Risk & Business

It has been proven out. Obesity increases work comp loss ratios 5 times. Now with studies estimating that 60% of the american work force is considered over weight, this should be of vital concern to the insurance industry. Work comp loss rates have gone down during the recession. Actuaries are reporting lowering loss trends due to the amount of people out of work. As the economy improves and more unemployed get jobs the expectation is that comp loss trends will start to get worse and rates will have to go up. Now throw in the fact that most of the newly hired will be overweight, and have been very inactive in day to day work because of unemployment, I do not think the actuaries have models to make these predictions. I feel it spells a unpredicted bad comp lose ratios than anyone expected. As I have said in previous blog posts, the worse case scenario for business owners will be a violent reversal of increasing comp rates that will be practically unaffordable for small business. This is

Currently truckers can drive 11 hours a day. If the Feds get their way this will change to 10 hours. Now this doesn't sound like a big change but studies show it could reduce truck fatalities by 2 or 3% . Even this doesn't sound like a big change but certainly any improvement on the fatality rate is worth it. Truck companies say that it will increase costs. Well this might be true but safety is as important as profit. Again risk managment is the key here. Most truck companies using good risk managment are always looking at driver fatigue and monitor their hours on the road. I think all this will work out for the truck companies and the improvement of the fatality rate. Until next time be careful out there and know you risks. K

If the Federal Government passes a new regulation proposed today, it will scrutinize Health insurers pricing over the next few years. Not being able to regulate rates they can certainly put undo pressure on companies that have an actuarial need to raise costs. This is troublesome to me as it opens the door for more and more regulation of pricing. It also opens the door for Federal intimidation on profits. If insurance companies are profitable then they may be criticized on their pricing and could be 'forced" to lower rates to reduce profit. Insurance is becoming more and more a commodity and therefore is starting to fall into a perceived public right. This could no doubt pit the Federal Government and the private business sector of insurance against each other. Stay tuned.  Until next time know your risks and be careful out there. K

Doctors that practice defensive medicine regularly are practicing good risk management, right? Well that depends. Good risk management has to fall into the lines of the organization's goals and budget. So when doctors go over board with testing and procedures then they may fall outside of both goals and budget. However at the same time the doctor may be preventing a large law suit by a patient against themsleves or their organizations. When thinking about this it really shows how the practice of risk management is very difficult to get right all the time. This is where risk professionals that are trained in analysis, identification, control and managment step in. The future for practitioners of risk management in medicine is bright. I see where they are sitting right next to the doctor making decisions on where to take risk and where to not take risk.  Until next time be careful out there and know your risks. K

You have heard it on the Progressvie commercials, name your own price and coverage is catching on with the big insurance companies. The insurance buying public are gobbling this up like candy. Many are cutting their insurance costs in half. I have a big problem with this. Insurance contracts are complicated and coverages are not clear cut. After 27 years in this business I am battling with insurance companies over coverage language weekly and only my experience level gets me through it so I can win more than I lose for the benefit of my clients. Now who is going to fight for the lowly guy who bought a name your own price policy when his coverage and limits are inadequate. I can tell you it will not be the insurance company. Buyers beware, these low priced options may be time bombs waiting to blow up when you have a claim. Buy your insurance from an independent agent. You get free counsel from them and you can be assured they will be in your corner when you have a claim. Until next time

Watching the metrodome's ceiling fall from the weight of the snow, made me think of a few things. First, how amazing it was that the collapse didn't occur during the game. Second, how the engineering of the dome couldn't handle 17 inches of snow. Third, some unfortunate insurance broker will have a busy Monday morning getting the claim going and talking with insurance adjusters. Luck sometimes beats risk and this situation is a perfect example. Lucky that a game wasn't going on when the collapse occurred. Lucky that the ceiling failure will make the engineers and builders repair it stronger so it doesn't happen again. Finally lucky that the insurance industry is around to fix the damage and move on with life. Yes luck is a formidible foe of risk however it doesn't come around that much. Risk tends to be around all the time, luck shows up every so often. The lesson learned here, use risk management in your business all the time because you cannot count on luck. U

Watch out all you social media internet users, more and more employers are using what you post as part of the employment record. "How dare they" you say, well get use to it. More and more employers are getting the inside sccop on their employees and how they feel about their jobs by what they post on social media. It is not uncommon for employers to use internet material in job evaluations. Now the question becomes is this legal and or is it right? I guess the courts will sort this out over time. One thing is for sure, if you put it out there on the internet it is fair game. Many of the younger generations do not quite understand this but they will learn real quick as they approach the job market. This also brings up a risk and insurance issue for small business owners. If you have employees and you are monitoring social media of your employees, you better protect yourself from possible backlash with insurance and risk management. You will need to get in place an EPLI policy

Master Card's servers were hit by Wikileak supporters after the founder Assange was arrested. This shows that even the big boys like Master Card have not covered all the risk basis against cyber hackers. It may be to much to ask any business owner to do but anyway you look at it, cyber risk management is a must in today's business world. Until next time be careful out there and know your risks. K

The life insurance association MDRT (million dollar round table), lost 1.0 million dollars after they found an IT manager embezzeled the money over a period of time. The scheme was to use a fraudulent IT systems vendor were big payouts were made under the guise of computer services. The fraudulent vendor split the money with the IT manager and no services were rendered. How does this happen to insurance people who are in the business of protection of others, well it goes back to risk managment. We are all guilty of not really being proactive on risk. we run our businesses as reactive to risk situations or events that are caused by risk. However the answer to reducing the drama in our business lives is to be proactive and use risk managment as a day to day discipline. It may take a while but I see the day that business owners will have risk managment meetings more than they have sales meetings. There is so much money that can be saved by risk prevention or reduction that it could be as

If you live in a flood zone or near a flood zone you are required to get flood insurance by most financial institutions. Unfortunately many business owners elect to get the coverage because they do not want to pay the premiums or they think flooding is remote. Well, just look at Nasville a year or so ago when the whole town was flooded. Many of the business owner did not have flood insurance, neither did many homeowners. Now the Federal Government is bailing out the uncovered by buying up homes and business properties that were flooded. So if the government is going to buy up flooded properties then why even require flood insurance at all. It seems to me that the Feds might as well just wipe away the need for policies and premiums and just buy out areas that were flooded. I know this sounds a little ridiculous, but it seems to hold true in all areas where unexpected flooding occurs. Just a thought. Until next time be careful out there and know your risks. K