Attitude is Key Factor in Disaster Preparedness

Corporations and individuals often underestimate their exposure to risk and are consequently unprepared for disaster when it strikes, say experts who study risks. Howard Kunreuther, professor of Decision Sciences at the Wharton School of Business, discussed the failure of many to adequately prepare for catastrophes. “There is a psychology of denial at play, where many believe that a disaster will not happen to them, and it is very difficult to change their perception”, says Dr. Kunreuther.

In my own experience as a risk reduction specialist, what Dr. Kunreuther says is very true. Business owners are geared to deal with whatever situation comes up that day, not necessarily a future problem. Businesses are in a “survival” mode, and that certainly is understandable in this economic environment. However, there is more to being an insurance agent than just selling insurance than just satisfying the creditors for a business. I see it as my responsibility to let you know some of the potential dangers that lie in front of the business owner.

The key question here is this: If a major disaster happens to your business, how are you going to handle it? Just having insurance may not be enough. How are you going to handle several key questions?

---How will you maintain you current customer base if you are shut down for a long period?

---If a disaster occurs, how fast can you get up-and-running again, and how will that happen?
    Who is responsible for what?

---Do I have adequate controls in place to keep us going in case of an emergency?

---What happens if I die tomorrow? Do I have quality people to keep the business going without me?

---Many more important issues

There’s more to a disaster than just the insurance. Reducing your risk and effectively dealing with disasters obviously includes the insurance coverage, but there must be plans in place to keep your business going without any more interruption than necessary as well.

Can you name some major disasters or occurrences that could occur in your business that you aren’t prepared for? I bet I can!

The template for a disaster recovery plan is fairly simple. The process of putting it together is much more complicated. Let us know if we can help you with that process.

Maintaining and Documenting Boat Rental Fleet Maintenance is Critical

I have often discussed the importance of using strong boat rental checkout procedures with my marina and resort clients. Strong checkout procedures are critical in any successful boat rental operation. Another equally important issue is proper boat maintenance and documenting the maintenance of each boat in a rental boat fleet.

A marina or resort’s boat rental customers will often be inexperienced in the operation of a watercraft. Strong checkout procedures will help the rental customer in the operation of the boat but a poorly maintained boat can lead to potential injuries related to equipment failure. A poorly maintained motor can lead to engine failure and even fire.

Potential lawsuits related to boat rental operations are usually based on an allegation that the rental company failed to insure that the rental customer was properly checked out on the safe operation of the boat, which led to injuries or property damage. Lawsuits can also allege that the rental company failed to perform proper maintenance of the boat, which then led to injuries or property damage.

To reduce the risk associated with boat rental operations, it is essential that boat rental companies use strong boat rental checkout procedures and it is just as important to perform proper boat maintenance based on the manufacturers maintenance schedule for each boat in the boat rental fleet. It is critical to document that maintenance by using written maintenance records for each boat in the fleet and keeping those on file for at least 3 years. Those records should be kept in a safe and secure location away from the primary rental operation.

If you have a boat rental operation, ask yourself if you are using good checkout procedures as well as performing proper boat maintenance and if you are maintaining those maintenance records. You never know when you might need to pull information from past boat rentals to protect yourself from a lawsuit.

For boat rental operators, have you been sued due to your boat rental operations?  If so, I would like to hear from you.  Please comment on this article.  Thanks!

Doug Timmons, CIC, CMIP

Marina and Resort Insurance Specialist

Commercial Risk Service

CRS to put on a great educational opportunity for Non-Profit Organizations

Commercial Risk Service will be offering a Workshop/Seminar on Thursday, January 27th geared toward educating the Non-Profits in Northwest Arkansas. All Non-Profit Organizations are welcome to attend. The Workshop/Seminar will be held at the DoubleTree Hotel in Bentonville and will begin at 8:00 that morning and last until 10:00. A free breakfast will be served starting at 7:30 for all workshop attendees.

Key areas of information include:

1) How to make your non-profit more competitive Information on how the non-profit world is changing, and how you need to respond to those changes. Key operational changes that need to be made within the organization.

2) Sarbanes-Oxley Best Practices Helpful information from a CPA firm about how to correctly and legally respond to this relatively new process, and how it affects your operation.

3) Blending resources for the community Information from a key player in the NW Arkansas Non-Profit community that shows Non-Profits how to work with people of limited resources and abilities and make it as easy for them as possible to help themself.

If you would like to sign up for this particular workshop, please click on the link below.

http://www.commercialriskservice.com/seminars.html

As we have stated many times, one of CRS’ commitments to our customers is to give them the most educational information we can in order to help them learn how to improve their operations and reduce their risks in the process. This Workshop/Seminar for our non-profit friends in NW Arkansas is just another example of that commitment. If any of you have suggestions for future workshops or seminars, please respond and let us know what would be important for you.

Amendment to Regulation on “Grandfathered” Health Plans under Healthcare Reform

On June 17th, the Departments of Health and Human Services, Labor and the Treasury (the Departments) issued the “grandfather” regulation which, by addressing how health plans can retain a “grandfathered” exemption from certain new requirements, helps protect Americans’ ability to keep their current plan if they like it. At the same time, Americans in grandfathered plans will receive many of the added benefits that the new law provides. The regulation also minimizes market disruption and helps put us on a path toward the competitive, patient-centered market of the future.

The grandfather regulation includes a number of rules for determining when changes to a health plan cause the plan to lose its grandfathered status. For example, plans could lose their grandfathered status if they choose to make certain significant changes that reduce benefits or increase costs to consumers. This amendment modifies one aspect of the original regulation.

Previously, one of the ways an employer group health plan could lose its grandfathered status was if the employers changed issuers (carriers)-switching from one insurance company to another. The original regulation only allowed self-funded plans to change third-party administrators without necessarily losing their grandfathered status. This amendment allows all group health plans to switch insurance companies and shop for the same coverage at a lower cost while maintaining their grandfathered status, so long as the structure of the coverage doesn’t violate one of the other rules for maintaining grandfathered plan status.

Wayne Perkins

Commercial Risk Service

479-273-1376

Wayne@CommercialRiskService.com

Safety- A Matter of “Awareness”

Let me ask you a couple of questions about safety in your workplace:

---Do you have a safety manual, but you don’t know exactly where it is because there is so much dust on the manual you can’t see it?

---Does your Safety Committee consist of you and 3 other people that haven’t worked for you in 3 years?

The truth is, Safety manuals and Safety Committees are good to have, but they are not really effective tools in keeping your employees from having on-the-job injuries.

Twenty years ago (yes, that’s right- 20), I worked for a grocery chain, and we were having a lot of injuries to our employees. Our Worker’s Comp costs were going through the roof, and we couldn’t figure out how to stop them. We had about 300-400 employees, so we decided to put in a partially self-funded plan. Now each store and its manager was responsible for the claims frequency and severity of its own employees. Their store was charged for the claim. As a matter of fact, part of the Manager’s bonus was based on injuries during the year. GUESS WHAT HAPPENED TO OUR FREQUENCY OF EMPLOYEE INJURIES- We had a 75% reduction in frequency and a 50% reduction in severity!!!

I tell you that not to suggest you go to a partially self-funded plan, but to help you understand what really matters in safety on the job. One thing changed- there was accountability for actions, and the managers made sure every employee knew how important it was for them to be safe! Voila- a Safety Program that works!

So, in conclusion, if you really want to reduce on-the-job injuries, there are two things I can recommend that I KNOW will help:

  1) CARE about keeping your employees safe
  2) Let the employees know safety is important to you- make them aware

Sounds pretty simple, doesn’t it? In reality, its hard work, but I can assure you it is easier than making your employees read the safety manual!!!

Does anyone have any experiences about safety they would like to share?

Commercial Insurance Rate Increases and What Causes Them

Many business owners ask me what causes their insurance rates to increase. There are often multiple causes for rate increases. A business’ loss history can affect insurance rates. If a business has multiple property or liability claims in a three or four year period, company underwriters will start taking a sharper look at that business to determine the risk of similar future claims. If the underwriters view the risk as higher than other similar businesses, they will factor that into their proposal. If claims are frequent or severe enough, some of the more conservative companies will simply decline to quote which will reduce the number of companies in the marketplace. When this happens, there is upward pressure on insurance rates.

Another factor in increasing insurance rates is the overall economy and the stock market. When the stock market is doing well, many insurance companies invest heavily, which is a major source of their profitability. During these times, insurance companies are looking to increase their market share and are willing to insure higher risk companies. Generally, the more competition among insurance companies in the marketplace, the lower the insurance rates for individual businesses.

Finally, regional factors can affect insurance rates for individual businesses. If a particular region of the country suffers an above average claim increase, insurance companies serving that region may decide rate increases are warranted. An example would be recent property rate increases in the marina industry in Arkansas, Missouri, Oklahoma, and Texas. This region suffered very high property losses in 2008 and 2009. In addition to the property losses, the stock market was also struggling during this time. Insurance companies started increasing rates in order to protect their profitability and the ability to serve the marine industry in the future.

How can a business improve their attractiveness to the insurance industry? A good risk reduction program is essential! Any steps that can be taken to reduce the likelihood of future property or liability claims should be taken. Be sure and share this information with your insurance agent. Your agent should be able to help you design a risk reduction program. A good program will help to lower your long-term insurance costs and help insurance company underwriters to provide the best premium rates available.

For more information on risk reduction opportunities, please contact Commercial Risk Service.

Doug Timmons, CIC, CMIP

Marine and Resort Insurance Specialist

Commercial Risk Service

dougt@commercialriskservice.com

Local 479-273-1376 x-25

Toll-free 888-636-0886 x-25

Employee Risk Management: Reduce Your Workers' Compensation Costs

As work environments become safer, the number of workers' compensation claims continues to decline. At the same time, the cost per claim has continued to rise along with the rising cost of health care in general, making the business costs substantial. Along with death and taxes, workers' compensation is something every small business owner with employees must deal with.

As of September 2008, figures from the U.S. Department of Labor's Bureau of Labor Statistics show that businesses spend an average of $28.87 per hour for each employee. This includes salary, as well as benefit expenses such as health insurance, vacation time, and workers' compensation benefits. Overall, 69.7 percent (or $20.13) of the hourly compensation given to employees goes toward salary, and 30.3 percent ($8.74) goes toward benefits, with 1.6 percent ($0.47) of that benefit percentage making its way to workers' compensation. Although 47 cents an hour doesn't sound like much, it adds up over time and can severely impact your business expenses, particularly if this per-hour amount increases.

Job classification is the main factor determining the cost of your premiums. Roofers and construction people, who work around heavy equipment, have the highest risks, whereas office workers have the lowest risk. The basic rates for each job classification are set by each individual state, but there are more guidelines for insurance carriers to follow than there are rules.

By working with your risk management insurance carrier, you can implement both pre- and post-claims programs that will reduce your workers' compensation costs overall. Besides implementing procedures that make your business a more desirable client in terms of insurance rates, you can save even more on your risk management costs by implementing the following practices:

When paying an employee time and a half for overtime, you may only have to report the regular wages, decreasing the amount of payroll that determines your insurance premiums.

Implement programs that bring workers back into the workforce at a faster rate, even if it means bringing them back part time or in a limited capacity. Rising workers' compensation costs are primarily due to increased use of benefits and longer duration of disability. The more time an employee spends on disability, the more wage replacement and medical services increase in cost.

Look for a pattern to claims. Do some locations or areas in your business have fewer claims than others? Determine the reason why. Reducing the number of workers' compensation claims gives your business a better safety record. This makes you a much better risk to an insurance company, making it more likely they will give you better rates in the long run. Overall, this is the best way to reduce your risk management expenses.