Enterprise Risk Management First Step

To establish a "holistic approach to your business risk,  the first step is to start with your goals. In order to achieve your business goals on a consistant basis you then need to keep the risk of the business in control in all phases. Therefore apply the risk management process to sales, marketing, human resources, financial, vendors, suppliers, stockholders, debt, R&D, etc... Enterprise risk management takes a lot of work and is the reason why most businesses do not do it. In my next post I will break down the risk management process that needs to be applied throughout your business. Until next time, be careful out there and know your risks.   K

ERM, What is It? How Does It Help Business?

ERM or Enterprise Risk Management is a holistic view of risk in a business. A lot of attention has been paid to ERM after the financial crisis and meltdown. Experts say that  if AIG had a solid enterprise risk program they would have seen their potential downfall. I will blog about ERM this month and how it can help small business owners. I will also give some examples of steps you can take to establish an ERM approach to your business. Until next time be careful out there and know your risk.  K

Pay as you drive coming

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The State of California has enacted a new "pay as you drive" directive allowing insurance companies to charge insured drivers based upon the actual miles they drive instead of the industry norm of actuarial based rates. While some have expressed displeasure due to so called privacy concerns, it seems to be a sensible approach to take. There are many who drive very few miles yearly and others who drive considerably more. Both of these classes of drivers tend to pay relatively similiar rates. Insurance companies do question drivers periodically on their mileage but I'm fairly sure most drivers tend to fudge those figures a bit. This seems to be a growing trend with companies such as Progressive taking the lead. It's only a matter of time before this spreads to the commercial side of insurance.

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Central Delaware Chamber Of Commerce to Promote Safety Credit for Members

The Central Delaware Chamber of Commerce is going to work with the Delaware Insurance Department to promote the work place safety program. The safety program allows qualified business owners to save up to 20% on their work comp premiums. I know my agency has promoted this program for the last decade and have had great success in keeping premiums down for our clients . With the recent rate reductions and the opportunity to apply for the work place safety credits, Delaware employers and small business owners have some of the lowest work comp rates in the nation. Just a few years ago Delaware had the 4th highest. The insurance companies however are monitoring the rate reductions cautiously. Delaware has a hard job, it has to balance the proper rates to charge from a smaller worker population, that still allow insurance companies to make money. If not, the companies may stop writing work comp business in the State which would not be good for Delaware business owners.  I hope the actuaries have done the math right !    Until next time be careful out there and know your risks. K

Get employees back to work quickly to keep work comp costs down

In the past I have spoken to clients regarding a particular workers compensation claim affecting them and have asked if they have brought the employee back to work yet. Too many times the answer is no, they have nothing for that employee to do since said employee is not 100% and unable to perform their specific job prior to their workers compensation injury/claim. The problem with this is that too often employers miss the point that even though an employee can't perform in the position they were in prior to their injury, it behooves the employer to create some type of alternative task/job the employee can do until such time they are able to resume their normal duties. Bringing that employee back to work means that work comp benefits /payments in that particular claim are being curtailed, thereby saving the employer potentially more being paid out, while adding to their experience mod and driving their overall work comp expenses up.

Anti-Trust Exemption Needed for the Insurance Industry

There is a lot of talk coming out of congress regarding the anti-trust exemption for the insurance industry. The McCarren Ferguson act which was passed over 40 years ago, gives the insurance industry the ability to share and pool loss data in order to set rates. Many in congress are saying that this allows price fixing by insurance companies and has contributed to the high cost of health and property/casualty insurance. The insurance industry and State insurance departments refute this accusation. Without the ability to pool loss data smaller insurance companies will not be able to set adequate rates in order to make a profit. The data information from others in the business allows more competition because small and medium companies can do business and compete with larger insurance companies. If this is to be abolished, small to medium insurance companies would not have the customer base, history, or money to get this all important loss data. A repeal of the McCarren Ferguson act will only reduce competition in the marketplace because insurance companies may go out of business. Until next time be careful out there and know your risk. K

Business Owners could be held Liable for What Employees view and Download off the Internet

Attention business owners, if your employees are downloading information from illegal websites, you may be held liable for damages. A recent case out of New Jersey, the appellate court found the employer liable for not policing an employee who was using the work computer to download illegal pornography. The case was settled for an undisclosed amount.  In addition there have been cases where employers were found liable for retaining an employee who they caught. This is a risk problem for employers which can easily be managed. Have a internet and computer policy that is a no tolerance policy. Have all your employees sign it and educate them on your no tolerance policy. Report anything illegal immediately to the authorities. Until next time, be careful out there and know your risks.   K

Identity theft on the rise

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According to an article in The Telegraph, an online UK website/newspaper, identity theft has risen by more than a third in that country. Based upon information provided by the article, there have been a total of 59,000 recorded victims of identity theft in Great Britain in the first nine months of the year whereas last year the total for the whole year was 62,658. The article went into further detail explaining that account takeovers, 3rd party hacks into an existing account have more than tripled in the last 2 years. The targets of these attacks are credit cards by more than half with the blame being online purchasing and cardholder carelessness being blamed. As a business owner it's more than likely that you and your employees are making online payments and or purchases using company credit. It would be wise to consult your insurance agent to discuss procuring coverage for this type of risk if you don't already have it.

Health Reforms Gettting Closer to a Vote, Who will be Taxed to Pay for It?

The Senate is scheduled to vote on health reform as early as next week. The buzz around the insurance industry is that health insurance companies are going to be taxed to pay for it. Right now there is talk in Washington about hitting insurance companies with a "windfall" tax from the profits they are expected to make with 50 million more customers in the system. This again is scaring me a little for my small business owner clients. Usually increase in big corporate taxes and or expenses always seem to trickle down to the business owner's pockets. That is what would happen if the insurance companies are taxed to pay for the health reforms. You can count in it. Until next time, be careful out there and know your risks.  K

State Work Comp plans control 25% of the work comp insurance premiums

A recent report showed that State work comp funds are insuring 25% of the work comp market. This high percentage is a disturbing sign that indicates the standard insurance marketplace is loosing its appetite for work comp. With the increasing costs of medical care and the rate decrease mandates from many States, insurance companies are staying out of the comp market because they can't make money. How this will play out for business owners is hard to tell. It is nice to have low premiums now but a loss of standard market options only bodes unfavorably for business owners in the long run. Stay tuned !   K