue: the rate of natural disasters—and the damage caused by them—have increased exponentially while home values and rebuilding costs have gone sky high. Mark Recht, SVP: Case in point: we just got another announcement from a carrier about adjustments caused by inflation. Unfortunately, higher premiums and insurance challenges aren’t just happening to property owners in areas prone to most natural disasters, such as California and Florida. Those are countrywide phenomena. There is currently a cloud casted over the market. CZ: That said, we can see glimmers of light at the end of the tunnel! Well, that’s hopeful. What makes you optimistic about the future?   MR: We saw a similar market a while back in Florida after Hurricane Andrew, but within a few years, things had shifted for the better. Homeowners learned to incorporate new and better risk-mitigation methods, the government placed stricter building codes, technology helped us to map the riskiest areas, and we incorporated more flexibility into insurance programs. Together, that all worked to stabilize the situation. As for the current moment, Cindy and I just met with reinsurers [Note: As a reminder, reinsurers assume a portion of carriers’ risks] and they told us they are in the process of figuring out how to add more capacity. If they can take on more risk, carriers will be able to as well. CZ: We have seen many insurance trends over the years, but, ultimately, they come down to finding a middle ground in the marketplace. That’s what the industry is striving for again today. I’m not saying the problems will be solved in a year, but our decades in the business have us hopeful that things will get easier eventually. At the same time, I don’t think insurance is going to be a buyer’s market again. What is Alliant Private Client doing to help policyholders in this market?   CZ: We are being proactive. We don’t wait to get non-renewal notices or other surprises. Our team is constantly on the lookout for unexpected solutions to lost coverage. MR: For instance, clients are becoming more comfortable with unregulated solutions, so that has allowed us to be more creative in our use of non-admitted options. And without being arrogant, the fact that we are one of the largest brokers in the country gives us significant clout among carriers who have begun to prioritize trading partners. We are also working more with different organizations, and sometimes even direct writers, to be able to offer solutions that make things easier for our clients. And what can clients do to make things easier on themselves?   MR: First and foremost, they need to recognize that it really is no longer a buyer’s market. These days, the priority is finding a suitable solution; pricing is secondary. Also, they should consider consolidating insurance solutions under one broker because carriers may, for example, be willing to take on your multi-million-dollar house in California’s brush territory if they are also insuring your less-expensive ranch in Idaho. You lose that benefit if you are dealing with multiple brokers. CZ: Also, when you get a bill, pay it on time. If you let your policy lapse, you might not be able to get it back. And be really thoughtful about making claims. Putting through even a $50,000 claim might hurt your premiums and renewal prospects. Be sure to discuss every potential claim with your broker first. Then they will help guide you on whether or not it’s in your best interest to put forth that claim. MR: And whenever you receive notice of a critical requirement—be it to trim brush or put in vents—follow through. Maybe you could ignore these in the past, but not anymore. Today, failure to comply might result in a policy cancellation. CZ: And lastly, of course, our clients should know that we are always here to help with questions and concerns about their risk management strategy. ...

Why fighting cybercrime is a family affair

Gather the family: It’s time to chat about cybersecurity.Today’s cyber risks are all too common and unfortunately, constantly morphing. From attacks and extortion to bullying and more, your family and property are likely at risk if you are on the internet. Last year, the FBI’s Internet Crime Complaint Center received a total of 301,580 complaints with reported losses exceeding $1.4 Billion. The biggest group of victims was people over 60 (49,523 of them lost $342 million), but more than 9,000 cybercrimes were reported with victims under the age of 20. So whether it’s your parents or your teenager, it takes the whole family to keep cybercriminals away. Those with substantial wealth and any degree of public prominence are generally the most attractive targets for the latest crop of techno-crooks. As such, personal cyber security policies are now as essential as home or automobile insurance. That’s why we urge clients to speak with us about resources for prevention, education and protection. But in case the gang is coming over for Sunday dinner, and you want to have this discussion sooner rather than later, these are the key areas to cover over the cornbread. Beware of (false) requests One of the fastest growing cybercrimes is called “social engineering” where crooks convince you to send them money by pretending to be someone you know. Often, they break into your email system to gather tidbits of personal information to make their appeals seem believable. Create a universally understood protocol before anyone in the family approves a money transfer, and make sure it involves face-to-face or voice verification. Don’t rely on email. Criminals can program automated responses from a hacked email account that seem realistic. Put an extra wall around your money Use unique passwords for each of your banks, investment companies and/or any account that could lead to a substantial loss. Similarly, consider using a separate email account just for communicating with your bank. Avoid conducting financial transactions on public Wi-Fi networks—while it’s getting harder to hack into data moving over Wi-Fi, it’s not impossible. Banking on your phone connected to cellular data is somewhat more secure. If anyone in your family is into Bitcoin or other crypto-currencies, they need to take extra security precautions. These systems turn money into unique code numbers and if they are stolen or lost, you can’t get them back. These losses are shockingly common. Use new ways to protect your passwords Lots of money is stolen by crooks who fool people into revealing their passwords. Remind family members to watch out for phishing emails from a “bank” or other site requesting information. Even better, make sure to enable the service that require you to log in both with your password and a code sent to your cell phone. Make your passwords really long. Never mind the old advice to make funny looking pA$$w0rdz with symbols and numbers. Many crooks use computers to guess all the possible passwords until one works. Foil this scheme by using a phrase of five or six words that you can remember. Normal spelling is fine. Use software that assigns a different password to each site you use, such as 1Password and Dashlane. That way if someone steals one password, they can’t get into any of your other accounts. Talk to your kids about their social interactions (and listen too) Watch for secret “ghost” apps that hide photos or videos in a calculator or enable private messaging. Listen carefully to your kids who are likely ahead of the trends! They may hear about other kinds of scams and technology problems that the whole family should be aware of. Today’s best policies assist with data restoration, credit monitoring and damages related to cyber bullying. Because cyber scams are evolving as fast as our devices (or faster!), it’s worth staying in regular touch with your Alliant Private Client account executive. Fortunately, the insurance industry is evolving right along with the criminals so those discussions will help to ensure your coverage is up to date. ...

Smooth sailing ahead: what you need to know about yacht insurance

Island hopping through the Caribbean or cruising the Mediterranean, yacht ownership should be a sun-filled dream come true. But, as every seafarer knows, storms and structural mishaps can quickly turn the dream into a nightmare. Contributing to that nightmare, yacht insurance policies are notoriously demanding and their terms are extraordinarily complicated. To help you navigate these complicated insurance waters, here are our insights to help ensure that you are never left high and dry. Current Conditions Securing yacht insurance has been a challenging task in recent years due to various factors including increasing natural disasters, regulatory changes, and economic shifts. The overwhelming payouts have forced several carriers out of the industry, and those that remained not only increased rates significantly but became extremely picky about who and what they would insure. In fact, today, many carriers would prefer to not cover first-time yacht owners at all. So, the first thing we tell people who ask about insuring a yacht is that the process will be an intricate one. Needless to say, it’s more important than ever to find an insurance professional who has the knowledge to put together a successful package, and the strong industry ties to get it done. The Right Approach For Securing Yacht Insurance Unlike some other more pro forma coverages, this one is neither quick-binding nor set-it-and-forget-it. It will take some work to get adequate coverage, then require more communication with your broker to adhere to the carrier's demands. These suggestions will make it easier to do both: Lean into the process: To obtain insurance, your broker has to paint your circumstances in the best possible light, and that is going to require know-how (theirs) and time (yours). Our watercraft team has the advantage of having worked for carriers, so they understand exactly what underwriters need to see, but they can’t create that packet of information without your help. Be prepared to answer questions: Underwriters want to know everything, from the primary mooring spot (although the bigger the yacht, the less it matters) to cruising itineraries to hurricane contingencies to who is your captain and crew. If you are buying a pre-owned yacht, you also need an accredited appraisal of its condition and value. Keep your insurance professional on speed-dial: Making sure you are properly protected means thinking beyond the vessel itself. Specifically, your insurance professional should review all contracts for marinas, shipyards and the like; few of those entities provide the blanket coverage you would expect them to, instead offloading as much liability as possible onto vessel owners. And to make sure your insurance remains valid, you will need to keep your insurance professional apprised of all operational changes, especially in personnel. Many carriers reject captains who they deem too inexperienced. It’s also important to let the insurer know, via your broker, whenever there are navigational changes. Four Concerns That Could Put You In Deep Water Yacht ownership comes with its own set of potential problems which is why proper coverage is essential. Here are some of the potential worries: Gusts and gales: When the winds blow, vessels get tossed about even when they are tied up at a marina. Big storms can rip pilings out of the ground, and that is bad whether it is your boat’s moorings or not, because once one boat is let loose, it can ping pong destructively through neighboring vessels. During those 2017 catastrophic storms, thousands of boats sank, but many others ended up on dry land, up to 1,000 feet from the water. Lightning: This is becoming more of an issue as vessels become more sophisticated. A strike can wipe out an entire electrical system, and these days that system can cost a million dollars or more. As a result, carriers have increased lightning deductibles. Fire: A bad shore power connection, an engine issue, shipyard carelessness ... any of these hazards can lead to costly damage, particularly because many boats are highly flammable. Groundings: Professional captains significantly cut down on the incidence of groundings and collisions. Nonetheless, the possibility remains, especially in crowded sea lanes such as those off the coast of Florida and in the Caribbean. A Tight Ship: What Needs To Be Covered Appropriate coverage protects you when there is loss of property, liability claims and environmental damage. The essentials include: Hull and machinery: Think of it as property coverage for your boat, protecting not only the vessel and its infrastructure, but also some personal property, tenders and recreational watercraft, even the mopeds you use to zip around towns after you dock. However, though helicopter pads on your yacht can be included, the helicopters will require additional coverage. Protection and indemnity (P&I): This provides coverage for your liability for anything, fixed or floating, that your yacht hits. It also encompasses bodily injury to passengers or the crew, property damage and a mariner’s version of workers comp. You also want your P&I policy to reflect your intended navigation area. If you are going to be cruising internationally, your policy must be able to respond every port around the world (note: this is why a great majority of yachts are covered under one of 13 P&I clubs). Wreck removal: Should your boat sink, the local jurisdiction may mandate that you remove it. That is quite an expensive proposition. Vessel pollution liability: This is another requirement in many jurisdictions— the United States made it mandatory after the Exxon Valdez oil spill. Frequently rolled into P&I, it also covers fines and penalties incurred for causing damage to natural habitats such as reefs. Yachting is almost by definition an interstate activity, so maritime insurance is less regulated than most other coverages. One benefit of this lesser oversight is that much of it can be tailored specifically to your— and your vessels—needs. We understand the tremendous pleasure that you expect to receive from yacht ownership, so we look forward to using our all-hands-on-deck approach to make sure nothing ever rocks your boat. ...

Risks in air: an aviation insurance overview

The majority of our clients spend a good deal of time traveling from place to place, high above the clouds. Some charter a private jet, others fly their own single engine aircraft, and many hop a helicopter to the Hamptons or LA to skip traffic. Almost all of these trips are uneventful, but as risk-management experts we know that often enough the friendly skies are not so friendly. In fact, the lawsuits and payouts resulting from crashes and other midair incidents have become so extreme that they have actually scared off some insurers. In the spirit of better-safe-than-sorry, we’ve created this brief of aviation’s inherent risks and the precautions and policies we recommend to minimize them. When you fly private Though COVID-19 has caused havoc on commercial airline travel, it has been a boon for private charter companies. To reduce contact with the virus, travelers are flocking to charters. A majority of those bookings are being made by new customers, and industry experts believe that once those flyers experience the ease of this type of travel—check-ins only 15 minutes before boarding, no taking off shoes, direct flights, privacy—many of them will be hooked. From a risk-management perspective, however, there is a downside, and it’s one that should be addressed before one pulls up to the airport: You could be held liable should something go wrong on the trip because private flyers select aircraft providers and determine flight paths as well as schedules with the aircraft operating company. Don’t worry—there are ways to counter this concern, depending on your connection to the plane. If you are chartering  Ask for additional insured status. Once the charter company lists you in its insurance policy, you will be protected to the limits of its liability (ideally, a minimum of $25M for helicopters, $50M for turboprops and $100M for jets). This will lessen the burden on your own umbrella liability policy. If you fly private regularly, you might want to consider sticking with one charter company that will give you ongoing additional insured status. Request a waiver of subrogation. After payouts, insurance carriers often seek reimbursements from “responsible parties,” and as a charterer that could include you. Obtaining this protection limits a charter company’s insurer from going after your assets. If you own a jet—or a share of one Make sure you are properly protected: Whether you own a piece of a plane, or all of it,—you’ve entered a higher realm of liability risk. Ownership means signing lots of contracts. Before you do, consult an aviation attorney and insurance professional to ensure you are aware of the risk and have mitigated the potential damage. When you charter a helicopter Autorotation notwithstanding, helicopters defy many of the laws of flight. If an airplane malfunctions, chances are it will glide, slowing its descent. Helicopters, which are traveling at lower altitudes to begin with, fall stone-like to earth. All of which is to say, even a minor accident in a helicopter can be very serious—causing broken backs and necks at best, disfiguring fires and death at worst. Obviously, underwriters know this, so insurance solutions are both significantly more expensive and somewhat limited. For example, one client of ours recently insured a six-passenger turboprop with $50 million in liability coverage for less than $30,000 a year; insuring a seven-seat helicopter in the same market cost a second client $130,000 annually, for a maximum liability of $25 million. So, if you’re thinking about purchasing a helicopter, you’ll likely need to consult a team of experts to get the maximum protection. If you’re chartering a flight, treat it as you would a jet:1) get named as an additional insured and 2) request that waiver of subrogation. When you are the pilot If you don’t get paid to fly, the insurance market considers you a hobbyist. And that means that, regardless of your training, you will be placed in a high-risk category. In other words, you’re looking at high premiums and low liability limits. A recent series of serious accidents and expensive settlements have made the market even tougher. But that doesn’t mean you can’t pursue your passion. Here’s what we suggest: If you own—or want to own—a small plane Talk to trusted advisors first. Insurance professionals and trust and estate attorneys will make sure you and your “bug smasher” are adequately covered. It’s important to note that it will be quite a challenge to protect yourself with insurance policies alone. Your team will need to get creative to fully insulate you against potentially massive payouts. Make sure you are insured when you’re grounded too. Fire, wind, heavy snowloads, hangar collapse, accidents during handling ... there are plenty of risks attached to planes even before you get up in the air. To park your plane, airports require you to sign a contract and show proof of insurance. Some plane owners may wish to self-insure, which will necessitate providing financial statements and written commitments. If you’re learning to fly or flying someone else’s plane Choose a flight school carefully. When you hire someone to teach you to fly, you’re hiring their plane too, and the problem with that is you can’t know how well that plane is being maintained. Once you get in the cockpit, you could be liable if something goes wrong and causes an issue. The lack of control you have in this situation can argue for a more radical solution: It may be worth buying your own small plane and learn to fly it. That gives you oversight over the insurance, so you can rest easier knowing you have the proper coverage. Consider non-owned aircraft coverage. These policies are available to pilots who borrow or rent small planes and to corporations that charter private flights or have employees and executives who fly or would like to fly themselves on business trips. Essentially, they cover bodily injury and property damage that may occur as you operate or use third-party-owned aircraft. If you want to fly a vintage or experimental plane Prepare yourself for an even more challenging insurance market. Seaplanes, home-built, vintage models and the like are treated quite particularly by the industry. Can you obtain coverage? Sure. Will it be quite expensive? Definitely. Obviously, and rightly, there are many factors at play when it comes to protecting yourself in the air. All of them make finding sufficient aviation insurance a challenging task. Challenging, but not impossible—especially if you work with a team of dedicated experts. Should you have more specific concerns, we are always available for a more targeted discussion. ...

Think before you post: a social media risk guide

In the 20 years since the beginning of its now-ubiquitous popularity, social media has transformed both society at large and our personal lives. From Facebook to Twitter, Instagram to TikTok, the various platforms—today used by 72% of Americans, according to the Pew Research Center—now regularly impact politics, commerce, work and relationships. They have inevitably caused a concerning increase in the daily risks assumed by every user. Though risk is rarely considered on a post-by-post basis, as insurance professionals, we are well aware of the negative outcomes. There was, for example, the client whose diamonds were stolen after she posted about them and included her whereabouts. And the client who was sued after uploading false, negative reviews about a retailer whose service failed to meet his expectations. Unfortunately, the list goes on and on. Of course, we don’t expect you or your family members to abstain from social media, but we do want you to know what can go wrong. These are the biggest issues and what we suggest you do to avoid each. Scams and fraud How it manifests: A recent report by the Federal Trade Commission found that criminals are targeting people on social media at an alarming rate. Individuals reported around $770 million in losses from social-media-centric rackets, such as investment frauds and shopping scams, in 2021 alone. These days, many involve fake cryptocurrency payments, with nefarious individuals posing on Twitter, Instagram or Facebook as successful billionaires like Bill Gates and Elon Musk, or as friends or family members to offer “tips” or otherwise ask for financial contributions. We have even seen pretenders declare themselves to be representatives of some cryptocurrency exchange platforms. How to protect against it: No matter how great the opportunity appears, never give money or account information to anyone online. Before investing, we recommend you consult your wealth manager or financial advisor. Legitimate opportunities can always be vetted. Note that even if you maintain fraud insurance and/or cyber policies, it is important to act prudently as coverage may not apply for every situation. It is also important to speak with your insurance advisor, regardless of the coverage you have in place. In short, no one is shielded from bad decision making or improper vetting. Digital doors to your home and accounts How it manifests: You might think you are sharing something mundane, but expert eyes can put it to use for their own unsavory purposes. For instance, whenever you, your children or even your household staff post photos of your home and its surroundings, it can potentially provide outsiders with information about entry points or the art hanging on your walls or the times of the day you are usually home—or more notably, not there. Similarly, if you post about things like your birthday, your pet’s name, or your favorite movie, you may be providing scammers with information that could help them decode your password, allowing them entry into accounts and other private online areas. How to protect against it: Use privacy settings to your advantage. The best option would be to keep all social media accounts private, so you are only sharing information with a curated group of trustworthy followers. Make sure your children and domestic employees do the same. Also, always elect to use 2-Step verification when offered by an app or website login. Liability, libel and slander How it manifests: While those in the public eye face a greater degree of risk, anyone who participates in a public forum is responsible for the words and views they put on display. This can affect you adversely in a few different ways: If you are an influencer who is commodifying aspects of your lifestyle, you may not be covered by your personal insurance should someone sue you for libel, slander or bodily injury since that could be considered a business pursuit and therefore a commercial exposure not covered by personal insurance. Similarly, if your teenager is an influencer, whatever they say or do can be connected to you as a parent. The age at which they are deemed independent adults varies by state, so parental responsibility may hold even for those living away from home in “hype houses”, with other content creators. The risk is comparable to that of children living in fraternities, where liability responsibilities ultimately land on the parents. If your child bullies someone online or pulls a harmful prank, you may be held liable for damages. If you publish negative comments that are not based on facts on Twitter, Yelp, Google, or any other platform, you could be held liable for slander and defamation. This is especially true if you attack the character of an individual or business or otherwise intentionally aim to injure their reputation. How to protect against it: Influencers and others who use social media commercially should create and operate under a commercial entity such as an LLC, thus creating distance between the enterprise and personal assets. They should secure commercial liability insurance too. Regardless of whether your children are influencers or not, speak to them about the serious risks of social media and how to post safely. Of course, you also need to be careful about the content and tone of your own published comments. Only write posts that are fact-based and defendable. Remember that whatever you say in the public sphere can be used against you, legally and otherwise. To that end, we encourage you to be mindful about what you are sharing and especially with whom. We also always recommend that clients incorporate cyber insurance and excess liability policies in their risk-management portfolio, as they offer additional layers of protection, especially if you regularly use social media. If you have any concerns about risk related to social media usage, we are, as always, here to discuss and advise. ...