Risk & Business

Recently, the board of directors for Volkswagon were served with a lawsuit from shareholders over the now well documented emmissions fraud. This will be a high profile case and will certainly expose the risks that directors and officers of companies have. Even in small business the claims against board members is increasing. General liability policies do cover the directors of companies in their capacity of business  but only for property damage and bodily injury. However the general liability policy has no coverage for the directors when they are sued personally for thier oversight or fiscal decisions. This is where the D&O insurance policy comes into play. These policies are written to specifically cover suits against directors and officers for thier personal liability in running companies.  Laws in most states allow directors to be sued, and is the reason for having these policies in place if you have a business that is controlled by a board. Talk to your insurance prof...

Small business trucking operations help create the backbone of our economy. However many are paying higher insurance premiums and are being penalized by the misuse of the Federal Motor Carrier Safety data. The SMS (Safety Measurement System) was developed by the Federal Government to identify those trucking risks that need to be scrutinized for roadside checks and onsite inspections. Unfortunately, insurance carriers and the courts are using the data to determine insurance rates and civil liability. The SMS data website clearly states that the data is for determining which trucking risks should be inspected. However the public availability of the data is enhancing its use for other purposes. This creates a big problem for small business trucking.  The data is flawed in the sense that small violations can be weighted inappropriately and this data is used as gospel by insurers and the legal community. Many trucking operations who have fantastic loss ratios but problematic SMS scores...

Effective in 2014, the Federal Government enacted parity laws for mental health programs in employer sponsored health plans. The legislation taken from the Mental Health Parity and Addiction Equity act of 2008, puts the burden of compliance on small business. Gone are the financial and treatment limits that affect out of pocket costs. Also the number of mental health days and visits are no longer limited. What does this mean for small business? It means that employers are going to have to review their plan options with mental health in mind. If the plans they are choosing to offer for their employees do not have mental health parity with other coverages,  then the small business owner could be in violation of the law. To make matters even more confusing, States that have similiar laws must also be complied with. If your State does not have parity laws on the books then the Federal legislation will dictate. Small business owners should consult with their health administrators and ...

Since its inception, the Federal Flood Insurance program has struggled with debt. This government backed program is currently 24 million dollars in the hole. The reason is that the Federal program has not charged the proper premiums for the risks that are in flood zones. Big payouts have ensued from storms over the years, and the debt has grown. So many in the industry are calling for private money to take over the program. There is plenty of capital in the insurance  marketplace and also new technology to help charge the proper premiums for the exposure., so now may be the time. Unfortunately the Federal Government does not have the political will to make that happen. The main reason is most policies are under priced and to make the corrections many voter's premiums would skyrocket.  In 2012 the Biggert- Waters bill did just that only to have it recalled because of the public outcry when they got their renewal bills. Sooner or later something has to be done. If the debt hole ...

The insurance marketplace that we deal with every day in America is directly tied to world events. So expect insurance rates to rise over the next year, especially in property. The Tianjin China port explosion will cost the world insurance market in excess of 1.5 billion dollars. This is a very big insurance event. This port was being used by most of the Fortune 500 companies in the world. As these companies make claims to their respective insurers, capital that is stored up in insurance companies will need to be replaced. So how do insurance companies replace capital?  They raise rates.  Only time will tell but it will be a sure bet that property rates will rise in 2016. Until next time be careful out there and know your risks. G. Kevin Nemith President CNC Insurance Assoc. & The Small Business Insurance Center Proudly Serving DE, MD, NJ, PA, & VA www.cncinsurance.com www.bizinsurancetv.org

Business liability policies will cover advertising, marketing and trademark liability claims. The coverage language is found in Part B of the standard ISO General Liability policy. The ability for businesses to do their own marketing and advertising has increased with technology, but so has their exposure to claims. Just a few years back, most businesses would hire marketing or advertising firms to promote their business. These firms would carry special insurance to cover claims. Now, with business owners doing their own thing, they are finding themselves testing their business general liability policy for coverage. So what will the business owners' liability policy will cover? You can expect coverage for libel & slander, violation of right of privacy, copyright infringement, and trademark infringement. With the explosion of do it yourself advertising and marketing, many small business owners are surprised when they get sued for one of these exposures. The good ...

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...