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POTS
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Mike has his terminology all wrong and as a result is confusing many in the trade.
Voice over IP (VoIP) is a method to send voice over IP networks. The alarm industry was first subjected to this with cable companies providing dial tone at residential premises, the hand off to alarm panels is still a POTS or PSTN (public switched telephone network) line interface. The panel access the dial tone exactly the same way it always did. As such there is absolutely no way that some ill gotten virus is going to be transmitted in any direction because a panel dialed a central station receiver, nothing has changed over the last 20 + years of dialers.
VoIP warnings in contracts were put in because of a variety of reasons but the top two are that many of the cable companies either don’t provide any, or provide minimal battery backup, the other problem is that many VoIP networks don’t support the antiquated protocols that alarm panels send and you increase the odds that a system won’t be able to communicate when it needs to exponentially
Where Mike in my opinion confused is that he does not know the difference between a panel dialing out over a VoIP POTS lines and panels and other devices communicating over IP networks to the central station.
When it comes to IP networks regardless of whether it’s the central station, the alarm companies facility or everyone’s cell phone security is, has and always will be something we have to secure the best we can. Network security is a part of everyday life and we need to get used to it, yes you should have coverage for it, in my opinion if your carrier won’t cover liability caused by a virus or malicious attack get a new carrier.
IP networks are here to stay, traditional analog POTS lines are going away and getting replaced at an alarming rate with VoIP , ATT has petitioned the FCC to allow them to discontinue analog POTS line’s as we know it today. So everyone in the alarm industry needs to get educated, plan their migration to the IP platform of their choice and get over it.
Remember the late 70’s when the phone company told the alarm industry that they were no longer going to provision copper for McCullough loop, direct wire? The pundits said then it will never happen, the digital dialer was born and guess what, the copper went away. Well POT’s is going away, lead follow or get out of the way.
Morgan Hertel
VP, General Manager
http://central-station.com/index.php/home
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Response:
The Standard Alarm Contracts all contain wording to provide protection to the alarm company for breakdown in Internet communication or computer viruses. At the moment I have not changed the warnings to subscribers that POTS is the preferred mode of communication. Is it time to change that warning?
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Insurance:
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There has been comment reguarding SARRG being a risk retention group and not an insurance company in the traditional sense. That is true, but what does it mean, and more importantly, what does it mean to you, the alarm dealer looking for E&O protection?
SARRG'S Program Administrator's comment is below. But let me tell you what I think I important to know.
An "Admitted Carrier" means that the carrier will be backed up by a state fund in the event the carrier goes out of business. The bail out will not necessarily be equal to the insurance coverage that was contracted.
An "Approved Carrier" is permitted to sell insurance in the state and has met whatever state requirement are set, including the posting of financials and a bond. The state will not bail out an approved carrier if it fails and defaults.
A Risk Retention Group is a federal, not state, creature. Once it qualifies in one state, as SARRG has, it is permitted to sell insurance in all states without qualifying with the state's requirements. Thus the state will not bail out a failed Risk Retention Group.
SARRG is a Risk Retention Group and therefore its insurance is backed by its own financial resources, as well as reinsurance coverage that SARRG has purchased with established insurance carriers. Because alarm E&O policies are in the range of one to five million dollars it is not likely that one or several claims would put the program in such jeopardy as to cause a failure of the company.
There are important issues to consider when you select an insurance carrier, and by the way, the industry is furtunate at the moment that there are choices, because there have been times when there was no choices. Premium may be the lowest priority of considerations. Whether your claims will be handled and how they will be handled is the highest of priority, and here is where many of the traditional insurance carriers fail miserably. Those that use house counsel or select from their roster of approved counsel that handle few alarm cases in comparison to the other types of claims they handle, short change the their alarm insured and the alarm industry as a whole. Stay clear of these carriers as long as you have a choice.
********** Bart had this to say about the SARRG program:
In New York Risk Retention Groups are neither admitted nor non-admitted. Security America is registered to do business in New York as required by New York law. Every year, New York reviews and approves this registration and Security America must submit to the state our annual report and audited financials. If we are not up to the standards of New York, they could withdraw the registration.
A broker in New York writing business with a non-admitted carrier is required to pay excess and surplus lines taxes. This is not the case for Security America, so clearly we are not non-admitted. Security America pays the same premium taxes as any admitted insurer. On the other hand, unlike New York admitted companies, Security America is not protected by the state guaranty fund should we become insolvent. So we do not clearly fit the admitted model either. Its basically a hybrid model under the Federal Risk Retention Group Act.
As a last note, we buy reinsurance from A rated reinsurers and undergo strict regulation to protect our policyholders from even a remote chance of insolvency, so we do not believe the fact we do not participate in the state guaranty fund to be of any consequence.
Bart A. Didden
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