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robintek

Jul 01
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4 Tips to Avoid Public Liability Claims

By Risk Management Bulletin

Research shows public liability claims — and settlement amounts — are on the rise. Here are four things you should be doing to protect your business:

Making sure you have a safety plan in place for identifying and fixing problems

It’s easy to get caught up in the day-to-day management issues of running a business, and often, immediate issues can seem to take precedence over long-term planning. But overlooking safety measures can cost you big in the long run. Be sure to consider your business and its potential risks from all angles and develop a robust safety plan to limit exposures to liability claims.

Seeking advice from peers and professionals

Especially if you’re just starting out in your business field or offering a product to a new audience, it can be difficult to understand your risk exposures. Being proactive in networking with peers and insurance brokers provides you with a rich source of information and insight from others who have “been there, done that.”

Being proactive in reviewing risks

Chances are that over time, your business will go through certain changes. Review your safety measures and policies several times a year to make sure they cover everything that needs to be addressed and review them again whenever something new occurs.

Making sure you have enough insurance

Few people care to spend hours poring over their insurance policies, but unless you take the time to really understand your coverage levels as well as the limitations and exclusions of your policy, you could be leaving your business open to major losses. Another typical mistake: Thinking the coverage a similar business has in place is “good enough” for your needs. Make sure your agent understands your business as well as its potential — and unique — risk exposures.

Keeping your business safe from costly public liability claims should be a priority. Make time in your schedule to take the steps necessary to ensure you’ve identified your business’ potential risks and have the safety plans and insurance coverage in place to avoid major losses.

Jul 01
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Best Loss Control Methods: return on safety investment

By Workplace Safety

Create a safety culture within your organization. Let every employee know safety is the number one employee benefit. The top executive takes the lead and mentions some safety news in every company meeting. Simply talking and promoting safety is time, it does not cost a great deal of money.

Some specifics:

Drivers must use seat belts, must be sober and drug free, not use cell phones or text while driving, and not pick up unauthorized passengers. At least semi-annually, drug test every driver and check their driving records. Randomly test one quarter of the drivers every three months. Establish a threshold for tickets and accidents, and stick to that standard. These minimum safety standards cost about as much as a tank of gas in a pick-up.

Supply personal safety protective equipment for employees. Although this requirement comes from OSHA regulations, it’s a great investment too. One eye wash at the local doc in the box costs about as much as a hundred pairs of safety glasses.

Harnesses to tie off workers at heights cost little next to broken bones and death from a fall.

Hard hats are about fifteen to twenty dollars each. Closing a head wound runs about five thousand.

Reflective vests or coveralls, again, cost much less than a man versus loader collision.

Now, suppose you could save five percent of your workers’ compensation premium for the next three years from reduced experience mod or lower premium rates. You can afford to make the investment in safety equipment.

Consider an incentive program like this: quarterly bonus for no injuries and perfect prompt attendance. Perhaps pay everyone who meets those criteria an extra fifty cents per hour for the quarter. This extra pay amounts to about one hundred dollars per month. Wouldn’t it be worth everyone earning it? Or, maybe one quarter the earners get a pair of Red Wing boots, a gift card to their favorite tool store, a gift card oriented towards their spouses, a flat screen television or use your imagination.

Small investments in safety awareness and loss prevention do pay large dividends in reduced losses.

Jul 01
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What is retrospective rating? Self-insurance?

By Workplace Safety

Insurance companies offer loss sensitive pricing plans for risk tolerant clients. In the most fundamental case, the client pays a standard premium, and receives a dividend or return premium based on losses.

More sophisticated pricing plans are available for clients willing to assume more risk. Retrospective rating plans (retros) provide an incentive for companies with excellent internal loss control processes.

Retros begin with a basic premium. This portion of the overall premium reflects the fixed cost of the program. The insurer charges administrative costs, some premium tax, loss control services, sales commissions, and underwriting costs in this premium. Basic premium is about twenty-five percent of the standard premium.

Added to the basic premium are the reserved losses multiplied by a loss conversion factor – usually about 1.15 – which includes claims and legal expenses. Total retro premium is basic plus converted reserved losses, with two other factors.

Retros generally have a minimum and maximum premium. Higher minimums and maximums allow less long-term risk transfer to the insurance company. The companies will reward this decision with lower basic premium, lower loss conversion factor, or better cash flow options.

Lower minimums and maximums will cost the insured in higher basic premiums, loss conversion factors or cash flow.

So how does a consumer use this information?

Do not consider a retro program unless your premium is at least two hundred thousand dollars.

The best time to enter a retro is after a bad claims year when your modification rises and will remain up for three years. A retro allows you to recapture some of that higher premium. But you must have losses under control.

Many retro plans are based on reserved losses. A reserved loss is an estimate of costs to be paid over the life of the claim. This number is not discounted. The company sets the reserves based on claims history. This number can obviously adversely affect the final premium without the insurance company actually paying a claim out.

Retro audits resolve this issue by resetting claims reserves annually and recalculating premium accordingly. So, expect three annual audits to reset the premium. It’s a long-term partnership between the insurer and the insured.

Forecast your own losses for the next three years. Decide what retro factors work in your favor – can you risk a higher maximum premium? Negotiate with the insurer about paid loss accounting rather than reserved losses, especially on medical only claims.

Negotiate a deductible on medical only claims to avoid the loss conversion factor add-on.

The self-insured program is the ultimate retro. You act as your own insurance company. Know your premiums will be above one million dollars per year for the foreseeable future before considering this funding method.

You will still encounter some fixed fees, like actuarial work, taxes, filing fees, and administrative costs. It still costs legal and investigation time to handle claims. The biggest advantage is cash flow on claims. Since you control reserves, you control cash flow.

The biggest disadvantage is when you decide to stop self-insuring and purchase insurance commercially. Be certain you will self-insure for a very long time.

Jul 01
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Review Class Codes and Descriptions: technology changes operations

By Workplace Safety

Technology associated with construction has dramatically changed operations. Carefully check the class codes and their descriptions to assure proper premiums.

Years ago, 5606 – contractor supervisors – served to describe on site personnel who actively performed construction activities while managing the site. The rate was equivalent to site carpenters. That code has evolved into the computer carrying, service providing construction managers and executives who document the construction process. The rate is closer to outside sales representatives now.

Even excavation and site work is being dramatically changed by GPS technology. Now computers design a cut and fill pattern with efficiency. Labor is more involved in checking the geotechnical and environmental properties of the soils rather than the actual movement of them.

As production technology improves, new sub-codes develop to reflect the decrease in risk. Painting, carpentry, electrician and other trades now use a selection of eight or ten separate codes to describe exact activities. More components are built in shops and brought to the site. This process can change the class code of the installers and the builders.

The trend is towards more computer driven operations. Less labor, more specialists. As this trend continues, class codes will be added, deleted and the descriptions changed. There are currently over seven hundred class codes. Some are antiquated with new meanings – like a ship chandler is now a hardware store.

It pays to become familiar with the classifications. If your business has been active for many years, the “governing code” may be incorrect. The governing code is the catch-all for your business which best describes the overall operation, more obvious in manufacturing. Corrugated box manufacturing has been reorganized into several class codes. Technology has separated the manufacture of cardboard and corrugated cardboard into laminating processes, cutting and folding processes, and fully integrated operations.

Read your relevant class codes and think about which one reflects your operations. Or ask your agent to do it for you.

Jul 01
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Workers’ Compensation Audits: why it pays to manage overtime and independent contractors

By Workplace Safety

Workers’ compensation requires an end of the policy year audit to assure proper premium is charged. This process protects both the insured and insurers.

Think through this process to make it easier, and cost saving. First, choose a policy year that creates an easy audit. The calendar year works for many companies. You already must report payrolls to the US government, the paperwork is essentially done. Calendar quarters work for the same reason.

If you prefer to use your corporate tax year, go ahead. If you complete quarterly profit and loss, you can use a financial quarter. But choose an annual period which already has an audit trail.

Keep payroll records separate for each workers’ compensation classification. Normally, this record keeping is straightforward. The same people specialize in certain tasks: clerical, sales, labor, or drivers.

Some operations can be more complex. If labor crosses from one specialty to another, perhaps a carpenter helps pour a concrete slab, that payroll should be split on an hourly rate. The higher rate applies otherwise.

Demand any subcontractor, for example a hood cleaning crew for a restaurant, provide a Certificate of Insurance (COI). Technically, insurance companies can charge for the payroll portion of any contracted work in the absence of a COI.

If you use to a non-covered contractor, keep those records to properly assign a discount for premium.

Lastly, keep records to isolate overtime pay. Overtime payroll receives a discount for premium purposes.

Make audits easier. Choose a convenient policy period. Keep records for independent contractors with COIs, and payments to those without. Isolate overtime pay. Segregate individual payroll by classification if that individual works in multiple job descriptions.

Your premium will be more accurate with a minimal additional management effort. And, the default position is always to increase payroll, and therefore, premium.

Jun 03
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Fundamentals of ADA Accommodation

By Your Employee Matters

Given the ever expanded concept of what constitutes a disability, employers will continue to face an ever growing compliance challenge. Here are some basics to be remembered:

  1. Knowledge of the need to accommodate an employee can come from numerous sources including a work comp claims manager, a company supervisor or manager, HR, the employee themselves, a union rep, a doctor, poor performance, simple observation, or some kind of hotline call.
  2. To have a good process, it must be laid out step-by-step with supporting documentation.
  3. Be interactive. Remember the rule that the first to give up on the dialogue process generally loses.
  4. Have appropriate education and training. For example, HR could create a simple video to help employees with the accommodation process.
  5. Allow managers to engage in simple, easy and quick accommodations.
  6. Proper documentation of all steps in the process.
  7. Ongoing communication, monitoring, feedback, and improvement.

The accommodation process begins with a needs assessment. This means a thorough review of the job description and duties and a clear understanding of the employee’s limitations including potential absences etc. Remember you can accommodate an employee by the following means:

  • Changing facilities or equipment
  • Job restrictions
  • Modifying schedules
  • Modifying a test, training, or policies
  • Offering vacant positions within their skill range
  • Offering temporary positions (the ADA does not require you to create a new position for an employee)
  • Support including readers, interpreters, or even dogs
  • A leave of absence
  • Any other idea that would generate a reasonable accommodation

Proper documentation of any undue burden

One of the biggest mistakes an employer makes is to assume in advance that an accommodation would create an undue burden. If the request is reasonable, the best approach is to let them try it and to be clear about performance standards. Document any shortcomings their accommodations may be causing and continue to communicate about ways to elevate them.

There is extensive material on the ADA on HR That Works including flow charts, checklists, forms, and policies to use. There is also training you can provide your managers (a good idea). Also remember if you have over 50 employees the FMLA may allow an employee who has serious medical condition up to 12 weeks of leave which they may use instead of accepting an accommodation.

Jun 03
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So Who Will Get the Raise?

By Your Employee Matters

Last year the consumer price index increase was 1.6%. It is scheduled to be closer to 2% in 2014. Therefore if an employee wants to get ahead in life they need to get a raise of at least 2%

According to a survey by Towers Watson Data Services employers are planning to increase wages an average of 2.9% in 2014. These increases won’t be distributed evenly. Those employees considered to be top performers or in top demand will receive the lions share.

Employers can make a big mistake by looking at their historical compensation patterns. Perhaps the most important question to ask is “what would you have to pay to hire that employee today?” It is the marketplace, not your compensation scheme, which defines a fair day’s pay.

Before anyone gets a raise they should be asked to explain how they’ve added more value to the company. One reason we designed the form Why I Deserve a Raise. When you think about it, a raise should be given any time an employee has added new value and you’ve got the cash flow to afford it. Waiting around for an annual comp discussion is yesterday’s thinking.

Jun 03
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General Safety Obligations for Employers

By Your Employee Matters

OSHA laws apply to every workplace. Here are the primary employer responsibilities according to OSHA:

Employers must provide their employees with a workplace that does not have serious hazards and follow all OSHA safety and health standards. Employers must find and correct safety and health problems. OSHA further requires employers to eliminate or reduce hazards first by changing working conditions rather than just relying on masks, gloves, ear plugs or other types of personal protective equipment (PPE). Switching to safer chemicals, enclosing processes to trap harmful fumes, or using ventilation systems to clean the air are examples of effective ways to get rid of or minimize risks.

Employers must also:

  • Inform employees about hazards through training, labels, alarms, color-coded systems, chemical information sheets and other methods.
  • Keep accurate records of work-related injuries and illnesses.
  • Perform tests in the workplace, such as air sampling required by some OSHA standards.
  • Provide hearing exams or other medical tests required by OSHA standards.
  • Post OSHA citations, injury and illness data, and the OSHA poster in the workplace where workers will see them.
  • Notify OSHA within 8 hours of a workplace incident in which there is a death or when three or more workers go to a hospital.
  • Not discriminate or retaliate against a worker for using their rights.

Note that if you are in the states below there are state laws and regulations you must also comply with. To get more info go to OSHA, your state OSHA site or the BNA State Laws Summaries on HR That Works

Jun 03
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EDITOR’S COLUMN: Growing Concerns about Employee Retention

By Your Employee Matters

Over the years we surveyed the thousands of companies that use HR That Works. Hiring somebody they can trust has been the number one concern of most companies. The second and third concerns have everything to do with the economy. Prior to the 2009 recession, employee retention was the second greatest concern with employee productivity being the third. Once the recession hit and everybody is hanging on for their dear lives, retention slipped into third place with productivity being the second greatest concern in the squeeze economy.

In last year’s survey retention climbed back into second place, once again indicating its bellwether position. Not only are employers concerned about retention, it’s hiding behind the fact they are having difficulty finding quality employees despite continued high unemployment levels.

More than ever, employers must do a good job of employee retention. The greatest factors in retaining your experienced employees are the opportunity for advancement and the relationship they have with their immediate boss. What it takes to advance an employee’s career should not be a mystery at your company. I encourage our members to go to O*NET and consider looking at their career ladder tools and modifying them for your organization. Don’t force employees to either guess about what the career ladder is or have ask you to find out. Tell them. Let them know what the opportunities are and what skills and experience will be required for them to reach the next level. If you are at a smaller company don’t let the lack of advanced job titles hinder career growth. Perhaps making up a new job title is better than telling an employee there is no room for advancement. There should always be room for advancement for excellent employees.

When it comes to the relationship with the boss, the question is simple: Does the boss spend any time showing the employee they care about them? Most bosses are running for their lives and spend more time dealing with the dramas created by the 20% non-producers than nurturing their top talent. There can be no greater mistake. All of your managers should have a plan for how they will help increase the quality of relationship between them and their top performers. That plan should include discussing job performance, career advancement and compensation opportunities.

HR That Works Members should use the Now That I Got Them How Do I Keep Them Training Module with its related forms, audits, videos, and more. Look at this month’s Form of the Month, The Employee Retention Program Possibilities Spreadsheet which will provide plenty of ideas for a retention programs.

Jun 03
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Personal Pick-up Use in Business

By Business Protection Bulletin

The personal automobile policy does not anticipate primary business use of a pick-up truck. Does it allow infrequent use of pick-ups to haul business supplies or furnishings? Arguably yes for every form of personal automobile. Does it anticipate a pick-up truck wrapped in corporate logos and phone numbers? No.

As a business owner, you are better off using a commercial insurance form to cover your personal trucks if you use them in business regularly.

But what about your employees using theirs?

Typically, and this is a point of debate among insurance professionals, personal pick-up trucks have a business use exclusion built into the policy. The test is whether the truck is used primarily or incidentally for business use. So if the employee’s insurance doesn’t cover a claim, who gets sued next?

The company should buy non-owned automobile coverage for this purpose. Non-owned coverage protects the business from lawsuits brought by injured parties involved in accidents with employee, rental, or borrowed vehicles used in the course of business.

What happens if the business owner borrows and drives an employee’s pick-up for business purposes?

If neither personal policy covers business use of trucks, where is the coverage for the business owner himself?

Non-owned auto coverage is a commercial automobile policy extension for the business, not the business owner personally. The business owner should endorse the commercial policy with a “Drive other cars” endorsement. This endorsement extends the commercial policy to include personal coverage for designated drivers listed while driving other vehicles on behalf of the business.

Companies make a distinction between commuting to work or school or just pleasure. This distinction is not because they believe all you do is commute back and forth; it’s because that limited use is higher risk. Companies may list a pick-up truck for business use on a personal policy, but they anticipate limited use. The debate among risk managers is where this line is drawn.

Rather than accept that risk, place all business use trucks on a commercial policy. Add to that policy a non-owned and drive other cars endorsement to be personally protected and to properly protect your business.

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