The JOBS Act (Jumpstart Our Business Startup Act) was initially passed in April 2012.  According to Mr. Sagalow, it was designed to make it easier for companies to raise capital with minimal oversight by the Securities and Exchange Commission (SEC).  While the SEC was also not happy with the loss of regulatory oversight,  D&O underwriters faced increased pricing pressure and potential losses.

The SEC is responsible for implementing the JOBS Act, but it has taken over three years to issue the first regulations in relation to Title IV – the Small Company Capital Formation title.

Prior to the JOBS Act, private companies were able to raise up to $50 million through a private placement memorandum.   Companies could solicit credible investors and the SEC had oversight over the entire process.     According to Mr. Sagalow, “the privately held D&O market was very comfortable with private placement memorandums and they were routinely covered…with a privately held D&O policy.”  Another way to raise capital was through Regulation A which had less regulatory oversight, but only companies to raise up to $5 million.

Title III Crowdfunding, another section of the JOBS Act, allows companies to raise up to $1 million through online portals with little SEC oversight and without using securities brokers. In addition, companies could to solicit unqualified investors.  Regulations for Title III have not been issued for over 700 days, according to Mr. Sagalow, but the SEC is expected to issue new rules in October 2015.

In March 2015, a new regulation called A Plus was issued by the SEC, and increased the amount that could be raised to $50 million with less regulatory oversight than Regulation D.  Regulation A Plus also eliminated the General Solicitation ban, so companies are now able to advertise for investors.  These changes, said Mr. Sagalow, have caused the D&O carriers to review their policies in order to make changes in terms of additional amendments and exclusions.

For more on Innovations in Insurance with Ty Sagalow, visit the WRIN.tv On Demand Library.

http://www.wrin.tv/why-are-do-underwriters-so-concerned-about-sec-changes-to-the-jobs-act/

In the third part of a series on Bitcoins, Ty Sagalow, President of the Innovation Insurance Group discusses “What’s News in Insurance” and how the peer-to-peer payment system has become more legitimate, if not more secure.

Recently, the U.S. Marshals Office auctioned 30,000 Bitcoins that were forfeited by Silkroad, one of the original Bitcoin companies allegedly involved in illegal activities.  Mr. Sagalow says “the decision by the United States Government to sell Bitcoins is significant, not just because they are worth about $18 million, in todays market…it really legitimizes Bitcoins.”

According to Mr. Sagalow, the U.S. Internal Revenue Service also announced that Bitcoins are considered “property” and can be used in taxable transactions. You can mow use Bitcoins to purchase items through Amazon and rent a hotel room via Expedia.com.  In addition, Mr. Sagalow says venture capital funding going towards Bitcoin investments and is supposed to top $300 million in 2014.

In this second part of the Bitcoin series in “What’s New in Insurance”, Ty Sagalow, President of Innovation Insurance Group, explains the growing legitimacy of Bitcoins, and risks associated with the peer-to-peer payment system.

There are approximately $8 billion dollars of Bitcoins around the world, says Ty, used to buy a growing number if online products and services. He questions whether holding and storing Bitcoins has risk and what it means for the insurance industry.

 Mr. Sagalow sees three main exposures: price fluctuation, mismanagement and theft. Mismanagement and theft offer opportunities for the insurance industry. According to Ty, “Mismanagement is an issue the insurance industry is familiar with and…risks covered by D&O carriers/underwriters on a daily basis.”  Ty believes Bitcoin companies should buy D&O insurance and will likely pay higher rates than more established companies.

 Great American and a number of Lloyds syndicates have announced the creation of Bitcoin theft policies.  According to Ty, Bitcoins “should be evaluated as a cyber risk” and offers opportunities for cyber and fidelity insurance carriers “too big to ignore.”

Ty Sagalow, President of Innovation Insurance Group, introduces “What’s New in Insurance”, a new segment on WRIN.tv that will look at new and emerging risks, new product and service developments as well as new ideas shaping risk management.

In the first of a 3 part installment of “What’s New in Insurance”, Mr. Sagalow looks at Bitcoins, the peer-to-peer payment system that uses open-source software.

Recently, Great American Insurance introduced a new fidelity insurance policy for Bitcoin theft.   According to Ty “…the market is still evaluating the policy…its terms and conditions as well as which companies are eligible to purchase it. “

Bitcoins have been around since 2009, when the first open-source peer-to-peer transfer software was first invented.” Ty explains that a” Bitcoin has no physical presence.” According to the U.S. Treasury Department it is a virtual currency.   Bitcoin has value, Ty says, “because…millions of people throughout the globe say it has value….A transfer or purchase using bitcoins has about 2% fee, (much lower than a credit card) and is anonymous.” 

Mr. Sagalow believes Bitcoins are here to stay. In the next edition of “What’s New in Insurance”, Ty will look at the risks posed by Bitcoins, and what new products are emerging to manage the risk.

Oasis Loss Modeling Framework unveiled a significant development in the modelling of natural catastrophes. With plug-and-play components, it promises to promote the creation of internal models, support reinsurance negotiation and regulatory compliance, and cost reduction.

Ty Sagalow, president of Innovation Insurance Group, and host of WRIN.tv’s Innovations in Insurance explains what this means to existing risk models, and future developments in the modeling space. He says the Oasis framework will enable member insurers, reinsurers and brokers to pool information in a cost effective way to meet regulatory requirements.

Mr. Tizzio says the role of technology and cyber liability present new risks in the E&O market. Mold exposure is an emerging risk in the umbrella and excess casualty market, and the continuous changes in the environmental and construction. Globally, there are risks associated with climate change, the movement of products through different modes of transportation.

Mr. Tizzio compares the evolution in cyber coverage to the development of Employment Practices Liability Insurance (EPLI).  As the exposure evolves, so too does the insurance coverage and the value added services that support the coverage. “It is never complete.”