As weather patterns continue to evolve, it is crucial for housing corporations to update their chapter house roofs to withstand the increasing intensity of wind and hail events. Convective storms in particular are a major cause for concern. Convective storms are extremely severe storms with defining characteristics of high winds, sudden temperature changes, and severe thunder and lightning.  

In light of these more severe weather conditions across the country, carriers are isolating geographic areas at greater risk to weather perils and are requiring additional measures be taken to update roofs. It is imperative to consider retrofitting affected chapter house roofs to mitigate risk.

Also at issue are state building codes. Many states have not updated their building codes to prepare for more severe weather, leaving existing and new structures vulnerable to sever weather damage. Building codes set the minimum standards for construction, however these standards may not always align with insurance requirements, leaving sorority houses vulnerable to potential coverage gaps. Furthermore, in many states and municipalities, building codes are not adequately enforced.

It is crucial for chapter houses in areas with inferior building codes to exceed minimum building code specifications to meet insurance expectations. This reduces the risk of roof damage and associated expenses if a convective storm hits a property. Housing corporations should be particularly wary of properties in the west and mid-west, where predictive modeling has determined a sharp increase in the frequency and severity of wind and hailstorms. Fortunately, universities are rarely near coastal areas, so that minimizes some of the increased risk of severe hurricanes.

MJ Sorority has consulted extensively with industry experts to create a list of recommendations for your chapters as they consider updating or replacing their chapter house roofs. At a minimum, we recommend that all of your chapter houses do an intake on the age and condition of their roof, which many roofing companies will do free of charge!

When it comes to fortifying your existing roof or installing a new one, MJ Sorority recommends the following:

Given the heightened risk of volatile weather, it is imperative that organizations do an intake and analysis of the health of chapter house roofs. Taking proactive measures to update and fortify roofs and bridging the gap between building codes and insurance requirements can mitigate the risk of roof damage and will maintain the safety and longevity of your properties. Prioritizing the fortification via the recommendations above will not only enhance the overall structural integrity of the properties in question but will also undoubtably contribute to the long-term sustainability of these important spaces for members.

Further Reading:

So, we’re betting at least some of your apps and online accounts have asked, “Do you want to opt into two-factor identification?” And, if you’re like many people, all that texting and code retrieval might seem just a little too much trouble.

Is all that security really necessary? Short answer: YES. And it doesn’t have to be hard.

Why should you use two factor identification?
Cyber attacks, personal data leaks, and phishing scams are becoming more common as hackers get more sophisticated and as we conduct more of our personal and financial transactions on apps and online. Scary factoid: the FBI’s Internet Crime Complaint Center reported that people lose $57 million in phishing and smishing schemes each year.1

Two-factor identification (2FA) provides an extra layer of protection to help safeguard your personal data and your dollars when you are accessing websites and apps.

What exactly is two-factor identification?
Also referred to as “two-step authentication,” “two-step verification” or “multi-factor authentication,” 2FA is an electronic security protocol that prevents you from accessing a website or an app until you validate your identity with two or more pieces of proof. This helps ensure that unauthorized users can’t pretend to be you.

Multi-factor identification “secures your logins from attackers exploiting weak, stolen, or leaked credentials,” says Laura Bennett, Senior Vice President, e-Consumer North America for BlinkSM by Chubb®.

How do you enable 2FA protection?
Many widely-used internet service providers (e.g. Google, Apple, Amazon) and social media platforms (e.g. TikTok, Snapchat, Facebook/Instagram), as well as financial sites, productivity, and personal apps (e.g. Paypal, Slack, Fitbit) have 2FA capability.

We do not endorse any particular vendor or brand of 2FA, but consumers should take time to research options along with the benefits of utilizing 2FA for their circumstances.

Is two-factor identification foolproof?
Currently, 2FA apps are the most secure user authentication methods. However, it is important to always practice good cyber hygiene habits:

We do not endorse any particular vendor or brand of 2FA, but consumers should take time to research options along with the benefits of utilizing 2FA for their circumstances.

Source: Chubb, the cyber insurance provider for MJ Sorority

Note: We have recently had several check fraud claims. We asked our partners at The National Bank of Indianapolis to write the following article to help you protect yourself from check fraud. See also our previous article on the subject.

Financial losses due to fraud are increasing every year. According to the FCC, losses due to fraud were up by more than 30% in 2022 compared to 2021. Nonprofit organizations tend to be particularly at risk due to 990s and other information useful to fraudsters being publicly available.

Particularly alarming is the rise in check fraud. FinCEN released a recent report indicating that check fraud occurrences reported by banks increased to 680,000 in 2022 from 350,000 in 2021.  
It is often recommended that we minimize the use of paper checks as much as possible.  Electronic credit card and ACH payments (with verified and secure payment portals), while not perfect, are much more secure. Credit cards also tend to have the most generous reimbursement terms if fraud does occur.

While this is sound advice, it is sometimes simply unavoidable to use paper checks as a form of payment.  Here is some general information and steps you can take to help protect your organization:

Check Processing and Check Fraud Trends:
Today, the processing of checks by banks is nearly all automated.  Gone are the days of banks examining individual checks and matching to signature cards.  Anyone with your account and routing number can easily create fake checks. On the bright side, bank processing software has become more sophisticated in detecting anomalies in check style and out of sequence check numbers.  

In response, the criminals are now trending back to intercepting real checks and changing the payee information.  This way, an altered check can be paid, and possibly go unnoticed for a much longer period of time.  Unless cancelled checks are examined closely, they can reconcile correctly, and not be noticed until the intended payee calls.  Depending on the payee’s accounts receivable systems, this is sometimes months later.

How to Protect Your Organization:

1. Positive Pay:  Most banks offer this service for a fee, and there is no better defense against check fraud.  It works by matching all checks that are drawn on your account to a file you send to the bank at the time you issue them.  If any information does not match, you are notified and have the opportunity to deny payment.

Some banks have different versions of Positive Pay, so make sure that your service is verifying the payee name as well as the other information on the check.

There is a similar “ACH Debit Filter” product which protects against unauthorized ACH debits which is also highly recommended.

Should you reject this optional risk management too, it will be incumbent upon you to manage your financial transactions in a more timely and more thorough manner.

2. Outsourced Payables Processing: Many organizations hire third parties to manage the processing of payables. The processors generally prefer to send payments via ACH, and only use paper checks when necessary. Usually, they will debit your account once and pull the funds into their bank account, and then make payments to your vendors from there. They should all have Positive Pay, but sometimes fraud still occurs. It is important to review their contracts and disclosures carefully to understand how fraud is handled and who is liable. Some of them have time limits after which they will not reimburse for fraud losses.

3. Reconcile and review account activity frequently: Identifying fraud as soon as possible is critical as the chances of recovering the funds diminish quickly with time. If a fraudulent check is reported within 24 hours, it can usually be returned before funds ever leave your account. Organizations that choose to not incur the expense of Positive Pay must be particularly vigilant.

4. Report fraud to your bank no later than 30 days from the incident. Regulation CC (the Federal regulation governing check processing and liability) requires the bank of first deposit to conduct specific actions if it is notified within 30 days. After that, the opportunity for recourse is greatly reduced.

5. Secure Check Stock: Protecting both unused check stock, and outgoing checks is another critical aspect of protection. Many of the intercepted checks are stolen from the mail. Unsecured mailboxes should be avoided.

What To Do if Fraud Occurs:

1. Notify Your Bank Immediately: The sooner the bank is notified the better the chances of recovering the funds. Your bank should also guide you through the process and advise on next steps.

2. File a Police Report: In addition to getting the police involved, this is a very important step to document the occurrence for potential insurance claims, and disputes down the road with intended payees.

3. Contact the Postal Inspector’s Office – If a check was stolen in the mail, be sure to file a report with this office. They also tend to be more proactive about pursuing fraudsters than the police.

4. Contact MJ Sorority to alert them to the incident and determine any additional action that needs to be taken.

In Summary:

As the threat of check fraud continues to evolve, we all must remain vigilant and proactive in educating ourselves and our employees . Staying informed about emerging trends, leveraging advanced banking technologies, and adopting best practices will help fortify our defenses. It is important to have a good relationship with a knowledgeable and responsive banking partner who can help develop and continuously improve your defenses against losses due to fraud.

We have seen a recent uptick in phishing scams among MJ Sorority clients. In today’s digital age, the threat of phishing is more prevalent than ever before. Did you know that over 90% of successful hacks and data breaches start with phishing scams? It’s a sobering statistic that underscores the importance of staying vigilant against this pervasive threat.

But what exactly is phishing? Simply put, it’s the process of attempting to acquire sensitive information, such as usernames, passwords, and credit card or bank account details, by masquerading as a trustworthy entity. Phishers often use bulk emails that try to evade spam filters, claiming to be from popular social websites, banks, auction sites, or IT administrators. It’s a form of criminally fraudulent social engineering that preys on unsuspecting individuals.

Phishing techniques have evolved over the years, becoming increasingly sophisticated and diverse. From traditional email and spam campaigns to more targeted approaches like spear phishing and session hijacking, cybercriminals employ a wide array of tactics to deceive their victims. They manipulate links, inject malicious content, and even resort to voice calls and SMS messages in their quest to obtain personal information.

So, how can you protect yourself against phishing attacks? Awareness is key. Familiarize yourself with the common techniques used by cybercriminals, and adopt anti-phishing strategies to safeguard your information. Be cautious when clicking on links or downloading attachments from unknown sources, and always verify the authenticity of requests for personal or financial information.

At MJ, we utilize KnowBe4, a firm that provides security awareness training to members of your organization. Each quarter, they produce an infographic with the top types of phishing attacks, as excerpted above. For the full infographic and associated data, click here. KnowBe4 also offers a free phishing security test that you can utilize to see if your employees are susceptible to phishing attacks – learn more here.

The past year saw a surge in severe convective storms, particularly hailstorms, causing billions in insured losses across the US. This trend is likely to continue in 2024 and beyond, impacting insurance premiums and available coverages, especially for properties like sorority chapter houses.

The graphic above shows the increase in the number of hail storms and the severity of the damage associated with them over the last twenty years. To zoom in and read the entire report, which we found very informative, click here.

These storms, packing powerful winds, hail, and heavy rain, pose a significant threat. In 2024 and beyond, the risk of severe convective storms looms large, driven by a combination of factors such as warmer atmospheric temperatures, higher moisture content, and shifting wind patterns. These storms can unleash destructive winds, large hailstones, torrential rainfall, and even tornadoes, causing extensive damage to buildings and infrastructure in their path.

Sorority chapter houses, often located in areas prone to severe weather, often face heightened exposure to convective storms. Their typically large, historic structures may be more susceptible to damage from high winds and hail, leading to costly repairs or even total reconstruction. Furthermore, the social nature of sorority houses means that they are frequently occupied, putting members at risk during severe weather events. 

Insurance companies take these risks into account when setting premiums for property coverage. As the frequency and severity of convective storms increase, insurers may adjust their pricing models to reflect the heightened risk. Other options for insurers in this new environment include: stricter requirements for risk mitigation measures, such as installing impact-resistant roofing materials or reinforcing windows and doors against high winds. 

In response to these challenges, sorority chapters must prioritize proactive risk management strategies. These strategies include the following recommendations and resources:

By staying informed and taking proactive steps, sorority houses can weather the storm – both literally and figuratively.

Water damage poses a significant threat to sorority chapter houses, often resulting in costly repairs, business interruptions, and reputation damage. In this resource, we share tips and strategies to effectively prevent water damage and safeguard the integrity of sorority chapter houses. For a shorter, visual resource, click here.

Domestic plumbing is the primary culprit of water damage. Most claims involve leaking pipes caused by corrosion, pipe burst, or failure. Failure to prevent and control corrosion is the root cause. Unfortunately, most corrosion is internal and is not easily identified. Galvanic corrosion is one of the most common types of corrosion.

Help us welcome our new Director of Risk Management Education and learn more about Kit Moorman. Learn more and read our press release.

When winter weather strikes, drivers face out-of-the-ordinary challenges when they get behind the wheel. Snow, slush or icy roads are involved in nearly one in four weather-related vehicle crashes. These conditions can make it harder for drivers to see, slow down and stop – all factors that can increase the chances of an accident.

If you must travel during winter weather, preparing your car in advance, knowing the forecast and driving based on road conditions are three key ways to help you drive more safely. Following are some winter driving safety tips to help you prepare for the elements – before you face them – on the road.

Preparing Your Vehicle
As temperatures start to drop, it’s time to make sure your car is stocked with a winter driving survival kit, including an ice scraper, a snow shovel and sand or road salt. This way, you’ll be prepared if winter weather arrives while you’re away from home. It’s also a good time to check your tires to determine whether it’s time to replace them or whether you need snow tires.

A few habits to adopt regularly during the winter months can also help prepare you for a wintry drive. Keep your windshield wipers in good condition and your windshield fluid reservoir filled so you can clear snow and ice from your windshield. Make it a practice to keep your gas tank full so you can run your engine and stay warm if you get stuck or stranded.

Keeping your gas tank full in extended cold weather can also help minimize the amount of water vapor in your tank, which can freeze when temperatures drop. In addition to keeping the tank full, consider keeping your vehicle in a garage and using fuel additives such as dry gas to help eliminate water vapor that could freeze in your gas lines. You should also either drive or run your car in a well-ventilated area at least every few days to help avoid a dead battery, another cold weather concern.

Watching the Weather
If you plan to travel when inclement weather looms, monitor road and weather conditions by checking local news stations or Internet traffic and weather sites. You can sign up for weather alerts to receive text messages and optional alerts for your area. Do not check your phone while driving and avoid all unnecessary distractions when you’re behind the wheel.

Driving for Winter Conditions
Before you leave the driveway or parking lot, take time to clear snow and ice off your car, including your windows, mirrors, lights, reflectors, hood, roof and trunk. Drive with your headlights on and be sure to keep them clean to improve visibility. Use caution when snow banks limit your view of oncoming traffic.

As you get on the road, remember that speed limits are meant for dry roads, not roads covered in snow and ice. You should reduce your speed and increase your following distance as road conditions and visibility worsen. Avoid using cruise control in snowy or icy conditions – you want to have as much control over your car as possible. Be cautious on bridges and overpasses as they are commonly the first areas to become icy. Avoid passing snow plows and sand trucks because the drivers may have limited visibility and the road in front of them could be worse than the road behind.

Breaking Down or Getting Stuck
If you are unexpectedly caught in a snowstorm and are stranded or get stuck in snow, if your car is safely out of harm’s way, stay in your car and wait for help. You can run the car heater to stay warm for 10 minutes every hour, but first, make sure your exhaust pipe is clear of snow. There is a danger of carbon monoxide poisoning if snow blocks the pipe and enables the deadly gas to build up in your car. Open your window slightly to help prevent any buildup.

Remember, driving in winter weather can be challenging, even for experienced drivers. Slowing down, allowing increased time to come to a stop, wearing your seatbelt, devoting your full attention to the road and being aware of changing conditions can help you drive more safely. If your travel route takes you into remote areas with limited cell phone coverage, consider informing a third party of your travel plans and share with them your route and when you plan to arrive. This way, if you are overdue, first responders will know where to start looking. If you’re unsure whether it is safe to drive, consider waiting until the roads improve.

Source:
https://www.travelers.com/resources/auto/safe-driving/winter-driving-safety-tips

We have recently had several claims involving fraudulent checks. Sororities aren’t the only victims. In an alert sent out in February, the Financial Crimes Enforcement Network, also known as FinCEN, reported that, “Despite the declining use of checks in the United States, criminals have been increasingly targeting the U.S. Mail since the COVID-19 pandemic to commit check fraud.” Criminals are becoming increasingly sophisticated in their methods, making it crucial for organizations to stay vigilant. These fraudulent activities encompass a range of tactics, including counterfeit checks, altered payee information, and even identity theft to gain access to legitimate bank accounts. As a result, it is imperative for chapter and house corporation officers and volunteers to be aware of these risks and adopt strategies to mitigate the threat of check fraud. We recommend the following strategies:

Background
Over the past five years, property insurance companies have faced significant challenges in maintaining profitability. A surge in catastrophic claims, changing weather patterns, and rising temperatures have contributed to this crisis. Factors such as the increasing severity of claims, dramatic rise in material costs, and historical underinsurance have compounded the problem. Additionally, there has been a startling rise in the number of billion-dollar disasters. These issues have forced insurance companies to implement rate increases, reduce coverage limits, and modify terms and conditions. The situation reached a breaking point with the devastating Hurricane Ian and subsequent winter storm of 2023. We are now in the midst of the worst property insurance market the industry has ever seen.

The Changing Landscape
The current state of the property insurance market demands a shift in the way insurance is approached. Insurers are being forced to move away from acting as quasi-warranty replacement policies and focus more on covering larger or catastrophic claims. Property owners must prepare for higher property deductibles and invest in building modifications and maintenance measures that reduce potential weather damage and the extent of damage. The industry is refining its underwriting strategies for risks such as tornadoes, wind, hurricanes, floods, wildfires, hailstorms, and freezes. Predictive modeling is getting more sophisticated and accurate, enabling insurers to better assess risk based on big data, the increasing speed of climate change, and subsequent specific locations prone to particular risks.

The crisis is not isolated to a single insurance company but is affecting the entire industry. The reinsurance market, heavily impacted by Hurricane Ian, is facing a day of reckoning. Rate increases and adjustments to coverage limits, deductibles, exclusions, and limitations have become prevalent. This situation poses challenges for insurance providers and agents, as many markets have declined coverage due to a concentration of residential frame housing values, as we already seeing in Florida and California.

Facing the Current Situation

MJ Sorority has shielded clients from market volatility in the past (see graphic) but now is being forced to address the evolving landscape. The insurance provider for the MJ Sorority Program, Travelers Insurance Company, informed us that they would be addressing conditions, rates, and deductibles upon each client’s renewal. Travelers’ actions are indicative of industry-wide changes that require careful consideration. Rest assured that unlike what we’re seeing in the homeowners’ markets[1], capacity and coverage are not at risk.

Conclusion
The property insurance market is facing unprecedented challenges due to an array of factors. Insurers and insureds alike must adapt to the evolving landscape by embracing a new business model that emphasizes coverage for larger or catastrophic claims. Increased property deductibles, building modifications, and refined underwriting practices are crucial steps. The industry’s focus on predictive modeling and big data can help allocate risk more effectively. MJ Sorority understands the difficulties posed by the crisis, and we are dedicated to enhancing risk management advice and resources, particularly regarding wind and hail perils, both at the headquarters level and among local housing volunteers.

By working together, insurers and insureds can navigate the perfect storm and ensure continued protection against unforeseen property losses. Please do not hesitate to reach out to your Client Executive with questions and concerns.

[1] For further reading about the insurance market, refer to the links embedded in the document above or review the following links fur further reading:

National fraternities and sororities have been dealing with changing circumstances on many fronts over the
last five years. Part of this changing landscape involves property management and adapting to significant
increases in property claims across the nation. As a result, property owners must prepare for higher property deductibles, due to the increase in the frequency of claims and in the increase in the severity (cost) of claims than in years past.

It is critical to an organization’s sustainability to have adequate short-term cash reserves and liquidity resources
for operational flexibility and for ensuring that organizational commitments are met timely. Beyond short-term cash reserves, fraternities and sororities should also consider building reserves to fund insurance
deductibles as claims are incurred. Such reserves (often designated by the Board of Directors) are funded so
that intermittent claims can be managed without disrupting already tight operating budgets.
In considering building an insurance reserve fund, organizations should consider the following areas:

Blue & Co.’s Not-for-Profit Services Team advises organizations on ways to improve both the balances and the utilization of reserves and liquidity resources to enhance sustainability over time. Please reach out to your local Blue & Co. advisor with any questions regarding these recommendations.

Thanks to our partners at Blue & Co. for this resource.

WHY IS HAIL SUCH A PROBLEM FOR YOUR PROPERTY’S ROOFING?
Hail can cause serious damage to your chapter house’s roof. Hail stones are made up of ice and come in a variety of shapes, sizes, and weights, which can all contribute to the destruction of your roof after a hailstorm. The weight of hail stones is also a factor that should be taken into account when considering hail resistant roofing as an option. Hail stones can cause dents, cracks, and even holes in your roof, which will leave it vulnerable to water damage and increased energy costs.

COSMETIC/AESTHETIC DAMAGE VERSUS PHYSICAL DAMAGE TO THE ACTUAL ROOF
The insurance industry has previously been willing to repair and/or replace roofs damaged by hail that are more cosmetic in nature or to match the entire roof’s shingles with the new replaced shingles due to actual hail damage. It is fair in saying that these days may be over.

There continues to be significant shifts in the weather patterns in certain parts of the US with increased wind and hail claims. The industry is seeing an increase in the storms producing conditions of hail and wind. There is an increase in the severity of the storms, thus bringing worse damage and the expanse of the areas affected are expanding more easterly than the past.

With the significant increase in hail and wind losses, all insurance companies are being forced to more closely analyze or underwrite each property risk and are looking at numerous alternatives to encourage more roof risk management. Examples we have seen across the insurance industry include:
• Significant increases in wind and hail deductibles in the wind/hail prone areas
• Limitations and exclusions to roof damage repair and replacement

IMPACT-RESISTANCE SHINGLES
Hail resistant roofing provides property owners an extra layer of protection against the destructive nature of hail stones, which can cause significant damage to traditional shingles and other roofing materials. It can withstand impacts from hail stones at speeds up to 150 mph, which is far stronger than traditional roofing materials. This extra protection minimizes the need to replace your roof after a hailstorm hits, and an additional advantage of impact-resistance roofing is its energy efficiencies, meaning you could save money on energy bills in the long run.

Unlike traditional roofing materials, impact-resistance shingles are designed to last longer, usually up to fifty years. The costs associated with hail resistant roofing materials will vary based on the resistance rating of the materials. These ratings run from Class 1 (least resistance) to Class 4 (highest resistance). Click here to see the Insurance Institute for Business and Home Safety’s list of shingle performance ratings. Generally, these roofing materials will cost more than the traditional roofing materials, but they also come with the added protection from hailstorms, last longer than traditional roofing shingles, and provide energy efficiencies.

DON’T WAIT FOR A WIND/HAIL CLAIM TO ADDRESS THE CONDITION OF YOUR ROOF
For the property owners in the following states, there has been significant increases in storms attributing to wind and hail claims:

We urge our clients in these states to take additional measures to have a sound risk management plan in place, to upgrade your roofing materials to the impact-resistance shingles when your roof needs to be upgraded, and should you have a claim, consider upgrading to the preferred materials.

ADDITIONAL ROOFING RISK MANAGEMENT
Travelers Insurance Company, who writes your property insurance, has developed an additional resource for you in your roof property management: