PRISM & Data Breach Response

The emergence of PRISM has caused a stir in the United States.

What is PRISM?

It is a collaboration between the National Security Agency (NSA), the Federal Bureau of Investigations (FBI) and the biggest tech companies in the country.  The agreement has provided the U.S. Government access to data including audio communication, videos, photos, emails, documents, call logs and text messages since 2007.

Headquarters of the NSA at Fort Meade, Marylan...

Headquarters of the NSA at Fort Meade, Maryland. 

How has PRISM come to light?

On Wednesday June 5th, a classified order was shared and made public.  The order to Verizon Wireless by the Foreign Surveillance Court directed the company to turn over domestic & foreign call data from the past and in the future.  Such data would be gathered by the millions and would provide sender and receiver of calls, duration, time and location.

PRISM came about through leaked PowerPoint slides that described the collaboration between the government and the tech giants.  When questioned, companies such as Google, Facebook, Apple, AOL, Yahoo and Microsoft gave the same canned response, “we do not provide the government with direct access to our servers.”

James Clapper, the Director of National Intelligence made statements suggesting that the collaboration existed and that the government was operating within the legal system.  Here’s what Clapper wrote about PRISM.

The whistle-blower

, 29 year old, Edward Snowden was a member of defense contractor Booz Allen Hamilton.  Snowden claims that a “massive surveillance machine” is in the making and that he leaked the information to  “inform the public as to that which is done in their name and that which is done against them.” Snowden is currently in Hong Kong, China while various US diplomats are calling for the country to extradite him.

As if internet security and privacy were not already a hot topic, it can be an effective transition into offering Data Breach Response Coverage.

The Breach Response product is tailored to healthcare, retail, hospitality and higher education operations.  The product is geared to moderate the results of a breach of data.  These mitigation tools will help minimize brand damage and legal liability by offering the following coverage.

Data Breach Response Features

For claim examples for Data Breach Response, click here.

Commissioner Change in TX

Kitzman is out as Commission after 21 months

After the long Memorial Day weekend, the Texas Department of Insurance and Gov. Rick Perry wasted no time before putting the confirmation of Eleanor Kitzman as Insurance Commissioner to a vote.

Kitzman was appointed by Gov. Perry in 2011 and remembered by many Senators for having far more interest for the companies and not for the consumers.  Her presumed bias becomes more evident with some of the events that took place during her tenure.

–          Kitzman removed a rule that would require insurers to give fair warning about any out-of-pocket costs that would be incurred for out of network expenses.  Insurance Journal

–          Kitzman declined to put any restriction on premium hikes in 2012.  This led to some of the most profitable years from companies such as Allstate, Farmers and more specifically State Farm who implemented a 20% rate increase in 2012. Dallas News

  • Kitzman and the TDI put off multiple requests for premium and loss figures.  The statistics that are usually released in April were not available until this past Memorial Day Weekend, just before her confirmation hearing.
  • The following are the Loss Ratios for the largest home insurers in Texas. Dallas News
    • State Farm – 47.5%
    • Allstate – 50.8%
    • Farmers – 66.3%
    • USAA – 54.4%
    • Liberty Mutual – 58.3%

–          Kitzman has been criticized for spending over $1.5 Million of tax dollars on consultant fees with a New York based firm. Insurance Journal

After Kitzman failed to be confirmed by the senate after 21 months of service, Gov. Perry appointed Julia J. Rathegber as the Insurance Commissioner of Texas.  Rathgeber was the deputy chief of staff in the office of Lt. Gov. David Dewhurst.  Rathgeber studied at the University of Texas at Austin and earned both her bachelors and law degree.  Rathgeber is involved in other various associations such as the State Bar of Texas and the Seton Fund Development Board. Texas State DirectoryRick Perry

Rathgeber will serve as Commissioner until 2015, when she will face the same confirmation process that Kitzman failed to conquer.  Rathgeber has a clean slate with potential for major impact.  How she handles the steady increase in property rates, the impeding hurricane season and how her office harnesses the economic boom in the state will seal her fate in 2015.

Thank you for reading the blog of AUI, Inc. MGA & Surplus Lines Broker.image

The Texas Boom & Your Agency

Flag of Texas

Flag of Texas (Photo credit: Wikipedia)

Texas State Capitol, Austin TX

Texas State Capitol, Austin TX (Photo credit: Wikipedia)

We are not breaking news when saying that Texas is in a boom.  The state that arguably has the most available area left to develop is making good use of it.  This growth certainly hasn’t happened overnight and certainly won’t stop overnight either.  The question remains, how will this growth effect the Insurance Industry.

The four major metropolitan areas; Austin, Dallas, Houston & San Antonio have sustained leading unemployment rates even with such rapid influx of new residents.  The U.S. Census reported the following statistics for population growth from July 2010 to July 2011.

#1. Dallas, TX – avg. 345.3 new residents/day

#2. Houston, TX – avg. 301.6 new residents/day

#9. Austin, TX – avg. 151 new residents/day

*Courtesy Austin Business Journal http://bit.ly/LErrop

This rapid growth has not prevented new residents from finding jobs.  The major industries; Energy, Technology, Healthcare & Finance have sustained growth over the past ten years to avoid major layoffs while opening new positions.  As unemployment & the economy was the hot-button issue for the 2012 Presidential Election, neither candidate cited the growth and success of the Lone Star State.

Forbes, often known for their “Top 10” lists, ranked the fastest growing cities from 2001 to 2011.

#2. Austin, TX                                    44.9%

#7. Houston, TX                                  31%

#9. San Antonio, TX                            29%

#10. Dallas/Fort Worth, TX                27.9%

Courtesy Forbes Magazine http://onforb.es/15iOUpH

One would imagine that with such rapid growth, the competition to find a job with decent salary would be beyond difficult.  Strangely enough, the exact opposite is to be said as the four major Metropolitan Areas in Texas all made the top 15 in Lowest Unemployment Rates, according to the Bureau of Labor Statistics.

#3. Austin, TX                    5.5%

#8. San Antonio, TX          6.0%

#12. Houston, TX              6.1%

#14 Dallas                         6.2%

US Average 5/2013          7.5%

*Courtesy Bureau of Labor Statistics http://1.usa.gov/bkALp4

 What does all of this mean for insurance professionals?  First, it shows that business are growing which correlate directly to premium size for all risks rated by number of employees or payroll size.  This means larger policies & more commissions for the agency.

Second, those businesses that are growing may be changing operations or offer a larger variety of products or services.  This means that the agent should be reevaluating the risk, adding whatever endorsements necessary or maybe even reclassification.  That being said, if it is an endorsement that requires additional premium it means more earned commission.

Third, more citizens means more insureds.  More insureds means more policies.  More policies mean more earned commissions

See the trend here?

As insurance agents, we should not let the growth in Texas intimidate, upset or deter us from writing more business.  In such turbulent economic times, we are fortunate enough here in Texas to be expanding at this rate.

That being said, it is important to have the markets available to accommodate all of your current and prospective insurances.  Having a reliable, competitive and motivated MGA & Surplus Lines Broker such as AUI, Inc will give you the confidence & support needed to solicit & write new business.

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