New York state cyber security regulation to take effect March 1

projection of man in binary code representing cyber security or cyber attack

By Karen Freifeld and Jim Finkle

NEW YORK/BOSTON (Reuters) – New York state on Thursday announced final regulations requiring banks and insurers to meet minimum cyber-security standards and report breaches to regulators as part of an effort to combat a surge in cyber crime and limit damages to consumers.

The rules, in the works since 2014, followed a series of high-profile data breaches that resulted in losses of hundreds of millions of dollars to U.S. companies, including Target Corp, Home Depot Inc and Anthem Inc .

They lay out unprecedented requirements on steps financial firms must take to protect their networks and customer data from hackers and disclose cyber events to state regulators.

“These strong, first-in-the-nation protections will help ensure this industry has the necessary safeguards in place” to protect businesses and clients “from the serious economic harm caused by these devastating cyber-crimes,” Governor Andrew Cuomo said in a statement.

The state in December delayed implementation of the rules by two months and loosened some requirements after financial firms complained they were onerous and said they would need more time to comply.

The new rules call for banks and insurers to scrutinize security at third-party vendors that provide them goods and services. In 2015, the New York Department of Financial Services found that a third of 40 banks polled did not require outside vendors to notify them of breaches that could compromise data.

The revised rule requires firms to perform risk assessments in order to design a program particular to them, and gives them at least a year-and-a-half to comply with the requirements. The final rule took into account the burden on smaller companies, a spokeswoman for the agency said.

Covered entities must annually certify compliance.

Institutions subject to the regulation include state-chartered banks, as well as foreign banks licensed to operate in the state, along with any insurer that does business in New York.

A task force of U.S. state insurance regulators is also developing a model cyber security law, which individual state legislatures could ultimately choose to adopt.

UnitedHealth trims drug coverage, including Sanofi insulin

A packet of diabetes drug Lantus SoloStar passes along the production line at a manufacturing site of French drugmaker Sanofi in Frankfurt J

(Reuters) – UnitedHealth Group, the largest U.S. health insurer, will stop covering several brand-name drugs as of next year, reinforcing a trend of payers steering prescriptions to lower-priced options.

In a bulletin seeking client feedback by Sept. 28, UnitedHealth said it is changing reimbursement terms for long-acting insulins and will no longer cover Lantus, the main insulin drug sold by Sanofi.

The insurer said Basaglar, a cheaper biosimilar insulin sold by Eli Lilly would be covered as “Tier 1,” meaning the lowest out-of-pocket costs for members. Levemir, produced by Novo Nordisk, will move from Tier 1 to Tier 2.

CVS Health made a similar move last month to drop Lantus in favor of Lilly’s new biosimilar.

Analysts at Jefferies said the sales impact of the United exclusion should be less than that from the CVS move, because the United plan covers around 15 million people while CVS covers 19 million.

Sanofi shares fell more than 1 percent on Thursday after the news but had recovered by 1200 GMT, while Novo was down 1.3 percent.

Sanofi reaffirmed its sales expectations despite the latest exclusion. A spokeswoman said the company was still targeting a decline in diabetes drug sales of 4 to 8 percent a year until 2018.

“We are disappointed with the decision. For Sanofi, it is a pity not to leave doctors a choice,” she said. “We had anticipated this kind of decision but we are holding discussions with other organisations in the United States to have them keep Lantus on their lists.”

Biosimilars are cheaper copies of protein-based biotech drugs such as Lantus, which are no longer protected by patents. They cannot be precisely replicated like conventional chemical drugs but have been shown to be equivalent in terms of efficacy and side effects.

United also said it will exclude from coverage Amgen’s white blood cell-boosting drug Neupogen, in favor of Zarxio, a biosimilar sold by Novartis.

UnitedHealth last year bought Catamaran for $12.8 billion, making it the nation’s No. 3 pharmacy benefit manager after Express Scripts Holding and Caremark, which is owned by CVS.

(Reporting by Deena Beasley, Ben Hirschler and Noelle Mennella; Editing by Ruth Pitchford and Elaine Hardcastle)

UnitedHealth sees further losses for Obamacare insurance

The logo of Down Jones Industrial Average stock market index listed company UnitedHealthcare is shown in Cypress, California

By Caroline Humer

(Reuters) – UnitedHealth Group Inc is still losing money on the individual insurance business created under U.S. President Barack Obama’s national healthcare reform law due to customers’ high medical costs, the company said on Tuesday.

The largest U.S. health insurer said that it was booking $200 million in losses in the second quarter to cover higher-than-anticipated use of medical services by customers this year. UnitedHealth and other insurers have blamed those costs for their losses from the exchange business.

The company said it expected the program, often called Obamacare, to reduce 2016 earnings by about $850 million, up from $475 million in 2015.

Next year, it will exit most of the two dozen states where it sells individual insurance on the exchanges but still has plans to sell in Nevada, New York and Virginia.

“We do not expect any meaningful financial exposure on 2017 business from the three or fewer exchange markets where we currently plan to remain,” Chief Executive Officer Stephen Hemsley said on a conference call with analysts to discuss second-quarter financial results.

Individual exchange customers this year have more severe chronic conditions, such as diabetes, chronic obstructive pulmonary disease and HIV, and attrition has been lower than expected, UnitedHealth said. It expects to end 2016 with 750,000 exchange members.

The company said its other businesses, including pharmacy benefit management and the technology and consulting divisions, were strong, and it reported higher-than-expected earnings and revenue for the second quarter.

UnitedHealth, which also sells employer-based insurance as well as Medicare and Medicaid, raised the low end of its full-year profit outlook to $7.80 per share from $7.75 and kept the high end at $7.95.

Shares of UnitedHealth were up 0.5 percent at $141.42. It is the only large insurer not involved in any of the major consolidation deals under review by antitrust regulators.

Other insurers were off slightly on the announcement but lost ground after a report that antitrust regulators were planning to block their deals. Aetna Inc was off 3.6 percent at $114.90, while Anthem Inc fell 2.9 percent to $131.11. Cigna Corp was down 2.3 percent at $130.02 and Humana Inc gave up 5.3 percent to $151.10.

Mizuho analyst Sheryl Skolnick said UnitedHealth’s Obamacare business could further weigh on 2016 profit, given that more members have stayed on than expected and will have higher expenses during the second half.

“They have tried as much as they can… to take as much of the losses as they can,” Skolnick said.

Revenue from the company’s Optum business, which manages drug benefits and offers healthcare data analytics services, rose 51.5 percent to $20.6 billion from a year earlier.

Net earnings rose to $1.75 billion, or $1.81 per share, from $1.59 billion, or $1.64 per share, a year earlier.

(Reporting by Caroline Humer in New York and Amrutha Penumudi in Bengaluru; Editing by Lisa Von Ahn)

Insurers shun risk as oil-linked quakes soar in Oklahoma

Oil Pump in Oklahoma

By Luc Cohen

OKLAHOMA CITY (Reuters) – As the number of earthquakes in Oklahoma exploded into the hundreds in the last few years, nearly a dozen insurance companies moved to limit their exposure, often at the expense of homeowners, a Reuters examination has found.

Nearly 3,000 pages of documents from the Oklahoma Insurance Commission reviewed by Reuters show that insurers and the reinsurers who cover them grew increasingly concerned about exposure to earthquake risks because of heightened frequency of seismic activity, which scientists link to disposal of saltwater that is a byproduct of oil and gas production.

Even as they insured more and more properties against earthquakes in the past two years, six insurers hiked premiums by as much as 260 percent and three increased deductibles. Three companies stopped writing new earthquake insurance altogether, state regulatory filings obtained by Reuters show. Several insurers took more than one of those steps.

In addition, the insurers would consider suing oil and gas companies for reimbursement in instances where they would have to pay damages to homeowners, according to several sources, including two insurance company officials.

So far Oklahoma’s biggest earthquake was a 5.6 magnitude temblor in Prague in 2011 that buckled road pavement and damaged dozens of homes.

However, the push to limit earthquake exposure reflects insurers’ fear that the surge in small quakes is a portent of a ‘big one’ in coming years, given the relationship between the magnitude and a total number of earthquakes in a certain area.

The filings show many insurers explicitly stated they were concerned about exposure to earthquake risk. In late March, the U.S. Geological Survey (USGS) warned that 7 million Americans were at risk of so-called induced seismicity.

The warning further heightened insurers’ and reinsurers’ concerns, Oklahoma Insurance Commissioner John Doak said.

Because earthquakes were rare in Oklahoma before shale oil and gas production soared in the past decade, very few residents carried earthquake insurance back then.

OIL, WATER AND QUAKES

That has changed as the number of quakes of magnitude 3.0 and higher recorded in the state soared from a handful in 2008 to 103 in 2013 and 890 last year, according to USGS. The value of coverage, usually offered as an add-on to standard homeowners’ policy, also spiked to $19 million in 2015 from less than $5 million in 2009, according to the Insurance Information Institute, a trade group.

Scientists link the quakes to the injection of wastewater generated from the oil and gas production process deep underground. Volumes of so-called “produced water” have ballooned as horizontal drilling and hydraulic fracturing, or fracking, boosted output in Oklahoma.

Monthly injection volumes in Oklahoma doubled between 1997 and 2013, according to a 2015 Stanford University study.

The Oklahoma Oil & Gas Association has said state regulators’ efforts to work with producers to limit the amount of wastewater injected would reduce seismicity.

So far, relatively few homeowners have filed claims, in part because the damages were not big enough to exceed the deductibles. Some who did say they had trouble getting compensation.

Julie Allison said the cumulative effects of the 39 earthquakes of magnitude 3.0 and above that had struck within two miles of her home in Edmond, Oklahoma, had caused $70,000-80,000 in damages, but Farmers Insurance denied her claim in April.

“They did not deny that we had damage,” Allison said. The insurance company, however, blamed it on ground erosion and settlement, she said.

Farmers said it relied on outside engineering experts for the assessment and that the Allisons have accepted the company’s offer to pay for a second opinion by an expert of their choice.

HIGHER EXPOSURE

For some insurers and reinsurers the risks have proven too big. Responding to the pull-back and premium hikes Oklahoma’s Insurance Commission has scheduled a “fact-finding hearing” in late May, Doak said.

Travelers Insurance Company , the sixth-largest provider of earthquake insurance in the state, stopped allowing existing policyholders to add earthquake coverage in November 2014. In a filing, it said it was making the change “to manage our exposure to earthquake in the state.”

The Hartford stopped writing earthquake insurance in Oklahoma in late 2014. Oklahoma Farm Bureau Mutual Insurance Company removed earthquake coverage from their existing homeowner policies in February 2011, filings show.

The Oklahoma Farm Bureau said it made a “business decision” to remove coverage in 2010. Travelers declined to comment beyond its filing. Hartford declined to comment.

Other companies raised deductibles or premiums. Andrew Walter, manager of underwriting research and development at Country Mutual Insurance Company, which raised its deductible last year, said the step aimed to “protect our financial strength in case of a large scale earthquake in the state.”

Others that hiked premiums include Chubb Ltd <CB.N>, which said it kept providing coverage to existing and new customers, but would not discuss premium rates, and EMCASCO Insurance Company <EMCI.O>, which did not respond to requests for comment.

Risk modelers fear that insurers are too exposed in the event of a “big one,” even though claims have been few thus far.

If they do end up with substantial claims for a large quake, insurers could sue the oil companies for reimbursement. At the Oklahoma insurance regulator’s request, several insurance companies clarified last fall that they did cover man-made quakes, which provided an incentive to try to recoup payouts from oil and gas companies.

Two insurers – the United Servicemembers Automobile Association and Palomar Specialty – said they could consider such action.

(Additional reporting by Liz Hampton and Terry Wade in Houston; Editing by David Gaffen and Tomasz Janowski)

Repair Crews assess Canada Wildfire Damage

Crews begin to work on the burned out remains of the Waterways neighbourhood of Fort McMurray

By Rod Nickel

FORT MCMURRAY, Alberta (Reuters) – Repair crews were expected to assess wildfire damage to the Canadian energy boomtown of Fort McMurray on Tuesday as the oil sands companies surrounding the ravaged city looked at bringing production back on line.

Political leaders got their first glimpse of the city on Monday since wildfire forced 88,000 residents to flee for safety. Alberta Premier Rachel Notley said they were encouraged by how much of it escaped destruction, estimating almost 90 percent of its buildings were saved.

But the tour also revealed scenes of utter devastation, with blocks of homes reduced to blackened foundations, front steps and metal barbecues.

Notley said 2,400 structures had burned within the city while almost 25,000 were saved.

The fire, expected to grow further on Tuesday, ravaged some 204,000 hectares (504,000 acres) of Alberta. But it also moved far enough away from the evacuated town to allow an official delegation to visit on Monday.

Officials warned it was not safe for residents to return, with parts still smoldering and large areas without power, water and gas. Notley said repair crews will have weeks of work ahead of them to make the city safe.

The assessment by officials came a few hours after insurance experts revised sharply downward their estimates of the cost of damage from the blaze, which began on May 1.

Cooler weather, which has helped firefighters battling the blaze, was expected to linger through Thursday, according to Environment Canada. Still, much of Alberta is tinder-box dry after a mild winter and warm spring.

Fort McMurray is the center of Canada’s oil sands region. About half of its crude output, or 1 million barrels per day, has been taken offline, according to a Reuters estimate.

Oil sands companies, which have high fixed costs, are expected to work as quickly as possible to get production back online, but face the challenge of many staff and suppliers being displaced by the evacuation.

In one encouraging sign for industry, Royal Dutch Shell Plc said on Monday it restarted production at a reduced rate at its Albian oil sands mining operation in Alberta, adding it plans to fly staff in and out.

But Imperial Oil said late on Monday it completed a controlled shutdown of its Kearl oil sands mining project, blaming the uncertainties associated with logistics.

(Writing Jeffrey Hodgson in Toronto; Editing by Ryan Woo)

Cyber Bullying has more than emotional costs

Electronic cables are silhouetted next to the logo of Twitter in this illustration photo in Sarajevo

By Amy Tennery

NEW YORK (Reuters) – Anyone who has had embarrassing photos posted on social media or been deluged with angry messages can attest to the high emotional cost of cyber bullying. But there is also a cost in real dollars for some to clean up their online reputations, including legal fees, security measures and even counseling.

For the 40 percent of adult Internet users who are dealing with this issue, according to 2014 Pew Research Center data, and numerous school-age children, there is a new insurance policy to help mitigate the financial repercussions.

Chubb Ltd recently began offering optional cyber bullying coverage for its homeowners insurance clients. The coverage is included in the company’s Family Protection policy, which costs around $70 a year. It covers up to $60,000 in compensation to clients and their families to pay for services including psychological counseling, lost salary and, in extreme cases, public relations assistance.

“It’s so hard to have complete control online,” said Christie Alderman, vice president of client product and services, Chubb personal risk services. “We do know that when it does occur it can be really devastating.”

Nicole Prause, a neuroscientist from California, learned the costs of cyber bullying the hard way.

After publishing a 2013 peer-reviewed paper that suggested sex addiction is not a clinical diagnosis, Prause said she was subjected to online insults from people she believes oppose her work.

The abuse varied in scope, from repeated claims that she faked her data to comments about her appearance.

“I had a TED Talk (posted online) and they just filled it with ‘tranny’ comments,” said Prause, who worked at the University of California-Los Angeles at the time the attacks began. “They have definitely singled me out.”

Prause filed a cease-and-desist order against her harassers, and said those persons are no longer allowed to contact her directly. But Prause said she spent around $5,000 to mitigate the damage over the years, hiring an attorney and someone to take screenshots of the abuse lobbed at her online.

Rich Matta, the chief executive officer of ReputationDefender (https://www.reputationdefender.com/), an online reputation management firm, says that the average consumer dealing with this problem can spend around “a few thousand dollars” a year to combat cyber bullying.

“It’s no surprise that remediation of cyber bullying is now insurable,” Matta said, referencing the Chubb insurance policy.

But some feel that taking out an insurance policy against online harassment is going too far.

Sameer Hinduja, co-director of the Cyberbullying Research Center and a professor of criminal justice at Florida Atlantic University, said insurance for cyber bullying reinforces a victim mentality and is “tapping (in to) the fear.”

“You can do a lot on your own to safeguard your reputation,” Hinduja said.

Experts say it is important for consumers to be proactive in protecting their online reputation, by taking a few simple steps.

Here are a few tips to avoid the cyber bully trap:

1. Keep it private

Hinduja recommends setting social media profiles to “private,” to avoid writing posts that are too frequent and opinionated, and to block or mute accounts that go too far.

“You are going to be a much better advocate for yourself,” Hinduja said.

2. Be proactive about your child’s online presence

While more schools are educating kids about cyber abuse, Matta said parents still need to monitor how their kids use social media. “They need to establish some boundaries and rules around when it’s OK to use technology,” he said.

3. Get help when you need it

For those who feel overwhelmed managing their online presence, resources like online ReputationDefenders can offer a reprieve – for a price. ReputationDefenders typically charges private clients between $3,000 and $20,000 per year, while Reputation 911 (http://reputation911.com/) offers monthly packages for personal reputation management between $195 and $995.

(Editing by Beth Pinsker and Matthew Lewis)