Risk & Business

As a small business owner today, cyber marketing is a must. Ninety percent of all consumers use search engines to buy products or verify businesses which they want to buy products or services. Small business owners now must use cyber marketing to compete. What is cyber marketing?  It is the use of social media, websites, SEO, and email marketing techniques, all linked together, that promote your business in a coordinated marketing strategy. Along with this new strategy comes new liabilities. Small business owners are now facing claims for various occurrences. Privacy breaches, email libel and slander, social media copyright infringements, etc..... are just some of the new liability claims brought against small bsuiness. Now the question becomes , "does our insurance policy cover this" ?   This is a question for every business owner's insurance professional. Many current policies do respond to cyber marketing claims but many still do not. The best risk management response ...

The "sharing economy" is on the rise.  Young consumers are looking to save costs by sharing everything. Housing, rides, personal property, technology, are just some of the areas where people are sharing expenses. So how will the insurance industry react?  The industry is not built on sharing insurance policies.  An insurance policy is a contract between the insurance company and the named insured. The industry closely reviews the named insured before writing an insurance policy. Even times where there are multiple named insureds, the companies underwrite to make sure they know who they are and the relationship to one another. The new "sharing economy" presents some unique challenges.  Future consumers will want the flexibility to share risks with multiple people. This flies completely in the face of insurance company underwriting standards. The future consumer will want to share risks in a moments notice. This also p...

The headline reads " Federal Government Office of Personel Hacked". This is why every business owner needs a Cyber Crime insurance policy. The crimes of hacking and breaking into computers has reached the highest levels. If you run a small business do not be fooled by the false security of your malware and virus guards. Do not think that your IT consultant that comes in once a month is smarter than the hackers. Your security and fire walls are sitting ducks to these criminals. A Cyber Liability insurance policy will not stop your from being hacked, but it will pay for the liability you may be saddled with when it happens. The insurance will provide you coverage for your damage and replacement and also the costs of liability to others because you failed to protect their data and personal information. Small business owners call your insurance professional today, and buy the coverage for cyber crime. The risk of loss is greater than it has ever been in the history of our soc...

Like individuals, many businesses are looking to get into the ride sharing world to make better use of their fleets and routes. They are looking at it as a way to increase income. With technology, having folks "ride along" for a price has become really easy. A word of caution is warranted however when looking at the commercial auto insurance policy. As a small business owner you could be exposing your business to a "truck" load of liability. Many of the insurance companies will exclude "livery" or "public transportation" in policies. Also many state jurisdictions have limited Personal Injury Protection limits which could leave the business underinsured for passenger injuries. There are many other exposures for ride sharing that have to be dealt with before it can become good idea to increase income. Time will tell as the insurance industry and State legislatures respond to the market demand for ride sharing. Stay tuned. Until next time be careful...

One of the biggest risks developing for construction small business is lack of talent to fill jobs. During the recession of 2008-2011, construction companies had to reduce their work force to stay in business. This meant a lot of well qualified workers were laid off. Now that construction is picking back up, these same workers are older and do not want to come back to work. Also the industry did not do a good job of recruiting and training a younger workforce and this has created a gap. If you ask small business owners in the construction business they will tell you, "I can't find help" and will continue to be a big problem. The need is in the field, project management, leadership, and even engineering. The economy depends on the construction industry to drive growth. This could be stalled if projects cannot get done or the amount of available work lay dormant because of a reduced construction work force. Only time will tell if these available jobs will be filled in time ...

Every small business owner that has purchased commercial insurance will have to deal with insurance audits. Mostly these audits are on the liability and work comp policies. The purpose of these audits is for the insurance companies to charge the correct premium for the exposures. So if your business has sales and or payrolls that were greater than what was expected, the insurance company will charge you the difference. If they were less then expected,  the company will return the premium to you. There are a two "gotcha's" that every small business owner needs to be aware of to avoid having to pay a large additional premium after an audit. Lets go over these. If your business is experiencing a great year and sales and payrolls are growing, don't forget to let the insurance company know. You will be able to adjust your insurance policies to pay in  during the year to avoid a large premium bill at expiration. This strategy also allows for better cash fl...

Hartford, one of the largest small business insurers in the US just published a report about the most common and costliest claims to small business. The most common claim is theft and burglary. The most costliest is reputational harm. Lets discuss each one. According to the article the claims average for theft was around $8000. This would include employee theft,  which also is very common. Twenty percent of all small business owners experienced a theft in a 5 year analysis. Reputational claims affected 35% of the small businesses analyzed. These claims averaged up to $50,000. They would include libel, slander, and privacy breaches. The good news for small business owners is that insurance policies cover both of these risks. With proper insurance protection the most common and the most costliest, claims to small business will not cause you to go out of business. Until next time be careful out there and know your risks. G. Kevin Nemith  President of CNC Insurance Assoc. ...

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, ...