Chubb v. Weinstein

Former film producer Harvey Weinstein, who is facing multiple sexual assault cases, has filed new court documents related to his fight against insurance giant Chubb over legal costs.

Citing this week’s court filings in Manhattan, Bloomberg reported that Weinstein’s lawyers are asking for an eight-day federal court trial to have jurors decide whether the insurer’s stand on his coverage is in bad faith.

It will be recalled that in February Chubb – several units of which have collectively issued about 80 policies to Weinstein and his family since the ‘90s – filed a lawsuit, arguing that defense costs from the molestation-linked cases aren’t covered.

Weinstein’s camp, in a countersuit filed last month, noted having paid the group of insurers over $1 million worth of premiums for what his lawyers described as “a wide variety of liability claims,” according to a Reuters report. The countersuit also cited unlimited coverage for the insured’s legal defense.

Bill Cosby ruling

Just this month the United States Court of Appeals for the First Circuit ruled that insurer AIG should foot the bill as far as the defamation lawsuits being faced by Bill Cosby are concerned.

The civil cases allege that Cosby – who has been convicted of aggravated indecent assault – defamed his accusers when he said the women were lying about their sexual misconduct complaints.

The ruling does not relate to legal costs for sexual assault lawsuits.

See related article: Chubb in legal battle with Harvey Weinstein over coverage.

This article was written by Terry Gangcuangco for Insurance Business America and can be found here: here.
Image of flooding

FEMA Turns to Reinsurance

The federal government, seeking to protect itself from the growing cost of natural disasters, is borrowing a technique from the private sector and buying reinsurance.

The Federal Emergency Management Agency, which started purchasing reinsurance last year for the National Flood Insurance Program, is now exploring the expansion of the program, spokesman Michael Hart said by email.

Reinsurance is coverage bought by insurers — or, in this case, FEMA — as protection against unexpectedly high claims.

As the federal government’s exposure to extreme weather and associated natural disasters has grown, so has the reinsurance industry’s role in helping cover that risk. In 2014, Freddie Mac and Fannie Mae began buying reinsurance to protect against a drop in the value of their mortgage loans, including losses caused by natural disasters.

FEMA worked through Guy Carpenter & Co. LLC, a subsidiary of Marsh & McLennan Cos., to buy $1 billion worth of reinsurance in 2017 from 25 carriers for the flood insurance program. This year, the agency bought $1.46 billion of reinsurance for the program.

In April, the agency announced its intention to buy a so-called catastrophe bond, which works like reinsurance, with the investor getting a return unless disaster costs to the government exceed a certain threshold. FEMA didn’t say how much the bond would pay out.

Separately, Republican Representative Dennis Ross of Florida, the vice chairman of the House Financial Services Committee’s Subcommittee on Housing and Insurance, has introduced a bill that would direct FEMA to look at buying reinsurance or similar products for part of its overall disaster costs — not just flooding.

Ross said that change would protect taxpayers from a sudden spike in costs, and also better protect the public from disasters by increasing the government’s incentive to reduce risk — for example, by restricting development in vulnerable areas, or imposing stricter building standards. “Private capital is going to impose good risk-management procedures,” Ross said in an interview. “Those are market forces that help dictate safe communities, safe environments, better cities.”

The Reinsurance Association of America, a trade group for the industry, has backed Ross’s proposal, telling him in a letter May 31 that “disaster victims, businesses, and communities could greatly benefit from a reinsurance risk transfer program.”

Disaster and insurance experts said that reinsurance would probably work at sheltering taxpayers from unexpected costs. But they said it’s far from clear that reinsurers would exert enough influence on the government to enact policies that reduce Americans’ exposure to risk — policies that tend to be unpopular, which is why they haven’t been adopted yet.

Reinsurers have significant influence over the decisions made by primary insurers, whose business models depend on reinsurers agreeing to buy their risk, according to Peter Kochenburger, a professor and deputy director of the Insurance Law Center at the University of Connecticut School of Law. But he said that same dynamic doesn’t hold for the government.

The federal government “can use reinsurance to reduce its risk, but it doesn’t need reinsurance in the way that many insurers do,” Kochenburger said. If reinsurers insist on unpopular changes to where or how people build, FEMA or Congress can say no.

Another problem is that FEMA doesn’t have direct control over building codes or development decisions. Paula Jarzabkowski, a management professor at Cass Business School in London, said reinsurance programs can spur policy changes, but it’s easier when the agencies facing higher premiums also have the authority to make those changes.

“There needs to be a concerted effort to join the parts of government,” Jarzabkowski said.

Jeffrey Czajkowski, managing director for the Wharton Risk Management and Decision Processes Center, said the rising costs of disaster, rather than pressure from reinsurers, is what’s most likely to spur more aggressive federal policy on climate resilience.

“If we have 2017 every year, we’re not going to make $70 billion available to the State of Texas every single year,” Czajkowski said. “We just can’t keep doing that.”

This article is written by Christopher Flavelle and can be found here. Copyright Bloomberg News


GDPR: What you need to know

You may have noticed that your email inbox has been flooded with emails from businesses and organizations informing you that they have “updated their privacy policy”.

The reason is that on May 25th, GDPR went into effect and if a business isn’t compliant, then hefty fines and penalties await.

What Is GDPR and Why Is It Necessary?

The General Data Protection Regulation (“GDPR”) is a legal framework that requires businesses to protect the personal data and privacy of European Union (EU) citizens for transactions that occur within EU member states. It covers all companies that deal with the data of EU citizens, specifically banks, insurance companies, and other financial companies.

The 1995 Data Protection Directive

In April 2016, the European Parliament adopted the GDPR, replacing its outdated Data Protection Directive, enacted back in 1995. Unlike a regulation, a directive allows for each of the twenty-eight members of the EU to adopt and customize the law to the needs of its citizens, whereas a regulation requires its full adoption with no leeway by all 28 countries second. In this instance, the GDPR requires all 28 countries of the EU to comply.

The issue with the Directive is that it’s no longer relevant to today’s digital age. Its provisions fail to address how data is stored, collected, and transferred today—a digital age. Like many regulations and statutes throughout the EU and U.S., these regulations haven’t been able to keep up with the pace of the levels of technological advancement.

Exploring the GDPR

The full text of GDPR is comprised of 99 articles, setting out the rights of individuals and obligations placed on businesses that are subject to the regulation. GDPR’s provisions also require that any personal data exported outside the EU is protected and regulated. In other words, if any European citizen’s data is touched, you better be compliant with the GDPR. For example, a U.S. airline is selling services to someone out in the UK, although the airline is located in the U.S., they are still required to comply with GDPR because of the European data being involved.

It is a very high standard to meet, requiring that companies invest large sums of money to ensure they are in compliance. According to the EU’s GDPR website, the legislation is designed to “harmonize” data privacy laws across Europe, providing greater protection and rights to individuals.

Before the Internet, Europe has long been the model for how our data should be protected and regulated. The reason is that the public’s concern over privacy has dominated the business sphere, ensuring that stringent rules on how companies use the personal data of its citizens is always taken into account.

Two days ago, the UK government created and enacted a new Data Protection Act, replacing the previous law that was passed into law back in 1998. Running 353 pages and full of complex provisions, it largely incorporates all the provisions of GDPR, but differs in that individual countries were able to select parts of GDPR that could be customized to their citizen’s needs.

After months of learning about data breaches from companies like Facebook and Equifax, this couldn’t be more necessary. Even Mark Zuckerberg jumped on board in his testimony before Congress on Capitol Hill, believing GDPR to be a very positive step for the Internet.

What Data Is Protected Under GDPR?

With the enactment of GDPR today, two major protective rights should be highlighted. First, the right of erasure, or the right to be forgotten. If you don’t want your data out there, then you have the right to request for its removal or erasure. Second, the right of portability. When it comes to “opt-in/opt-out” clauses, the notices to users must be very clear and precise as to its terms.

GDPR requires clear consent and justification. Pursuant to the GDPR, the following types of data is addressed and covered:

(1) Personally identifiable information, including names, addresses, date of births, social security numbers

(2) Web-based data, including user location, IP address, cookies, and RFID tags

(3) Health (HIPAA) and genetic data

(4) Biometric data

(5) Racial and/or ethnic data

(6) Political opinions

(7) Sexual orientation

What Criteria Needs To Be Met?

As mentioned earlier, the GDPR requirements comprise of a total of 99 articles–that’s alot of reading. Any company that stores or processes personal information about EU citizens within EU states must comply with the GDPR, even if they do not have a business presence within the EU. Companies are subject to GDPR if:

(1) The business has a presence in an EU country;

(2) Even if there is no presence in the EU, the company still processes personal data of European residents;

(3) There is more than 250 employees; and

(4) Even if there is fewer than 250 employees, if the data-processing impacts the rights and freedoms of its data subjects

How Do You Know If You Are Prepared?

Well, individuals and businesses have had almost two years to figure out how to ensure their compliance, so there shouldn’t be an excuse for failure to comply. But, let’s be realistic, a large number of companies are going to get hit, hard. Today marks the day in which all that effort is broadcasted to the world of consumers.

#1 –Data Breach Incident Response Plan

The biggest sign of readiness is having a data breach plan or incident response plan in place. While most companies have some form of a plan in place, they will need to review, amend, and update it, ensuring full compliance with GDPR requirements.

This is only half the battle. You better be prepared to enact it when a data breach occurs. Testing these plans is essential, otherwise, how will you know if its actually ideal? The GDPR requires that companies report breaches within 72 hours, or 3 days. How well the data response team is able to implement the plan and minimize any damage will affect how much a company is fined and/or penalized.

#2 –Hiring A Data Protection Officer (DPO)

The GDPR requires that a data protection officer (DPO) be appointed and hired. However, it doesn’t address whether it needs to actually be a discrete position, so presumably, a company could name an officer who already has a similar role to that position, so long as they are able to show their protection of personally identifiable information (PII), with no conflict of interest. GDPR allows for the DPO to work for multiple organizations, lending support for a “virtual DPO” as an option.

#3 –Create a Record or Log of Risks and Compliance Progress

Now that the clock has ticked its last tock, companies better have an updated record as to its progress made over the past two years, showing its identification of all its risks and measures taking in attempts of minimizing or eliminating those risks. This record, or Record of Processing Activities (“RoPA”), is required in Article 30 of GDPR, focusing on the inventory of risky applications and programs that may be operating.

However, another question presents itself in terms of the keeper of the log and how its maintained. The fear of manipulation, alteration, and fraud are still issues to be addressed. In the era of blockchain, having a log stored that’s stored on the blockchain that is unable to be manipulated or altered could prove extremely useful for companies moving forward.

How Does This Affect the US?

When it comes to US businesses, the GDPR requirements will force them to change the way they process, store, and protect customers’ personal data. Companies must provide a “reasonable” level of data protection and privacy to its customers, ensuring its storage only upon the individual consent by those customers and no longer than absolutely necessary for which the data is processed. However, the regulation doesn’t define what “reasonable” means in terms of ensuring compliance, so this could present future complications when incidents occur and whether or not an organization took enough steps to ensure minimal damage.

Upon request, companies must erase personal data—unlike the Cambridge Analytica and Facebook data breach that is still unfolding. The right to be forgotten is a powerful right and a right we as citizens are all entitled to. However, GDPR doesn’t supersede any current legal requirement where an organization is required to maintain certain data, like HIPAA requirements.

How Does This Affect Social Media Companies?

Your mind probably just jumped to Facebook and how this will affect social media networks. As we’ve seen since Mark Zuckerberg’s congressional hearing on Capitol Hill two months ago, many social media companies and online networks have already updated their privacy policies and terms of service in anticipation of today’s deadline.

Facebook’s response is going to be closely scrutinized by European regulators in wake of the Cambridge Analytica breach as well as lingering concerns over the company’s data collection. Same with Twitter, yet no major scandal has put them in the public spotlight.

Accountable EU Representative

If you think social media platforms are exempt from this regulation, you’re thinking is also outdated. GDPR requires that social media companies have a designated EU representative that can be held accountable for the GDPR compliance of the organization within Europe.

Clear Privacy Notice

After hearing Zuckerberg’s testimony, it’s clear that users need to be presented with a simple and clear privacy notice that they can actually understand—not something that looks like a bulk collection of Harry Potter books bound together.

The Right To Be Forgotten

It will be interesting to see how these companies will deal with user requests for deletion of certain personal data. It is no longer safe for a company to assume that their customers or users are content with their personal data being held—seeing as most of the have no idea it’s held until something unfortunately happens.

I asked Arizona internet attorney, Anette Beebe, what she thought about “the right to be forgotten” and how it affects our freedom of speech.

“In the EU, under The Right to Be Forgotten, people who were once bad actors have been able to sweep their history of wrong doing under the rug. However, in the U.S., we value the freedom of speech and providing people with more information, rather so they can make informed decisions, rather than hiding it. I can understand privacy and respect that, but I don’t respect a law that helps unscrupulous people being able to hide from their misdeeds or have truthful, but unflattering information taken down just because someone doesn’t like it.”

Beebe anticipates a wave of demand letters directed to website clients, asking for content to be taken down that in reality, has no chance of being taken down. “It will be interesting to see how the courts tackle these issues moving forward,” says Beebe.

What Happens If You Fail To Comply With GDPR?

Just ask Facebook and Google who were hit with a collective $8.8 billion lawsuit (Facebook, 3.9 billion euro; Google, 3.7 billion euro) today by Austrian privacy campaigner, Max Schrems, alleging violations of GDPR as it pertains to the opt-in/opt-out clauses. Specifically, the complaint alleges that the way these companies obtain user consent for privacy policies is an “all-or-nothing” choice, asking users to check a small box allowing them to access services. What happens if you don’t choose “I accept”? You’re denied service. A clear violation of the GDPR’s provisions per privacy experts and the EU.

Failing to adhere to the GDPR has steep penalties of up to €20 million, or 4% of global annual turnover, whichever is higher. Reports estimate that about half of U.S. companies that should be compliant on GDPR requirements by today, won’t be. There’s more to it than all those emails coming to your inbox about updated privacy terms.

According to a December 2016 PwC survey, 68 percent of U.S. based companies expect to have spent $1-$10 million to meet these GDPR requirements.

But, some websites in the U.S. have decided to block their services entirely rather than adhere to the new regulations, going completely dark. Dozens of American newspapers are currently blocked in Europe and web services like Instapaper have suspended operations in the European Union for the foreseeable future.

Facebook and Google Already Hit With $8.8 Billion Lawsuit for GDPR Violations

The GDPR is no joke and nothing to mess around with.Today is a big day for every business and organization in the world. Let’s hope that the companies we are loyal to, are loyal to us.

This article is by Andrew Rossow, an Internet Attorney in Ohio and a Contributor for Forbes. This article is a repost from Forbes and cab be found here.

Supreme Court ruled on class action lawsuits

Supreme Court Rules on Class Action Lawsuits

A divided U.S. Supreme Court ruled that employers can force workers to use individual arbitration instead of class-action lawsuits to press legal claims. The decision potentially limits the rights of tens of millions of employees.

The justices, voting 5-4 along ideological lines, said for the first time Monday that employers can enforce arbitration agreements signed by workers, even if those accords bar group claims. The majority rejected contentions that federal labor law guarantees workers the right to join forces in pressing claims.

The ruling builds on previous Supreme Court decisions that let companies channel disputes with consumers and other businesses into arbitration. The latest decision applies directly to workers’ wage-and-hour claims, and its reasoning might let employers avoid class action job-discrimination suits as well.

“The policy may be debatable but the law is clear: Congress has instructed that arbitration agreements like those before us must be enforced as written,” Justice Neil Gorsuch wrote for the majority.

Arbitration supporters say that forum is cheaper and more efficient than traditional litigation. Critics say companies are trying to strip individuals of important rights, including the ability to band together on claims that as a practical matter are too small to press individually.

Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan dissented. Ginsburg called the ruling “egregiously wrong.”

“The inevitable result of today’s decision will be the underenforcement of federal and state statutes designed to advance the well-being of vulnerable workers,” Ginsburg wrote.

The workers in the case said the National Labor Relations Act guarantees them the right to press claims as a group, either in arbitration or in court. The 1935 law protects “concerted activities” by workers, without explicitly mentioning lawsuits.

The majority said that language wasn’t specific enough to overcome a separate 1925 law that says arbitration agreements must be enforced like any other contract.

About 25 million employees have signed arbitration accords that bar group claims, a lawyer for the workers in the case told the court.

The cases are Epic Systems v. Lewis, 16-285; Ernst & Young v. Morris, 16-300; and NLRB v. Murphy Oil USA, 16-307.

This article is a repost from Insurance Journal and can be found here.
Disability Awareness Month Graphic

May is Disability Insurance Awareness Month

May is Disability Insurance Awareness Month, a time to address the strategies you have in place to protect yourself and your family from loss of income due to injury or illness.

Without your paycheck, how long would you be able to make your mortgage or rent payment, buy groceries, or pay your credit card bills without feeling the pinch? If you’re like most, it wouldn’t be long at all: Half of working Americans couldn’t make it a month before financial difficulties would set in and almost one in four would have problems immediately, according to a Life Happens survey .

That’s where disability insurance comes in. Think of it as insurance for your paycheck. It ensures that if you are unable to work because of illness or injury, you will continue to receive an income to make ends meet until you’re able to return to work.

You insure your autos, your home, your business, and hopefully, your life. Don’t forget to insure your income. We’re here to answer any questions you may have, and of course, we are always happy to provide you with a no-obligation quote.

Did you know?

25% graphicMore than 25 percent of today’s 20-year-olds will become disabled before retirement.

1 in 8 graphicOne in eight workers will be disabled for five or more years during their working careers.

12% graphicAbout 12 percent of the American population is classified as disabled (37 million).

34 plus graphicThe average long-term disability absence lasts 34.6 months.

This article is based mostly on information from Life Happens and can be found here.

Small Business Week 2018

The SBA’s Small Business Week runs from April 29 to May 5 this year. Here’s why this event matters for today’s entrepreneurs.

Sunday kicked off National Small Business Week, and if you aren’t already celebrating in the festivities, you might want to start planning to join in now.

Led by the U.S. Small Business Administration, Small Business Week recognizes outstanding small business owners and entrepreneurs throughout the United States and in U.S. territories. From Sunday, April 29 through Saturday, May 5, the SBA will be livestreaming award ceremonies along with announcing the National Small Business Person of the Year. Other activities slated include a three-day virtual conference from May 1 to 3, co-hosted by SCORE and a Twitter chat on Friday, May 4 about tips for starting and growing a business.

Now more than ever before, National Small Business Week matters for entrepreneurs and small businesses of all sizes. Here’s a look at the effect this event has on the entrepreneurial community.

Small businesses are the backbone of the U.S. economy.

According to the SBA, more than half of Americans own or work for a small business. Entrepreneurs also help create two out of every three new jobs in the United States, yearly. Since the week-long event was first issued in 1963, the number of small businesses created has continued to rise. Fewer businesses are failing, too. Although it is quite popular to cite startup failure statistics — particularly in their first year — the reality is that 50 percent of small businesses survive five years or more in business.

2018’s National Small Business Week is setting the tone and pace for future events to come.

In addition to the livestreamed event ceremonies, virtual conference, and Twitter chat, the SBA will be hosting events to get entrepreneurs from all walks of life involved in the festivities on and offline.

A #SmallBusinessWeek Hackathon will be held in Washington, D.C. the weekend of April 27 to 29 with a $24,000 prize pool awarded to winning submissions. The SBA will also hit the road with a multi-city bus tour from May 1 to 3 as they highlight some of the best and brightest entrepreneurs across the country.

National Small Business Week helps foster a business-friendly environment.

The Kauffman Foundation’s recently included the results of their entrepreneur survey in their 2018 State of Entrepreneurship Address. Respondents have a positive outlook when it comes to the future of their businesses, but are less optimistic about the United States as a whole. One of the biggest reasons cited for this feeling was the belief that the government should prioritize an environment that fosters small business-friendliness and support.

While it may take a bit more than one week-long event each year to successfully create and build upon that kind of environment, it’s key to keep celebrations like National Small Business Week growing and thriving. For a look back at National Small Business Week through the years, the SBA offers video highlights to watch on their website.

This article is a repost from and can be found here.

Amazon Entering Banking Industry

Tech companies pose a clear challenge to banks and none more so than Amazon, which is reported to be in talks with JPMorgan Chase and other big retail banks to create a checking-account-like offering aimed at younger adults and those without checking accounts. This move would build on the company’s initial forays into financial products over recent years and be the start of its venturing into lending, mortgages, property/casualty insurance, wealth management and term life insurance, according to consultants at Bain & Co.

A recent Bain report on banking finds many financial services customers are all too ready and willing to ride the wave of disruption.

In its survey of more than 133,000 consumers across 22 countries, Bain & Co. found that more than half of U.S. respondents – and fully three quarters of those age 18 to 24 – are willing to buy a financial services product from established tech players, with Amazon atop the list of the most trusted. Apple and Google round out the top three.

While many in banking bet on fintech startups as the likely disruptors, Bain analysts contend established technology firms could pose the bigger threat. “Fintechs may have innovative products, but they struggle to build brand recognition or a distribution model that attracts many customers. Large technology firms already have established brands and customer access, which provide an almost unassailable distribution advantage,” the report notes.

According to Bain, Amazon is well positioned to succeed in U.S. banking because of its frequent purchases and customer reviews; a full commercial relationship including credit card on file; integration into consumers’ computers, smartphones, tablets, TVs and home audio devices; excellent service, including a great returns policy; and no major security breaches so far.

Once Amazon establishes a co-branded basic banking service, Bain & Co. expects the internet giant to move steadily but surely into other financial products including lending, mortgages, property/casualty insurance, wealth management and term life insurance.

Bain notes that Amazon could follow customers as they age and move through different life and family stages. and it has has the ability to personalize offers and communications. “Online shopping patterns already tell Amazon what it needs to know about customers’ life events, from getting married to having children to buying a house, which will allow the company to offer relevant financial services products—and information from those products will further increase the depth of the data,” the Bain report says.

“Amazon’s interest in banking is something we’ve anticipated for a while,” said Gerard du Toit, who leads Bain & Co.’s banking and payments sector in the Americas. “Checking and debit accounts are notoriously unprofitable, especially for a fee-free model aimed at younger customers, who often have little money to keep in the account. Most banks don’t relish serving this part of the market. But Amazon has a number of good reasons to dive in. Its incremental costs to do so will be almost nil and it stands to benefit in ways that go far beyond making money on bank accounts.”

Amazon can afford to go after this previously unprofitable segment in part because it can transform the economics of banking; Amazon does not have the burden of an expensive branch and contact center network – which Bain estimates comprises roughly 40 percent of a typical North American retail bank’s costs. The company can also avoid a lot of the customer acquisition costs borne by most direct banks because it already has digital relationships with so many Americans.

Amazon can also avoid dealing with bank regulatory compliance or managing the balance sheet. For example, Amazon’s retail banking partner would hold deposits, while Amazon would design and manage the customer experience and distribution.

Finally, Amazon can make it easy for customers to pay right from that account instead of with their credit cards, which impose fees for each transaction on Amazon or its third-party merchants. Bain estimates that Amazon could avoid more than $250 million in annual interchange fees in the U.S. alone.

“Amazon stands a very good chance of succeeding in banking, by disrupting the industry as it has in retailing,” said du Toit. “Customers indicate ample willingness to buy financial products from technology firms, and Amazon has earned their trust more than most other tech firms. It also possesses all the essential ingredients: digital prowess, a large customer base, an organization skilled at delivering pleasant customer experiences, and ample leeway to extend the brand into banking.”

Judging from the results the last time a tech giant named Google tried to sell insurance, Amazon also stands a good chance of failure. As Insurance Journal first reported in 2016, Google shut down its insurance sales operation Google Compare after only a year.

In doing so, the tech giant said that “the Google Compare service itself hasn’t driven the success we hoped for.”

In an analysis after the Google failure, experts told Insurance Journal that Google failed because it did not understand the insurance business. Some experts in online insurance shopping believe that Google realized it could make more money with its AdWords pay-per-click business than it could selling insurance and other financial products online.

This article is a repost from Insurance Journal and can be found here.

graphic of autonomous car

Uber Halts Autonomous Car Tests After Fatal Crash

Uber Technologies Inc. halted autonomous vehicle tests after one of its cars struck and killed a woman in Tempe, Arizona, in what is likely the first pedestrian fatality involving the technology.

The 49-year-old woman, Elaine Herzberg, was crossing the road outside of a crosswalk when the Uber vehicle operating in autonomous mode under the supervision of a human safety driver struck her, according to the Tempe Police Department.

After the incident, which happened at 10 p.m. local time on Sunday, she was transferred to a nearby hospital, where she died from her injuries. “Uber is assisting and this is still an active investigation,” Liliana Duran, a Tempe police spokeswoman, said in an emailed statement.Uber said on Monday that it was pausing tests of all its self-driving vehicles on public roads in Pittsburgh, San Francisco, Toronto and the greater Phoenix area. “Our hearts go out to the victim’s family,” a company spokeswoman said in a statement. “We are fully cooperating with local authorities in their investigation of this incident.”

Companies including Alphabet Inc., General Motors Co., Uber and Baidu Inc. are investing billions of dollars to develop autonomous-vehicle technology because it has the potential to transform the auto industry, transportation in general and the way cities work. One analyst has estimated Alphabet’s Waymo unit is worth at least $70 billion. The fatality in Tempe could slow testing, delay commercialization and undermine such optimism.

Testing has expanded to complex urban areas as states like Arizona and Texas take a light-touch regulatory approach and companies race to be first to commercialize the technology. That’s helped improved the systems, but also increased the chance of a pedestrian death. Experts have long worried about the impact deadly crashes could have on the nascent industry.

“We’re within the phase of autonomous vehicles where we’re still learning how good they are. Whenever you release a new technology there’s a whole bunch of unanticipated situations,” said Arun Sundararajan, a professor at New York University’s business school. “Despite the fact that humans are also prone to error, we have as a society many decades of understanding of those errors.”

The National Transportation Safety Board is opening an investigation into the death and is sending a small team of investigators to Tempe, about 10 miles east of Phoenix. The Department of Transportation’s National Highway Traffic Safety Administration dispatched a special crash investigation team.

The NTSB opens relatively few highway accident probes each year, but has been closely following incidents involving autonomous or partially autonomous vehicles. Last year, it partially faulted Tesla Inc.’s Autopilot system for a fatal crash in Florida in 2016.

The NTSB’s cautionary tone on the emergence of self-driving technology contrasted with the Department of Transportation, which revised its policy on self-driving vehicles last year in an attempt to remove obstacles to the testing of such vehicles.

“As always we want the facts, but based on what is being reported this is exactly what we have been concerned about and what could happen if you test self-driving vehicles on city streets,” said Jason Levine, executive director of the Center for Auto Safety, a Washington-based advocacy group. “It will set consumer confidence in the technology back years if not decades. We need to slow down.”

The Phoenix area is a fertile ground for experiments in the technology. Uber has been testing there with safety drivers behind the wheel. Late last year, Alphabet Inc.’s Waymo, which has tested in the Phoenix area for years, began removing the safety drivers to transport a small number of residents. (Waymo staff sit in the back seat.) General Motors Co. is also testing in the Phoenix area. A GM spokesman declined to comment, and a representative from Waymo didn’t return multiple requests for comment.

This article is a repost from Bloomberg written by Mark Bergen and Eric Newcomer and can be found here.

Why Companies Are Relaxing On Employee Drug Testing

Employers are struggling to hire workers in tightening U.S. job market. Marijuana is now legal in nine states and Washington, D.C., meaning more than one in five American adults can eat, drink, smoke or vape as they please. The result is the slow decline of pre-employment drug tests, which for decades had been a requirement for new recruits in industries ranging from manufacturing to finance.

As of the beginning of 2018, Excellence Health Inc., a Las Vegas-based health care company with around 6,000 employees, no longer drug tests people coming to work for the pharmaceutical side of the business. The company stopped testing for marijuana two years ago. “We don’t care what people do in their free time,” said Liam Meyer, a company spokesperson. “We want to help these people, instead of saying: ‘Hey, you can’t work for us because you used a substance,’” he added. The company also added a hotline for any workers who might be struggling with drug use.

Last month, AutoNation Inc., the largest U.S. auto dealer, announced it would no longer refuse job applicants who tested positive for weed. The Denver Post, owned by Digital First Media, ended pre-employment drug testing for all non-safety sensitive positions in September 2016.

So far, companies in states that have legalized either recreational or medicinal marijuana are leading the way on dropping drug tests. A survey last year by the Mountain States Employers Council of 609 Colorado employers found that the share of companies testing for marijuana use fell to 66 percent, down from 77 percent the year before.

Drug testing restricts the job pool, and in the current tight labor market, that’s having an impact on productivity and growth. In surveys done by the Federal Reserve last year, employers cited an inability by applicants to pass drug tests among reasons for difficulties in hiring. Failed tests reached an all-time high in 2017, according to data from Quest Diagnostics Inc. That’s likely to get worse as more people partake in state-legalized cannabis.

“The benefits of at least reconsidering the drug policy on behalf of an employer would be pretty high,” said Jeremy Kidd, a professor at Mercer Law School, who wrote a paper on the economics of workplace drug testing. “A blanket prohibition can’t possibly be the most economically efficient policy.”

Companies are having a hard enough time hiring, with unemployment hovering around 4 percent. “Employers are really strapped and saying ‘We’re going to forgive certain things,’” said James Reidy, a lawyer that works with employers on their human resources policies. Reidy knows of a half-dozen other large employers that have quietly changed their policies in recent years. Not all companies want to advertise the change, fearing it might imply they are soft on drugs. (Even former FBI director James Comey in 2014 half-joked about the need for the bureau to re-evaluate its drug-testing policy to attract the best candidates.)

Why the change? Pre-employment testing is no longer worth the expense in a society increasingly accepting of drug use. A Gallup poll in October found that 64 percent of Americans favor legalization. That’s the most since the company first started asking the question in 1969, when only 12 percent supported changing the plant’s status. Drug tests costs from $30 to $50 a pop, but the potential costs to an employer are far greater than the actual test.

In addition to helping ease the labor market, eliminating drug testing could have even broader benefits for the economy, said Kidd. Employers could hire the best, theoretically most-productive workers, he said, instead of rejecting people based on their recreational habits. Companies have said they lose out to foreign competitors because they can’t find people who can pass drugs tests, a particularly acute problem in the areas most affected by the opioid crisis.

Some jobs, such as those involving the use of heavy machinery, will always require drug tests. Excellence Health still drug-tests any employee working on a government contract, even in states where weed is legal. Companies are also reserving the right to test after an accident or if an employee comes to work notably impaired.

Not all companies are ready to change course. Restaurant Brands International Inc., which owns Burger King, hasn’t altered its corporate marijuana policy, said Chief Executive Officer Daniel Schwartz. Ford Motor Co. still treats pot as an illegal substance, according to a company spokeswoman.

Weed-averse employers have a notable ally: Attorney General Jeff Sessions. A longtime opponent of legalization, Sessions rescinded in January the Obama-era policies that enabled state-legalized cannabis industries to flourish. The uncertainty caused by the Justice Department’s actions may discourage companies from making changes.

Employers can also get discounts on workers’ compensation insurance for maintaining a “drug-free workplace” by, in part, drug-testing workers. But the types of workplaces forgoing pre-employment tests already enjoy relatively small savings. A job in an office setting, for example, won’t have very many workers’ compensation claims, compared to a factory. The money saved by meeting the qualifications for a drug-free zone isn’t worth it.

“We assume that a certain level of employees are going to be partaking on the weekends,” said Reidy, the employment lawyer. “We don’t care. We’re going to exclude a whole group of people, and we desperately need workers.”

This article is a repost from Bloomberg written by Rebecca Greenfield and Jennifer Kaplanand and can be found here.

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