Risk Management Bulletin

Vehicle accidents on or off the job can create serious problems for you, your organization, your employees, and their families.

Consider these facts:

• Motor vehicle accidents are the nation’s most common cause of both accidental death and workplace fatalities (causing one in four fatal work injuries).
• There’s a motor vehicle-related injury every 10 seconds — and a fatality every 12 minutes. Many of these accidents occur during the workday or during commuting time.
• Motor vehicle crashes cost employers $60 billion a year. The average crash costs $16,500, and if an injury results, the tab can reach $74,000 or higher. When a worker dies in a traffic accident, costs can top $500,000.

More than 40% of traffic-related deaths involve alcohol, and another 20% result from the use of illegal drugs. Unfortunately, all too many workers grab a quick drink or smoke a joint on their lunch hour, including those who drive on the job — and even more employees stop off for a few cold ones on the way home.

You’re in an ideal position to help prevent many of these deaths, injuries, and costs by making sure that your employees understand the risks and take the proper precautions whenever they get behind the wheel — whether it’s in a company vehicle or their own car.

Use statistics, photos, or videos of traffic crashes, stories from your own experience, and other “shock” tactics to shake employees out of complacency about driving hazards. Reinforce the message that highway accidents can, and often do, have a tragic impact. Each day, these mishaps hurt not only drivers who cause accidents, but also passengers, people in other vehicles, and the families of all those injured or killed.

Most medium-sized and smaller companies protect themselves against their property and liability exposures by purchasing Commercial insurance, while large corporations and government agencies prefer to use some type of alternative risk financing for this purpose. However, businesses of any size can employ this tool to enjoy such benefits as improved cash flow and a lower total cost of risk.

Using alternative risk requires internal management discipline and a willingness to commit the appropriate resources. Size isn’t that important. The main criterion is losses. As a rule of thumb, alternative risk financing makes sense if a business has approximately $1 million of annual losses in a single line. The claims should have these characteristics:

• Reasonable predictability
• Moderate volatility
• Minimal exposure to a catastrophic event
• High frequency and low severity – meaning that a business should have at least several dozen losses a year, most of less than $50,000. For example, a large hotel or bank would probably experience a number of small Workers Compensation claims, but few large claims.

Casualty insurance products (such as Workers Comp, General Liability and Auto Liability) are the best candidates for alternative risk financing. Because Comp and Liability claims tend to be paid over one to five years or more, insurers of these lines generate substantial investment income on their premium reserves until losses are fully paid. By using alternative risk financing, you can invest your funds elsewhere, rather than paying premiums to the insurance company.

Insurers have developed a number of colorful terms for what amounts to a handful of alternative risk financing techniques. These methods include:

• Excess insurance
• Reinsurance
• Guaranteed cost
• Retrospective rating
• Large deductible
• Self-insurance
• Captive insurance

Our risk management professionals would be happy to work with you in developing an alternative program that’s tailored to your needs. Just give us a call.

How well do employees know the meaning of the colors used for safety signs and tags in your workplace? Although red is associated with danger in nearly everyone’s mind, the warnings indicated by other colors might not be so obvious to all workers. That’s why OSHA requires color coding — and why you need to train your employees in recognizing the meaning of these signs at a glance.

Here are the most common codes:

• Red = Danger. OSHA recommends using red, or predominantly red, for danger signs or tags, with lettering or symbols in a contrasting color (usually white against the red background). Red is also used for fire apparatus and equipment, safety containers for flammables, and safety devices such as switches for emergency stopping of machinery, stop bars, and buttons.
• Yellow = Caution. These signs and tags are all yellow, or predominantly yellow, with lettering or symbols in a contrasting color (usually black). Yellow is often used for physical dangers such as slipping, tripping, falling, striking against, and pinch points.
• Orange = Warning. These orange, or predominantly orange, signs and tags generally have black lettering or symbols. Orange is often used for potentially dangerous parts of machinery or equipment that might cut, crush, shock, or otherwise injure a person.
• Fluorescent Orange/Orange-Red = Biological Hazard. These signs and tags have lettering or symbols in a contrasting color (usually black). This color designates infectious agents and wastes that pose a risk of death, injury, or illness.
• Green = Safety Instructions. These signs usually have white lettering against the green background. Some part of the sign might also contain black lettering against a white background. Green is used to designate first-aid equipment, emergency eyewash stations, and so forth.
• Fluorescent Yellow-Orange. This color is used, with a dark red reflective border for triangular signs on slow-moving vehicles.

If you’re a tenant, you might feel that you’ve avoided many loss exposures, such as fire damage to the structure, normally associated with ownership of buildings. But have you read your lease lately? Really read it?

Many leases contain extensive insurance requirements that the tenant must agree to maintain. Although these usually include liability arising from the tenant’s actions and responsibility to cover their property for loss, sometimes overlooked is the extent to which the tenant might have agreed to cover exposures normally assumed to be the responsibility of the building owner.

For example, in retail shopping areas, there’s often an abundance of external glass windows. Although these are clearly the property of the building owner, many leases transfer any responsibility for damage to the windows to the tenant. The idea is that because the tenant most directly controls the potential loss exposures for the glass (such as vandalism, accidental breakage, maintenance inspections, and so forth), the tenant should provide the insurance. Similar reasoning might lead to the tenant being held responsible under the lease for other loss exposures not directly attributable to their own negligence.

If you’re a tenant, now’s the time to pull out that copy of your lease. Review it with your legal counsel to see if there might be language or agreements that need addressing. Then let us review the lease for the insurance implications (and be forewarned — they won’t all be contained in a paragraph titled “insurance”).

Our risk management professionals can help you take ownership of your loss exposures by sitting down with you to review what your lease requires, how well your current program meets these requirements, and the options for making any necessary changes to your protection.

To follow up on the article “Is Your Workplace Disaster Ready?” in the previous issue of Reducing Your Risk, we’d recommend using this self-assessment checklist for business owners developed by the Institute for Business & Home Safety (IBHS).

“10 Questions: Is Your Business Ready?”

Your answers will help determine how well you handle an emergency:

1. Are you concerned that a natural or human-caused disaster might disrupt your normal business operations?
   __Yes __No __Unsure
2. Have you determined what parts of your business need to be operational as soon as possible after a disaster and planned how to resume those operations?
   __Yes __No __Unsure
3. Do you and your employees have a disaster-response plan to help assure your safety and to take care of yourselves until help can arrive?
   __Yes __No __Unsure
4. Could you communicate with your employees if a disaster occurred during or after work hours?
   __Yes __No __Unsure
5. Can your building withstand the impact of a natural disaster, and are your contents and inventory adequately protected?
   __Yes __No __Unsure
6. Are your vital records protected from the harm that a disaster could cause?
   __Yes __No __Unsure
7. Could you stay open for business if your suppliers can’t deliver, your markets are inaccessible, or basic needs (water, sewer, electricity, transportation, etc.) are unavailable?
   __Yes __No __Unsure
8. Do you have plans to stay open even if you can’t stay in or reach your place of business?
   __Yes __No __Unsure
9. Have you worked with your community, public officials, and other businesses to promote disaster preparedness and plan for community recovery?
   __Yes __No __Unsure
10. Have you consulted with an insurance professional to determine if your insurance coverage is adequate to help you get back in business following a disaster?
    __Yes __No __Unsure.

Results: Your score indicates how well-prepared you are for a disruption.

• 7 – 10 Yes answers: You’re well on your way.
• 4 – 6 Yes answers: You have lots of work to do.
• 1 – 3 Yes answers: You should get started immediately.

Our risk management professionals would be happy to work with you in developing a disaster management plan tailored to your needs. Just give us a call.

Stress costs American businesses more than $300 billion a year in terms of poor performance, absenteeism, and health care costs.

Common sources of stress include:

• Personal problems. Concern about finances, the illness of a family member or friend, struggles with children, or relationship problems.
• Lifestyle changes. Getting married, having a baby, starting a new job, the death of a loved one, or even moving to a new home or neighborhood.
• Job problems. New assignments, a new boss, performance appraisals, relationships with co-workers — even a promotion!
• Everyday hassles. Commuting, screaming children, crowded stores, cooking, cleaning, and chauffeuring the kids to their activities, and so forth.

Here are four proven methods that can help you, and your employees, reduce, eliminate, or manage stress:

1. Lifestyle Management: Exercising or even basic stretching or yoga will give you endurance and energy to get through stressful events. Proper diet and adequate sleep are essential to successful stress management.
2. Stress Avoidance: Do something about the minor annoyances of life. For example, taking an alternate route to work or leaving a few minutes earlier could mean you miss the traffic. Understand your limits: Accept that some things are — and might always be — out of your control.
3. Stress Therapy: Keep a sense of humor about stressful situations. Try to make some time each day for relaxation. That could just mean some quiet time doing something you enjoy. Talking over the things that stress you with someone you trust and respect can also be a big relief.
4. Organization: Set priorities. Develop a basic routine for your life – a daily framework for what you’ll be doing. Use a calendar or personal organizer to write everything you have to do each day. Finally, stay flexible; the best laid plans will often need to be changed due to any number of reasons.

Follow these steps and remove your distress!

Thanks to millions of jobs lost and thousands of facilities shut down during the recession, empty or partially vacant buildings are becoming increasingly common in both cities and suburbs. Office vacancy rates in most cities topped 10% in 2008 — and are projected to hit 16.7% this year.

Compared with the multitude of risks that come along with managing a fully functioning commercial building, one might conclude that a vacant property would present substantially fewer hazards. However, vacant properties face unique hazards that, unless properly managed, could lead to costly losses at a time when money is already tight for building owners. Even though these buildings are unoccupied, by no means, should they be left unattended!

If you own vacant commercial property, make sure to evaluate your exposure to such losses as:

• Undetected Damages: When everyday functions are removed from an office building or retail property, small hazards like an exposed electrical wire or a slow water leak are less likely to be corrected and can quickly snowball into much larger problems. An average of 14,900 fires a year (40 a day!) occur in vacant buildings, causing more than $118 million in direct property damage.
• Crime and Liability Risks: When tenants move out of a building, property owners might be tempted to reduce security or surveillance activities to cut costs. However, the owner can be held liable for such activities as arson or theft from criminals attracted to the vacant premises.
• Environmental Red Flags. A facility used to store chemicals or other pollutants must have these materials removed or adequately stored to prevent leaks or seepage. Building owners can be held liable for cleanup if hazardous materials contaminate nearby groundwater or natural resources (including wildlife). Manufacturers, dry cleaners and medical facilities are especially vulnerable to these types of risk.

To help you prevent or reduce claims from vacant properties, our risk management specialists are available to recommend a variety of loss control measures.

When an emergency strikes your workplace, there’s no time for hesitation. You need to have a comprehensive and well-rehearsed plan ready at a moment’s notice — to keep your employees safe, no matter what.

That “what” could be a lot of things:

• Fires. This most common workplace emergency, costs American businesses more than $12 billion a year.
• Explosions. From fires, chemical reactions, combustible dust, etc.
  Toxic chemical releases. Often require emergency response in the workplace and in the surrounding community.
• Natural disasters. Earthquakes, floods, or windstorms can strike with little or no warning.
• Workplace violence. Dangerous, life threatening, and often unpredictable – even terrorism.

To help keep this “multiheaded monster” at bay, we’d advise you to:

• Determine a comfortable degree of preparedness. At a minimum, your emergency plan should involve evacuating workers, controlling any hazards to them, the environment, or the public – and leaving the rest to outside responders. On the other end of the spectrum, you might prefer to have all the equipment and supplies to provide comprehensive disaster response on your own.
• Develop a disaster preparedness checklist. This list, which should include all aspects of emergency response, will help ensure that you anticipate all essential details.
• Evaluate the “what ifs.” Walk around with your checklist and try to imagine how different emergencies could actually impact your workers and your operations.
• Build your plan step-by-step. Don’t wait until you have all the “i’s” dotted and all the “t’s” crossed. Create a comprehensive strategy, piece by piece, until you’re satisfied.
• Document policies and procedures. Write up all emergency policies and procedures and make them available to supervisors and employees.
• Keep your plan up to date. Review it at least once a year, and revise as necessary when circumstances, hazards, etc., change.

Our risk management professionals would be happy to work with you on designing and implementing an effective disaster management plan – or put you in touch with qualified professionals who can help Just give us a call. And like a good Scout, you’ll “be prepared!”

Phone fraud costs American businesses billions of dollars every year. How much is it costing you?

Although computer hackers might break into telephone systems for thrills, thousands of criminals make a living at it by selling their services to “retailers,” who offer stolen phone-access numbers to drug traffickers or illegal immigrants.

To protect your business against phone fraud, experts recommend taking these basic proactive measures:

• Adopt a prevention program. Use the security measures that your system provides and change passwords and/or access codes frequently.
• Block calls to countries where you don’t do business. Most phone thieves are interested in making international calls.
• Eliminate direct inward system access or remote access systems, which allow employees working remotely to access an outbound line with an 800 number. Issue phone credit cards instead.
• Review call-accounting reports to identify fraudulent usage. Check for repeated failed password attempts, long calls, calls after certain hours, and other patterns.
• Secure your voice mailbox and auto-answer attendant system to prevent an inbound caller from getting an outside line via these automated devices. Change passwords to access mailboxes monthly.
• Discuss security measures with your long-distance phone carrier. The phone company might have informational materials for your staff.
• Educate all employees about phone fraud. Instruct your switchboard operator not to transfer incoming calls to an outside operator. Make sure that employees working on the road don’t have anyone listening or watching when they read or key in their calling-card number. Tell employees not to give their PIN to any caller (phone companies never call customers to verify a PIN).
• If you have a PBX system, do a monthly security audit and check authorization codes. Consider buying a PBX protection package that can help you monitor potentially fraudulent activity, such as repeated searches for a dial tone, and can limit your liability for unauthorized calls. You might be eligible for a discount on toll-fraud insurance if you have a PBX security package.
• Buy Toll Fraud insurance. If you have a PBX security package, you might be eligible for a discount.

Our specialists can help you create a comprehensive phone fraud protection program. Just give is a call.

With the coming of summer, more and more workplaces will be turning up their air conditioning — and that might well trigger an outbreak of “dry eye syndrome” (DES) among your employees. The symptoms of DES include redness, itching, extreme sensitivity to light, excessive tearing, and a scratchy or filmy sensation in the eye.

More and more cases have been cropping up in the working population, with the condition becoming so common that it’s easy to ignore. Some 9 million to 10 million Americans have been diagnosed with chronic DES, while millions of others suffer occasional symptoms. The American Academy of Ophthalmology reports a “staggering” increase in DES, with one ophthalmologist treating an average of 10 cases a day, mostly caused by prolonged exposure to air conditioning systems.

The cases are concentrated in specific work environments. Research by the National Women’s Health Research Center shows a strong percentage of cases among accountants, software engineers, executive assistants, and customer service reps — all professions tied to computer screens in air-conditioned offices. This conclusion dovetails with a survey which found that of some 300 workers suffering from DES, more than two in three reported that their work involved extensive computer use in air conditioned (or low humidity heated) workspaces.

However, the problem is also found outside the office, among such groups as long haul truckers and airline flight crews that spend their workdays in confined, highly air-conditioned spaces, with little influx of fresh outside air.

As summer heat forces many of us to spend more time indoors and motivates building engineers to turn up the air conditioning, your workers might be increasingly vulnerable to DES — leading to lost work time and falling productivity. It makes sense to educate employees about this exposure. Let them know that although the symptoms are unpleasant, painful, or frightening, the condition is usually easy to treat. You can also take such preventive measures as varying the temperature and giving workers breaks in areas with the air conditioning turned down.

For guidelines on dealing with DES in the workplace, please get in touch with us.