Keeping it Safe, and Limiting Liability During Holidays
With year-end festivities about to begin, you should include safety into your holiday plans, be that if you are simply decorating the office or throwing a holiday/year-end party for your staff.
While you obviously want your staff to relax and have fun at your holiday party, you also want to make sure they get home safely and that nobody gets hurt or sick at your party.
Some of your safety priorities should be
- Liquor consumption,
- Safety on the premises of your party, and
- Food-borne illnesses.
Due to their infrequent nature, the liability risks of company-sponsored holiday events are often overlooked. To ensure the health and well-being of all who attend, it is important to be aware of any potential liability concerns that your company may face if the event doesn’t go exactly as planned.
Safety
While you want your staff to enjoy themselves, safety should still be your top priority during the holidays.
Keep in mind that if someone trips and injures themselves on an extension cord for your holiday lighting or other holiday decorations, it would be considered work-related and could possibly be subject to workers’ compensation. The same may hold true for injuries sustained at work parties as well. Consider the following:
- If you are holding a party at outside your office, inspect the venue first to make sure it meets your safety standards. Some things to keep an eye out for include: exits emergency lighting, and flooring that might prevent slips and falls, particularly if there is a chance of bad weather.
- Keep an eye on the weather forecast and if storms are looming on the date of your party. Consider the effects that weather may have on safe travel to and from the party.
- Do you need security?
- If party-goers are leaving at night, make sure nobody has to walk out alone in the dark to their car for safety reasons.
- Use food safety best practices like keeping hot foods warm and covered and not leaving perishable food out for too long to reduce the chance of someone getting a food-borne illness.
- Have an emergency plan in case someone is injured or needs medical assistance. Know where the closest hospital is and if anyone knows how to use a defibrillator or can perform CPR.
Risk and potential liabilities
You’ll want to minimize the chances of being sued for actions related to the event.
- Prior to the event, remind your employees that rules against harassment, discrimination and conduct apply at the event as well and infractions will be dealt with as you normally would.
- Monitor behavior at the event, as if people are drinking, they may act in ways that they normally wouldn’t. Take prompt action if any activity or behavior exceeds acceptable bounds.
- Make the event optional for your workers and let them know that it won’t reflect poorly on their performance evaluation, advancement potential or job security if they don’t’ attend. Emphasize this in all invitations and announcements should emphasize this point.
- Limit alcohol consumption.
- Avoiding activities or items such as mistletoe or inappropriate music that could lead to physical contact, unwanted social pressure or inappropriate conversation.
- Taking complaints that stem from the party seriously. As you would with any other incident, document, investigate and take appropriate action.
Alcohol
Some companies have recognized the liability exposure that alcohol represents and have chosen to hold holiday events free of beer, wine, or liquor. If it will be served, there are some important considerations that can help to limit potential problems:
- Hold the event at an off-site location and hire professional bartenders who have their own insurance and are certified for alcohol service. Speak with the vendor to determine what protocols it uses to keep from serving minors and others who are visibly intoxicated.
- Provide an array of choices of non-alcoholic beverages.
- Don’t have an open bar. Instead hand out a set amount of drink tickets to control consumption (two is usually a standard amount).
- Stop serving alcohol at least an hour before the event ends.
- Give a supervisor or manager the authority to cut off anyone who is intoxicated.
- Provide alternative transportation that may include free cab or Uber rides.
A word about insurance
Make sure you that any vendors you use, carry insurance. Insist on seeing the certificates of insurance with sufficient coverage and liability limits for:
- Catering firms,
- Bartending firms,
- Facilities, or
- Entertainers should be required to produce
When reviewing rental contracts, be sure to note any hold harmless or indemnity agreements that could release the vendor from liability and instead hold your company responsible for losses from situations over which you have no control.
Also, talk to us to make sure that your own insurance policies cover any mishaps that may occur at your company event.
Preventing Substance Abuse in the Workplace
Drug and alcohol use by employees on or off the job is a troublesome societal plague that has put many employers on the defensive.
Research by the U.S. Department of Labor shows that between 10% and 20% of the nation’s workers who die on the job test positive for alcohol or other drugs.
The same research shows that industries with the highest rates of drug use are the most physically dangerous and involve the operation of machinery, such as construction, mining, manufacturing and wholesale.
With this in mind, you need to know all of the tools available to you as an employer to ensure that you keep a strong drug- and alcohol-free workplace policy in place, while trying to minimize the effects of employees who are heavy users off the job.
An effective policy can reduce the risk of workplace injuries to an impaired employee as well as co-workers and anybody your company may come in contact with, particularly customers or vendors. The actions of one impaired person, or someone that uses heavily off the job, can have far-reaching effects and turn out to be a significant liability for your company.
The federal Occupational Health and Safety Administrations as well as state-run OSHAsl offer employers help in sorting out the complexities of putting together an effective drug- and alcohol-free workplace policy.
Federal OSHA outlines five components it considers necessary for a drug-free workplace: a policy, supervisor training, employee education, employee assistance and drug testing.
Drug testing, it says, “must be reasonable and take into consideration employee rights to privacy.”
The federal agency has guidelines available to help resource-challenged small businesses formulate a policy aimed at a drug- and alcohol-free workplace. They include:
- Drug-Free Workplace Advisor Program Builder. For employers needing to develop a policy from scratch, this guides them through the various components of a comprehensive written drug-free workplace policy. It then generates a policy based on an employer’s specific needs.
- Substance Abuse Information Database (SAID). This includes sample drug-free workplace policies, surveys, research reports, training and educational materials and regulatory information.
- Resource directories. These contain current lists of national, state and local resources, including summaries of state laws on workplace-related substance abuse, community organizations that help make businesses drug-free, and help lines for those who have a drug problem.
- Training and educational materials. These include presentations, articles, fact sheets and posters to help employers provide workplace drug and alcohol education.
- Workplace Frequently Asked Questions. These are available free of charge.
More detailed information for each of the above guidelines is online at: www.osha.gov/SLTC/substanceabuse/index.html
The New Zealand example
One good approach to drug and alcohol policies comes from New Zealand. Its OSHA – in simple, practical language – advises employers in that country to:
- Formulate rules, agreed to by all parties, which apply the same for everyone: employees, contractors and employers.
- Write the policy clearly and make it available to all in the workplace.
- Describe steps needed to ensure a drug- and alcohol-free workplace.
- Enforce the rules “consistently and fairly.”
The policy, says New Zealand OSHA, should aim to avoid worker drug or alcohol impairment without discriminating against or punishing employees.
Once formulated, the agency adds, the policy should be part of the company’s official health and management practices in recruitment and training, integrated into its human resources department and widely circulated throughout the business.
How to Rebuild on Time After a Commercial Property Claim
For businesses that suffer property damage, getting repairs or rebuilding completed on time and within budget is becoming an uphill battle.
A mix of inflation, supply chain challenges leading to material shortages, a tight construction labor market and the inherent complexity of commercial construction have pushed costs higher and stretched timelines longer. This can leave a company unable to operate or producing revenue at only partial capacity while they wait.
As the problem worsens, it’s important that property owners have a strategy to jump-start repairs through planning and by establishing a network of contractors in advance.
Why repairs are taking longer and costing more
Multiple forces are converging to make commercial reconstruction increasingly difficult to complete efficiently:
- Persistent inflation — Verisk reports that commercial reconstruction costs rose 5.7% year over year through the second quarter of 2025, with concrete prices jumping by more than 9%.
- Supply chain disruptions — Tariffs on imported materials, supply chain issues and transportation delays are further inflating prices and lengthening delivery times. It’s not uncommon for a project to be delayed for months because of part shortages.
- Labor shortages — Nearly 900,000 skilled trade positions remain unfilled nationwide, and many contractors are struggling to meet demand for work.
- Complex project requirements — Commercial construction is far more intricate than residential work. Unlike a home, a commercial property may include multiple systems such as HVAC, fire suppression, medical gases, industrial machinery or commercial kitchens, all of which must meet strict codes and specialized standards.
- Local contractor limitations — Contractors accustomed to routine maintenance may lack the expertise or workforce to manage large-scale reconstruction, leading to delays as businesses search for more capable contractors.
The risk multiplies after natural disasters
After natural disasters, these problems are compounded. Local labor, materials and equipment become scarce almost immediately after a disaster, as affected businesses vie for the same resources.
In these situations, unprepared property owners can end up paying steep premiums for scarce labor or settling for subpar work just to reopen sooner. Insurers face their own exposure as delayed repairs prolong business interruption claims and push overall loss costs higher.
Steps property owners can take
While these challenges are significant, property owners can take practical steps to mitigate repair delays and inflated costs when filing commercial property claims.
Build a broader, pre-vetted contractor network — Relying solely on local contractors can backfire after a catastrophe.
Developing relationships with a wider network of pre-qualified commercial restoration firms ensures capacity and capability when demand spikes. A vetted network also allows property owners and insurers to match each job to the right expertise rather than defaulting to whoever is available.
Use time-and-material pricing models — Traditional fixed-price contracts can create inefficiencies and inflated costs when project scopes shift. A time-and-material model charges based on actual labor hours and materials used, which in turn offers transparency and flexibility.
This approach also allows for detailed tracking and frequent review of expenses so both owner and contractor understand exactly where costs are going. According to Verisk, smarter review models based on time-and-material data can cut inflated commercial repair bills by 20% or more.
Establish pre-loss agreements — Pre-loss agreements set expectations in advance by outlining pricing frameworks, response times and emergency protocols before a loss occurs.
By having these contracts in place, property owners can mobilize resources immediately after a loss without wasting time negotiating terms. This proactive planning is particularly valuable for multi-site operations or organizations located in catastrophe-prone regions.
Emphasize proactive project management — Active oversight keeps contractors accountable, coordinates multiple trades and helps ensure the contractor stays on schedule. This requires someone on the team to regularly check on work progress.
Whether through an internal facilities team, a dedicated project manager or virtual monitoring tools, close supervision helps ensure the repair process stays on course and minimizes costly delays.
Compliance Alert: New Law Expands Protected Paid, Unpaid Leave
California employers have new compliance challenges because of a law that further broadens the circumstances under which employees can take protected paid and unpaid leave.
AB 406, which took effect Oct. 1, 2025, expands on last year’s revisions to the state’s paid sick and safe time and crime-victim leave laws, adding new categories of protected absences that cross multiple statutes — and increasing the complexity of managing employee leave.
Employers will have to once again revise their HR policies to ensure they comply with the new law as some law firms warn that AB 406 affects a number of intersecting statutes.
What AB 406 does
AB 406 amends both the state’s paid sick leave law — the Healthy Workplaces, Healthy Families Act (HWHFA) — and Government Code section 12945.8, which governs unpaid job-protected leave.
Effective Oct. 1 — The new law adds two new reasons for which employees can take protected time off:
- To appear in court as a witness to comply with a subpoena or court order, including if the employee is a crime victim.
- To serve on an inquest jury or trial jury.
Effective Jan. 1, 2026 — The law also extends job-protected leave for employees or their family members who are victims of certain serious crimes (the law cites 14 of them). Covered workers may take leave to attend court or administrative proceedings related to those crimes, such as arraignments, pleas, sentencing hearings, parole hearings or other proceedings where victims’ rights are at issue.
For this purpose, “victim” is defined broadly to include anyone who suffers direct or threatened physical, psychological or financial harm as a result of serious felonies such as domestic violence, sexual assault, felony stalking and DUI causing injury.
Overlapping leave laws complicate compliance
The new rules expand and interlink several different statutes — the HWHFA, the California Family Rights Act and the Fair Employment and Housing Act — making it more difficult for HR departments to determine which law applies to each situation.
For example, an employee attending a sentencing hearing on behalf of a family member could qualify for leave under both the paid sick and safe time law and CFRA if that family member also has a serious health condition. HR teams must carefully review each request to ensure the proper leave type is designated and tracked.
Notice, documentation requirements
The Civil Rights Department has issued a new mandatory workplace notice titled “Survivors of Violence and Family Members of Victims – Right to Leave and Accommodations.” Employers must post and distribute this notice and train managers on confidentiality and retaliation protections.
The takeaway
With some provisions already in effect and others coming Jan. 1, 2026, employers should:
- Update employee handbooks and leave policies to reflect AB 406’s new covered uses.
- Train HR staff and managers to identify overlapping leave rights and apply the proper designations.
- Post the new CRD notice and review confidentiality and anti-retaliation procedures.
- Audit HR systems and time-off codes to ensure new leave categories are captured.
- Coordinate state and local leave requirements to avoid conflicts.
Finally, discuss any planned changes with your legal counsel to ensure compliance with the new law.
New AI-in-Hiring Rules Are in Effect: What You Need to Know
Starting Oct. 1, 2025, any California employer that uses artificial intelligence and other automated tools in recruiting, hiring, promotion and related human resources decisions will have to ensure that the tools don’t discriminate against protected classes.
The new regulations, promulgated by California’s Civil Rights Department, cover any “automated decision system” (ADS) which the rules broadly define to include any computer-based process that makes or influences employment decisions, such as:
- Artificial intelligence,
- Machine learning,
- Algorithms,
- Statistics, and
- Other data-processing techniques.
If your firm uses AI or another data-driven system in hiring, you’ll want to beef up record-keeping and set testing procedures to ensure that the tools you use comply with the new regulations.
What counts as an “automated-decision system”
Examples of systems that are covered by the new regulations include:
- Résumé screeners — These may favor applicants who use certain wording, which can disadvantage older workers or those from different cultural or educational backgrounds.
- Targeted job-ad delivery — Tools may push job ads to preferred genders, age groups, races and other protected classes.
- Puzzle or game-style assessments — These tools may screen out people with certain physical or neurological conditions.
- Voice and facial analysis tools — Tools that assess “enthusiasm” or “communication style” may produce biased results against applicants with disabilities, speech differences or accents.
Basics of the new rules
Discrimination risk — It is unlawful to use an ADS or other selection criteria that discriminate based on any protected characteristic such as race, gender and ethnicity. Crucially, an employer can be liable even without intent if the ADS causes an adverse disparate impact on a protected class.
Anti-bias testing — Employers are required to perform anti-bias testing of their automated systems. In any investigation or lawsuit, regulators and courts may look at six factors to determine whether an employer took reasonable steps to avoid discrimination:
- Quality of the testing
- Efficacy (how well it detects bias)
- Recency (how current it is)
- Scope (which systems or data were tested)
- Results of the testing or due diligence
- The employer’s response to those results (what was changed or fixed afterward)
Failing to conduct or document bias testing could weigh against an employer in a discrimination case.
Record-keeping — The rule requires employers to keep ADS-related records for four years.
What you can do
If you use an ADS system in your personnel decisions, focus on the following to comply with the new rules:
Tracking — Track your ADS system’s involvement in recruiting, hiring, promotion, training selection, performance screens or advertising. Include vendor tools and “off-the-shelf” filters.
Testing — Build a defensible bias-testing program and document the six factors that regulators will look at:
- Quality,
- Efficacy,
- Recency,
- Scope,
- Results, and
- Your response.
Planning — Establish a plan to regularly test your ADS systems for bias-tainted decisions. Most importantly, if you detect deficiencies, document the steps you took to address the problems.
The takeaway
One of the keys to a successful defense is showing you have taken steps to remedy issues with tools that you use in employment decisions. That means being able to show that you have ensured your data-driven personnel tools do not discriminate.
As a side note, employers should expect more AI-related legislation in the years to come as more companies use it in their day-to-day operations.
Workplace Incivility, Violence Costing Businesses Billions
American workplaces are facing a growing civility crisis that is costing companies dearly.
According to new research from the Society for Human Resource Management (SHRM), rudeness and discourteous behavior are costing U.S. businesses an estimated $2.1 billion every day in lost productivity, absenteeism and disengagement. The problem doesn’t stop at rudeness: a separate study shows a sharp rise in workplace violence, suggesting that incivility and more serious misconduct are increasingly intertwined.
For employers, both studies should be a wake-up call to address incivility, bullying and other actions that can destabilize the workplace and possibly lead to lawsuits if severe enough.
SHRM’s Civility Index found that U.S. workers collectively experience 208 million acts of incivility each day, from curt emails and dismissive tones to eye-rolling or gossip. While these behaviors might seem minor in isolation, they add up to staggering losses.
Where incivility goes unchecked, managers in SHRM’s study reported:
- Lower psychological safety,
- Weaker team cohesion, and
- Diminished trust.
SHRM pointed to the following as major drivers of the trend:
- Political polarization,
- Residual pandemic stress, and
- “Digital bravery,” the tendency to say things behind a screen that one would never say face-to-face.
The effect, according to SHRM Chief Human Resources Officer Jim Link, is a workplace culture where even routine communication is more easily perceived as hostile.
From incivility to violence
While rudeness doesn’t always lead to violence, patterns suggest the two are related.
Traliant’s 2025 Employee Survey on Workplace Violence and Safety found that 30% of workers witnessed workplace violence in the past year, up from 25% in 2024. Fifteen percent said they had personally been targeted, up from 12% in 2023. Industries like hospitality and health care were particularly affected.
The overlap matters for employers. A culture that tolerates disrespectful behavior can erode trust and embolden more extreme actions. Even if uncivil acts are not illegal, they create a climate where violence, harassment or retaliation is more likely to emerge.
Preventing incivility at work
Drawing from SHRM’s recommendations and best practices, here are practical strategies employers can use to address problems before they escalate:
- Set clear expectations: Define what respectful behavior looks like in your organization and communicate consequences for violations.
- Provide communication training: Help employees navigate disagreements without crossing the line into hostility.
- Model civility at the top: Leaders who practice respect and professionalism set the standard for everyone else.
- Promote open dialogue: Encourage feedback and ensure employees feel safe raising concerns.
- Recognize positive behavior: Reward and acknowledge employees who contribute to a healthy workplace culture.
- Offer anonymous reporting: Give employees safe channels to flag issues without fear of retaliation.
- Invest in inclusivity and mental health: Unconscious biases and cultural misunderstandings can fuel incivility at work. Inclusivity training can help educate employees about biases and cultural competency to reduce misunderstandings.
- Use de-escalation techniques: Train managers to calmly defuse conflicts before they spiral.
Takeaway
For executives, the message is clear: incivility is not just an HR problem, it’s a bottom-line issue.
A disengaged workforce translates into lost output, higher turnover, reputational risk and in severe cases costly litigation. Unlike external market conditions, workplace culture is something leaders can directly influence.
Liability, Large Court Verdicts Drive Commercial Auto Insurance Price Surge
Commercial auto insurance companies continue to post steep losses for liabilities like third-party injuries and property damage, which is driving continued rate hikes for businesses, particularly fleet operators, according to a new report from A.M. Best.
The line posted its 14th consecutive year of underwriting losses in 2024, with liability coverage alone accounting for $4.5 billion in red ink. Those losses were slightly offset by physical damage coverage (part of a comprehensive package), which logged a $1.5 billion underwriting profit for the industry last year.
As losses mount, some commercial auto insurers have left the market and those that remain have tightened underwriting standards, making renewals and securing new policies more difficult.
Commercial auto renewal rates jumped 8% in the second quarter of 2025 from the same period the year prior, according to Ivans Insurance Services. During the last few years, rate increases have averaged 10% or more, but sometimes policyholders are hit with a much larger increase as their insurer must catch up to rising costs.
Even businesses with few claims are seeing significant rate hikes and tighter underwriting, meaning no organization can escape the growing exposure in case one of their drivers is in an accident.
What’s driving the trend
Social inflation and nuclear verdicts: Courts are awarding increasingly larger jury verdicts, and plaintiffs’ attorneys are more aggressively pursuing cases and pushing for trials over settlements, emboldened by favorable outcomes. This has led to more frequent and severe claims that outpace rate increases.
As well, third-party litigation funding is becoming more common, with external investors bankrolling lawsuits in exchange for a share of the settlement.
Vehicle repair costs: Modern vehicles are packed with sensors, cameras and advanced safety systems. Repairs require specialized parts and skilled technicians, many of whom are in short supply. The imbalance between demand and available workers has pushed labor costs higher.
Longer repair times: Parts shortages and limited repair shop capacity have stretched out repair timelines. The longer a claim stays open, the greater the legal exposure and ultimate settlement cost, according to A.M. Best, which estimates the commercial auto insurance industry to be under-reserved by $4 billion to $5 billion.
Driver shortage: As more experienced drivers retire, the labor crunch has meant fewer available drivers and more newbies, which can strain operations and increase risk, including:
- Higher accident rates
- Greater pressure to cut corners
- Inadequate training and mentorship
- Risk of driver fatigue
Shrinking insurer appetite and the rise of E&S coverage
As losses mount, many traditional “admitted” carriers are pulling back from commercial auto risks. This reduced capacity has forced some businesses to turn to the excess and surplus market for coverage.
E&S carriers historically focused on unusual or higher-risk accounts that standard insurers avoided. But today even businesses with relatively typical auto exposures are finding themselves placed with E&S carriers. While these insurers fill a critical gap, their premiums are usually higher, and terms can be stricter.
What you can do
Focus on safety: Instill a strong safety culture from the top down and invest in driver training. Require all drivers to check their vehicles before each shift and leverage telematics to track driver behavior.
Stay proactive with repairs: Build relationships with qualified repair shops to reduce downtime.
Work closely with us: We can explore options across both admitted and E&S carriers to ensure you have the right protection at a competitive rate.
Ballot Initiative Seeks Repeal of Proposition 103, Overhaul of Insurance Regulations
An insurance agent has filed papers with the state of California to qualify an initiative for the 2026 election that would repeal Proposition 103, a landmark insurance measure that has tightly regulated property and auto insurance rates since 1989.
Since 1989, Prop. 103 has required insurance companies to submit requests for rate changes to the California Department of Insurance (DOI). Under the law, the insurance commissioner is required to review those filings, decide whether they are justified, and can deny or limit increases. Consumers and advocacy groups are also allowed to intervene in the process, giving the public a voice in rate decisions.
The measure also made the post of insurance commissioner an elected position instead of one appointed by the governor.
Critics of Prop. 103 say the law slows down the rate approval process, which can drag out for months or even years due to bureaucratic obstacles. Proponents say it keeps insurance companies in check and that having an elected insurance commissioner allows them to act without political interference.
What the new initiative would do
The proposed ballot measure, dubbed the California Insurance Market Reform Act of 2026, would:
- Replace the elected insurance commissioner with an appointee chosen by the governor and confirmed by the state Senate.
- Establish stricter timelines for the DOI to act on rate filings, generally requiring decisions within 120 days.
- End the intervenor system that allows consumer advocates to challenge rate filings at insurers’ expense.
- Require wildfire risk maps to be updated every three years and allow insurers to factor in reinsurance costs and wildfire mitigation activities when setting rates.
The measure was submitted by Elizabeth Hammack, an independent insurance agent, who argued that Prop. 103 has caused dysfunction and delays that have worsened California’s insurance crisis.
Supporters and critics weigh in
Some in the insurance industry say the lengthy approval process under Prop. 103 has made it difficult to adjust rates in line with rising risks, especially from wildfires. Insurers also argue that delays and a provision requiring any rate hike request of 7% or more to trigger a DOI hearing have discouraged larger filings. As a result, most insurers have limited their requests to 6.9%, which they say has been inadequate in recent years due to rapidly rising claims costs for both property and auto insurance.
Combined with increasingly destructive wildfires, the difficult approval process and insurers’ inability to use certain forecasting models have prompted many companies to restrict writing homes and commercial properties in the state.
Consumer groups oppose the new proposal. They say Prop. 103 has saved Californians billions of dollars on auto insurance and kept home insurance rates more affordable than in many other states. Critics warn that repealing it would open the door to steep premium hikes with less accountability.
Long odds ahead
For now, the initiative remains a long shot. To make the November 2026 ballot, supporters must gather more than 546,000 valid signatures by next spring, a tall order without major funding. Consumer Watchdog, the advocacy group founded by Prop. 103’s author, has dismissed the campaign as unserious and underfunded.
If it does qualify, the proposal could set up a high-stakes battle between consumer advocates and insurers at a time when California residents are already frustrated with rising premiums and shrinking coverage options.
What it means for you
For California consumers and businesses, the debate is ultimately about the balance between cost and availability of insurance. Supporters of repeal say loosening regulations could bring insurers back to the state, giving homeowners and drivers more options. Opponents say it would leave consumers at the mercy of insurance companies with little protection against sudden price spikes.
With signature gathering still in its early stages, the proposal may never reach voters. We’ll keep you posted on developments.
New Rules May Coax More Insurers Back into California Market
In an effort to bring more insurers back into California’s homeowner’s and commercial property insurance market, the state Department of Insurance (DOI) has approved a system that will allow insurers to use forward-looking wildfire risk models to price policies in areas susceptible to wildfires.
The DOI hopes this and other measures it’s been taking, will provide some relief to businesses and homeowners in high-risk areas. Up until this point, insurers have been barred from using risk models that predict future wildfire claims costs and instead have been forced to use historical data.
Insurers have been pushing for this change for years, saying restrictive regulations have kept them from adequately factoring in wildfire risk.
What these models do
The DOI in August established the Pre-Applications Required Information Determination (PRID), a process that insurers can use to get their predictive models approved.
“The PRID process has introduced the potential for bringing relief to the many insurers who have struggled to provide coverage across California,” the DOI said in a press release. “With the ability to use more innovative risk forecasting model technologies, many carriers may return to provide coverage in the wildfire prone regions of California.”
Through PRID, the DOI has already approved prospective wildfire models, created by three companies, that insurers can use to price policies in the Golden State.
One such wildfire model was created by the risk-modeling company Verisk, which uses decades of wildfire science, engineering expertise and climate data to provide a forward-looking view of risk.
Another model approved through PRID is by Kimberly Clark & Co. That model, which has already been accepted in 24 other states, incorporates the impacts of climate change and accounts for mitigation efforts at property and community levels to encourage the reduction of wildfire risk.
What it means for the market
This could give homeowners and business owners more options in areas where it has been difficult or impossible to find coverage in the private market. The DOI is requiring insurers that use the new models to also commit to writing more policies in wildfire-prone regions.
With the new models in place, Mercury, Allstate and CSAA have announced plans to write more property insurance policies in California.
Rates are likely to shift as insurers adopt the models. Properties in areas shown to be at higher wildfire risk may see premium increases, while those in lower-risk areas or where fire-safety measures are in place may benefit from discounts.
Other changes in the works
The wildfire models are part of a larger effort to improve California’s strained property insurance market. Other steps include:
Expanded discounts for mitigation: Homeowners and businesses can qualify for premium reductions by taking specific wildfire safety steps.
Temporary FAIR Plan expansion: The FAIR Plan has raised its commercial property coverage limits from $10 million to $20 million for single facility and up to $100 million for a multi-unit property.
Reinsurance reforms: Insurers will be able to better manage their exposure to catastrophic losses, which regulators say should help keep the market stable.
Takeaway
For homeowners and businesses, these changes mean more choices may soon return to the market.
Prices will likely vary more widely depending on location and wildfire readiness, but insurers may start competing again to write policies in parts of the state where coverage has been scarce.
The Five Most Common Types of Employee Fraud, Theft
At some point, the odds are that a company will be affected by some form of employee theft or outright fraud.
Fraud can severely crimp a company’s finances and put the firm in a serious bind if the theft is large enough. With technology, fraud has in some ways become easier, but at the same time it typically leaves a trail of electronic breadcrumbs that may be hard to disguise.
According to the Association of Certified Fraud Examiners’ (ACFE) global “Report to the Nations on Occupational Fraud and Abuse” report for 2024, the median loss in the U.S. from a single case of:
- Employee fraud was $61,000,
- Manager fraud was $150,000, and
- Executive fraud was $300,000.
Here are the five main types of employee fraud and what you can do to thwart it.
Purchase order fraud
This is typically carried out in one of two ways:
- The employee initiates purchase orders for goods that are diverted for personal use, or
- The employee sets up a phantom vendor account, into which they pay fraudulent invoices, with funds eventually being diverted to the employee.
Company credit cards
Employees who have company credit cards may use them for illegitimate purposes to purchase items or on entertainment and travel. Some common types of fraudulent use of credit cards are fuel purchases, airfares, home supplies, meals that are not work-related and entertainment.
Payroll fraud
There are typically three ways that an employee can pull off payroll fraud:
- Setting up phantom employees on your payroll systems who are paid like regular employees but whose funds are diverted to the perpetrator’s account.
- Paying out excessive overtime.
- Continuing to pay employees after they die or after they leave your employ.
You should have systems in place to detect whether you have more than one employee with the same bank account number or the same address, unusually high overtime payments and whether dead or terminated employees are still on your payroll.
Sales and receivables
Some employees may collude with vendors to make payments for services never rendered or products never received.
Other times, you may have sales reps who inflate sales to receive higher commissions or bonuses.
Data theft
This involves an employee stealing important company data like trade secrets, personally identifiable information, client credit card numbers or client lists. In some cases, the employee would provide this data to third parties.
You may be able to detect this kind of theft by running tests to see if a database has been accessed by an employee without access privileges or if reports were generated by employees without authorization. You may also be able to run tests to find out if any employees have sent e-mail with attachments that include sensitive company data.
What you can do
According to the report, most theft occurs at one or more of the following stages:
- Procurement
- Payment
- Expense
If you are going to do any employee monitoring, these are the places you may want to focus on first.
The ACFE said that by analyzing transactions in these areas (such as with continuous monitoring systems driven by data analysis), it is often possible to test for a wide range of employee fraud as well as bribery and conflicts of interest.
Also, three out of four fraudsters displayed at least one of the following behavioral clues:
- Living beyond means (39%)
- Financial difficulties (27%)
- Unusually close association with vendor/customer (20%)
- Control issues/unwillingness to share duties (13%)
- Irritability, suspiciousness or defensiveness (12%)
- “Wheeler-dealer” attitude (12%)
- Bullying or intimidation (11%)
- Divorce/family problems (10%)