Last week I presented on ways employers can improve their workers’ compensation program at the Arizona Small Business Association’s annual meeting. Here are the key takeaways for Arizona businesses who have workers’ compensation insurance.
Don’t treat employees as subcontractors. Many businesses, especially in the trades like plumbing or roofing, make this costly error. This is a priority fix both for your employment tax obligations and for covering your employees under workers’ compensation. In Arizona, all you need is one full- or part-time employee (as defined by the IRS or an administrative law judge) to need workers’ compensation insurance.
Tighten injury reporting protocols. Rapid report to your carrier makes a huge difference in workers’ compensation costs. Back injuries are 35% more expensive if not reported within the first week, for example.
Do you have the best agent for your business needs? Does the brokerage or agency offer tools like Modmaster to help you reevaluate your experience modification factor and pinpoint what each injury costs? If not, maybe it’s time to find a new agent.
How’s your safety culture? Safety begins at the top. Employees can’t push safety uphill. Beginning each meeting with a safety report and forming a safety committee of line employees will make a big difference in your organization’s culture.
Where do you need safety training? Can your agent or insurer provide training resources? Spending a little money for training will save you lots of money (and administrative costs) in the long run.
Do you need stronger hiring practices? Spend money pre-hire by using thorough pre-employment physicals, background checks and testing to eliminate undesirable candidates before you hire them.
Do you know who your adjusters are? Ask your carrier for an introduction if you haven’t met them. Skype or phone conferences quarterly can help, or better yet, on-site visits to discuss each loss, will help reduce costs.
Hone in on those claims where employees don’t get better. Work with your carrier to manage these long-term claims. Ask your adjuster to specifically outline their plan of action on the claim.
Do you have a return-to-work program? If not, you run the risk of an employment claim and increase the cost of each of your claims. Never tell an employee, “We can’t take you back until you’re 100%.”
Make your workplace a healthier one! Comorbidities like obesity, diabetes and hypertension drive medical and workers’ compensation costs. There are many vendors that can bring resources to your workplace to help manage health, including your health insurance carrier.
If I can help you improve your workers’ compensation program, call me for a no-obligation consultation today at 602.870.3230.
How safe is your dryer?According to the US Fire Administration (USFA), about 2,900 dryer fires occur each year in the United States. These fires caused five deaths, about 100 injuries and over $35 million in property losses annually. While the leading cause of dryer fires is accumulated dust, fiber and lint, the type of exhaust hose you install can greatly reduce your risk of fire.
Using a plastic or vinyl dryer hose can cause fires, according to the USFA. The photo shows in the top half the type of dryer exhaust hose you should use. If you are currently using the bottom type, a plastic hose, replace it immediately. These types of hoses can melt or ignite.
It’s always a good idea to take a few other preventative measures. 1) Clean your lint filter after each cycle. 2) Install a smoke alarm in your laundry room or adjacent to your dryer. 3) Never leave the dryer running when you’re away from home. 4) Never vent your dryer anywhere except directly outdoors. Venting into an attic or soffit is a recipe for fire and violates most local fire codes.
The average cost of a dryer fire if it’s contained to the room of origin ran just under $1,800 in the past few years, according to USFA. However, dryer fires that spread beyond the room of origin had an average cost of just over $49,000. Money is only part of the equation if a dryer fire breaks out in your home, however. Who can put a dollar value on the injury or death of a loved one, or the death of a beloved family pet, should a fire break out?
I rarely go into Circle Ks or convenience stores or places of that ilk because I’d prefer not to get shot (risk avoidance). However, on the way to a volunteer gig the other day and against my better judgment, I stopped in a Circle K near Interstate 17 in Phoenix to buy a pop (or soda, as some call it). As I walked in, I noticed there was a mop bucket full of black water near the register and that my shoes stuck to the floor as I went to get my pop. As I filled my cup, I noticed a sign that said, “Out of straws.”
At the register I said hello to the cashier and asked the young man if he was holding out and if perhaps he did have a straw. He nearly started crying. He said they ran out of straws earlier in the day and he couldn’t get any from neighboring Circle Ks (franchise issues?). He said that people were so irate that they were dumping their entire sodas on the floor, which he had to clean up.
I asked, “Really, it’s like ‘I hereby dump my soda on the floor in protest because you are out of straws?'” Yes, he responded sadly. He said he had given his two-week notice because he just “just couldn’t take it anymore.”
Wow. Not having a straw for a Big Gulp? Not a rage-o-meter offense, in my humble opinion. Which leads me to today’s topic: “What the heck is wrong with people?”That young man, so traumatized by the day’s events that he quit his job, is a human being. He’s someone’s son, he’s a grandchild, and he’s a human being with feelings. Have we swung so low that we’re willing to dump our sugary sodas on the floor and our rage onto a poor cashier in a convenience store?
Don’t get me wrong. I know that everyone, me included, acts badly from time to time. We lose our temper in traffic, we snap at someone who may only be trying to help us, or we hang up in frustration on a customer-support person. However, for people to stoop this low, to “make a statement” that makes no statement other than they desperately need anger management, to me is simply beyond comprehension.
I have nothing deep and philosophical to say about this except it makes me much more aware that my behavior has consequences. It also reminds me that this type of bad behavior means we as risk management professionals will always have jobs.
I am so grateful that I don’t carry useless, non-specific rage over an imaginary victim status. When a store is out of straws, it isn’t a personal affront to me or an assault by the universe to make my life harder.Apparently, though, that rage is present in and acted on by many. And that, my friends, is exactly why I stay out of convenience stores. That and Milk Duds. But that’s another story.
By 2020, an astounding 40 percent of the workforce will be our Millennials, born between 1976 and 2001. Is your organization ready?
Did you know that by 2014, Forbes predicts that 36 percent of the workforce will be comprised of Millennials?And by 2020, an astounding 40 percent of the workforce will be our Millennials, born between 1976 and 2001. Is your organization ready?
Yesterday I attended a Society of Insurance Trainers & Educators gathering in Scottsdale hosted by Markel. We discussed the current generation of Millennials entering the workforce and taking their places in many of the nation’s insurance internships. Where are we going to get this talent? I think the question that is perhaps more important is this: Once we recruit them, how do we manage them for their long-term growth and their long-term retention in the organization?
Here are a few facts we know about our Millennials.
More than high salaries, Millennials want to find careers that “make a difference.”Our industry has failed to capitalize on the fact that as an industry, we pump billions into the economy to restore people’s lives, allow businesses to grow and expand, and to promote worthwhile charities. Maybe we should strongly consider improving our image through our marketing efforts.
Millennials are the most chauffeured, tutored, scheduled and micromanaged generation in history. They are not, by and large, risk takers. You know that hovering manager who drives the self-directed Baby Boomer employees crazy (and often out the door)? Why not place that manager in charge of your new hires and interns?Mills want and need more reinforcement as opposed to Boomers, who generally want to be shown a desk and left alone.
As Millennials graduate from college, they are often swimming in debt.Let’s show Mills a career path with income factors they can tie to specific achievements, for example earning an Associate in Claims or the CPCU designation.
According to Pew Research Center, our Millennials are the most college-educated generation in US history. Holding a college degree, or even an advanced degree, does not necessarily mean that all those young people possess the skills to succeed in the insurance industry. Don’t be surprised when you must invest in teaching skills you assume a Millennial would have learned in college, like critical thinking or how to use a spreadsheet.
Millennials will be your biggest brand ambassadors. We need to encourage their responsible dialogue on social media, not discourage it or suppress it in the workplace. Almost one-quarter of Millennials factor their job choice on the hiring organization’s social media policies, according to the Forbes article.
Millennials will assume supervisory and management positions much more quickly than did we Boomers. Therefore, it is critical that we hire for leadership attributes: integrity, communication skills, self-confidence, a sense of humor, creativity and critical-thinking skills, to list just a few.
If you are concerned about where the insurance industry will find its next generation of talent, take heart. The industry has begun to seriously address this problem.(We’re never first to the scene of a fire, are we?) Let’s keep talking, but more importantly, let’s begin to change the perceptions of our industry to attract and retain that next generation.
There’s a lot of great news and advice from the risk management front in this edition of the Cavalcade of Risk.
There’s a lot of great news and advice from the risk management front in this edition of the Cavalcade of Risk. Let’s begin by evaluating the risk that your employer-provided health insurance may soon be a thing of the past. InsureBlog’s Nate Ogden evaluates Ezekial Emmanuel’s dire predictions.
When it comes to worker health and safety, Julie Ferguson of Workers’ Comp Insider says that it may be time to shake up the film industry again. According to Ms. Ferguson, it is no more acceptable for film employers to try to play fast and loose with worker lives than it is for coal mining, manufacturing, or any other industry. In her post Death on a Georgia Railroad Trestle, she talks about how a recent fatality is sparking calls for safety reforms in the Hollywood film community.
Speaking of worker health and safety, did you know you can probably avoid hiring your next workers’ compensation claim? Much of workers compensation cost containment is related to good information, good systems, and proper planning. When it comes to hiring, it can be staggering to think about the amount of liability a company is taking on with each new employee. When you bring on a new employee, you are also bringing on the liability that they can safely perform their job. Michael Stack at Reduce Your Workers’ Comp blog offers us a few tips.
We always look forward to a glimpse at Bob’s Cluttered Desk, and this month Robert Wilson looks at school shooting drills. States are embracing active shooter drills in public schools, conducting sometimes unannounced drills that simulate an active shooter on campus. In some districts teachers are expected to be shot by pellet guns as part of the training. Is this a good idea, or simply a way to traumatize teachers and their students?
Dennis Wall is our next host. He has chosen his theme and he is asking for posts related to residential mortgages, force-placed insurance, the participants in the mortgage process, the participants in the securitization of mortgages, and related themes.
If you’re a new risk manager, these tips can help you transition into your new, challenging role.
The transition into your first risk management job can be difficult. Whether your boss promotes you into your first risk management job or hires you from another organization, you want to excel at your new position over the long haul. In part, that means avoiding mistakes, even though we often learn our best lessons when we fail. However, some mistakes can seriously hurt your risk management program, harm your reputation, or even derail your career. Here are ten mistakes you can avoid.
1. Don’t rush in with all the answers. You may arrive wanting to form your own alliances and acquire your own team, but avoid making hasty decisions. Give current employees a chance to prove themselves before you transfer them or hire your own team. The same applies to vendor relationships. You can lose a great deal of historical exposure along with loss history and coverage negotiation knowledge if you immediately decide to switch insurance brokers. “Changing brokers can be a great way to create significant coverage gaps or an errors and omissions claim for your friend the new broker,” according to one Atlanta broker. Some vendor alliances, such as relationships with contractors and body shops, may be long-standing, especially in a small town. Rushing in and making changes can cause big ripples in a little pond.
2. Don’t try to do everything at once. In my teens, I read a book called Ringolevio, about a kid named Emmett Groan growing up in the streets of New York City. One of his compatriots frequently warned Emmett when he was about to rush headlong into a decision, “Take it easy, greasy, you’ve got a long way to slide.” I found that advice very applicable in risk management. If you inherit a big job, you will be faced with hundreds of decisions, some big, some small. Take your time. While you may feel overwhelmed at first, chip away at the organization’s most pressing problems. Put out fires as they arise. Then schedule time for you and your advisers — your brokers, your attorneys, your actuaries, and your managers – to develop sound strategies and solid strategic plans.
3. Don’t use a shotgun, use a rifle. If the organization is experiencing too many injuries, for example, don’t jump to an obvious solution like deciding more personal protective equipment will answer the company’s biggest safety issues. Talk with front-line supervisors, study historical loss data, and consider several options before you throw money at a problem. Once in the door, interview employees, talk with other managers, meet with your vendors, and set a few important priorities for your first six months in the job. Using a rifle approach means you’ll have to say “No” to some people. This can cause problems. When possible, explain why you’re declining to act on the problems or the specific issues others may present to you. The more transparently you operate, the less criticism you will face. Openness reduces speculation and helps avoid resentment.
4. Don’t job hop. Most people can be very ambitious early in their careers. Yet too much ambition can hurt your career. Think long and hard before changing jobs. Bad bosses rarely outlast their employees. Deciding to change jobs because of a conflict with a supervisor is often short-sighted. The grass might seem greener on the other side, but sometimes that’s because of a septic tank (to paraphrase a famous comedian). These questions may help you avoid rash decisions.
Am I making the change solely to earn more money or for a more prestigious title? If so, will this change “pay for” what I will lose?
Am I making the change because I’m feeling unchallenged or bored? If so, what steps can I take to make my current job more challenging? For example, would becoming more active in a trade association, offering your expertise to a local non-profit, or mentoring an up-and-coming risk management professional add challenge and interest?
How will this impact my retirement financially? Will I be changing retirement systems or will I lose significant bonuses or vacation due to the change? Always factor those figures into the salary decision. This question becomes more important as you edge closer to retirement age.
How will this change impact my family and my coworkers? Our coworkers can turn even a challenging job into an appealing one. Do you really want to leave your coworkers? As for family, what ages are your children? Disrupting school-aged children can be very problematic and have negative, long-term consequences.
What are the odds I will regret this decision? Go ahead, we’re numbers people. Put a percentage to your decision then ask yourself if you’re really ready to take that gamble.
It takes months to settle into a new job. It’s often a year or more before we feel comfortable. Some studies show that many people who change jobs would have done much better if they had stayed put longer. Change for the sake of change frequently is not positive.
5. Don’t entertain gossip about your predecessors. Some at your new organization may try to build an alliance with you at the expense of your predecessor. Short-circuit these conversations whenever possible. Tactfully turn the conversation to another subject or excuse yourself from the conversation. Try not to make an enemy of the person who is trying to get into your good graces.
6. Don’t revisit your predecessor’s decisions. Especially when working with unions, you may find people lined up at your door asking you to revisit your predecessor’s judgments. Unless your predecessor’s conclusions negatively impact your overall program, don’t rush into undoing the decisions and the work he or she completed. You may not be operating under the same set of facts or with the same long-term vision that former risk manager had at his or her disposal.
7. Don’t believe your own PR. Never pretend you know more than you know and don’t start believing your own “press.” While others may soon invite you to participate on panels and present at conferences, remain humble and teachable. It’s terribly painful to learn humility through humiliation.
8. Don’t fail to communicate. A lack of communication is one of the most damaging mistakes a risk manager can make. A risk manager must have the ear of employees across the organization, from line supervisors to senior management. According to Don Donaldson, President of LA Group, a Texas-based risk management consulting group, “A risk manager needs to be an excellent communicator and facilitate his or her message across the entire organization. In my mind, that requires getting out of the office and pressing the flesh; seeing and being seen and listening, really listening, to determine what is going on in the organization.” Management by walking around is one strong tool in a new risk manager’s tool bag. Once people see that you’re willing to leave your office to discover what is happening, whether it’s on the shop floor or on the sewer line, they’ll more readily accept your expertise and counsel.
9. Don’t get discouraged. “New risk managers may make the mistake of thinking that risk management is as important to others in the organization as it is to them,” according to Harriette J. Leibovitz, a senior insurance business analyst with Yodil, Inc. “It takes time, and more time for some than others, to figure out that you’re more than an irritation to the folks who believe they drive all the revenue.” Over time, you will prove your value to the organization many times over. Until that day, quietly do your job and find encouragement from your risk management peers.
10. Don’t forget to laugh. You will be privy to the peculiarities of human nature both at its finest and at its worst, so don’t forget to find the lighter side of situations when you can. A robust sense of humor will help you through the rough spots and build bonds with your coworkers.
While these are just a few tips to help you in your new role as a risk manager, your peers probably can offer many more ways to ensure success. Over my career in risk management, I have found my fellow risk management professionals to be some of the most generous people in my life, always willing to share their expertise and provide me with a helping hand. Develop and lean on your network.
If this is your first job as a risk manager, you’re in for a wonderful experience. Take time along the way to enjoy the experiences, appreciate the great people you will meet and appreciate the lighter side of risk management.
Today, though, I urge you to take a moment to contact a person in your career for whom you are grateful, either past or present, and say, “Thank you.”
This year my women’s group, which has been meeting once a month for our third year, is reading and discussing a book by Amanda Gore, The Gospel of Joy. I heard Ms. Gore speak at a teleconference last year and her highly personal presentation really hit my core beliefs.
Her book is perfect for a study group since there are twelve chapters in the book, one for each month. Each chapter explores a different spiritual principle, for example, listening, laughter, hope and gratitude. Gratitude has always been my struggle. I sometimes say, “My glass isn’t only half empty; it has a hole in it.” In other words, I have to work to stay grateful.
One of the questions in her gratitude chapter hit home with me. It asked, “Did your parents’ behavior model gratitude?” I can easily say that, “Yes,” their behavior did.Both my parents were independent insurance agents and both people of strong faith. My father, a Lutheran, served in his church as a council member and all-around fix-it guy. My mother, a more reserved Catholic, quietly put her faith into action by volunteering for years at the Westside Food Bank. Their motto in business was “Service before self” and while they were very successful insurance agents, they never let profit interfere with doing the right thing.
I grew up with three older brothers and one of us, usually me or my brother, Ted, was always wrecking a car. (I was quite sure my father owned an interest in the local body shop he insured.) After our accidents, my father would assess the damage then quietly say, “Everything happens for the best.” Frankly, at the time I thought he was slightly mental.
“Dad,” I finally asked when my brother ran his Mustang into a ditch at the end of our street, “How can a car accident ‘be for the best’?”
“Perhaps this minor accident where no one was hurt saved him from a major collision. After all, cars we can fix. You and the boys are irreplaceable.” Dad could always put things into perspective for me. I am so grateful for the wonderful lessons my parents taught me.
This story leads me to my topic – professional gratitude. There are so many insurance gurus who have mentored me over the years, from one of my first bosses at Commercial Union – who predicted, “Ms. Germond, in five years you will be a claim manager,” and I was – to the many risk managers who helped me when I was a fledgling risk manager, never an easy job.
Over the years I have trained and mentored my share of risk and claims professionals. Rarely do they thank me. I’m not dismayed by this; I rarely think of it because at some level, I am sure they are grateful but unaccustomed to expressing gratitude verbally. Today, though, I urge you to take a moment to contact a person in your career for whom you are grateful, either past or present, and say, “Thank you.” I guarantee you: This will mean a great deal to him or her.
As many of you know, for years I have alternated between running Insurance Writer full time and working more directly in the insurance industry. I just couldn’t stay away from a challenge. But I also know there is more to life than a paycheck. This year, I’m putting it all on the line to branch out, utilizing my God-given gifts to provide specialized services to the insurance industry.
If you’re interested in learning more about Ms. Gore, here is a link to her YouTube channel. If I can help you, these are some of my areas of specialty:
Copywriting, including White Papers, advertising copy, articles, ghostwriting and blog entries
Consulting with small-to-medium sized businesses to reduce losses and improve workers’ compensation programs
Curriculum development and on-site training, including:
It’s time for the insurance industry to wake up and smell the dog food. A more nuanced approach to pet underwriting is a win/win for the industry and for pet lovers everywhere.
Property Casualty 360 and other industry magazines report escalating dog bite settlements. The industry is moving to endorsements and policy language to exclude canine liability. Why doesn’t the insurance industry take a more analytical approach to underwriting household dogs? As dog trainers will tell you, aggression is not breed-specific. Almost any dog improperly socialized, or with dog aggression in its line, will bite. I’ve seen American Kennel Club-elite Labradors, one of the friendliest breeds, that will take a chunk out of you, and German shepherds that wouldn’t bite you if it would save their own or their master’s life.
Rather than deny coverage by breed, why not partner with the American Kennel Club (AKC) and use theCanine Good Citizenprogram as an underwriting guideline? The Canine Good Citizen must pass 10 temperament tests – for example, allowing a stranger to approach, demonstrating a lack of dog aggression (very important since so many people get bitten when their people-loving dogs tangle with other, not-so-dog-friendly pooches), and the dog’s reaction in a crowd. Evaluators are available in hundreds of locations throughout the United States.
People who love their dogs would happily dole out the small cost associated with their dog’s evaluation rather than face no insurance. This is not a blanket endorsement of the American Kennel Club. However, their Canine Good Citizen certification is a strong indicator of Fido’s friendliness and steady temperament.
The insurance industry has always adapted coverage to meet the needs of a changing society. Dog ownership is not changing; in fact as crime rates escalate, more Americans turn to dogs for their safety. Underwriters do not understand canine temperament. Instead, there has been a knee-jerk reaction to exclude one of our home’s best protectors against burglars, and many Americans’ best friends. Simply, insurers refuse to take a more nuanced approach to underwriting dogs. Using the Canine Good Citizen is a solid approach instead of a blanket exclusion by breed. It might take some time to develop the partnership with the AKC, but in a previous discussion I had with a staff member at the AKC, they are eager to help.
Americans love their dogs. And dogs will not go away. Instead, more owners will deny they own an excluded breed and insurers will be stuck in coverage battles that will do nothing to further the industry’s image. Additionally, messing with America’s best friends will do nothing to improve the industry’s always struggling image.
It’s time for the insurance industry to wake up and smell the dog food. A more nuanced approach to pet underwriting is a win/win for the industry and for pet lovers everywhere.
With 2014 rapidly approaching, contact your broker or consultant now to discuss steps you can take to reduce your 2014 commercial premiums.
What can you expect for property and casualty insurance pricing in 2014? Expect some increases, but watch for significant decreases in at least one line of insurance. According to Willis’s recently published Marketplace Realities 2014, new capacity is flooding the market from “as widespread as China and Omaha.” New capital supply offers a more “inviting marketplace,” Willis executives believe. Others insurance experts across the U.S. agree. Here is what to expect in 2014.
Primary and Excess Casualty
Do not expect huge decreases in casualty prices even with “abundant” capacity and “new market entrances,” according to Willis and other experts. With the loss of the federal terrorism backstop looming in December 2014, carriers hesitate to write exposures with large risk concentrations. Underwriters are also avoiding manuscript endorsements, relying more heavily on Insurance Services Office (ISO) language. Standard ISO language has more court decisions behind it, which equates to more predictable loss experience for underwriters to base their rates, many believe. Willis predicts casualty pricing to increase two to 10 percent in 2014.
Auto and Fleet
Auto liability continues to challenge fleet owners nationwide. Experts predict auto liability pricing increases between two to 10 percent. Underwriters are imposing higher retentions on risks with large fleets, heavy trucks or poor loss experience. Carriers like ACE offer auto liability buffer limits, coverage outside the working layer when primary limits do not meet umbrella attachment points.
There are several emerging issues in workers’ compensation. With the Affordable Care Act expected to bring new insureds into the healthcare system, expect strains on the work comp system. This will put pricing pressure on workers’ compensation premiums. While experts predict that earlier treatment for comorbidities will benefit workers’ compensation experience, we predict this will be a long-term benefit. In the near term, Willis predicts work comp rates will increase from 2.5 to 10 percent. The exception is California, where employer can expect rate increases of up to 20 percent.
Employment Practices Liability (EPL)
Adverse claims experience is placing upward pressure on EPL coverage. Entities domiciled in certain California counties may find themselves unable to obtain coverage, Willis predicts. While overall capacity remains “abundant,” there are no new EPL carriers entering the market. Pricing overall will be flat to a 10 percent increase, with private, nonprofit and smaller employees predicted to face up to 15 percent increases. The Equal Employment Opportunity Commission continues its aggressive enforcement plan despite some staggering trial losses for the EEOC in 2013. There is no time like the present to explore ways to decrease your EPL risks and avoid EEOC scrutiny.
When Cyberrisk gets its own page in a white paper discussing rates, you know it is a hot topic among insurers and risk managers. There were more than eight hacking incident per day in the US in 2012 according to the report. With increased security concerns, coverage is now a “must have” for many organizations. Calling the market for stand-alone Cyberrisk “active,” Willis predicts rates will remain competitive. If your firm has had losses, however, Willis predicts slight changes — between -two to five percent overall. There are many new Cyberrisk buyers in the marketplace and pricing for first-time buyers remains competitive. If you outsource your data to cloud vendors, underwriters will review your existing contracts. Your indemnification language will be a critical factor in underwriting your risk.
Directors & Officers (D&O)
Price increases are moderating with pricing expected to be flat to a high of 20 percent for financial services firms. Homeowner and condominium associations as well as educational institutions should expect premium increases. One carrier has indicated a willingness to provide “mega limits” for Side A coverage, which protects executives against claims not indemnified by the corporation. The non-traditional money that is now flooding the insurance industry may lead to downward pressure on D&O pricing in 2014, Willis contends.
We saved the best news for last. With loss ratios hovering between 75 and 85 percent for many property insurers, Willis and other insurance experts predict a big decrease in property insurance pricing. In non-catastrophe exposed risks, expect a 10 to 12.5 percent decrease in pricing. For cat-exposed property, Willis predicts smaller decreases of between five to 10 percent. Any port in a storm, right?
With 2014 rapidly approaching, contact your broker or consultant now to discuss steps you can take to reduce your 2014 commercial premiums.
Cavalcade of Risk #192 gallops into view with some interesting risk-related posts and great advice from various risk experts in their specific fields, from life insurance to enterprise risk management.
Excuse the slightly tongue-in-cheek lead-in, because this week’s Cavalcade of Risk is full of great risk management information. We visit a variety of risk management experts for their take on current events impacting their practices. Take a few minutes, grab a cup of coffee and visit and interact with our contributors.
In this post, Dr. Sidorov looks at a recent scientific study that examined national insurance data to determine what happened to the commercial health insurers in the wake of the Obamacare rule that they spend at least 80 to 85 percent of their income on medical care. It turns out that the most vulnerable part of the health insurance market-individual insurance-saw a decrease in profitability.
Jeff Rose helps us through the maze of medical conditions that can limit your ability to buy health insurance in his post. If you have an aortic valve disorder like aortic stenosis or aortic insufficiency, these conditions will impact you when you apply for life insurance. Insurance companies are very cautious about aortic valve disorders because of their potential to cause serious heart problems. There is hope, however. Jeff informs us you can still get insurance despite your condition. It really depends on a few factors, including the seriousness of your condition. To get a better idea of what to expect, read his guide to insurance underwriting for aortic valve disorders.
Here’s a news flash: If you are uninsured, there is a risk of being overcharged for hospital services. In California, the risk is 0. Jason Shafrin of The Healthcare Economist explains why here.
Recently, there have been some remarkable changes in how life insurance is now underwritten, including the use of social media and new technology. Henry (Hank) Stern of InsureBlog has the details.
Julie Ferguson of Workers’ Comp Insider isn’t talking scratch when she asks: “How much risk do you want to take with your kids’ chicken nuggets?” Chickens are on the front burner on the legislative circuit lately with the USDA seeking to overhaul poultry processing regulations that many see as unsafe for workers.But Julie notes that there is more than just worker safety at stake. Read her fast take on fast food here. I would have said, “Winner winner; chicken dinner.” Except after reading her post, and watching the video, I may go vegan. Soon.
David Williams of Health Business Blog says that a patient advocate tells him that it’s “dangerous” to rely on online doctor ratings and reviews and to rely on the “facts” instead. David argues that the case against reviews is seriously overrated and the proposed alternative paths are not as promising as they sound. Read his comments here. I have to admit, I’m a big believer in Yelp and a frequent Yelper myself. I don’t go out to dinner without checking Yelp, let alone try to find a service provider, doctors and dentists included.
Here are some closing thoughts from yours truly regarding the trends I and other risk management experts throughout the US are currently seeing.
Enterprise risk managementis becoming increasingly important to organizations.
Jury verdicts continue to rise.Check your liability limits and double check your policies to determine if you have defense inside or outside limits. Most professional liability policies provide defense within limits, and defense costs can erode your limits significantly.
Workers’ compensation costs have moderated in a few states; however, don’t expect to see rates decrease anytime soon, like never.Medical costs continue to escalate nationwide, outstripping wage loss benefits paid.
Cyber risks continue to be the bane of businesses at home and abroad; however, hackers increasingly target small-to-medium sized businessesbecause they seem to provide the path of least resistance to hackers.
Commercial insurance prices increased by six percent in the second quarter of 2013, the 10th consecutive quarter of price increases, according to a recent survey conducted by Towers Watson. Now is the time to bulletproof your risk management practices and consider increasing your deductibles or taking higher self-insured retentions.
This does it for another edition of Cavalcade of Risk.
Cut rate auto and homeowners insurance may cost you big in the long run.
You no doubt frequently receive solicitations and ads from insurance companies promising to save you money on your auto or homeowners insurance. Most consumers are looking at each expense they pay to cut costs. However, buying cut-rate insurance may cost you much more in the long run.
Insurance is your first line of defense against life’s calamities. After a loss, these are just a few of the problems a good insurance company can help you solve.
Provide prompt and courteous service year round after a loss.
Provide knowledgeable adjusters who can assist you in making important post-loss decisions.
Find a top-rated repair shop to repair your damaged car.
Promptly and conveniently provide a replacement vehicle while your vehicle is in the shop if you purchased rental coverage.
Pay for a similar alternative living space if you are unable to occupy your home after a loss.
If you are sued after a loss, provide a strong defense with excellent legal counsel.
Provide prompt board-up services after a loss.
Help you locate a trustworthy contractor if your home or roof is damaged.
Cut-rate insurance carriers cost less because they generally provide fewer services and less coverage. The decision to purchase insurance should go beyond price. Protection for your home and family after a loss is priceless.
Several of my friends have recently been involved in auto accidents and found themselves lacking rental reimbursement coverage and gap coverage. Gap coverage helps make up the difference between a totaled new car and its depreciation if the vehicle is damaged while the owner is still “upside down.” A good independent insurance agent can help you avoid these necessary coverage gaps.
Don’t get suckered into buying insurance solely based on the lowest premium. If you have a loss, cheapest may cost you.
Hoarding behaviors are on the rise. Take proactive steps to address problems head-on before they escalate to save you repair costs and potential liability.
Today animal and other hoarding cases are mainstream news and the stuff of television reality shows. Early in my career, I worked for a group of self-insured cities and experienced my first case of animal hoarding, if you consider a rat an animal.
In a small Bay Area apartment complex, fellow tenants walked by an apartment unit and noticed a rat sunning itself once in a while on the windowsill. No biggie, they thought. “Live and let live” is a Bay Area core value. Eventually as they passed, however, they noticed the curtains were chewed at the bottom. Still not a big deal. Until one morning, lots of rats were hanging out on the sill and the neighbors decided to peek under the ever-shortening curtain hem. What they saw freaked them out. There were many, many rats, hundreds in fact, scampering about or chillin’ on the furniture, maybe even watching Animal Planet. Neighbors called the management company which turned to the city for help. As the city’s claims representative, I arrived right after a Hazmat team.
Sure, it started out innocently enough – two rats that bred. Then those rats bred. Then the tenants turned their bedroom into the “rat room” and moved into the living room. Soon, rats were everywhere, hundreds when I arrived, as city workers in respirators caged and counted.
“Domestic squalor” is a term used by professionals to define people who slowly destroy their own living quarters. Those who stockpile may experience extreme loneliness after the death of a partner or may have a mental disorder. However, despite the reasons one begins to hoard, landlords must proactively manage these issues to reduce liability. After all, others have to live near these blighted properties.
If you own a rental unit, you probably have a hoarding story or two of your own. Tenants who store papers, hoard animals or even cook meth may be in your story repertoire. Managing the general factors that encourage or discourage these types of problems and others in housing risks can help you to avoid contending with a big, big mess. Those factors are environmental, biological and equipment-related.
Environmental factors include crowded hallways, inadequate lighting which encourages acts like using dark areas as toilets, overgrown landscaping and floors in poor condition.
Biological factors include not treating vermin infestations, such as roof rats we harbor in inner city Phoenix. These pesky creatures destroy wiring and bring a host of other problems, including mites, rat waste and odor. Bedbugs, too, have become a national problem.
Equipment factorslike leakingboilers and other poorly maintained equipment are frequently the root cause of other injuries and incidents like mold.
Only by frequent condition assessments of your tenant-occupied properties can you hope to discourage hoarding and other problems. Here are some tips to help you reduce the exposure to hoarding losses.
Try to develop relationships with repair people. Use them to report on the general condition of that property when making repairs, for example a plumber who replaces a leaking faucet or a heating specialist who repairs the heater. They can tip you off to any problems.
Put language in your lease agreements allowing monthly property inspection. Use monthly maintenance calls to replace heater filters as the time to eyeball the property condition. This monthly visit helps you both ensure your equipment is well maintained and that hoarding or filthy conditions are nipped in the bud.
Hoarding is a difficult situation. Do not let situation get out of hand. If you never faced this problem as a landlord, visit this URL to see what can happen when hoarding runs wild. Your city or county health department may offer guidance, as the city I represented did in the rat affair. Local social service organizations can often assist with the human element, which may be the hardest piece to manage.
If you do run across a case of domestic squalor, you may need to marshal outside resources before safely deploying workers. Many companies now specialize in cleaning up after hoarders. Beware, though, coverage for hoarding-related losses may be dicey under your insurance policy.
Landlording is never simple, but with many living alone without family support, hoarding behaviors are on the rise. Take proactive steps to address problems head-on before they escalate to save you repair costs and potential liability.
Consultants by choice or by chance need strong insurance advice before hanging their shingle.
While this was written a few years ago, my advice is timely and bears repeating. More professionals are launching their own consultancies. Now more than ever with cyber-liability and intellectual property claims escalating, consultants need a highly experienced agent and solid insurance coverage advice.
There are many things people do wrong when driving. How can you stress the importance of safe driving to your employees? Here are a few tips.
While trying to mind my own business as I was getting my nails done this week, three young gals who had just had babies came in for a pedicure and sat right behind me. They talked for about twenty minutes about breast milk pumping. One complained about finding the time to pump. “How long is your commute?” one asks the time-strapped mother. “15 minutes,” she answers. “Oh, that’s not long enough to pump,” the advisor said.
“I want to read that police report,” I said to the gal doing my nails. A woman sitting a few chairs away said to me, “Oh, they do it all the time,” meaning the young women who breastfeed, I guess.
Something Tells Me It’s All Happening At the Zoo
Then the gal with time constraints said, “Well, we’re going to the zoo tomorrow, so I can do it then.” I couldn’t resist, at that point, not knowing if she meant she would pump while she walked among the giraffes or on the trip there, so I said, “Well, at least you’ll be among mammals.” They didn’t find that amusing.
I posted this conversation on my Facebook page because I found it so amusing and completely bewildering. The comments I received made me realize: pumping and pedaling is not an anomaly. One gal told me her friend’s daughter told her teacher she wanted to be when she grew up, “Just like my mom. She can breastfeed the baby, eat a hamburger, and drive with her knee, all at the same time.”
What Else Goes Wrong Behind the Wheel?
So if your employees are pedaling and pumping, I wondered what else they might be doing behind the wheel that might impact the small business owner. Since I’ve been out of front-line claims handling for a number of years, I decided to ask some of my friends who handle claims. Here are some things they find in police reports as they investigate claims.
In a long-haul trucking accident that involved fatalities, the truck driver was reviewing pornography as he drove. He drove over the top of another vehicle, resulting in several fatalities.
Shaving and driving are frequently reported.
One adjuster reported his insured activated cruise control in a recreational vehicle then headed for a nap.
Reading at stop signs is a frequent problem in accidents.
Eating behind the wheel also contributes to many accidents.
How to Avoid Pumping and Pedaling and Other Unsafe Driving Habits
There are many things people do wrong when driving. How can you stress the importance of safe driving to your employees? Here are a few tips.
Set the expectation at employee orientation that safe driving, whether at home or at work, is critical to job performance. How employees drive in their own vehicles is a direct indicator of how they will drive yours.
Put safe driving reminders in pay stubs from time to time.
Have employees sign a form when they use a pool car that clearly states they will wear their seat belts and obey all rules of the road.
Let all employees know how much accidents cost your company. While you don’t have to identify the employee who had the accident, in your next meeting, for example, tell employees, “The accident where we rear-ended another vehicle cost over $120,000 to settle.” Employees understand money.
Hold employees accountable for at-fault accidents. Make it clear in your personnel policies that any failure to work safely, including driving safely, can mean discipline up to and including termination.
Know Your Employees’ Driving Habits
From time to time, ride with your employees. Do they tailgate? Do they chat more than they drive? If so, a company-wide driver training may be in order. National Safety Council offers driver training in most states. One auto accident can devastate your loss history, so money spent to prevent auto and other accidents almost always pays for itself.
In the case of breast-pumping and driving, I cannot even fathom how to avoid this exposure. Perhaps your female managers who have had children can take your lactating Madonnas aside and offer some advice. Good luck with that.
Nancy Germond hosts the 144th Cavalcade of Risk, and it’s no turkey!
Since this is the closest the Cavalcade of Risk will come to Thanksgiving this year, what better topic than “turkey” risk problems? While not all blog entries conform to this juicy topic, here are a few that do. In that tone, let’s begin with my Allbusiness blog post, “Consider the Total Cost of Jerks to Your Organization.” In it I discuss how much one human turkey in the workplace can actually cost your organization.
In “The Truth is Stranger than Fiction” category, Jon Coppelman of Workers’ Comp Insider, presents “Turkey Shoot.” This post discusses a case of an insurance investigator shot by the claimant he was investigating, allegedly after being mistaken for a turkey. The truth is often stranger than fiction, isn’t it?
Next, we move to another big turkey that is making the excess market sit up and notice just a bit on the topic of climate change. Have you ever asked yourself if Mother Nature could disrupt your business? This is an old tale for many companies who make their homes in states that regularly experience extreme weather—but what about the rest of us? Read “GRC Preparedness in a Changing Climate” on the Risk Management Monitor written by Alex Bender here.
We move on to some of the biggest turkeys of them all: mortgage makers. At Insurance Bad Faith Claims Bad Faith Law Blog, Dennis Wall updates “Good Faith: Homeowners Betrayed, Banks Unreal: California Investigates, Refuses Pre-Immunity.” His posting presents a reality-based review of why there should be a settlement in the talks between State Attorneys General and financial institutions which are, at one and the same time, Mortgage Loan servicers and originators. This settlement would include all claims based on anything other than the original conditions of the talks. What reasons do the Attorneys General have for even considering a Release of All Claims including claims not yet made and that they have not yet investigated? Read more to learn how Dennis Wall really feels.
As the Supreme Court announces its intent to ponder the national health care debate and those fortunate enough to have group health ponder high-deductible savings accounts and what that means to their budget, Louise Norris presents an interesting look at opting out of group health for individual coverage. Be sure to read her entry, “More Flexibility With An Individual Health Insurance Plan,” posted at Colorado Health Insurance Insider.
In our next post on Disease Management Care, Dr. Jaan Sidorov examines Medicare’s efforts at reducing costly readmissions. It turns out that it’s not only difficult to identify those patients who are likely to be readmitted, but the math necessary to compare readmission rates across hospitals is in its infancy. Dr. Sidorov argues in “Medicare Hospital Re-Admissions: Bad,” that while Medicare’s program is well meaning, this is another example of policy running out ahead of reality.
Medicare will start paying hospitals more which receive high marks for patient satisfaction. What steps are hospitals taking to avert the risk that they receive low scores? The Healthcare Economist weighs in with “Medicare to Hospitals: The Patient is Always Right.”
And as long as we’re talking about healthcare, Hank Stern asks the timely question: “Have you considered the risk of disability and how it might affect your ability to earn a living?” InsureBlog has some thoughts on how to manage that risk. As someone who became quite ill without disability coverage, I can tell you this is a question we should all consider. Read “Are You Protected” and take heed.
That is all the entries we have this time. Have a safe and secure Thanksgiving.
I frequently promote the benefits of having an experienced independent agent on your side whether you are a personal insurance consumer or own a high-value commercial enterprise. Silicon Valley Blogger presents How a Good Insurance Agent Helps Cut Insurance Costs at The Digerati Life.
My contribution this week to the Cav is a post from my Risk Management for the 21st Century column employers to quantify the costs of intimate partner violence to their organization. It’s always closer than we think. And sometimes an employer intervention can literally mean the difference between life and death.
John Coppelman’s post at Workers’ Comp Insider has an interesting take on how an employer’s attempts to reduce work comp costs can cause more problems than it solves! In claims, bad decisions sometimes make bad law and I think this could tread on bringing the wrath of the legislature down on all employers. What do you say?
Thank you for dropping in. It’s late, and now, it’s away to the Batcave and up the Batpole to bed.