Risk & Business

Every small business owner has experience with certificates of insurance. If you want to do business with vendors or take out loans, or sign contracts, a certificate will be requested. So lets quickly break down what a certificate is. First and foremost a certificate is not your insurance policy. It is not intended to replace the actual terms, conditions, and coverages in your insurance policy. The certificate is for informational purposes only and is only good the day it is printed. Why? Well insurance policies go through numerous changes during the year. You may add or subtract coverages or covered items. You may not pay your premium and cancel your insurance coverage. You may add policies to your insurance portfolio. With the dynamic nature of small business insurance, it is easily seen why certificates are only good the day they are issued. So why are certificates so commonly requested and used. The main reason is that most people can understand the simple format and design of ...

As a small business owner, you do everything. Not only are you the rain maker but you are also responsible for running the business as a well - oiled machine. So what happens to the business if something happened to you. What do you want to happen to your business?   You are the key person, and your business needs to cover your life so it can either continue , be sold, or wind down. How do you accomplish this?  There are many options but simply have your business buy life insurance on you. You can tailor the policy so the death benefits can do what you want it to do, and the business can expense the premium as a business deduction. Business owned life insurance is a great tool to allow your wishes for the business to be fulfilled.  Check with your professional insurance advisor and agent for the proper use of business life insurance. Your small business is like family, so life insurance is one of the best ways to protect it. Until next time be careful out there and know y...

It has been proven that employer sponsored wellness programs can reduce the costs of health insurance plans. Now recent studies has shown that it can do a world of good for work compensation costs also. Reductions in work comp claims and the costs of those claims on employers, improves dramatically with wellness programs.  The duration of work comp claims also improves so employees can get back to work quicker. These healthier workplaces, tend to isolate comorbidities that may exist in employees before they have an injury on the job. These comorbidities, or preexisting conditions, can be improved or mitigated by wellness programs. Also small business owners who integrate their work place safety programs with their wellness programs have shown even better results.  If you can put together a wellness program with an integrated safety program, the chances of reducing the costs of work comp claims can be greatly improved. As it is said, health is everything. Until next time be ca...

Business owners are barraged with numerous Federal and State regulations every time they open their doors. The latest that is getting everyone's attention is wage and hour compliance. The Federal government recently announced they will be tightening the rules and looking for stricter compliance with the Fair Labor Standards Act , wage and hour rules. This has spawned an uptick in litigation against employers.  Workers who feel they were unfairly compensated because of their hours being deducted or their wages cut, are filing suits. Small business owners are going to have to be more diligent in how they pay and keep hours for their employees. From a risk management perspective, self audits are necessary every year to make sure you are following the rules. You may also want to add wage and hour coverage to your insurance portfolio, mainly by endorsing your EPLI policy. This is not going away anytime soon, so you will need to tackle it head on. Consult your ...

Google is getting into the insurance business and it is happening now. They will be launching auto insurance availability with many of the top insurance companies going in with them. Google will be using a rate engine that prices the driver not the vehicle. Because Google knows where you are at all times they can price insurance in "real time". So how can this help customers?  Real time pricing that charges how you are driving and where you are driving, daily , will most likely reduce premium costs when compared to the old underwriting ways of charging by the type of car, and where the car is garaged, (just to name a few).  A few other companies have real time pricing, but only for the auto. They will not be able to hold a candle to Google who has exploded location and tracking technology of the individual. It is going to be a game changer, stay tuned.  Until next time be careful out there and know your risks. G. Kevin Nemith, President of CNC Insurance Associates &...

Ergonomics comes from the Greek words "ergon" and "nomy" which are "work" and "laws" respectively. The term means the laws of work. It also means important issues if you are a business owner. Making sure the working environments for your employees are fitted to the person and not the job is vital in today's workplaces. The reason?  Reduced injuries and accidents will mean more productivity and profit. Recent studies show that inappropriate designed workplaces can average up to $30,000 per injury, and this is just medicals. If you add lost time and lost productivity,  the number can be staggering for small business. Every small business owner needs to know the "ergo" risk factors. Here are some of them: 1) Repetitive tasks, 2) Excessive force, 3) Awkward posture, 4) Static Loading, and  5)Vibrations. As a small business owner, understanding how to risk manage these ergonomic risk factors can be vital to the success of your business...

There are 2 theories on what causes accidents. The first theory is people cause accidents. Social and personal ancestry affect a workers personality (e.g., stubbornness and recklessness) that lead to faults which leads to unsafe conditions , which lead to accidents, and finally to injuries. The other theory is physics causes accidents. Energy builds up in certain conditions and is suddenly released causing accidents and injuries.  Which one do you subscribe to?  In my experience I can point to both theories and see truth. Take the example of the hot head foreman on a construction crew who gets so frustrated with his guys he decides to do the job himself. So he grabs the tools he needs and begins to lift and work to complete the job. Unfortunately he injures his back because as the foreman he is not use to the rigors of the job. His personality trait caused the accident. Now lets look at physics. Here is an example.  A loaded delivery...

Every small business owner needs to know about insurance modeling.  What you pay for insurance rates will most likely be directly related to it. Insurance models  are algorithms which tell the insurance companies how much to charge you. They base these calculations on data obtained from various sources about your business. A lot of this information may not even seem related to business insurance. Here are some examples,  how do you pay your vendors?,  what is your credit score? , has your company lost money in the last few years? , how does your business compare to other businesses in your peer group?  These are just examples of  data insurance companies may use. There is a lot more but much of it is proprietary.  Understand that everything you do in your business is fair game to the insurance company modelers.  It is a new world !  Until next time be careful out there and know your risks G. Kevin Nemith,  President CNC Insurance Assoc...

Small business owners guess what?  The Delaware Insurance Department has just approved a 11% reduction in work comp rates for 2015. Many of you reading this blog will be getting premium relief  for 2015. What does this mean for the future of the Delaware work comp market. Well lets hope we do not have a repeat of a few years ago. If you recall the work comp rates were rolled back and reduced dramatically on the back of Senate Bill 1 in 2007, which was betting on updated fee schedules to reduce work comp claim costs. Unfortunately this did not work too well and the State was forced to increase rates back up in order to preserve the insurance market. Not only did the rates go up but they went up so quickly that many small business owners were hit really hard with increased premium costs at a time when they could not afford it (during the Great Recession). Now this is round 2. The State legislature passed a law that will force medical costs down 30% over the n...

Every small business owner who has enough work comp premium to establish an experience mod, knows the importance of that number being under 1.0. If the mod goes over 1.0 then it could affect your ability to get contracts or to stay on contracts. The work comp experience mod is used as an indicator of your safety. That is why most job contracts require mods under 1.0. Risk management procedures are a must in order to keep a mod under 1.0. Enclosed are a few ideas to accomplish this. 1) Update and review safety practices to avoid and reduce work comp claims 2) Review losses and reserves with your insurance broker on a continuous basis. 3) Double check the math calculation on the mod formula to make sure it is correct 4) Double check the  loss reporting data from the insurance company to the Comp Bureau to assure accuracy 5) Make sure your payroll audits are accurate and have been reported to the Comp Bureau correctly These are just some of the ri...

The Liberty Mutual Research Institute just reported the top work place injuries in the US. And the winners are.  1) overexertion , 2) falls from same level, 3)getting hit by an object. Lets review each one and suggest a risk managment treatment.  Overexertion happens all the time. It is number 1 because it is hard to prevent. Lifting, bending, crawling, and reaching are all causes of overexertion. A simple but effective risk managment strategy for prevention is recurrent training. Teaching workers proper techniques to protect their bodies, can go a long way in reducing these claims. Falls from the same level are your typical tripping injuries. Risk managment solutions can be as simple as continuous  and ongoing, clean up, fixing, moving, and rearranging to prevent trip hazards. Think ergonomics. Getting hit by an object rounds out the top 3 and can usually be pointed to mobile equipment and autos. Again risk managment treatments focus on backing alarms, visual aids, an...

Congress left on the Christmas break without passing a terrorism extension. This unexpected turn of events has left business owners extremely vulnerable. With no Federal back stop, coverage has dried up in the private market. Insurance companies didn't see it coming and have no financial resources to pick up the coverage. So Congress let down business by leaving them uncovered. Hopefully after they return they will pass an extension. If not it could be a major problem for business as the private market cannot provide the coverage and businesses may have to operate with none. Yikes !! Until next time be careful out there and know your risks. G. Kevin Nemith, President CNC Insurance Assoc. And the Small Business Insurance Center. Serving DE, PA, MD, NJ, & VA www.cncinsurance.com www.bizinsurancetv.org

As we close out another business year, the big story for 2014 has to be cyber risk. Every business owner will need to consider cyber attacks and find ways to protect against them. Cyber risk has now become part of the risk management and insurance conversation. In the eyes of business owners it should be protected against like fire, wind and other perils. How the insurance industry responded to breaches is also a big story, as many claims were excluded under the liability policy, but enhanced coverage under special cyber risk insurance policies saved the day ( if they were bought) . I will be writing more about cyber in 2015, as this risk continues to evolve. Business owners and their risk professionals will have to continually look at the exposure and find ways to treat it so it doesn't come home to "byte" . Until next time be careful out there and know your risk. G. Kevin Nemith Pres. CNC Insurance Associates Inc. and The Small Business. Insurance Center Serving DE, ...

A few major insurance companies are petitioning the National Transportation Board to get permission to use drones in their insurance business. Yes, you read it right, drones !  The insurance industry is visualizing using drones for business inspections, claims adjusting, and evaluating catastrophic losses. This may seem futuristic but in reality drones flying over your business to take a look are probably only a few years away.  Imagine the scenario where you call your insurance company or agent after an auto accident and within minutes a drone comes flying over to video the scene. Or your building just had some wind damage and as soon as the storm subsides drones from the insurance company are flying over taking pictures of the damage and sending the images back to the claims office. You can only imagine the many uses of drones in the insurance business, and that is just what insurance companies are doing. Insurance companies are always looking to reduce expenses in order to ...

The media coverage of the rioting and civil unrest in Ferguson Missouri, showed damage beyond imagination. Small businesses were looted, burned, and destroyed by protestors. This event is an ongoing problem for the business owners in the town. Rebuilding and getting back to normal will take a long time and will depend on insurance.  Commercial insurance policies will pay for the damage and also for many, the loss of  business income. Long term insurance issues could be down the road however. Once insurance companies pay millions of dollars of claims in Ferguson, the insurance industry then has to decide if they are going to continue to make insurance available for the town. Also underwriting standards and criteria may make rates skyrocket.  The insurance industry will have to evaluate if the town is still a high risk for future damage & losses. This will determine if Ferguson business owners will have adequate and affordable insurance down the road.  Let's hope t...

This blog usually is written about topics that affect the risk and insurance issues of small business. However, I ran across an interesting article regarding the sales of Pet Insurance. I was curious to understand why this insurance product was outselling health insurance and life insurance. In other words, people are buying better protection for their pets than themselves. Veterinarian costs have gone up and pet medicines have gone up, but that doesn't fully explain the sales explosion.  The availability of new surgical procedures and treatments has increased but that doesn't fully explain it either.  When it comes right down to it, our pets are our family and we will do anything for them. Most people who buy pet insurance just want to make sure they have enough dollars to do the things they need to do medically to help their pets. Until next time be careful out there and know your risks. G. Kevin Nemith President CNC Insurance Assoc. & The Small Business Insurance Cent...

Reinsurance is unknown to most small business owners. Actually, the term and the concept of reinsurance has probably never been discussed in broker/client insurance meetings.  So why bother? Reinsurance is going through an historic change. This change may affect the overall insurance market sometime in the future which could create insurance issues for small business.  So let's break it down. Reinsurance, insures the insurance companies. They are at the top of the heap in the insurance world. The reinsurance industry makes sure that insurance companies can pay really big losses and claims that otherwise would bankrupt them.  The reinsurance industry is under fire right now as new money comes to the top of the insurance food chain. Hedge funds and other money funds  are telling underlying insurance companies that they can cover the really big losses as good as reinsurance but can do it at a lessor cost.  This has given the reinsurance industry competition it has...

Recently Wal-Mart announced an elimination of health insurance for their part time workers. This goes along with many other large corporations shifting full time positions to part time and eliminating health insurance and other benefits. This all in the name of reducing costs as health care premiums and regulation costs from the ACA , are putting earnings pressures on business. Now experts are warning that the shift to part time could create more work comp claims. Part time workers are less likely to be properly trained or have continual training. In addition part time workers are less likely to be " conditioned " to the rigors of  the job which could increase work comp frequency. Many experts are predicting that any cost savings,  could be wiped out by the increase costs of comp claims.  So what are business owners suppose to do? The best risk management advice is to take some of the savings and invest in safety training and education for part time employees. Also find w...

The Delaware Compensation Rating Bureau has announced that it is requesting roughly a 1.5% rate decrease for work comp rates in 2015. This comes off the heals of consecutive rate increases over the last three years. The Bureau is hoping that the legislative changes put in place over the summer will start to have an impact on high medical costs that have been driving the increases. This is a risky move however. If the medical cost containment does not work, then expect a slingshot reversal of rates sometime in 2016 or 2017.  The DCRB states in their filing that the rates really should be 25% increased in 2015 ! However they believe the cost containment measures will work and that is the reason they are requesting the small decrease. Small business owners need to keep an eye on this as successful cost containment means decreasing rates over the next few but failure of the legislative initiatives could mean big time work comp rate increases a few years from now.  Until next time ...

So you go to the appliance store and you buy a brand new stove. The dealer begins putting the info into the computer and then asks you if you want to buy a 2 year warranty. You are told that it covers if "anything goes wrong", and will cost just a small amount of money each month or a one time fee.  Now you may ask "isn't this insurance? Warranties  have terrms and conditions in their contracts just like insurance policies. The money you pay is just like an insurance premium. When there is a problem you call the warranty company and put in a claim just like insurance. So what is the difference between warranties and insurance? The most glaring difference is that warranty contracts are not regulated as strongly as insurance is. Most people that sell warranties are not licensed. Insurance professionals are required to be licensed. Warranty contracts can vary completely from one to another, where insurance contracts have some consistency in coverages and language.  Ther...