Do You Need To Insure Your Home Business?

Driving to clients' homes always made Brandi Greygor nervous.

As the owner of Sassy Mama Boutique, Greygor often drove as much as $10,000 in women-and-kids' clothing and accessories to home parties and exhibition halls. She would set up merchandise, which then
sat overnight unattended before an event took place.

Greygor wasn't so worried about a dismal sale. She had no business insurance, and if a child were injured using one of her toys or a shopper was hurt, she could be sued for health-care costs. Also, if anything went wrong – if, say, merchandise were damaged, lost or
stolen Sassy Mama would face a big loss.

"That $10,000 of wholesale merchandise is $20,000 to $30,000 of income, if I were to lose that," says Greygor, who is based in Union, Ky. Her 1-year-old home-based business was uninsured for more than nine months until April, when her worries about her risks led her to purchase insurance coverage. Sassy Mama's story is a common one.

Sixty percent of home-based businesses lack adequate business insurance, according to the
Independent Insurance Agents & Brokers of America, based in
Alexandria, Va.

One reason owners forgo insurance is confusion over what may be already covered by a homeowner's or a renter's policy.

But most home-business owners have little or no coverage from their homeowner's policy. What's more, if you file a homeowner's (or renter's) claim for losses sustained by a previously undisclosed home-based business, your insurer may refuse to cover it or cancel your policy, says Ryan Hanley, an insurance agent at Murray Group Insurance Services in Albany, N.Y. At best, you might receive a small reimbursement.

"People do not realize that if the UPS guy comes to your door with a business package in his hand and slips and hurts himself, there is no
coverage for that injury in their homeowner's policy," Hanley says.

If you’re doing business at home, you’re smart to have insurance. The amount of your sales doesn’t matter. The amount
of loss you could face should something go wrong is what counts.

So how can an entrepreneur protect a home-based business? Start
by insuring your business right away. You can choose from one or more of these three basic types of insurance, depending on your
business's complexity and type.

1. Rider to a homeowner's or renter's insurance
policy

The most inexpensive home-based business insurance is an add-on
or rider that expands a homeowner's or renter's policy to cover the
company.

The cost of such a rider is minimal -- perhaps $100 a year but it generally provides about $2,500 of additional coverage, says Loretta Worters, vice president of the Insurance Information Institute in New York City, an industry trade group and information clearinghouse.

This type of insurance may be appropriate for a one-person business without a lot of valuable equipment or many business-related visitors, and unlikely to suffer a major loss if unable to operate for a while as a result of fire or another disaster.

Such coverage may work, for example, for an accountant who works at home preparing customers' taxes and delivers the returns via email, Hanley says. But it could leave a home-based business owner on the hook for costs such as a large medical bill for that injured
UPS man.

2. In-home business policy

An in-home policy covers a broader spectrum of contingencies, including loss of critical documents or theft of funds being taken to the
bank for deposit.

An in-home policy, issued by a home insurer or a specialty firm, usually is a plan against injury or theft covering as many as three employees, Worters says. Rates typically run from $250 to $500 and the plans can cover as much as $10,000 in losses.

Most serious home-based business owners may want to consider picking up at least an in-home policy, says Rebekah Marshall, multiproduct insurance manager at the National
Federation of Independent Business.

"This covers business equipment
and liability [for injury]," she says. "That's important if
people are coming in and out."

If you're interested in an in-home policy, you’ll need to find one that will cover your business type in your state. Each state sets its
own rules about the insurance coverage that can be offered to home-based
businesses.

In general, given the low coverage amount, purchasers of in-home policies often operate low-revenue or part-time businesses .
3. Business owner's policy Entrepreneurs who need more than $10,000 of coverage should pay for a business owner's policy. This comprehensive policy is what brick-and-mortar retailers, among other businesses, use, Marshall says.

Circumstances usually covered by this type of plan include damage to or loss of business equipment and other assets, liability for customer injuries, loss of critical records, malpractice or professional liability claims, and loss of income or a business interruption in the case of a power outage or a natural disaster. Such a policy might also protect you when driving a personal vehicle for business purposes.

This insurance protects against a higher amount of loss than a homeowner’s policy rider or an in-home business policy.

Videographer Logan Hale, owner of 2-year-old Your Little Film in Los Angeles, paid about $500 for a $2 million business owner’s policy to cover his $25,000 of equipment against breakdown, theft or damage.

His plan also covers loss or damage to home movies sent to him by customers, as well as injury or property damage inside a client's home or public venues. He shopped
around a bit before Los Angeles-based Farmers Insurance agent Rodney Pyle found a specialized policy for videographers, he says.

"As I started increasingly going into people’s homes to shoot, it really pushed me to say ‘2011 is about getting covered,' " he says.

“Now I feel so much safer, knowing I'm not putting my family at risk for a possible lawsuit."

As your company grows, it may require additional coverage not covered by a business owner's policy, Marshall says, such as life insurance, workers' compensation, and business-vehicle insurance. But for most small businesses, the business owner's policy can provide a suitable basic safety net.

Business owner's policy "is an investment in the business you should make if you're serious about what you're doing," Marshall says.

Greygor is relieved that Sassy Mama is now covered by the business owner's policy she purchased in April, especially the protections in case a customer is harmed by a product, she says. Like Hale's, her policy has $2 million worth of coverage.

"I'm a mom," she says, "and I wouldn't ever want to be looking at another mom and saying I don't have enough coverage for
[her] injured child to be taken care of."

Fidelity National Financial To Acquire Stewart Information Service At A Whooping $1.2b

Fidelity National Financial (FNF), the world’s largest title insurance company, has announced an agreement to acquire title insurance company Stewart Information Services Corporation.

FNF will acquire Stewart for $50 per share of common stock, representing an equity value of about $1.2 billion.

The consideration will be paid half in cash and half in FNF stock.

Stewart is one of the country’s leading title insurance companies, and provides residential and commercial title insurance, closing and settlement services, appraisal and valuation services and other offerings to the real estate industry.

“We are excited to welcome Stewart, its employees and its customers to the FNF family,” said William P. Foley II, chairman of FNF.

“The venerable Stewart brand has a long and respected history in the title insurance industry, and we see tremendous potential in working with the Stewart management team to invest in and grow the Stewart brand on a national basis as part of our longtime, successful strategy of operating multiple title insurance brands under the FNF umbrella.”

“We are very familiar with Stewart in the marketplace and see multiple areas where we can assist and accelerate Stewart’s growth plans,” said Raymond Quirk, CEO of FNF.

“We also believe there are significant operational efficiencies we can bring to bear by leveraging FNF’s shared-services infrastructure that will
provide meaningful long-term value-creation opportunities for our shareholders.”

The agreement is subject to Stewart stockholder approval, federal and state regulatory approval and other
conditions. The transaction is expected to close in the first or second quarter of 2019.

Foreign Buyers in US Insurance M & A Market To Evolve in 2018

The US insurance market continues to be an attractive prospect for foreign buyers. Direct investment via mergers and acquisitions (M&A) from foreign countries into the US insurance industry has shot up by $70 billion since 2013, according to the Bureau of Economic Analysis.

Global professional services network Deloitte expects to see a continuation of inbound M&A interest into the US throughout 2018, especially in the P&C and specialty insurance segments. The firm highlights interest from.Asian buyers in its 2018 Insurance M&A Outlook report , suggesting available capital remains abundant in counties like Japan, China and Taiwan.

Market trends also suggest the potential for heightened interest by European buyers as they reevaluate the role the US market will play in their business portfolios. The
US dollar has been falling relative to the euro and the pound over the last year, but that could change given continued interest rate increases in the US, according to Deloitte.

“Foreign buyers have been one of the most important stories in the US insurance M&A market over the past several years, in particular buyers from China and Japan,” said Boris Lukan, M&A and Restructuring Leader, Insurance, Deloitte.

“We believe foreign participation is likely to evolve throughout 2018. Moving forward, we expect Japanese and European companies to be active, but we expect Chinese activity to drop off slightly.

“Chinese insurers have had a difficult time with regulation both in their home country and here in the US, where they’re facing pressure from state and federal
authorities.

It has been challenging for them to provide sufficient information that gives transparency into ownership and control of the parent company. This has caused Chinese/US transactions to be delayed or broken up entirely.”

China’s Oceanwide Holdings is going ahead with a $2.7 billion acquisition of US insurer Genworth Financial, despite delays caused by concerns around Chinese access to sensitive US personal data.

The acquisition deadline was extended from November 2017 to April 2018 to give Oceanwide time to amend their proposal in order to win the approval of The US Treasury Department’s Committee on Foreign Investment in the United States.

Chinese investors are also facing pressure from within China, where the government is putting value constraints on outbound investment deals and M&A transactions.

“In contrast, Japanese companies have been substantially more successful in providing the transparency that regulators seek,” Lukan said.

“European companies are also in a strong position to participate in the insurance M&A market in the US.

Given the decline of the US dollar against a basket of foreign currencies, and improvements in stock valuations in Europe - which provides companies with a stronger acquisition currency – we anticipate more European involvement in the US market through 2018.”

Lloyd's Coverholders to Enjoy Extended ACORD Membership

All Lloyd’s coverholders are now eligible for a free custom membership with ACORD, the global standards-setting body for the insurance industry.
In support of the London Market Target Operating Model (TOM), the partnership will see Lloyd's coverholders gain access not only to ACORD Delegated Authority Data Standards but to training and other valuable resources as well. Benefits include implementation support and having a platform to collaborate on the Delegated Authority Standards.

“We’re pleased to extend ACORD membership to all Lloyd’s coverholders,” commented ACORD president and chief executive Bill Pieroni. “With this unique agreement, Lloyd’s coverholders will be able to leverage key ACORD Standards.

This will help further drive deployment of straight-through processing, ensuring both efficiency and effectiveness across stakeholders.”

With offices in London and New York,
ACORD facilitates fast and accurate data exchange, as well as efficient workflows, by developing electronic standards, standardized forms, and corresponding tools. Worldwide members include insurance and reinsurance firms, agents and brokers, software providers, financial services organizations, and industry associations.

“The modernization work under the banner of TOM is making further strides towards creating a market that is highly accessible, efficiently run, and relevant to the
needs of customers,” said Lloyd’s chief operating officer Shirine Khoury-Haq.

“Providing coverholders with access to ACORD resources will make it easier for them to do business with the London Market and enable them to engage in the DA SATS (Delegated Authority Submission Access and Transformation) phase of the TOM initiative.

“This is about delivering better solutions to our customers with smoother processing in a more consistent manner, and enabling one-touch data capture for the London Market.”

ACORD vice president of standards and membership Malou August, meanwhile, believes the global insurance industry is now evolving beyond the often inefficient and time-consuming task of manual reporting, with many already embracing the advantages of standards-driven automation.

60-80% of Data Is Not Accessible For Decision Making - Insurers

Life insurance companies worldwide have a big data problem.

While other sectors of the insurance industry, like P&C and health are embracing the benefits of data analysis, artificial intelligence and new technology, many life insurance companies are still lagging far behind.

For the life insurance industry to evolve in the US and beyond, the effective utilization of big data is crucial, according to Dror Katzav, CEO of Atidot, a provider of big data and predictive analytics tools for the life insurance
industry.

Atidot is a cloud-based platform tailored specifically to the needs of the life insurance industry, which enables life insurers to make data-driven business decisions, while simultaneously enhancing their services to cater to the unique requirements of their customers.

“Probably the biggest challenge life insurers are facing is how to work with and monetize the tremendous amounts of data they collect,” Katzav disclosed.

“Many companies we talk to are saying 60-80% of their data is not accessible for decision making.

“Ideally, what they need to do is augment their data with external sources who can run predictive models to help them understand the consumer, and then leverage that predictive analysis to make business decisions.

Those who fail to do that are facing an economy where maybe 40-60% of their book of business is not breaking even. The money they spend on things like acquisitions, underwriting and administration is not being earned back in premiums because customers are churning and lapsing before they get to profitability.”

Legacy systems and methodology are two key barriers preventing life insurers from evolving into fresh digital age carriers. Some are dragging along legacy technology that’s 50-years-old and does not have the ability to produce the high-quality data insights that consumers expect today.

For example, consider a life insurance company with a book of business of 100,000 policyholders. The question
is: who among this customer base needs to increase their coverage?

Legacy technology might group the policyholders by age and gender, whereas big data analytics can provide insights that are much more fine-tuned around things like address and employment changes.

“Predictive analytics and big data enables much better lead generation and provides companies with a great trigger point for conversation with a consumer,” said Katzav.

“Customer satisfaction is becoming more and more relevant. Our task is to help companies monetize and use their data to improve their insurance solutions, distribution methodologies and customer services.

“From our experience at Atidot, most life insurance carriers are eager to find their way in this new world.
The reaction we’re getting to our solution is amazing.

We’re giving life insurers a whole new layer of understanding on how to approach the customer and how to serve and address their insurance needs
properly. It’s definitely a win-win solution for everybody.”

Data Expertise of Tech Giants Could Challenge Insurers

Amidst all of the worrying over Amazon’s eyeing of the insurance market, many have been consoled by the idea that entering a complex, highly-regulated industry is no easy feat for a newbie – we know Google has already had a failed crack at it.

But the vast amount of data held by tech behemoths, and the insight that it can offer into consumer habits, may well give them an edge over insurers still struggling to get to grips with technology, according to some.

“It wouldn’t take much for a big tech giant to start offering insurance, given what they know about people
already,” Sanjay Parekh, CEO of Cocoon.

The insurance industry has been slow to adapt to technology so far – but for good reason, says Parekh.

“Insurance companies generally have established processes that have worked well for decades, and in some cases hundreds of years. They’ve been built at a steady rate, and built for a very process-driven industry that’s very highly regulated,” he said.
In contrast, the tech industry isn’t subject to much regulation, and exists in a state of continual advancement and transformation.

“In many ways it’s inevitable that the two different approaches are quite often in conflict.

Having said that, the insurance industry in general needs to try and look at ways of departing from its standard processes to incorporate some of the technologies that are available,” the CEO said.

The danger lurking for incumbents is the pace of change, which could take them by surprise should they fail to keep up.

Short-term, the industry may go on unscathed – indeed we have seen many insurers posting healthy profits recently – but that’s likely to be a different story in 15-20 years from now, says Parekh.

“The insurance industry is a data-driven industry, ultimately, and there are lots of very large technology businesses that know a lot more about customers than the insurance industry itself knows,” he said.

Andrew Holderness, global head of corporate insurance at law firm Clyde & Co, echoed similar sentiments in a recent interview with Insurance Business, highlighting the power behind e-commerce giant Amazon.

He said: “If you have, as Amazon clearly does, a customer base…in the high millions, and the data behind all of that as to what it is that you and I are buying, and where we are buying it, etcetera, you have
two very powerful pieces of information.”