The Good, the Bad, the Ugly
Fewer Injuries, Higher Medical Costs, Higher Premiums

The National Council on Compensation Insurance (NCCI) recently released its findings on the results for the year 2000.

The good news:
There has been a persistent decline in workers compensation claims frequency spanning almost all industries since the early 1990s.

The bad news:
The decline in frequency was offset by increases in indemnity payments and medical costs.

Both have been on an upswing since 1994 and have increased about 6% annually.   NCCI says the combined ratio for 2000 will be 118%. For every dollar in premium the industry took in, it paid out $1.18 in losses and expenses. Worse still, this represents the fifth consecutive year of deteriorating combined ratios.

For employers, this means that premiums will almost certainly continue to rise. You can mitigate the rapid growth in workers compensation premiums through aggressive loss control. Please give us a call and we’ll help you set up a program that should minimize your workers comp premiums.

Are Laptops a Hazard to Your Health?

Laptop computers are a way of life for many busy executives. However, chronic injuries can occur if not used properly. Some suggestions:

Profound Effect of Absences

More and more, employers across the country have been feeling the effect of employee absences on productivity. A recent study by William M. Mercer confirms just how costly employee absences are.

The Mercer study found that the direct impact of employee absences averaged 14.3% of payroll in 1999, and the indirect costs might have added another 50%. For the purposes of the study, absences included sick days, workers compensation, short-term disability, and long-term disability.

The study showed that the costs of unscheduled absences rose 5% from 1998 to 1999. Despite these costs, many employers have done lit- tle to mitigate the problem.

Controlling unscheduled absences was a major concern to only 43% of respondents. Unscheduled absences can eat away a company’s bottom line. Companies that institute programs minimizing unplanned absences could see a boon to profits.

Adventures in Advertising

Advertising forms a critical element to many companies’ success. Yet for most businesses it’s an incidental activity that is not part of the firm's primary business.

In all advertising you face a risk exposure. In many cases your com- mercial general liability (CGL) policy for advertiser’s liability protection will cover you, but you should be aware that advertising liability coverage under the CGL is limited.

For coverage to apply, a business injury must have been suffered by another party as a result of certain specific actions that occur during the course of a company’s advertising activities. Among the most common activities are:

• Oral or written publication of material that slanders or libels another.
  
• Oral or written publication that violates a person’s right of privacy.
  
• Misappropriation of advertising ideas or style of doing business.
  
• Infringement of copyright, title or slogan.

Protection against these types of risks is usually found under Coverage Part B of the CGL policy. If your company has a potential advertising liability exposure that might fall outside of these areas, you could need specific advertising liability coverage. Give us a call to discuss possibly supplementing your CGL coverage.

Materials: Handle with Care

Hazardous material handling is a critical task. Businesses need to take specific actions to minimize liability exposure under the Comprehensive Environmental Response, Conservation and Liability Act (a/k/a Superfund).

You must make sure drums and containers are made of or lined with material appropriate for the hazardous materials being stored and are not filled beyond 85% of the rated capacity. Equipment used to handle hazardous material must be designed for the task.

Proper storage of these materials is another must. Superfund clearly states that owners of facilities storing these materials will have ultimate liability to the general public. Keeping hazardous materials in specifically designed storage lockers provides an extra level of safety.

When considering storage lockers, look at electrical wiring, venting, overall design, and flammability of the material. A good storage locker can significantly reduce the potential for discharge of hazardous materials, thus limiting the liability of the owner.

Retired: Still Need Life Insurance?

There are many reasons to maintain your life insurance even after you’ve retired. Here are four ways this coverage can assure peace of mind for your golden years:

• To provide income for your spouse or family after your death. If your portfolio alone won’t generate enough income for your surviving spouse, life insur- ance can generate additional income.
   
  
• To pay the taxes of your estate. If you have an estate where much of your wealth consists of real estate, you don’t want your heirs to be forced to sell liq- uid assets at an unfavorable time. It makes sense in these situations to use your life insurance policy to pay Uncle Sam.
   
  
• To pay outstanding loans. If you have consumer debt, life insurance can save survivors from the burden of using their resources to cover it.
   
  
• To give a gift to your favorite charity. Life insurance can be used for gift giving to a charity such as a church, syna- gogue, hospital or university.

Understand the benefits of continuing your life insurance. Call us for more details

Concern Over Hiring Practices

Due Diligence can improve hiring practices - and avoid legal issuesaving Sufficient Limits

In the wake of the earth-shaking events of the last six months, employers are concerned about how extensive background checks need to be to avoid any liability issues. At the heart of liability is whether the employer exercised due diligence on new hires.

Due diligence describes the level of investigation needed in certain decisions. With regard to the hiring process, it is defined as a reasonable investigation prior to hiring.

The intensity of investigation is based on the risk involved and the level of authority of the employee being hired. Exercising due diligence can improve overall hiring practices and can help if legal problems arise.

Having maintained a best practices protocol will demonstrate your firm’s prudence in its hiring practices and may reduce subsequent liability issues. Adding appropriate professional liability coverage is another prudent action. Give us a call.

Safe Travel

Though most employers are curtailing unnecessary company travel, some travel must take place. For many companies, corporate travel is part of doing business. Although the traveling employee should be responsible for his or her own safety, the employer also bears a certain responsibility.

The first step in business travel safety is a review of the itinerary. The corporate travel department should check the itinerary for potential safety hazards, such as travel in areas with a high risk for theft or violence. Even long drives that bring on fatigue should be considered a hazard.

Awareness of these types of situations is critical, and plans should be instituted to keep them at a minimum. Today, travel is more difficult than ever. Anything that a company can do to ease the burden of the traveling employee is time and money well spent.

Severance Options

Layoffs can cause a run on company cash to pay severance. Such distributions usually come at a time when companies can ill afford cash outlays. There is an alternative to the straight cash severance package, though.

Companies can save cash by restructuring the laid-off employee’s pension benefit. Through a qualified severance arrangement, some companies have increased pensions by the amount of the calculated severance package. In this way, the business can save cash while still delivering the value of the severance benefit to departing employees.

Unlike raiding overfunded pension plans, this approach actually uses pension trust funds to finance pension-related activities, complying with current IRS code. Use of this approach typically has been reserved for companies engaged in a plant closing or massive layoffs.

Although this type of arrangement reduces the immediate outflow of cash, this is basically an accounting issue. The cash severance is shown as a payroll expense on the balance sheet immediately. Under the qualified sever- ance arrangement, the expense is written off, usually through flat-line amortization over 15 years.

The new approach requires a significant amount of research and legal review. However, it provides you, the employer, with some degree of flexibility at a time when you can use it.