Publishing Exposures – by Stew Nelson

In our previous post we discussed how network data breaches can lead to cyber liability. In this post we explore liability that firms face from just having a presence on the web. Whether you are actually doing “business” with your web site is irrelevant. As this liability is similar to those found in the publishing industry they are frequently referred to as publishing or media exposures. Additionally, social media tools such as Facebook, blogs and Twitter can also expose a company to law suits to defend themselves from claims of injury from copyright or trademark infringement, defamation/libel or violation of privacy. We will delve into this more in a future post but be warned that a standard general liability policy will not cover any of these publishing claims if they stem from your use of the internet or web site to broadcast your message.

Most of these exposures can be avoided by having clear guidelines for your web developers and bloggers that mainly rely on common sense. First, you should always assume that content you obtain or link to on or from another web site is protected and always ask permission from the author to use his or her material before publishing unless you are certain that your use will be considered a fair use. Next, if you are notified that you are violating a copyright in most cases you simple need to take down the offending material. However, lately a new “business model” is emerging that attempts to profit from copyright violations by suing first and demanding large sums of money that typically are negotiated lower. One firm has even gone so far as to demand the ownership of the offender’s domain name be included as part of the settlement.

These “shadowy” firms are sometimes referred to as “Copyright or Patent Trolls” as they troll the net looking for clear cut and even not so clear cut violations and then they purchase the settlement rights from the injured party and pursue a settlement that they will earn their “profit” from. There are even “Do It Yourself” and “How To” web sites that outline how to sue someone for stealing content if you don’t want to use the services of a copyright troll. Clearly the legal landscape is changing as content providers are now providing warnings to content thieves on the web site.

Representations and warranties on your web site regarding product or services that you offer are also sources of potential liability if you don’t exercise care in what you say or warrant as true. I have a client that warranted on their web site that all employees were screened with background checks. When this was later found to be partially untrue because of a theft by an employee the company was fined by a state regulatory agency for violating a state consumer protection statute. They ended up settling with a substantial payment to the state and they also were forced to take down the offending statement.

Another client was sued by a competitor for trademark infringement because their logos were similar and allegedly could cause confusion in the mind of their costumers. The offending company ultimately ended up changing their trademark and logo and ended up spending a considerable sum of money to change all of their marketing material. The take away here is that right or wrong, a company needs to defend themselves against a law suit and infringement of a trademark claims are excluded under most general liability policies. The internet clearly introduces a new risk for a business. While “Buyer beware” is still certainly good advice, the internet adds a new dimension with a new caution…Buyer and Seller beware!

For a good discussion of how to avoid publishing liability refer to this government web site on copyrights.

Kapnick Ranked 5th on Top 20 Agency List

In an era of so many challenges for businesses, and so much negative news floating around, Kapnick Insurance Group is pleased to be able to continue to share some good news with our clients and prospective clients! We were recently ranked 5th on a list of 20 of the largest business insurance agencies in metro Detroit, as published in the May/June issue of DBusiness Magazine. This list was compiled through individual interviews with each of the respective business insurance agencies. The agencies are ranked by total 2010 revenue, and are located in the region consisting of Wayne, Oakland, Macomb, Washtenaw and Livingston counties.

New Perils in a Connected World – by Stew Nelson


Stew Nelson blogger on the New Perils in a Connected World

This is a weekly series of blog posts on interesting, pertinent or little known topics on insuring your business properly. It is my belief that in insurance, “What you don’t know can hurt you!” After reading these posts I hope you will have a better understanding of the nature of the threats you and your business face. These articles are not designed to cover every conceivable risk that your business will encounter. However, I do hope that my writing will stimulate your thoughts on ways to organize your business in a manner that first minimizes or avoids all the risks that you can before you buy insurance. I also hope I can promote a dialogue between you and your insurance professional on unavoidable risks facing your business. Again, this is always the first step to take before you purchase any insurance. Armed with this information, I hope you and your agent will be able to perform a realistic cost benefit analysis for insuring only residual risk thereby maximizing the ROI on your insurance dollars.


Understanding Cyber Liability

This is my first post in a series designed to acquaint you with the emerging risks you and your business might encounter while doing business on (or even “near”) the World Wide Web. Many refer to these perils as “cyber risks” and the related potential liability as “cyber liability”. In my first few posts I will discuss the full spectrum of “cyber risks” inherent in doing business on the Net. Later, I will cover why you cannot look to your general liability policy alone for protection from cyber risk and elaborate on why – most likely – you will need more specific policies (often referred to as “cyber insurance”) which are designed to protect you from cyber liability. Finally, the last series of posts will deal with how you can protect yourself with cyber insurance and what you should look for in the way of a cyber liability policy before you purchase it.

Who needs cyber insurance?
It is hard to imagine a modern business that doesn’t need some type of cyber insurance. No matter what size or what industry you are in, you are not exempt from cyber liability. At its simplest, if you have a web site or send or receive emails you are exposed to cyber liability. The “bottom line” is that almost every business needs some form of cyber liability coverage.

What types of risk create cyber liability?
Data breaches (online data theft) are a very real source of potentially very expensive cyber liability. Almost daily you can read about a data breach incident in which sensitive information is lost, stolen, posted in public view improperly or destroyed. In some cases the compromised information consists of social security and/or credit card numbers, email addresses, driver’s license numbers, medical records or other bits of information that we all would want kept from “prying eyes”. Let’s look at some recent real life examples of cyber crimes and use them to examine potential cyber liability claims you may face in your business. Understand that your liability does not have to be the result of a crime. It can easily be the outcome of human error or a disgruntled/careless employee.

The latest breach involved a Dallas based email marketing company named Epsilon, a subsidiary of Alliance Data (NYSE:ADS). The Epsilon breach took place on March 30, 2011 when hackers penetrated their email system and made off with 2% of Epsilon’s client’s email addresses. Epsilon’s blue chip client list just happens to include banks; JP Morgan Chase, Citi and US Bank, and retailers; Target, Best Buy and Kroger just to mention a few. While there are many more household names that were involved this should be enough to get you thinking — “Is my name and address involved?” — “What else might they know about me that was stolen?” At least they didn’t get my credit card information…you hope!

This high profile security breach is a good example of what can happen to even the most security conscious company. As in most breaches (the only thing that is damaged immediately is the company’s reputation. Likely, it will be many months before the first potential fallout will occur. Epsilon’s damaged reputation will not immediately affect their P&L Statement. However, angry customers can cause significant embarrassment and more seriously – a loss of future business that could negatively impact earnings. Consequently, many cyber liability policies have added coverage for “damage control” expenses such as PR and legal expenses to lessen the financial impact of a breach.

Another early expense that will be incurred by Epsilon is the expense of notifying all the individuals or companies affected that their information was stolen. These notification costs can be substantial. (As a side note, I personally had my credit information stolen from Countrywide Mortgage who in addition to notifying me by a $10 registered letter — also paid for credit monitoring services for me for three years! Some consultants have estimated the cost of losing a single record can be over $200! Now imagine a laptop disappearing with 50,000 records!)

Back to Epsilon — As days go by there will most certainly be an investigation by any number of federal regulators and also by Epsilon themselves. The cost to conduct an internal investigation of this larceny could be a significant expense for Epsilon that potentially would be covered by a cyber policy. Damage control and investigatory costs are referred to as first party costs as they are borne by the insured. Additionally, if Epsilon was found negligent in protecting their customer’s data there may be fines/penalties imposed by a regulatory agency also. Government fines in most instances are not insurable. Also, if the attack caused actual damage to software or hardware those costs would also be considered covered first party expenses. First party expenses are typically covered by most cyber liability policies.

Later, as the stolen data makes it way through the Black Market for who knows what purpose, new threats may emerge. Armed with specific bank information and email addresses a clever “phisher” can dupe naive email recipients into disclosing their bank account information and passwords and then systematically empty online bank accounts with fraudulent withdrawals. If an attorney can trace the financial loss back to the Epsilon data breach a new type of claim may be triggered – Third party claims. Third party claims are suits brought by plaintiffs, not affiliated with Epsilon, seeking to recover expenses they incurred to clean up the mess. There is no way to judge early on how large these potential third party liability claims might be. The amount could be staggering especially if class action suits can be filed on behalf of enough people with actual damages. A properly structured cyber liability policy could protect Epsilon from most of these third party losses. Third party cyber liability coverage can be added to a professional liability policy or included in a broader stand-alone cyber liability policy.

Online data breaches are serious perils that face anyone that stores sensitive public information or intellectual property like trade secrets or product designs on their network. Online theft of data can lead to a wide array of first and third party claims and associated expenses such as defense costs, settlements, judgments and investigations. A properly structured cyber liability policy will provide balance sheet protection against these losses.

My next post will cover another source of emerging cyber liability that flows from “publishing” exposures from blog posts such as this on your web site or in chat rooms for defamation, libel or violation of copyrights or trademarks. The World Wide Web could truly be called the Wild Wild West!

How Agents Can Work With Multinational Clients

Multinational Insurance working for you

Let Kapnick assist you with your global insurance needs

By Laura Mazzuca Toops on April 12, 2011,


Building a strong relationship with a foreign business partner is essential to the process, said Jim Kapnick, president of Kapnick Insurance Group, an Assurex member. “To effectively handle a master global program, one needs to have a relationship with the local insurance providers for expert advice in each country and have the ability to effectively communicate back to the controlling broker,” he said. “As an Assurex member, we have the opportunity to meet and build relationships with our partners across the globe throughout the year. This allows us to build deep personal relationships that are incredibly important to properly handle the servicing needs of a multinational client.”

Jim Kapnick quoted in national underwriting website.

For more information, please see our Global Insurance Services.

Healthy Recipe of the Week

Vegetable Pita Pizza Recipe Healthy Food

Vegetable pita pizza is a healthy meal that tastes great, too.

Eating healthy can be challenging with the hectic lives we all live. These mini pizzas topped with an assortment of veggies are an ideal mid-afternoon snack.


Vegetable Pita Pizzas Recipe
Prep Time: 10 mins
Cook Time: 13 mins
Total Time: 23 mins


  • 2 large pita, 100% whole-wheat
  • cooking spray
  • 1/2 cup(s) assorted fresh vegetables (such as small broccoli or cauliflower florets, red sweet pepper strips, sliced fresh mushrooms, and/or chopped carrot)
  • 1/4 cup(s) pizza sauce
  • 1/4 cup(s) cheese, mozzarella, shredded


  1. Preheat oven to 400°F. Place pita bread rounds on a baking sheet. Bake for 5 minutes.
  2. Meanwhile, coat an unheated small skillet with nonstick cooking spray. Preheat over medium heat. Add the vegetables; cook and stir until crisp-tender.
  3. Spread pizza sauce on pita bread rounds; sprinkle with cooked vegetables and cheese. Bake for 8 to 10 minutes more or until light brown. Serve warm.

Nutritional Info (Per serving):
Calories: 113, Saturated Fat: 1g, Sodium: 291mg, Dietary Fiber: 3g, Total Fat: 2g, Carbs: 20g, Cholesterol: 4mg, Protein: 5g

Exchanges: Vegetable: 0.5, Starch: 1, Fat: 0.5 Carb Choices: 1.5


Recipe source –

Cardiovascular Disease and American Business

Business Insurance, Cardiovascular Disease, Coverage, Michigan, Ann Arbor

Cardiovascular Disease and American Business

The cost of heart disease and stroke for businesses in the United States, including health care expenditures and lost productivity from deaths and disability, is tremendous and the problem continues to grow.

No other disease is as detrimental to American health and welfare as cardiovascular disease. At any given time, more than 80 million people are affected by some form of cardiovascular disease. The Centers for Disease Control and Prevention (CDC) reports that heart disease is the nation’s leading cause of death, and stroke ranks as number three. The economic implications of cardiovascular disease are just as grave as the health consequences. The cost of heart disease and stroke for businesses in the United States, including health care expenditures and lost productivity from deaths and disability, is tremendous and the problem continues to grow.

For many people, cardiovascular disease can be prevented through lifestyle changes. Unfortunately, many of those who are at risk are unaware of their own risk status or unsure how they can reduce their risk. Prevention and wellness messages that address these issues have been successful in the workplace because employers are in a unique position to provide information to employees so they can understand how to control their risk factors and access treatments. Tackling this concern through health promotion programs, individual risk assessment, tailored health messages and incentives to achieve and maintain a healthy lifestyle can significantly improve employee health, dramatically reduce business-related costs, and effectively yield higher productivity and profits.

Cardiovascular Disease and American Business

Addressing cardiovascular disease is a public health responsibility, but it is also a strategic business issue. For U.S. businesses, the growth in resources devoted to treating cardiovascular disease has had a direct correlation to declines in company profits. Studies demonstrate that the same risk factors that lead to cardiovascular disease account for a major proportion of health care costs, workers’ compensation payouts and sick leave pay. Thus, emphasis on the prevention or modification of risk factors is a sound business decision.

Programs that address key components of cardiovascular disease are the most effective at improving health and reducing costs, yet some companies feel that the high cost of their existing health care plans precludes them from considering additional benefits or wellness programs. However, cardiovascular disease prevention is well worth the investment. The CDC conducted a study of nine organizations with workplace health management or wellness programs and found a return on investment ranging from $1.40 to $4.90 per dollar spent. The approaches included using a health risk assessment, offering fitness facilities, providing nutrition education and providing education programs targeted to those at high risk of disease.

How to “Sell” Cardiovascular Wellness in the Workplace

Several companies have reported an initial investment of $200 per person per year for targeted cardiovascular workplace wellness programs (there is evidence that per person costs may decline after the first year). In an environment where already high health care premiums are rising, some benefits managers may find that company decision makers will need concrete evidence to support any additional investment in cardiovascular disease prevention. The following strategies can help to illustrate the significant ROI that can be realized from cardiovascular programs:

  • Cite the literature. Several studies measure direct and indirect costs of cardiovascular disease and give concrete data about cost-to-benefit ratios of preventive programs.
  • Emphasize increased savings. The cost of prevention efforts is significantly less than the cost of treating disease. In light of rising health care costs, programs that lead to reduced medical claims, office visits and hospitalization offer an immediate opportunity to save money.
  • Educate decision makers. Explain how much of your company’s health care costs go toward treating cardiovascular disease and its risk factors. Present this data with information about programs that can help minimize or control these risk factors, giving examples of health care cost savings that could be realized if these programs were implemented.
  • Compare health care costs with net revenue. Seeing the proportion of profits that go to health care spending underscores the need for strategies to reduce overall health care costs.

Kapnick Named Top Places to Work

Top Place to Work Insurance CompanyOver the past two years, the Detroit Free Press has honored more than 100 businesses in southeast Michigan as Top Workplaces as assessed by the people who know best: their employees.

The Detroit Free Press named Kapnick Insurance Group to its 2010 “Top Work Places” – Kapnick ranked 29th.

Over the past two years, the Detroit Free Press has honored more than 100 businesses in southeast Michigan as Top Workplaces as assessed by the people who know best: their employees.

This year, the Detroit Free Press expanded their search and accepted nominations of companies statewide, looking for the best places to work throughout Michigan. The Detroit Free Press, in conjunction with its research partner, Workplace Dynamics, followed a strict survey and interview process to narrow down and select what will be publically recognized as Detroit Free Press 2010 Top Workplaces.

As a credit to the program’s ever growing popularity, the perseverance of companies all over Michigan, the dedication of the winning companies and the pride of Michigan workers – this year was their biggest yet. The Detroit Free Press received the most nominations ever, totaling more than 950 companies – Kapnick ranked 29th.

Kapnick Insurance Group takes great pride in its selection of team members, company culture, and of course, it’s obvious desire to offer an incomparable workplace for its employees. “This is quite an honor and we are very happy to be recognized among the best employers,” said Jim Kapnick, president.