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Court: Insurer Off the Hook for $500K Settlement to Florida Spa Guest

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A federal appeals court ruled that Evanston Insurance Co. doesn’t owe a $500,000 settlement that a Florida spa owner agreed to pay to a woman who suffered a stroke during a massage.

The decision, issued in an unpublished opinion, affirms a lower court finding.

According to facts outlined in the decision, in June 2012, Kalandra Lewis sustained a variety of injuries including a stroke, during a massage at the Serenity Spa for Total Health and Relaxation Inc. in Lee County, Florida. Denise Vega owned the business and Hanzel Alpizar was the licensed massage therapist who performed the massage.

Vega was insured by a medical professions professional liability policy issued by Evanston Insurance Company. The policy listed Vega as an insured, not her spa.

The court noted the following relevant policy language relating to the insurer’s duty to pay all claims: “by reason of any act, error or omission in Professional Services rendered or that should have been rendered by the Insured [Vega] and arising out of the conduct of the Insured’s [Vega’s] Professional Services.”

The policy defined professional services to include “[m]assage and [r]elated [m]odalities.” Even if “rendered” could mean done by the insured herself or provided by the insured, the omission or negligence still has to arise out of the insured’s professional services.

Additionally, in Exclusion B, the policy excluded coverage for “liability arising out of the insured’s activities in his/her capacity as proprietor, superintendent, executive officer, director, partner, trustee or employee of [any] business enterprise not named as an Insured under this policy.”

As a result of her injuries, Lewis and her husband filed a lawsuit against the spa, Vega and Alpizar in Florida state court alleging negligence and loss of consortium.

The suit included a vicarious liability claim against Vega since Alpizar was under Vega’s “supervision, employ and control” when he performed the massage.

Evanston notified Vega there would be no coverage for the defense or indemnification of the claim. In March 2015, Vega entered into a Colbentz agreement with the plaintiffs. This resulted in Vega assigning any causes of action she had against the insurer to the plaintiffs and she consented to a judgment of $500,000 against her.

In exchange, the plaintiffs agreed they wouldn’t execute the consent judgment against her. A few months later, the plaintiffs filed an action against Evanston seeking a declaration there was coverage under the policy for vicarious liability claim.

There was also a claim of breach of the insurance policy. The same day, Evanston had the action removed to the US District Court for the Middle District of Florida.

The parties filed cross motions for summary judgment. On June 17, 2016, the district court ruled in favor of Evanston.

Last month, the Eleventh Circuit U.S. Court of Appeals affirmed the district court decision after hearing oral arguments and determining the policy didn’t cover Vega’s business.

 

SOURCE

http://www.insurancejournal.com/magazines/features/2017/08/07/459789.htm

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Small and medium-sized businesses are not investing in cyber protection despite spate of attacks

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Over a fifth of SMEs hit by a cyber attack said that the breach had cost them more than £10,000 and one in 10 said that it had cost them more than £50,000

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Small and medium-sized businesses are not earmarking significant amounts of cash to bolster their cyber-security defences, despite almost one-sixth of all companies suffering an attack within the last year.

According to data compiled by insurance company Zurich, 875,000 SMEs across the UK have been affected by a cyber-attack over the last 12 months, with firms in London worst affected.

Of the companies hit, just over a fifth reported that it cost them more than £10,000 and one in 10 said that it had cost them more than £50,000.

But despite those potential losses, a survey of over 1,000 UK SMEs also showed almost half – or 49 per cent – admitted that they plan to spend £1,000 or less on their cyber defences in the next 12 months, while 22 per cent said that they don’t know how much they will spend.

That’s despite 25 per cent of medium-sized businesses saying that they had been directly asked by a current or prospective customer about what cyber security measures they have in place.

“The results suggest that SMEs are not yet heeding the warnings provided by large attacks on global businesses,” said Paul Tombs, head of SME proposition at Zurich.

“While the rate of attacks on SMEs is troubling, it also shows that there is an opportunity for businesses with the correct safeguards and procedures in place to leverage this as a strength and gain an advantage.”

In April, a study commissioned by cyber security firm CGI and conducted by Oxford Economics found that public companies’ share prices fall by an average of 1.8 per cent on a permanent basis following a severe cyber-breach, where large amounts of sensitive information are lost.

A report by Lloyds of London earlier in Julyargued that a major, global cyber attack – akin to the Wannacry attack that took down the NHS in May – could trigger an average of £41bn of economic losses, a figure on par with a catastrophic natural disaster such as US superstorm Sandy in 2012.

“While recent cyber-attacks have highlighted the importance of cyber security for some of the world’s biggest companies, it’s important to remember that small and medium sized businesses need to protect themselves too,” Mr Tombs said.

The research was conducted by YouGov on behalf of Zurich.

 

SOURCE

http://www.independent.co.uk/news/business/news/sme-cyber-protection-attacks-hackers-small-businesses-medium-sized-security-online-wannacry-a7868426.html

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Goldman Sachs to sell off a 7% stake in Hastings Direct

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a car crash

An investor group – headed by Goldman Sachs – will sell 46mln shares via a placing, raising just shy of £100mln in the process

A Hastings Group Holdings PLC (LON:HSTG) investment group headed by Wall Street giant Goldman Sachs has told the market it is selling off a 7% stake in the motor insurance business.

Hastings Investco Limited currently owns around 58% of the motor insurer’s shares but plans to reduce this to nearer 51% through a share placing.

The investors are selling 46.2mln shares at a price of 216p, a few pence short of today’s opening, valuing the transaction at around £100mln.

Alongside Goldman Sachs Merchant Banking division, Hastings Investco comprises non-executive directors Richard Brewster and Edward Fitzmaurice, as well as former director Keith Charlton.

Neil Utley, who masterminded the management buyout of the business back in 2009, is also one of the investors.

Hastings Group – based around the seaside town of the same name – has enjoyed a strong 2016, with the share price rising by nearly a third in the year-to-date.

The company itself will not receive any of the funds generated.

Shares dropped 4%, or 10p, to 219p.

 

SOURCE

http://www.proactiveinvestors.co.uk/companies/news/166949/goldman-sachs-to-sell-off-a-7-stake-in-hastings-direct-166949.html

 

 

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Half of insurers to merge in next three years

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Almost 50 per cent of insurers expect to acquire new technologies through mergers and acquisitions in the next three years, according to a Willis Towers Watson survey.

The poll of 200 senior-level executives within the insurance industry found almost three-quarters (74 per cent) believed the insurance sector has failed to show leadership in digital innovation.

Cost was a major challenge with respondents blaming the length of time required to commercialise new technologies (32 per cent) and the size of investment required to transform (24 per cent).

Fergal O’Shea, Europe, the Middle East and Africa life insurance mergers and acquisitions leader at Willis Towers Watson, said banks had more contact with customers, which gave them a head start.

He said the quality and frequency of the information exchange between insurers and customers, who may simply be renewing a policy once a year, just isn’t the same.

Mr O’Shea said: “However, insurers recognise the importance of building a sustainable digital infrastructure to improve customer engagement and as an essential distribution channel, which is likely to be addressed through internally-driven innovation, joint ventures and mergers and acquisition activity.

“For those that hesitate, there remains the commercial risk that they will get left behind and fail to capture future generations and younger policyholders who are more likely to engage via digital distribution.”

As well as the half of respondents expecting to make an acquisition over the next three years directly driven by the desire to acquire digital technologies, 14 per cent plan to make more than one acquisition.

The survey reveals nearly all respondents (94 per cent) expect distribution to be the area where digital technologies have the greatest impact over the next five years.

Insurers also said they saw claims processing and loss adjustment, and customer management as strategic priorities.

 

SOURCE

https://www.ftadviser.com/protection/2017/01/16/half-of-insurers-to-merge-in-next-three-years/

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