2011-New Healthcare Reform Provisions Go Into Effect

Repealing the healthcare reform law is at the top of congressional Republicans’ to-do list this year. But as long a President Obama is in office, he will do anything he can to keep his administration’s marquee achievement on the books. So, as the new law lives on, provisions keep rolling out.

With the start of the new year, the Department of Health and Human Services implemented about a dozen reforms from the Affordable Care Act. Experts say that the 2011 provisions, like some already put in place, could prove popular with consumers-seniors especially-making the path to repeal a bit steeper politically for the GOP.

Medicare beneficiaries stand to gain most from the early 2011 changes. According to Professor Kenneth Thorpe, who heads the Department of Health Policy and Management at Emory University, two provisions will be especially tough for Republicans to eliminate. First, while seniors have been required to pay part of the cost of Medicare services like cancer screenings and annual physicals, the law makes such preventive services free for most beneficiaries. In addition, the law made these services free for those enrolling in new private plans starting last September. Another provision starts closing the coverage gap, also known as the “donut hole”, for seniors on the Medicare Part D drug plan. Now, beneficiaries with drug costs that surpass $2,840 within a year must pay full price for all drugs until their annual drug costs reach $4,550. The new rule offers a 50% discount on brand name medicines for those who fall in that gap. “If you do repeal the law, you’ll have to start charging people for preventive benefits. You’ll have to increase what seniors pay for prescription drugs,” says Thorpe. “Neither one of those [actions] would be very popular.”

Understanding Success

I just finished reading Malcolm Gladwell’s third book “Outliers”. It focuses on the origins of success. Gladwell brings home lessons that should be remembered. Think about how these factors might apply to you or your company:

1) There’s no substitute for hard work.
You and the people at your company must be willing to put in the time and effort to grow the business. No athlete, business person, musician, or anyone else succeeds without hard work. One of my favorite sayings in the book is an ancient Chinese proverb- “No man who rises before dawn 365 days a year fails to make his family rich.”

2) The 10,000 hour rule
If you want to be great at something, or at least be known as an expert, you need to study this subject for at least 10,000 hours. This holds true for anything. Be careful letting more experienced employees go just because “they cost me more”. Losing their tremendous wisdom and experience could leave a big void in your business.

3) The importance of cultural norms
For example, many Asians are accomplished in math not because of their IQ- but due to their work ethic: how their numbering system works, the precision required growing rice, and of course, willingness to attend schools an extra 50 days a year. What is the work norm at your company? Is everyone punching the clock or actually getting things done?

4) The need for opportunity and encouragement.
The bottom line: no one succeeds alone. We all need encouragement and nurturing. This becomes a real challenge when companies are shutting down on communication and training. Are you people being nurtured properly?

5) The importance of expressing yourself.

This discussion first came up in a risk management context in which Korean airline pilots were causing crashes because subordinates were intimidated about contradicting their superiors- even in the face of a disaster. Many times, CEO’s or presidents of companies are the last ones to know the truth until they’re in the middle of a problem. Here’s the point: we must “invite” subordinates to bring us their ideas, to break past the “Culture of Silence”.

6) Meaningful Work
One of my favorite quotes from the Gladwell book is “Hard work is a prison sentence only if it doesn’t have meaning”. Most of us work hard, but do you really love the work you do? Gladwell says there are three factors that are essential to our work if we are to be successful:
---Autonomy gives us a sense of responsibility for the work that we do.
---Complexity allows us to grow and learn.
---Meaning lets us realize the impact of our work.

The lack of your employees having autonomy, complexity, and meaning will continue to deprive your business of excellent workers who find it more meaningful to work for themselves.

What do you do at your business to allow your employees to have autonomy, complexity, and meaning in their day-to-day activities?



Have a great week!

Bobby Bland PWCA, CIC
Vice President
Commercial Risk Service

Let’s Have a GREAT New Year, OK?

It has been six months since we switched over to Commercial Risk Service last July, and six months since we started our blog. We still have a lot to learn about how to best use our BlogSpot, but I am proud of the information we have given you in those six months. We haven’t had as many people sign up for our blog as I would have hoped at this point, but I know we are doing the right thing here. This is a relatively new mode of communicating with the business leaders, but without a doubt what we are offering here is good information and the right way to go. We are proud of the followers we currently have and look forward to adding more and more business leaders to our blog as we go.

For most of you, 2010 was a little bit better than 2009, but not where you probably hoped you would be at this point. It appears to me that 2011 will again be an improvement over this past year, but still not as much of an increase as hoped. However, I believe there is a beacon of hope in this dimly lit period we have been through in the last 2-3 years. Through all of the lost sales and layoffs and downsizing, those businesses that prevailed have learned how to operate with less and still be viable. As the economy comes back in the next 2-3 years, let’s not forget what kept us going in the economic downturn- lean and mean companies that are still productive.

Commercial Risk Service is passionate about finding ways to help our clients reduce risk in their organizations. Every day, we are thankful for the opportunity to help companies work smarter and keep their employees safer. And every day, we look for more places we can make a difference in your business.

Have a Happy and Prosperous 2011.

Bobby Bland PWCA, CIC

Vice President

Commercial Risk Service

Changes in Restaurant Operations- Make Sure the Risk is Covered

The Restaurant industry is beginning to recover from the recession faster than some other industries. The National Restaurant Association predicts flat sales through the end of 2010, which is a good sign compared to the last 2 years! Here are a couple of new things that are happening in the restaurant business that need attention for their risk as well:


1) An emerging exposure and coverage need for restaurants is cyber risk insurance. Like other businesses, restaurant owners rely more and more on the Internet for various aspects of their operation. Using the Internet as a tool to push more business also means new exposures such as data/security breach, copyright or trademark infringement, data destruction and/or corruption as a result of a virus, as well as firewall and network security attacks.

Internet use exposes restaurants to risks that may not be covered under many commercial insurance policies. Make sure you are covered properly.

2) Similarly, restaurants use more sophisticated equipment to operate their businesses than in the past. Whether it is computer-based cash registers integrated with point-of-sale management systems, multiple refrigeration systems, commercial-grade sound systems, or inventory scanners, restaurants are using technology to be more efficient and help manage their business. You just need to make sure that you have equipment breakdown coverage for this technology. It is easy to overlook this coverage.

All restaurants are becoming more sophisticated in their approach to running their business. This is absolutely necessary. Just make sure you are also keeping up with the exposures that are inherent in those changes.

Let me know how your restaurant business or any other business is changing. I would be interested to know what changes you are making, and how it has impacted your business.

Bobby Bland PWCA, CIC

Vice President

Commercial Risk Service

What Is Subrogation and How Does It Affect You?

You purchase insurance to transfer risk from your operations to an insurance company. When you have damage to property or injuries to people, you file a claim so that the insurance company pays the claim. What if somebody else caused or is responsible for the damage or injury? How would you feel if an uninsured person drove their boat into one of your docks or rental boats creating severe damage or injuries? I am sure you would want that person held responsible for the damages or injuries. This is where subrogation comes into play.

Subrogation means that your insurance company sues for reimbursement of claim payments when another party or company is responsible for the damages or injury. The lawsuit could be against an individual or company.

Anytime you have a claim, and your insurance company pays for property damages or injuries to your employees or a third party, it is in your interest to examine whether a third party or company is responsible for the damages or injuries. This is because any claims you have are kept on a historical record by the insurance company and if you have a number of claims and/or very expensive claims, you will be impacted in a couple of ways including higher annual insurance premiums and fewer insurance companies willing to insure your business. If there are circumstances that you are aware of that would lead to subrogation opportunity, please bring them to my attention so that we can bring them to your insurance company’s attention. If your insurance company can subrogate and recoup the cost of the claim payment they paid on your behalf, the claim you had will not impact your future insurability. This will help to keep your insurance premium as low as possible and allow you to purchase insurance from the very best companies.

Examples of subrogation opportunities include but are not limited to:

1. Equipment or tool failure causing property damage or injury
2. Any damage to your property caused by a third party
3. Any employee injuries caused by a third party or equipment/tool failure
4. Any auto accident where someone else was at fault or due to mechanical failure
5. Any boat accident causing damage to your boat or injuries to your employee(s)

If any of these things occur, I would want contact info of any person involved, and if a piece of equipment or tool fails, I would need the company name of the manufacturer, the model and serial number of the piece of equipment or tool.

If a claim payment is small, usually under $5,000 or so, an insurance company generally won’t subrogate because it costs them more than it’s worth to go to court. Each company has their own guidelines. However, as claim expenses grow, your insurance company will definitely consider subrogating and that is definitely in your interest so keep your eyes open for any opportunities such as those listed above.

Ask yourself if any other agent has brought this to your attention in the past? Ask yourself if you have had any claims in the past where subrogation would have been possible? I am always interested in hearing about claim stories and how the claim was handled by the insurance company so if you have any good stories, please comment on this blog.

Doug Timmons, CIC, CMIP

Marine and Resort Insurance Specialist

Commercial Risk Service

What makes a business stable and profitable?

In my years in this business, I have seen all ends of the spectrum regarding how people run their business. There’s the hands-on type that is actively involved and calling all the shots. There’s the owner who is basically incognito- he is rarely there or never there, but he has quality people throughout the organization. I’ve seen sloppy work areas as well as back-room floors so clean you could eat on.

Well run companies that are growing and/or prospering don’t all look the same. In addition, poorly run businesses that are either losing market share quickly and/or profits as well aren’t cut out of the same cloth. One of the great strengths about our country is that if you own a business, you can choose to run it any way you want, as long as it is within the boundaries of being legal. Good managers come in all shapes and sizes.

There are, however, a few common threads that I have witnessed among those businesses that I have come across that are stable and profitable over the long haul. In every instance, the management team, including the owner or leader, exhibits the following traits:

1) The key management people in the organization, including the owner, show that they genuinely care about the employees throughout the business. They understand that their people are the reason they have been successful.

2) As a part of that concern for their employees, the management team creates a discipline within the organization of making sure their employees know how important safety is for everyone. When an employee is injured, they do everything they can to take care of that employee. Because of this great working environment, the employees in turn pay attention to safety, and when they are injured, they do everything they can to get back to work as soon as possible. They help to police the safety throughout the organization.

3) Because the employees feel that their employer cares about them individually, there is very little turnover, which creates a much better and more profitable working environment.

In short, I have found that caring about your employees and making sure they are safe and taken care of is directly linked to your long-term profitability. The effort and resources you spend making sure your employees know that you appreciate and care for them will come back to you in the long run.

You don’t necessarily need a huge safety manual or a “safety committee” to have a safely run business. The most important thing you can do for safety is to show you care about it. Many of you business owners that are reading this blog are the very people I am talking about. Your safety program and your business is a success because you have shown you care about your employees!

Self-Funded Products Re-Emerge in the Benefits Market

There has been a recent push in the benefits market for self-funded (partial self-funded) products. The products are targeted at the 50-200 employee group sizes. These types of products are not new. They have been around for a number of years, being very popular about 20 years ago. The recent re-emergence is caused, in part, by the new healthcare reform act. If you are considering this type of product, please proceed with caution.

Why should you proceed with caution? Most of you are familiar with the fully-insured plans. You pay your monthly premium, and your carrier pays the incurred claims. Self-funded plans are different and they can be both tricky and confusing. The first important component to a successful plan is to find the right Third Party Administrator (TPA). Your TPA actually processes your claims and pays them as well. They negotiate pricing for re-insurance and can also find the best network of providers to fit your company. Where you need to be very careful is regarding the various funding methods that support your plan throughout the year. Does your re-insurance carrier pay for large claims immediately, or do you have to pay them and wait from re-imbursement? As you can imagine, if not done correctly, that could be a huge drain on your cash reserves. What happens if you decide you want get out of the plan and go back to fully-insured? If that happens, you have to consider what is called “run-out exposure”. In other words, you are responsible for any claims that were incurred before you terminated your self-insured plan. These “run-out claims” could continue for 90-180 days. If you contract is not done correctly, you are left with this cost exposure.

Now that I’ve seemingly talked you out of the self-insured product, let me say that there are good, safe products out there. The key is finding a trusted insurance advisor that has adequate knowledge of this market. One that can find you a plan that has all of safe funding mechanisms built in. If that is done, the self-insured market is not something to run from.