Lloyd’s of London is unmoved by the recent release of hacked documents relating to the 9/11 terrorist attacks of 2001.
The insurer denies that its systems and corporate networks were compromised by any cyber incidents of late, especially from a hacker group calling itself ‘The Dark Overlord’.
Speaking to The Registeron Thursday, a Lloyd’s of London spokesperson said: “Lloyd’s has no evidence to suggest that the Corporation’s networks and systems have been compromised and remains vigilant with a number of protections in place to ensure the security and safety of data and information held by the Corporation.”
On New Year’s Eve, The Dark Overload hacker group posted online messages about possessing 18,000 secret documents of the 9/11 World Trade Center towers destruction and litigation/settlement cases. The group threatened to release the document files if no payment was made to their bitcoin account.
The Dark Overlord twitter thread
The hacker group says, it’s financially motivated and would release the files in layers and payment milestones. On Friday, the group made Layer 1, which includes several checkpoints, available after receiving a total of 3.27 BTC ($12,550) on their bitcoin address.
However, the files appear to be merely documents of emails communication between several law firms, such as Husch Blackwell (formerly Blackwell Sanders), and insurers like Hiscox that convey the litigations co-operation agreements and main parties background information.
Nonetheless, Hiscox immediately distanced itself from the rumours. In a statement, it said “The online posts relate to an incident we reported in April 2018 (view here), when we were made aware that a US law firm that advised Hiscox, some of our commercial policyholders and other insurers, had experienced a data breach in which information was stolen.”
The insurer added “The law firm’s systems are not connected to Hiscox’s IT infrastructure and Hiscox’s own systems were unaffected by this incident.”
On Wednesday, twitter suspended the hacker’s group account for breaching its policy by publishing hacked materials. The group then moved on Reddit but the account was also banned. In response, The Dark Overlord is now publishing its announcements on the blockchain powered social network Steemit.
Meanwhile, Lloyd’s said that they will continue to monitor the situation closely, including working with managing agents targeted by the hacker group.
America’s chief investment regulator, the Securities and Exchange Commission (SEC), is cracking down on robo advisers. In particular, the SEC is fining prominent robo advisers for misleading clients, improper advertising, and lack of compliance.
The SEC accuses Wealthfront of exaggerating the capabilities of its robo adviser, a press release states. For instance, Wealthfront allegedly claimed its robo adviser could monitor all of its client accounts to maintain a tax-loss harvesting strategy.
The SEC alleges the robo adviser did not monitor the accounts. Hence, the tax-loss harvesting strategy may not have been implemented as Wealthfront promised in advertising.
A tax-loss harvesting strategy can theoretically reduce clients’ tax liability by selling certain assets at specific times, as explained in their promotional video below. Thus, Wealthfront clients could have paid taxes they might have avoided.
In addition, Wealthfront tweeted unproven testimonials about its products and paid bloggers to promote its services, the SEC charges. Moreover, Wealthfront failed to maintain a compliance program required by US securities laws, the SEC charges.
Wealthfront will pay the SEC $250,000 (£197,631) to settle its case, Business Insider reports. In addition, Wealthfront will certify compliance and tell its clients about the order.
Robo adviser Hedgeable shuts down
The SEC alleges another robo adviser, Hedgeable, failed to comply with securities laws or properly document its transactions. Plus, Hedgeable is accused of making misleading statements about its robo adviser’s performance.
Hedgeable reportedly withdrew from the investment business in August 2017. However, Hedgeable’s app and website are still online. Additionally, the company paid an $80,000 penalty for offering misleading comparisons of its robo adviser’s performance to competitors.
In particular, Hedgeable offered performance comparisons that were not based on competitors’ actual-trading models, the SEC alleges. Moreover, Hedgeable’s robo-adviser platform did not include an effective regulatory compliance program, the SEC alleges.
Robinhood’s regulatory troubles
Another popular robo adviser platform Robinhood is accused of violating US banking regulations. Robinhood is a popular stock-picking robo adviser that suddenly dropped plans to offer “cash-management” accounts shortly before Christmas 2018.
Barron’s accuses Robinhood of offering savings and checking accounts not insured by the Federal Deposit Insurance Corporation (FDIC). To explain, the FDIC is a government agency that insures most bank accounts against loss in the USA.
Robinhood robo advisor app on Android store
However, Robinhood’s accounts were supposedly insured by a private trade association called the Securities Investor Protection Corporation (SIPC) not the FDIC, Barron’salleges. Notably, Robinhood stopped offering the accounts 36 hours after the allegations.
In fact, SPIC CEO Stephen Harbeck told Barron’s his organization was not insuring the Robinhood accounts. Tellingly, Barron’s reports Harbeck threatened to file an SEC complaint about Robinhood’s activities.
Senators want robo-advisers crackdown
Robinhood’s activities even attracted the attention of the United States Senate.
Seven US Senators wrote a memo asking the SEC and the FDIC to investigate Robinhood’s bank accounts on 20 December 2018, CNN reports. The senators asked the agencies to determine if Robinhood was misleading customers.
Plus, the senators want to know how the FDIC and SEC monitor fintech startups. Not coincidently, the SEC’s announced its actions against Hedgeable and Wealthfront on 21 December 2018.
Therefore, political pressure for a crackdown on robo advisers and similar products like cryptocurrency exchanges is growing in the United States. Under those circumstances, more companies are likely to follow Hedgeable’s lead and pull out of the robo-adviser business.
Risks from robo advisers
The SEC actions and the Robinhood saga indicate there could be significant risks from robo advisers and other next-generation investments platforms.
Significantly, the Robinhood story indicates many of the platforms offered by such platforms are not insured. Thus, there is a risk the robo advisers could run out of money and require a government bailout.
Managed assets like hedge funds run by robo advisers can cause financial crises or make them worse. For instance, the infamous hedge fund Long-Term Capital Management (LTCM) nearly triggered a global financial crisis when it ran out of money in 1998.
Only a bailout organized by the US Federal Reserve prevented LTCM’s complete collapse. The fear is that funds controlled by robo advisers or artificial intelligence (AI) could collapse as LTCM did.
Thus risk managers need to examine the dangers created by new technologies like cryptocurrencies, decentralized exchanges, AI, and robo advisers. Moreover, there is a need for new insurance products to cover the risks created by robo advisers.
Hong Kong-based digital insurance start-up Bowtie has raised $30 million in its Series A funding round, led by Canadian insurance company Sun Life Financial.
This marks a significant milestone for Bowtie, which recently became Hong Kong’s first online only insurer to receive a virtual license from the region’s insurance regulator, the Insurance Authority (IA).
Hong Kong’s IA is serious about pushing the digital transformation in the insurance industry, so it chose to launch a fast-track approval system to provide virtual insurer licenses in September 2017. The program has garnered a lot of interest, as more than 40 companies have applied for these licenses, serving the IA’s vision of “pushing insurtech in Hong Kong to give more choice for customers.” Bowtie is the first beneficiary of this vision.
Bowtie’s vision
Bowtie, which was founded in 2017, will use this funding to launch its online-only, health and life insurance products to customers in Hong Kong in the first half of 2019.
Fred Ngan (left) receiving Best FinTech Awards 2017
That should allow the digital insurance start-up to disrupt the multibillion-dollar insurance market in Hong Kong thanks to its low-cost nature of operations.
Bowtie’s virtual insurer license means that it won’t be able to maintain any physical locations. It can only offer its services direct to the customer through digital channels such as computers or smartphones, eliminating the need for banks, agents, physical paperwork, and location-related costs.
As a result, Bowtie can pass the benefits of its online-only model by offering commission-free health insurance to clients.
Fred Ngan, the Co-founder and Co-CEO of Bowtie, said: “The online business model allows us to run at low cost – we only need about 50 people to develop the technology and provide customers services. We don’t need to share any commission with agents or banks so we have a cheaper distribution channel than the traditional insurance companies.”
Ngan is going after the low-hanging fruit in the Hong Kong insurance space. He goes on to point out that Bowtie doesn’t intend to compete with traditional insurance companies who sell complex policies with high sums.
Instead, Bowtie is looking at simple products in the life and medical insurance niches that don’t attract the attention of traditional insurers and agents because of low margins.
However, Bowtie can maintain a low cost base thanks to its online-centric model, which allows it to go into areas where legacy insurers wouldn’t pay much attention. This vision seems to have attracted some big names.
Apart from insurance behemoth Sun Life, Bowtie’s Series A backers also includes Hong Kong X Technology Fund, which is backed by Sequoia Capital managing partner Neil Shen and Tencent founder Pony Ma.
Sun Life InsurTech strategy
Sun Life believes that this investment will allow it to go after an under-served opportunity in the Hong Kong insurance space. Fabien Judy, Sun Life Hong Kong CEO, opines that people are under-insured in the life and health insurance sectors in the region.
He points out that the Bowtie investment is a part of Sun Life’s digital transformation, which would possibly help it attract more customers through the online channel. However, the two companies will operate as separate entities.
Sun Life’s investment in Bowtie makes sense as the online insurance is gaining tremendous traction. An EY survey has found out that over 80% insurance customers across the world are open to using digital interfaces such as smartphone applications instead of going through traditional channels that involve brokers, agents, or banks.
GoCompare, one of the UK’s top price comparison aggregators, has partnered up with fraud prevention expert Featurespace to improve the detection and prevention of fraudulent activities on its website.
Online fraud has become a major issue for many industries, and is now the most commonly experienced crime in England and Wales. According the ONS (Office National Statistics), it accounts for 42% of all estimated offences, approximately one in six offences are incidents of online fraud.
Over the years, GoCompare has built one of the most popular online insurance comparison and switching platform in the UK. Its success has also brought problems such as fraud, which it had to address with mixed results.
Fraudsters, being smart people, use clever but unscrupulous tricks to manipulate online comparison platforms (aggregators). They tend to use quote manipulation, application fraud, ghost broking, and many other practices. All of these have had negative effects on the platforms, especially in terms of trust.
Featurespace, Cambridge-based adaptive behavioural analytics world leader, developed a machine learning software hub that can monitor customers’ data in real time. The hub branded as ARIC (Adaptive, Real-time, Individual, Change-identification) Fraud Hub features functionalities that spot anomalies, block new fraud, and recognise genuine customers.
GoCompare, with the help of Featurespace’s ARIC Fraud Hub, intends to tackle fraudulent transactions activities furthermore, thus adding to its existing efforts in combating fraud.
Fleur Lewis, GoCompare’s Head of Fraud said: “We recognise that comparison websites act as the gatekeepers of data for many insurers and that we have an important role to play in the prevention of front-end fraud.”
“We recognise that comparison websites act as the gatekeepers of data for many insurers and that we have an important role to play in the prevention of front-end fraud.”
Fleur Lewis, GoCompare’s Head of Fraud
Lewis sentiment is shared by the Insurance Fraud Taskforce recent 2017 report, which also recommends the aggregators to interact with existing fraud databases, such as the Claims and Underwriting Exchange (CUE), and data sharing schemes on a consistent basis. This could help improve the industry’s ability to detect fraud at the point of quote.
Monitoring customers’ behaviours
Claims history, points on a driving licence, and or car modifications are some of the material facts would-be customers deliberately fail to disclose in order to lower their insurance premium.
One of key features of Featurespace’s ARIC Fraud Hub is that the system monitors the real-time behaviour of each applicant, and therefore can detect and alert any anomalies spotted.
According to their website, Featurespace’s ARIC Fraud Hub platform uses Bayesian statistics algorithms to build the individual customers profiles. Bayesian statistics refer to the branch of statistics that relies on the Bayesian inference model. The model is one of the key building blocks of machine learning (ML) and artificial intelligence (AI) technologies in recent times.
Featurespace’s ARIC Fraud Hub platform
The model works by applying probability to statistical problems. This simply means that the probability of observing an event A, given a prior realised event B plus background information, is inferred. Essentially, the approach attempts to link established background information with incoming evidence to predict the probability
In practice, GoCompare will now be able to compile a model of every potential customer’s likely behaviours based on their online transactions. If a customer interacts with the website in a way that doesn’t match their profile, the Featurespace software will alert the GoCompare’s fraud prevention team
One fraud every minute
These new capabilities will not only help GoCompare ensure a frictionless customer experience but also provide its insurance partners with genuine customers – thereby reducing their operational costs and losses.
Last August, the ABI (Association of British Insurers) revealed the true extent of insurance fraud in the UK, where one insurance fraud is detected every minute. In total, detected and undetected fraud costs an estimated £3 billion each year.
The effects of fraud are premium increases for genuine customers, GoCompare with the new Featurespace partnership aims to reduce that burden.
Deutsche Bank settled a €4 million fraud investigation with German public prosecutors for its role in helping clients carry out dubious tax deals, Bloombergreports.
The settlement puts an end to a probe known as ‘Cum-Ex’ deals. The Frankfurt-based prosecutors identified the troubled bank as one of the parties facilitating the controversial tax schemes.
While Deutsche Bank denies its involvement as being the intermediary of the tax deals, it recognizes its role in the activities of some of its clients. The charge against the bank relates to deals done by individuals investigated in the probe, which the bank acted as a custodian for.
Bloomberg reveals that a payment of €540,000 (£486,000) was made to the prosecutor’s office. This resulted in the cases against three of the six individual suspects being dropped. The agency currently handles eight cum-ex probes. The €4 million fine ends parts of the cum-ex investigation which relates to raids made in September 2015.
Cum-Ex trading
The so-called ‘Cum-Ex’ deals were based on complex tax schemes that allowed owners of shares to claim refunds, more than once, for tax paid on dividends payouts – thus effectively syphoning off taxpayers’ money into investors’ pockets.
Profitable companies, that decided to reward investors who owned their shares, did so by paying a sum of money out of their profits (or reserves) at the end of their financial year. This payment is called the dividends.
Upon receiving their payments, investors are charged a dividend tax at source. In Germany, it’s currently at 25%. However, foreign investors can request a refund from the tax authorities.
Around the dividends payment day, shares of large companies were sold and bought back via a network of banks, stock traders and lawyers. The shares changed hands so quickly that the tax authorities were unable to identify who the true owners were.
Working together, investors then claimed multiple refunds for tax paid on the dividends and pocketing the profits amongst themselves, while the treasury footed the bill.
The man behind this scheme is allegedly former government tax expert, Hanno Berger, who jumped ship to become one of Germany’s most profitable tax attorneys. His clients included Adidas, Karstadt and the family that owns BMW.
It took a cross-border investigation of 38 reporters, 19 media over 12 countries, digging 180,000 pages of documents to expose possibly one the biggest tax robbery in European history.
The European Parliament acknowledges the estimates that the fraud have cost Germany around €25 billion, France €17 billion, Italy €4.5 billion, Denmark €1.7 billion and Belgium €201 million.
Stronger EU tax authorities needed
During a plenary session held on the 29 November, European Union MEPs called for an inquiry, rule changes and stronger tax authorities to avoid a repeat of the cum-ex tax fraud scandal, which cost member states more than €55 billion.
ESMA & EBA inquiry
MEPs have called on the EU’s European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) to conduct an inquiry into the schemes that defrauded member’s tax authorities.
The financial regulatory agencies need to assess the potential threats to the overall EU financial markets and establish the participants involved. In addition, they need to evaluate if national or EU laws were breached. The agencies should also examine whether national supervisors took actions against the wrongdoers.
EU rule changes
In spite of recently adopting the sixth update of the Directive on Administration Cooperation – DAC6, MEPs urge for additional changes to the Directive that also oblige the disclosure of schemes established for dividend arbitrage.
The adopted DAC6 aims to enhance tax transparency and combat aggressive tax planning across the European Union (EU)
Improve tax surveillance
MEPs also call on the Commission to propose a European framework for cross-border tax investigations, the setting up of an EU Financial Intelligence Unit, and an early warning mechanism.
Member states must invest in and modernise their tools, provide adequate human resources to improve surveillance, and ensure better information sharing between tax authorities
Only then EU tax administrators can successfully deal with any new aggressive cross-border tax schemes.
For the time being, Deutsche Bank is let off the hook with this settlement. However the company is still battling further pending investigations.
General Electric (GE), one of the most iconic names in American business, is cracking up because of debts. A company founded by Thomas Edison is selling assets to survive.
“This is a slow-motion break-up of the company,” Stifel analyst Robert McCarthy tells CNN Money. For example, GE is selling off core businesses such as lighting and healthcare to raise cash.
In addition, some of GE’s oldest and most prestigious components including its railroad division are probably for sale. The plan is to raise enough cash to pay off debts and pension obligations.
General Electric had $114.9 billion debt and $263.5 billion in liabilities on 30 September 2018. Yet it generated $122.1 billion in revenues in 2017, Stockrow reports. Thus, GE cannot pay its debts with current resources.
Not surprisingly, General Electric reported a net loss of $22.8 billion and an operating loss of $20.9 billion on 30 September 2018. Under those circumstances, the only way GE can raise money is to sell assets.
However, the value of those assets may not cover General Electric’s debts. For instance, analysts value the lighting business at $600 million to $800 million, LED Insidereports.
GE could face bankruptcy
Yet General Electric faces over $15 billion in obligations from its failed finance company GE Capital, The Financial Times estimates. Thus GE could be incapable of paying its debts and facing bankruptcy.
Additionally, General Electric’s pension fund is facing a $29 billion shortfall, Forbes contributor Ken Kam calculates. To explain, the amount of pension payments GE is obligated to make exceeds the cash in the pension fund by $29 billion.
Markedly, Kam thinks bankruptcy is the only way GE can avoid making those pension payments. To clarify, if General Electric declares bankruptcy it can transfer the pension obligations to a government agency called the Pension Benefit Guarantee Corporation (PBGC).
USA corporate debts risks
The situation at General Electric puts a spotlight on USA’s corporate debts and pension crises. In detail, GE is one of many America corporate giants with massive amounts of debt and pension obligations.
For instance, struggling automaker General Motors (GM) recorded total debts of $102.3 billion on 29 November 2018. Consequently, General Motors announced a massive cost-cutting plan on 20 November 2018. The cost-cutting plan will eliminate 14,000 jobs, several factories, and several vehicles, The Detroit Free Pressreports.
GE and GM are trying to avoid the fate of retail legend Sears which declared bankruptcy on 15 October 2018. Sears filed bankruptcy because it could not meet a $134 million debt payment.
Like GE, Sears is selling assets including its iconic Craftsman tools and Kenmore appliances brands. Sears is trying to avoid liquidation with a total reorganization and loans from Cyrus Capital Partners.
Moreover, Sears is struggling with pensions just like GE. Former Sears CEO Eddie Lampert admits contributing $4.5 billion to pension plans between 2005 and 2018. Sears must make payments to 90,000 pensioners.
General Motors, for its part, contributed $1.1 billion to US pension plans in 2017, according to Pensions & Benefits. In addition, GM contributed $1.2 billion to Canadian and UK pension plans in 2017.
It is estimated that the total US corporate pension plan obligations were $68.5 billion on 31 December 2017. However, America’s corporate pension plans had $62.9 billion in assets on the same day. Thus America is facing a corporate pension crisis.
General Electric at a glance
Finance legends JP Morgan and Anthony Drexel formed the company that became General Electric in 1889 by merging two companies. One of GE’s predecessors was the firm Edison organized to commercialize his light bulb.
Today, General Electric’s products include commercial and consumer finance, locomotives, jet engines, water treatment systems, power grids, appliances, and generating plants. General Electric’s former subsidiaries include the American television network NBC, which it sold in 2011.
General Electric was one of the companies that built America. GE’s debt-driven crack up could be the beginning of a new American economic crisis.
After 20 months of negotiations, the 27 European Union (EU) leaders finally agreed to the UK’s Brexit deal at last Sunday 25 November 2018 Brussels summit.
A satisfied Theresa May, UK Prime Minister, urged both Leave and Remain voters to unite behind the agreement, as it marks the culmination of UK exit negotiations with the EU and also the start of a crucial national debate.
During her briefing, May said: “The British people don’t want us spend any more time arguing about Brexit. They want a good deal done that fulfils the vote and allows us to come together again as a country … In parliament and beyond it, I’ll make the case of this deal with all my heart and I look forward to that campaign.”
On 11 December, May will put her Brexit deal to Members of Parliament (MPs) in the House of Commons, with the intention of getting an approval. So as to facilitate the UK’s exit from the European Union planned on the 29 March 2019.
However, the narrow nature of the Leave victory in the 2016 referendum has made Brexit a deeply divisive issue in the country ever since. While some favour the deal, many on both sides of the argument have come out against it.
Deal strong oppositions
For many Leave voters, the agreement shackles the UK to a Customs Union and Single Market for an indefinite amount of time. This part of the deal – known as the backstop – was designed to stop Northern Ireland being treated differently from the rest of the UK, in assuming regulatory alignment with the Republic of Ireland, and therefore the rest of the EU.
Prime Minister May has instead agreed that the entire UK remain in the Customs Union and Single Market temporarily, until such time as a permanent solution to the thorny issue of the UK’s border with the Republic of Ireland can be resolved.
Critics argue that the timeframe for this is too vague and could effectively leave the UK in a situation where they are part of the Customs Union and Single Market, but have little or no influence over it. Britain will no longer be a EU member state but would still have to pay billions of pounds every year for access to it.
While May has claimed that the deal has ended freedom of movement for EU citizens in the UK, and conversely for UK citizens across the European Union. It has also guaranteed the rights of those EU citizens already living in the UK, and will do so for any of those arriving in the country after the 29 March 2019 deadline.
The Labour opposition in Parliament have come out against the deal because it does not meet the party’s six tests. Labour leader Jeremy Corbyn says it fails to guarantee the rights of British workers which they currently enjoy as being part of the European Union. But more importantly, he added that it’s a bad deal for the country and Labour will oppose it.
Theresa May is trying to sell yesterday’s summit as a great success but to borrow a phrase “nothing has changed”.
With her own Conservative Party deeply divided on the deal, and opposition parties such as Labour and the Scottish National Party all vowing to vote against it, there is still a possibility that it will be passed nonetheless.
Brexit Deal voted down
So what are the alternatives? While the Prime Minister insists she is not looking beyond the 11 December vote, it would be wise to consider the ‘what ifs’ and the risk of a no deal.
Firstly, if the deal is voted down, then Corbyn has said he believes that will be a rejection of the Prime Minister herself and attempt to force a no-confidence vote in Theresa May which he hopes would then trigger a General Election.
Both party leaders do seem to be in agreement that the UK cannot leave the EU without a deal. There are a number of different scenarios which may play out if the Prime Minister’s deal is voted down.
If Theresa May is ousted or indeed resigns as party leader, she will be replaced with another Conservative leader who may believe they can negotiate a more favourable deal with the EU. Although that looks unlikely given that the EU leaders have already insisted that the deal on the table is the only one they will be considered.
Likewise, if Corbyn gets a General Election and becomes Prime Minister, he might seek to strike a new deal with the European Union, although he may run into the same difficulties as a Conservative Party leader.
The other option is, whoever is Prime Minister following the Parliamentary vote, takes the question back to the public and holds a second referendum. May has insisted she will not do that, and Corbyn seems reluctant too, although he has not come out strongly against it. Hence, there may have to be a change of leadership in either party for that to happen.
No Deal scenario
When no deal is talked about, it is often in the context of the UK ‘crashing out’ of the EU without a deal. That gives an indication of the potentially damaging affect a no deal would have.
While it is difficult to see Parliament allowing this to happen if the current deal is rejected, it would remain a possibility in the absence of anything else.
Goods which the UK exports to Europe would be immediately slapped with tariffs and subjected to inspections. It is estimated that farm exports could be hardest hit, with potential tariffs of up to 40%.
Checks at ports and airports could also lead to massive delays and disruptions, both for lorry drivers and travellers. A slowing down of the transport of goods and costly tariffs would severely disrupt the supply chain of many foods and there could be shortage of some foods while supermarket prices would rise sharply.
Under a no deal, British citizens living in EU countries would instantly have no legal status and this would apply to EU citizens in the UK.
The doomsday alternative of a no deal is perhaps what Prime Minister May is hoping will sway MPs to get behind her deal, but it is risky strategy and all eyes will be one the House of Commons on 11 December to see if it pays off.
Climate change is forcing American insurance companies to enter the firefighting business. Chubb, in particular, operates its own fire brigade called Wildfire Defense Services.
The Wildfire Defense Services (WDS) fights wildfires in 18 American states, NBC reports. For instance, WDS saved the home of Chubb policyholder Fred Giuffrida on 8 October 2017. To explain, WDS’s services are available to Chubb policyholders with homes insured for more than $1 million (£780 million).
Chubb is one of several American insurers offering firefighting services. For example, the PURE (Privilege Underwriters Reciprocal Exchange) Group of Insurance Companies has offered firefighting services in California since 2014.
Additionally, AIG’s Private Clients Group has offered firefighting coverage since 2004. The Private Client Group covers homes owned by 42% of the people on the Forbes list of the 400 richest Americans, Stephen Poux revealed.
Not surprisingly, the cost of such coverage is not cheap. Private Clients Group premiums run from “several thousand dollars to several tens-of-thousands,” Poux said. Poux is the AIG Private Group’s Global Head of Risk Management and Loss Prevention.
Risks from private firefighters
Insurers are taking huge risks and inviting controversy by offering private firefighting services.
Insurers could face increased liability costs because of the risks private firefighters take. For example, lawyers can sue an insurer if a private firefighter dies or becomes injured defending a home.
NBC reports Chubb’s WDS firefighters did not report their location to authorities while fighting the fire at Giuffrida’s home. Thus fire could have WDS firefighters without backup.
Under personal injury law insurers could be liable for deaths and injuries to private fighters. Moreover, insurers could be liable if private firefighters hinder official firefighting efforts.
Insurance firefighter controversy
Controversy over private firefighting is erupting in California because of recent wildfires that killed 77 people. Officials expect the death toll to rise because they are still searching for bodies, the Associated Press reports.
Most of the victims were poor and elderly residents of working-class communities. Meanwhile, private firefighters saved the homes of wealthy Californians like Kim Kardashian and Kanye West.
Motherboard reports private fighters kept flames away from the tabloid queen’s $60 million (£46.63 million) Los Angeles area home. In addition, West and Kardashian were not even there during the wildfire – authorities evacuated the celebrity.
Not surprisingly, headlines attacking private firefighting are filling American media. Hence, private firefighting is now an issue in America’s growing debate over income inequality.
A likely outcome will be legislation to ban or restrict private firefighting. The recent victories of left-wing Democrats in America’s midterm elections make such legislation inevitable.
Strangely, some insurers could welcome such legislation because of the rising costs and risks of private firefighting.
Climate change is increasing the number of wildfires and the potential damage they can cause. For example, 48,390 homes were at risk from fires in California on 13 November 2018. Hence, there could be too many homes for private fire brigades to protect.
Climate change increases fire the danger by changing weather patterns and creating droughts. For example, there are no rains to put out fires.
Significantly the lack of moisture kills vegetation while heat dries out trees and grass. That creates vast amounts of fuel for wildfires which can quickly grow into destructive infernos no firefighter can cope with.
Climate Change and Firefighting
Under those circumstances, it will be impossible for insurance company firefighters to save many clients’ properties.
The Camp Fire destroyed the entire town of Paradise, California, and 10,500 homes during the week of 12 November 2018. Notably, the Camp Fire was still burning out of control on 19 November 2018.
An obvious dilemma for insurers will be private firefighters refusing to risk their lives to save millionaires’ homes. Another risk will be authorities ordering private firefighters to protect the entire community.
Hence climate change could force insurers out of the firefighting business. Consequently, insurers will drop fire insurance or fire insurance for expensive homes. Insurers will drop fire insurance because they cannot afford the increased claims created by climate change.
Will Trump Take Action?
Thus insurance companies could join the groups lobbying President Donald J. Trump (R-New York) to take action on climate change.
Trump reportedly believes in climate change but refuses to take action or a firm stand on the issue. Trump is reluctant to tackle climate change because many of his financial supporters and voters deny global warming.
Hence Trump keeps making conflicting statements about climate change. In addition, Trump’s administration has dramatically scaled back the US government’s climate change fighting efforts.
Only time will tell if insurers have the money and influence to change Trump’s behaviour. Hence, all the candidates preparing to challenge Trump (or his successor) in the 2020 Presidential race could receive a lot of money from insurance companies.
Dubai-based carrier Emirates Airline has announced that it is currently preparing to launch what it has dubbed the world’s first ‘biometric path’, offering travellers a seamless journey across its main hub in the United Arab Emirates.
Utilising the latest facial recognition and iris scanning technologies, passengers of the Gulf carrier can soon check-in for their flight, complete immigration procedures, and even access the premium Emirates Lounge hands-free, simply by walking through biometric checkpoints across the terminal.
Airports across the world are following suit. Clear, a New York-based technology firm contracted by the US government, announced last week that it is currently expanding its kiosk network to a total of 22 airports across the country. Instead of queuing for Transportation Security Administration officers to review travel documents and boarding passes, pre-approved Clear members will be able to verify their identities by undergoing a quick eye scan.
Biometrics risks
The use of biometric technology is gaining traction beyond the air travel industry. Following a string of high-profile data breaches impacting well-known companies in recent years, businesses are looking for better authentication systems while balancing end-user security and usability.
Widely used username-and-password models, along with two-factor authentication methods, will soon be phased out in favour of biometric technologies. Spiceworks, a professional network for the information technology industry, recently reported that nearly 90 per cent of businesses will deploy biometric authentication technologies by the year 2020, with 62 per cent already using some form of biometrics.
Yet many experts warn that the wide adoption of these methods are not without significant risks to users and could potentially create entirely new forms of identity theft and other cybercrimes.
David Emm, Kaspersky Lab’s Principal Security Researcher, recently commented on how serious a breach of this kind of data would be, and how it could cause even more damaging impacts for victims than current methods of identity theft.
In a public statement, Emm said “The development of biometric technologies has given us the ability to use our bodies for authentication, which is increasingly stretching to travel hubs, such as airports. The major benefit, of course, is greater efficiency. However, the integration of biometric identifiers, such as fingerprint, iris and facial recognition, shouldn’t be introduced at the expense of security. Biometric data, stored by a single service provider or across an industry, is a valuable target for cybercriminals. And a breach that resulted in the exposure of such data would be serious – perhaps more so than the compromise of passwords. Any security breach resulting in leakage of biometric data is likely to have extremely serious consequences: we can change a compromised password, but not a compromised fingerprint or other biometric.”
“We can change a compromised password, but not a compromised fingerprint or other biometric.”
David Emm, Kaspersky Security Researcher
Regulations playing catch-up
Despite the specific nature of this kind of information, there has until recently existed no legal framework for the protection of biometric data. Legislation instead has been awkwardly adapted from existing regulations concerning personal data protection and privacy.
In May 2018, the European Union (EU) implemented the General Data Protection Regulation (GDPR) for European member states, which addresses biometric data and has been considered a significant milestone for data protection and privacy. However, the GDPR defines biometric data somewhat vaguely, thus allowing member states to pursue very different strategies for the protection of biometric data.
Specifically, the GDPR defines biometric data as “personal data resulting from specific technical processing relating to the physical, physiological or behavioral characteristics of a natural person, which allow or confirm the unique identification of that natural person, such as facial images or dactyloscopic (fingerprint) data.”
But by defining biometric data under such broad terms, the GDPR appears to recognize that biometric technology is relatively nascent and will continue to evolve. By using this definition, the GDPR seems to cover a wide range types of biometric data that could become available with the adoption of burgeoning technologies. The regulation will just have to keep one step ahead.
In the United States, however, there is no unified federal law regulating the collection and use of biometric data. The states of Washington, Illinois, Texas, each recently passed a biometric privacy law at the state level last year.
But with US President Donald Trump signing an executive order calling on officials at the Department of Homeland Security to speed up the deployment of the biometric system to airports, it is clear that federal regulators are also increasingly focusing on biometric data protection.
Yahoo has agreed to pay $50 million in a preliminary settlement of a US federal lawsuit stemming from a series of data breaches that affected three billion users.
In a deal scheduled for final approval by the US District Court in San Jose, California, Yahoo will compensate 200 million affected account holders across the United States and Israel.
Yahoo has also agreed to provide two years of credit monitoring and identity theft insurance free of charge to eligible account holders.
The $50 million fund will be distributed to members of the class-action lawsuit to reimburse paid users for up to 25 per cent of their service charges, as well as cover the cost of any financial damages related to the breaches.
Yahoo will also pay up to $35 million in legal fees. The cost will be split between Verizon Communications, which acquired Yahoo’s core business last year, and Altaba, a company set up to manage Yahoo’s remaining investments and assets.
According to the agreement, claims can be submitted by all eligible Yahoo account holders that suffered financial losses in connection to the incident. Losses can include reimbursement for fraudulent charges, delayed federal tax refunds or other issues linked to having personal information compromised online.
The fund will compensate eligible account holders for time spent fixing any issues arising from the security breach at a rate of $25 per hour. Account holders with documented losses will be reimbursed up to 15 hours of lost time, totalling $375. Users that cannot document losses are eligible to file claims of up to $125. Yahoo users that paid up to $50 annually for a premium email account will also be eligible for a 25 percent refund.
Yahoo has appointed AllClear ID, a Texas-based online consumer protection firm, to manage the credit monitoring and repair services that will be provided to eligible account holders as part of the agreement. The firm will provide services with a retail value of $180 per year.
According to sources close to Yahoo, the company’s legal team are positive about the agreement, given the uncertainty of a potential verdict had the case headed to litigation. Industry experts have assessed the value of the data lost in the attack range from $1 to $8 per account, suggesting that Yahoo could have been ordered by the court to pay affected account holders up to $1 billion had it lost the case at trial.
This news follows an announcement in April of this year that Altaba agreed to pay a $35 million fine to the US Securities and Exchange Commission (SEC), settling charges that the company misled investors by failing to disclose the data breaches, which occurred in 2013 and 2014 but were not revealed until two years later.
US federal law enforcement officials confirmed that hackers based in Russia had stolen sensitive data such as Yahoo usernames, addresses, phones numbers, and security questions and answers for hundreds of thousands of accounts. Yahoo claimed that hackers did not obtain credit card information, bank account information, or passwords.
Yahoo revealed the incident to the public only after it had already negotiated a $4.83 billion deal to sell its digital services to Verizon. It was later confirmed that the final sell price was discounted by $350 million, accounting for a potential loss of brand reputation and possible financial impacts of the breaches.
Yahoo previously disputed estimates of potential damage related to the breach, claiming that many of its account holders had register false information about their birthdates, names, and other personal data when signing up for email accounts.
In a security hearing before the US Senate Commerce Committee, Yahoo executives claimed that they had not been able to identify the method of intrusion, or the exact source of the breach. The company did not notice that it had been compromised in until third party evidence of the breach was presented by federal law enforcement in 2016.
A hearing to approve the preliminary settlement is scheduled for 29 November before Judge Lucy Koh at the US District Court for the Northern District of California in San Jose.
If approved, notices will be emailed to all affected account holders and published in the print editions of People and National Geographic magazines.
Yahoo has not yet issued a public statement about the settlement.
