Data, disasters and distractions Trends to watch in the insurance world

But several insurance-industry observers in Central Pennsylvania maintain that a bigger menace lurks 24 hours per day, seven days per week: data theft.

A day doesnt go by that we dont hear of some data breach, said Jason Ernest, deputy CEO and legal counsel for Insurance Agents & Brokers, a trade group in Mechanicsburg. Cyber security really is a misnomer. Its really about data security.

We are afraid businesses are not up on the issue, Ernest added. This can affect anybody.

For those companies that have some protection, it usually isnt enough, he said, adding that his organization recommends a two-prong approach to coverage. Get it, and then make sure it covers everything, he said.

I am fearful that a lot of businesses either dont have it or dont have enough coverage, he said.

Ernest was one of several insurance-industry experts asked by the Central Penn Business Journal to share advice for businesses as 201 gets underway. In addition to weather issues and cyber security, the experts identified trends in vehicle coverage worth noting.Steven Buterbaugh, president of McConkey Insurance & Benefits in Springettsbury Township, York County, said cyber security remains an issue that all businesses need to take seriously. Insurance can be affordable, he said, so that makes the cost easier for businesses to absorb.

They need to get out in front of cyber attacks, Buterbaugh said.

A lot of small businesses including shops, restaurants and professional offices mistakenly think cyber criminals only go after big companies, Ernest said. But all it takes is one breach and a business could be liable for the loss of personal data of most or all customers, he warned.The natural disasters of the past year make property insurance top of mind for people reading or hearing about the misfortunes of others. But a lot of businesses neglect to add business interruption insurance, which could be a fatal mistake, Ernest said.

A hurricane, for example, might spare a business building but take down the communications and electrical systems needed to serve customers. If that problem lingers, a business in operation for years could be forced to close within weeks or months, if it doesnt have coverage for businesses interruption or equipment breakdowns, he said.

The coverage might not offer 0 percent replacement of lost business, but it could buy enough time until the lights come back on, he said.

Ron Gallagher, president of the Pennsylvania Association of Mutual Insurance Companies, said an annual conference being held in State College March will focus on weather patterns and what it means to the insurance industry. David W. Titley, a meteorology professor at Penn State University, will lead a discussion on how the Northeast could be affected by climate change and what insurance companies should expect.

Gallagher, who spent 25 years with the Pennsylvania Department of Insurance and 15 as deputy director, said insurance companies cant technically pass on the costs of a disaster in another state to consumers in Pennsylvania. But past trends are used to set future rates.

Still, because Pennsylvania is a highly competitive state, insurers must be careful about raising rates too much, anyway, he added.Ernest and Buterbaugh both pointed out that vehicle insurance for consumers and businesses could start to cost more as insurance companies deal increasingly with distracted drivers. And they said another issue continues to grow as a problem: distracted pedestrians.

Distracted pedestrians are causing auto accidents all across the county, Buterbaugh said.

Ernest pointed out that a standard fender-bender, which could come from hitting a deer or striking a pedestrian, is much more costly for newer models of cars because of the increased safety equipment that might include cameras and sensors to avoid crashes.

While the technology has helped decrease the frequency of crashes, the severity of the crashes has gone up, he said.

And that means that insurance premiums are going up, Ernest and Buterbaugh said.

So far in Pennsylvania, rates have been relatively stable and lower than the national averages, said Ron Ruman with Pennsylvania Insurance Department. Ruman pointed to a study released early in January that showed Pennsylvania has competitive auto rates compared to other states.

Pennsylvanias average premium in 2015 was $971, which is 3. percent below the national average of $1,009, according to the department.

The agency also said that, during the same period, premiums in Pennsylvania increased on average by 7.3 percent. That compares to the national average of nearly 12 percent.

In general, we have a pretty competitive market, Ruman said, whether that be for individuals or businesses.Who: Pennsylvania Association of Mutual Insurance Companies

What: Annual spring conference

Where: Nittany Lion Inn, State College

When: March , 7:45 a.m. to 3 p.m.

Why: A main focus will be on insurance issues tied to global warming and what insurance companies should do.

More information: https://www.pamic.org/event-2761215View the full article from the Central Penn Business Journal at http://www.cpbj.com/article/20202/CPBJ01/20994/data-disasters-and-distractions-trends-to-watch-in-the-insurance-world. Copyright 201 BridgeTower Media. All Rights Reserved.

CREDIT: Thomas A. Barstow