TJX Settles With Banks Over Data Breach

WSJ(12/19)

TJX Cos. settled a lawsuit brought by a group of New England banks over a data breach that resulted in the theft of millions of credit-card numbers.

Terms of the settlement weren't disclosed, but TJX said the amount paid is covered by a $107 million reserve taken in the second quarter. The Framingham, Mass., retailer will pay part of the costs and expenses the banks incurred, not including attorney fees.

Banks said numbers and personal data stored in TJX's computers on as many as 100 million cards were stolen by hackers, who remotely tapped into the computers beginning in July 2005. The case is the largest of its kind. TJX has denied wrongdoing.

The settlement, which comes about six months after the suit was filed in federal court, is expected to give a big boost to a separate agreement proposed last month between TJX and Visa Inc. That proposed settlement, under which TJX has agreed to pay as much as $40.9 million for losses incurred by banks, is contingent on acceptance by banks representing at least 80% of the Visa-card accounts involved.

It isn't known how many banks have decided to accept the Visa proposal, the deadline for which is today. Under terms of the federal lawsuit settlement, the banking associations of Massachusetts, Maine and Connecticut will recommend that their members accept the Visa proposal. The associations represent approximately 300 member banks, many of which are Visa issuers. Banks accepting the deal forfeit the right to sue TJX.

At least one bank, Alabama-based Amerifirst Bank Inc., has declined to participate in the federal-court settlement. It has the option under a federal court ruling last week to pursue its case against TJX in Massachusetts state court.

Officials of Amerifirst Bank couldn't be reached to comment last night. In an interview last week, Joseph Whatley Jr., an attorney representing Amerifirst, said it was his client's intention to continue its suit in Massachusetts. He said Amerifirst and a Tennessee bank he represents in the case would receive less than three cents for every dollar under terms of the agreement between Visa and TJX.

TJX still faces state and federal investigations into the breach.

Confused by Actual Cash Value and Replacement Cost Value?

Here is an interesting article that appeared in the Anderson-Kill Loss Advisor.

ULLICO pays UAW $2,500,000 UL Claim

We were instrumental in having Ulico Casualty pay a difficult Union Liability claim. Ulico stepped up to the plate and paid a very difficult claim and helped our client.

We are lucky to have good clients and good insurance companies to represent.

AIG's Lexington Insurance Adds Social Services Practice

Lexington Insurance Company has formed AIG Human & Social Services Risk Solutions, a new industry practice to provide insurance and risk management products to the social services sector.

The new industry practice serves for-profit and non-profit organizations in the social services industry, including alcohol and drug rehabilitation clinics, adult day care, mental health facilities, community service organizations, counseling service organizations and crisis centers.

AIG Human & Social Services Risk Solutions provides coverage for the entity, its volunteers and employees. The group's portfolio of insurance includes professional liability, general liability, directors and officers liability, workers' compensation, property, inland marine, automobile, employee benefits liability, sexual abuse/molestation liability, crime/fidelity, umbrella liability, employment practices liability, accident and health, and boiler and machinery.

Frank T. Nosek, will serve as practice leader for the new organization. In this capacity, Nosek will coordinate with AIG's Program Administrators and brokers to facilitate access to AIG's product portfolio.

Visit from AIG

Max Perkins of AIG will be stopping by our office about 2:00 on Thursday, December 13th. If you have any questions about NetAdvantage or any other AIG products, this would be a good opportunity to get some answers.

Information on Virginia's New FR-44 Requirement

Effective January 1, 2008, Virginia law requires a person convicted of certain driving violations to purchase a liability insurance policy with coverage double the minimum limits. This means those convicted of driving under the influence of alcohol or drugs or driving after the forfeiture of their drivers licenses must purchase limits of at least $50,000 for injury or death to one person, $100,000 for injury or death of two or more people, and $40,000 for property damage. In November, the Virginia Division of Motor Vehicles sent a “Notice of Requirement” to those who fit into one of these categories, advising them that they must have an insurance company file a FR44, a new form showing they have at least $50/$100/$40 coverage. (Another new form is FR46 which companies submit to the DMV when coverage is cancelled.) It is the responsibility of the driver – not the company or the agent – to see that these limits are in effect. Although it is permissible for companies and agents to advise insureds of the new requirement, it is not mandatory. Another point in which you may be interested is that you can mandate limits higher than those required, and you may want to do so, especially if your companies do not have a $50/$100/$40 filing. Some agents already have procedures that require their insureds to purchase limits higher than those required by law. Electronic copies of the DMV forms have been sent to companies, but the companies can require agents to complete the forms if they prefer.

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