Risk & Business

As a small business owner you are constantly battling the cyber criminals who are  trying to bust into your server and steal your data. If you haven't addressed cyber security with a modern risk management approach, you are opening yourself  up for potential problems. So with that in mind, let's briefly discuss the risk management of cyber security.   As a business owner you need to analyze some key risk indicators.  They are: ,   1) What would be the financial impact from a cyber hack? 2) How resilient are we if we did have an attack?  3) How imminent is an attack on our data?  If you can answer these questions honestly about your business then you are on your way for a solid risk management plan. The hard part is finding the answers. There are a lot of cyber risk checklists and analytical tools out there to assist but no matter how difficult you have to get started. Also don't forget to buy Cyber Liability Insurance. These policies...

Many small business owners see the coverage "uninsured and underinsured" motorists coverage on their business auto policy, and do not fully understand what it protects.  I thought I would write a few lines that may help with this understanding. Uninsured and underinsured motorists (UM & UIM) coverage protects you, the business owner , from damage with drivers that meet this definition. Based on recent studies, 25% of all drivers either have no insurance or very little insurance. The minimum coverage in many states to have legal auto insurance can be as low as $15,000 liability limits. If you get hit by a driver in a minimum limits auto policy,  they can only offer the $15,000 to pay for your auto damage and your injuries. This leaves you with a potential big gap. That is where your uninsured and underinsured motorists coverage kicks in. This coverage will pay for your damages and repairs and also help pay injuries and lost wages. It is also ve...

With the new OSHA rules mandating that employers report any employee hospitalizations, heat related issues have garnered some attention. Prior to the new reporting rules, only multiple employee hospitalizations from one incident had to be reported. In heat stress related claims, very few multiple events occurred so there was very little reporting to the Feds. Now many employers find themselves having to report when an employee gets heat stress on the job and has to go to the hospital for hydration and monitoring. Heat related cases are common in the summer months for workers who spend their work day outdoors. Now a usually non reportable , has to be reported to OSHA. The Feds are taking notice since the amount of reported cases has increased this year. Fines have followed with some "willful" penalties assessed to employers. So this summer take some risk management steps to avoid having your employees get heat stress. here are some steps as noted by the Business Insurance Jour...

During this time of the year many small business owners enjoy throwing summer picnics for their employees and families. The events usually include food , alcohol and fun activities. Unfortunately this combination causes some things to happen. So the question comes to mind, who is responsible? Employees that get hurt during employer sponsored picnics could file for work comp benefits. Some state jurisdictions will allow these type of claims. A lot will depend on the circumstances surrounding the injuries however.  If a family member of an employee gets food poisoning from bad egg salad, is the business owner liable?  Maybe, maybe not, the good news here is the business general liability would cover the claim if the business if found to be liable. What about alcohol related claims , is the business liable?  Again , possibly, but the general liability policy will cover under the clause of host liquor liability, unless you are selling the alcohol and deemed " in the busines...

Many small business owners get confused when it comes to insurance. It can be down right intimidating.  Understanding the umbrella policy is one of those intimidating items. Every small business owner needs one but only a low percentage actually have them in place.  So let's take a few minutes and clarify what the umbrella policy is and why you should buy one. An umbrella policy is extra protection over your business policy, auto, and work comp all in one form. It is also very inexpensive when compared to other lines of insurance. An umbrella policy can also add extra limits of liability coverage even if you only have one underlying policy. You do not have to have a lot of other policies to have an umbrella. So if you only have a business owners policy covering your small business and no auto or work comp, you can still have an umbrella policy over top adding an extra limit of coverage. Most umbrella policies add another 1,000,000 of coverage, but this limit can be increased ...

My last blog post discussed the increasing losses that are occurring in automobile insurance. Right on cue, OSHA released its top causes of fatal accidents and guess what? ,  it is auto.  According to OSHA and the US Bureau of Labor Statistics, 41% of all fatal  work place  injuries were caused by transportation losses, i.e. Auto losses.  Coming in a distant second is falls and trips at 17%.  This brings up a interesting risk management discussion. What is causing this ?  Is it more commercial vehicles on the road, or less capable drivers,  or even more impaired drivers?  Technological  distractions could also be the culprit (cell phones) .   Fleet safety incentives and programs that have been pushed by insurers, obviously are not improving loss ratios. Telematics and GPS monitoring is not helping either. Only time will tell how this will play out. Insurance companies will want to see improving results or small business owners will...

Recent reports from many insurance sources are indicating a loss problem in automobile insurance. Many insurance companies are showing this line as losing money. Underwriting results are getting worse each quarter. So what is causing this to happen? Historically, auto insurance has been a winner for insurance companies. Some experts feel it is the price of gas. With the cost per gallon lower than it has been in years more people are driving which cause more accidents. Also the cost of a new car has skyrocketed. You can't get away with buying any new car under $25000 these days, so the cost to fix a damaged one is putting pressure on insurance company profits. Don't forget all those texting drivers out there. Could cell phones be distracting more drivers than previously thought?  One thing for sure, unless the auto insurance line turns around, you can expect a rise in rates in the very near future. The insurance industry will not absorb losses for very long befo...

Occasionally, I get questioned about the difference between mutual insurance companies and stock insurance companies. So I will try to explain the difference so you as a small business owner can decide if it makes a difference in your insurance purchase. Mutual companies are owned by their policy holders and stock companies are owned by stock holders. Both mutual and stock companies can be very large and write insurance on a national scale, or small and only write in a region.  On closer look, when you buy a policy from a mutual company you are technically one of the owners of that company as long as you purchase insurance from them. Your insurance policy is your "ticket" to ownership. If there is profit at the end of the year and a dividend is declared, the policy holders will reap the benefits and may get some of their premium back. With a stock company, where stock holders actually own stock certificates, the profits are returned to the holders of those stock certific...

A recent interpretation letter from OSHA has put a big "monkey wrench" in post accident drug testing policies. Most small businesses have policies to drug test workers post accident. In many of the federal and state projects this is required of the employer. However OSHA is looking at post accident drug testing very closely. If they feel there is a possibility of the program inhibiting injury or illness reporting by employees or if the program is used for unreasonable discipline actions, then the employer could be fined.  This is definitely problematic for small business. The need for good risk management and the protection of the public, guides the use of post accident drug testing. OSHA could however turn this upside down if they begin enforcing and fining employers for their programs. Keep an eye on this one folks. Until next time be careful out there and know your risks. G. Kevin Nemith, President CNC Insurance Assoc. & The Small Business Insurance Center Serving ...

The horrific events in Orlando emphasize a second look at your insurance coverage. Small business owners do not have coverage for terrorism events. However each renewal cycle, you as the business owner, have the option to buy or reject the coverage which is underwritten by the Federal Government.  Since September 9/11 this coverage has been available but most business owners will sign the rejection form to save premium. Unfortunately, today and going forward this coverage is going to be needed as we face the growing threat of terrorism in our country. For small business owners you can purchase terrorism coverage for your property, liability and work comp. The cost of the coverage will vary depending on values, limits, and exposure. Make sure you have a conversation with your insurance professional about how to protect your business from terrorism. Until next time be careful out there and know your risks. G. Kevin Nemith,  President CNC Insurance Assoc. & The Small B...

Many small business owners are using undocumented workers as employees. Most of the time this is done without even knowing it as many workers will use fake social security numbers or tax ID numbers, to pass the screening and hiring process. However when an on the job injury occurs the medical bills and lost wages are still the responsibility of the business owner, both from a legal and moral position. The good news however is that more and more states are allowing the work comp system to pay for these claims. Prior to these legislative changes many small business employers found themselves in a pickle with legitimate claims to pay and no legal way to use the work comp system to pay them. Even the states that have not put legislation in place, there is case law which gives the insurance companies who cover work comp a "directive" to pay these injury claims.  This is good news for small business because it takes them out of the legal cross hairs , especially when most business ...

With the new overtime regulations just signed by President Obama, small business owners should get ready for the headache that is about to hit. Business owners now have to pay overtime for salaried workers that make under $47,476 a year. This will surely put pressure on small companies and will result is the aforementioned headache.  Labor costs will go up immediately as companies comply with the regulation. Litigation against employers will also go up as record keeping errors and disputes over wages and hours will result. So what will small business owners do?  Many will reduce staff to help pay for the additional costs. Some will move people into part time status. Many will also put a freeze on hiring. For the salaried workers it will trigger higher wages. The Labor Department estimates that over 4.2 million people will see raises due to this regulation. Unfortunately, this will most likely not happen. Small businesses will adapt to keep their labor costs down in o...

In the early part of the 20th century the work comp system was started as the ultimate bargain between employees and employers. Employers would buy insurance to take care of injured workers and the workers would no longer have the right to sue their employers for thier injuries. This system has worked great for many, many years. However changes are starting to happen to the system as employers are looking to reduce the tremendous costs of work comp. Medical costs increases and litigation are driving the continual rise of work comp premiums. Employers are now looking to opt out of the work comp system to take control of these costs. Many states have statutes that allow this to occur. The risk to employers is that they no longer have the protection of not being sued by employees that the current work comp system gives them.  The risk to employees are they lose their protection of having a guaranteed mechanism to pay for their on the job injuries. It is going to be interesting to see ...

Total Cost Of Risk (TCOR) , is a measurement that many business owners do not know about. Calculating your business TCOR and working to reduce it each year can add more profit to your bottom line. Let's dig in. Just operating a small business everyday produces risk. Buying insurance to protect the business from risk is what every business owners have to do. Adding up how much insurance costs your company is Step 1 in figuring TCOR.  Now look at any retained losses you had to pay out of  pocket in the course of a year, like deductibles, or losses that you didn't even turn in to the insurance company. Add these up and you have Step 2 in figuring TCOR.  Including any fines or penalties is Step 3. This would include Federal or State fines, or regulatory penalties for your operations. It could also include contract damages, or breaches. Next,  add the labor costs and administration costs of safety personnel and risk management personnel to get Step 4. Now total the result...

The FBI recently issued a warning to consumers about the increasing vulnerability of vehicles being hacked by cyber criminals. Modern technologies built into today's vehicles expose car owners to the same cyber risks that your business faces with your computer systems and point of sale credit card scanners. Let's break down just a couple of the risks this  may bring to your business. Hackers could break into your WiFi connected vehicle and shut it down. What would be the cost to your business if your fleet of delivery vehicles is out of commission because of a cyber attack? Who is going to pay for the repair of the computer module and the re-programming in the trucks, your insurance company? I doubt it. How about if a hacker steals customer data or sensitive business data from a smart phone carried by your driver that has connected to the truck's WiFi? Is your cyber insurance protection going to cover the costs to notify the customers and recapture the lost data? What happ...

In almost 28 years of selling and servicing business insurance, every month that goes by one of my clients will most likely ask, " how much liability limit should I buy for my business?". This is not an easy question to answer. Every business has their own risk profile  and budget, which has to be taken into account. There is also one other item that has to be considered when buying liability insurance. The limit can run out during the policy year! Allow me to explain. When you buy a property policy covering your building you determine an insurance limit. If the building is damaged due to a covered claim, the limit would be used to repair and replace the damaged portions of the building. The limit then "resets" to its full value and is available to cover the next claim to the building even if it is in the same policy year. Contrast this with liability limits. If your business is sued during a policy year and your liability limit is paying the costs of the lawsuit, ...

Most small business owners will insure their buildings and contents for loss. However studies have shown that nearly 60% do not cover their lost income after damage to their business. Many business owners are under the premise that they can get the business back on its feet in no time and start making money again. This is simply not the case. The recovery time will most likely be longer than expected. This means business owners will lose more income than they can afford. The solution is to insure your loss of income with Business Income Coverage. This coverage replaces your net income so that you can keep yourself paid and your employees paid while your building or contents are being repaired or replaced. It also pays for the continuing expenses that your business would have due to contracts or utility services. This coverage is as important as insuring your building and contents. Ask your insurance professional to discuss this option and how to add it to your insurance portfolio. Unt...

Have you ever thought of yourself as a corporation?  Most people do not. It is a concept that needs to be explored. How many of your decisions in life would be different if you ran your life like the CEO of a company.  We will explore this more in future blogs but for now let's imagine this scenario as it relates to finances. As a company CEO would you run your company with staggering debt?  If you did the growth and profitability of the company would be compromised.  However many people run their lives with staggering debt, and have trouble making ends meet or achieving their goals.  See the similarity. For the individual their financial planning is unorganized and void of professional counsel or advice on most occasions. As a company CEO you would be bringing those individuals in regularly.  Every year the company would post a budget and work to operate under it to assure profitability. As individuals this is rarely done. We will discuss this concept fur...

As the young generation of business owners emerge, their use of Robo-Advisors is booming.  The Millenials are very comfortable using algorithmic robots to get advice on just about everything.  Financial advice is now common place. You don't have to look to far to find computer based financial services that business owners can use. But what about insurance and risk management?  Well, the Millenials are demanding that the insurance industry get in the game. They are looking for "Robo-Advisors, to help them learn about insurance and "advise" how to buy the right policies and save money. Basically , they are describing the role of the insurance agent. However the Millenials would rather use Robo-advisors, to learn and then go find an agent to purchase when they are ready. This process is all based on the younger generation's adversion to being sold.  So attention all agents out there, be part of their learning process and be ready when the young business owners come ...

It is early in the year and already Mother Nature has given us some pretty wild weather. Flooding in the mid-west and east has again put a strain on the National Flood program.  This program backed totally by the federal government is in need of some help. Currently the program is 20 billion in debt and the storms keep happening. In order to fix it and make it sound financially, the rates have to increase and private insurers have to get in the game. In every Federal program politics rule, and having the political will to do the right thing is not in the foreseeable future. The federal government has to realize that private businesses need to get involved to bail out the program.  Homeowners need to realize that rates will have to increase to keep coverage viable. If these two things don't occur, the program will collapse under a mountain of debt. Keep your eye on this one folks. Until next time be careful out there and know your risks. G. Kevin Nemith, President of CNC Insu...