The Bull Stops Here Blog

Be careful…you could be tomorrow’s safety news!

My favorite show on television is NCIS.  I look forward to every Tuesday night sitting down with the family and watching a new episode.  Last night, it was another rerun. I hate repeats!  I understand why - they have to time their programs to end during “sweeps” and since shows don’t have as many episodes, you need to sprinkle in reruns.   I still don’t like them.

Are you performing “reruns” with your safety meetings?  Are you running through the same old programs, videos, and training?  If so, your employees will get bored.  Just like watching reruns on television, they only have so long of a shelf life.  In order to maximize your efforts in risk management and get the most bang for your buck, you need to be innovative, creative, and fresh.

Otherwise, your employees will just tune you out!

© 2010 Dan Weedin. All Rights Reserved

What small businesses can  do right now to start 2010 with the upper hand?

Small businesses  notoriously overpay for their insurance due to lack of risk management  strategy.  If you were to commit to a strong approach to your  insurance, safety practices, risk management and forecasting, you would  be able to save money in 2010 on your premiums, as well as improve efficiency  and profitability.

Here are a few tips that you can implement today that will minimize risk and maximize profit:

1 – Get a  complete diagnostic of your safety program.  Injured employees cost  small businesses money in increased workers compensation premiums, loss of  time, and hiring or moving people to replace the injured worker.  Offices  have a huge issue with ergonomics, as this accounts for 50% of workers comp  claims in the country.  Being able to identify exposures and put safety  practices into place to alleviate them will have a direct impact on their  bottom line.

2 – Bid out insurance.  The insurance market is still  “soft,” meaning that premiums are down and competition for business among insurers is up.  Not looking at all possibilities is simply not prudent  and can be expensive.  Regardless of when their renewal is, they should  make a commitment to aggressively bid out their insurance.

3 – Get a  complete diagnostic on your property and casualty insurance.  I rarely  find a policy that can’t be adjusted to save money.  Normally, business owners leave the programming of their policies to the agent or broker without  getting involved.  This is an area that with proper attention could  immediately improve the program by cutting costs and/or preventing uncovered  claims.

4 – Consider Health Savings Accounts (HSA) for medical  insurance.  The programs will vary among states and insurers, but this is  a real option to save money for the employer and actually provide a flexible  policy for the employee.  I had a client that saved $6,000 a month making  the switch last year.

Start off this new year and decade the right way for your business. Minimize your risk and maximize your profit by implementing these strategies today!

© 2010 Dan Weedin - All Rights Reserved

A recent accident at Cowboys Stadium in Dallas left workers injured.  They fell from an icy part of the roof.  Luckily, nobody dies.  Reports are that proper fall protection wasn’t used.  Ouch!  Make sure you train and monitor your employees constantly!

Read the story.

Be safe,

I recently had a lengthy conversation with a client regarding certificates of insurance and being named as an additional insured.  Here are a few bullet points that came out of our conversation where you might benefit…

• A certificate of insurance isn’t worth very much to the holder.  It simply states that the insured had coverage at the limit shown on the day the certificate is dated.  That’s it, that’s all.  For all the holder knows, the insured canceled their policy the next day.  Certificates are nice to have (I guess) for the recipient, but they really are limited in scope and time sensitive.  You can’t bank on them.
• If you are an additional insured, the insured’s insurance company is obligated to defend and pay for you in the event of a claim where you are named.  You will be notified if the policy cancels or is set up to non-renew.  That’s the good news.  Make sure any certificate shows you listed as an additional insured.
• Certificate holders can receive a certificate at no cost to the insured.  After all, there is no risk.  Some insurance companies charge insured’s a fee for adding additional insureds because they are adding risk.
• Additional insureds never increase the limit, so the more additional insureds, the more quickly the limit can be exhausted.  In most cases, defense costs are in addition to the limit.  If you have a surplus lines company involved, make sure that is the case.

I’m a big believer that if you have a risk exposure (i.e. landlord-tenant, contractor) then you should be named as an additional insured and receive proof that this occurred.  Otherwise, being a certificate holder means nothing because it gives you no rights and little information.

Be safe,

I read an article in the local paper today stating that Washington State Insurance Commissioner Mike Kreidler has mailed out notices to about 200 commercial insurers telling them not to use the “governmental action” exclusion to deny flood claims - Read the Article.

Here’s the problem - many Kent Valley (south of Seattle) homes and businesses are being told they will flood this year due to the restrictions being put on the Howard Hanson dam.  It can only be filled up to 1/3 capacity until it can be tested later this spring.  Because of that, there is almost a certainty that some flooding will occur.  The federal government has a program through FEMA, but for many businesses, the coverage is too low, so they’ve gone to private insurers to pick up the slack.  FEMA has no exclusion for governmental actions; private insurers always have.  Mr. Kreidler has made his political statement by wagging his finger at insurers telling them not to go down this path.

What he has now also done is basically closed off the tap to those businesses who haven’t purchased flood insurance through the private companies.  If they weren’t scared off before, they are now.  My guess is that this action was taken for political reasons.  It makes Mr. Kreidler look good to voters.  The reality is that private insurers don’t go into a situation where there is a certainty that they are going to pay for a loss.  It’s part of a concept called “adverse selection.”  Put yourself in their shoes.  If you were an insurer and all the media is guaranteeing flooding in an area, and the state insurance commissioner is telling you that your exclusions won’t carry any weight, why would you insure anyone in that area?  The answer is, you wouldn’t.

I met last week with a business owner that sits right next to the Green River.  You can barely see the river now, but in the next 60 days, he expects a real chance that his building will flood.  He’s purchased flood insurance within the last 3 weeks.  His timing may be good to have the coverage, but will it stand up when claims roll in?  Mr. Kreidler has thrown down the gauntlet.  Will it end up in court?

The real victims in this mess are the homeowners and businesses.  Many will undoubtedly flood, causing damage to property and potentially long-term damage due to loss of clients who go elsewhere for their business.  That will never be recouped from insurance.  In the meantime, I envision a scenario where insurers and government get into a finger-pointing duel over who is responsible.

If you are in this situation, here are my suggestions:

1. If you’re a homeowner, buy the flood coverage through FEMA.  It should cover the vast majority of your claim.
2. If you’re a business, purchase flood insurance NOW, if it’s still available.
3. Be open about the situation.  Get written (e-mail works) confirmation from the insurer that if it does flood due to the dam situation that there will be coverage.  You don’t want to pay thousands of dollars in premium just to have coverage denied.
4. Plan for the worst.  Find alternate locations for property or workers; reassure customers; set up triage areas, buy sandbags; create e-mail and phone trees; buy supplies; head for the hills and high ground; whatever it takes to set yourself up to continue operations.
5. Video record your operations and/or take photos.  You may need documentation about your property in the case of a loss.

You’ve been given fair warning.  Don’t get caught unprepared.  The business owner I met with has already started preparations.  He is smart.  Whether it’s your home or business you need to do the same thing.

Final thoughts - I understand the media attention and the insurance commissioner taking a strong stand.  The problem now is that with all the hype, it will become virtually impossible to find private insurance if you don’t already have it.  If you are affected, take action now.

OK, I lied…one more final thought.  Flooding will also occur outside the Kent Valley.  Regardless of where you live or have a business, you MUST consider this an exposure.  Even if you’ve never flooded, be prepared and honestly look at your risk.  Take a lesson from Hurricane Katrina where claims for flooding were denied because of the levy failures.  This winter, re-evaluate your exposure to flooding and talk with your agent or consultant.

Be safe,

Dan

Excellent personal risk management post by my friend Scott Simmonds.  Do you have a black book?

Read the Post

Ask the mayors of these Kentucky towns hit hard by ice storms. They are happy they had a program like Agility in place. What about you?

The Puget Sound Business Journal recently reported that the Seattle Rotary Club had $350,000 embezzled from them by an employee.  It was a hired bookkeeper, which is not uncommon in larger service clubs.  I’ve been asked if Directors & Officers Insurance is needed to protect the organization.  You need to know the distinction between Directors & Officers and Employment Practices Liability for your own business insurance.

Directors & Officers coverage provides financial protection for directors and officers of an organization if they are sued with respects to the performance of their duties.  It’s like an Errors & Omissions policy for management of the board. It’s about performance failure and negligence.  This would not protect the Seattle Rotary Club in this situation because this was an intentional act by an employee.

What they need to have (and you too) is Employee Dishonesty coverage.  This protects you if your employee steals money or products from you.  I had a client whose bookkeeper absconded with over $25,000 over a two year period.  She even had the audacity to charge her entire honeymoon to my client’s bank account!

Any organization - profit or not for profit - that has employees needs to have Employee Dishonesty.  Period.  Nobody thinks they are going to be robbed by an employee.  The reality is it happens all too often.  My client was in shock because they thought their employee was golden.  Of course he did.  That’s why they were in that position.  Bad stuff happens.  That’s why you need this insurance.

Be safe.

I saw this article in the Puget Sound Business Journal today.  I have written many times about employee dishonesty.  Too many times I’ve heard clients and others say, “I would have never suspected they would do that.”  No kidding!  If you had, they would have never been put in charge of the money.

Whether it’s your own business or your favorite non-profit, make sure that specific practices are put into place so you don’t wind up on the front page of the paper AND out of your money!

Read the story

Be safe.