Blog - Month: October 2024
This Insurance Can Help You Survive Another Business’s Disaster
November of 2011, floods inundated large parts of central Thailand, including thousands of factories that made everything from automotive parts and hard disk drives to eyeglass lenses and air conditioners. In addition to the human and economic cost in Thailand, the disaster affected businesses around the world.
Carmakers in Detroit shut down because they could not get the parts they needed and half of the world’s hard disk drive production was wiped out, leaving computer manufacturers with stalled assembly lines. When disasters like this occur, businesses around the globe feel the effects.
In addition to making advance arrangements for alternative suppliers, businesses can protect themselves by purchasing two types of insurance coverage: Contingent business interruption, and supply chain insurance.
Contingent business interruption
Contingent business interruption insurance, also called business income from dependent properties, pays for a business’s lost profit plus continuing expenses when it must slow or stop operations because of damage to another business’s property.
These other businesses can be customers or suppliers. For example, if a motorcycle dealership was left with no bikes to sell because its supplier in Japan suffered a fire, the insurance would make up part of the lost income.
The damage must result from a cause of loss that the insurance policy covers, such as fire or a hurricane. This is important because standard property insurance policies do not cover losses caused by catastrophes such as floods and earthquakes.
Supply chain coverage
Supply chain insurance takes contingent business interruption a step further. It covers income lost because of damage to a supplier’s or customer’s property. However, it also covers losses resulting from events that do not cause physical damage. These may include:
- Labor disruptions
- Production process problems
- Trade disputes
- Wars
- Political turmoil
- Closed roads, bridges, railroads and shipping channels
- Public health crises
- Actions by regulators
- Financial difficulties
Businesses often have different tiers of suppliers, with key suppliers in the top tier and less important ones in the lower tiers. It is common for them to insure only the top tier.
However, insurers are increasingly offering multi-tier coverage. This applies to the business’s entire supply chain. Multi-tier coverage provides a more comprehensive solution for the business while also spreading out the insurer’s risk.
Some insurers offer options. One lets policyholders choose between measuring losses in terms of gross earnings or number of units from the supplier. Some also offer agreed-value coverage, which eliminates penalties for buying amounts of insurance less than the amounts of value at risk.
Businesses should determine where they are vulnerable to supply chain losses and develop back-up plans for dealing with unexpected disruptions. These could include reserves of the needed supplies and contracts with alternative suppliers.
Insurance can help the business recover from a supply chain loss after the fact. Advance planning can help make that loss as small as possible.
If you would like to know more about business interruption insurance, don’t hesitate to contact us.
Preventing Carpal Tunnel Syndrome in Your Staff
Carpal tunnel syndrome is the bane of the office worker and if an employee gets it from repetitive motion work in front of the computer, the employer can end up with a costly workers’ comp claim on its hands, particularly if doctors call for surgery to remedy the injury.
That’s why it’s important that companies focus on prevention by making small changes to how their employees work in jobs that involve repetitive motions, like working on a computer, a cash register, a restaurant and in many manual labor and manufacturing occupations.
Carpal tunnel syndrome is triggered when the nerve that runs from your forearm to your wrist gets pinched at the wrist. This muscle controls a few of the small muscles in the hand and fingers as well as all sensations, and it is a common workplace injury that is caused by repetitive motions, particularly among people who are frequently using a keyboard and mouse.
Here’s a look at this all-too-common affliction and how you can help your employees avoid it.
Symptoms
There are several symptoms that usually occur when an employee has carpal tunnel. The first is a frequent burning, itching or tingling feeling in the palm of your hand. Often people say their fingers feel swollen when there is no visible swelling.
Signs of carpal tunnel syndrome often occur at night and can wake the sufferer up with the need to shake out their wrists as if they have fallen asleep. Another common symptom is decreased strength in your hands that may make it difficult to get a tight grip on something or to pick up tiny objects with your fingers.
Prevention
Train all of your employees who spend long hours behind a desk or typing on a computer in the following preventive measures for carpal tunnel:
Provide chairs with sturdy back support that promote sitting up straight and prevent workers from slouching.
Good posture is key. Employees should adjust the height of their chairs so that their arms and wrist are level. Do not bend your wrist all the way up or down when using a keyboard. A relaxed middle position with the wrists parallel to the floor is best. Keep your keyboard at elbow height or slightly lower.
Replace old keyboards and other desk tools with ergonomically designed ones. For example, alternative geometry keyboards (Microsoft Natural Keyboard, Apple Adjustable Keyboard) allow the user to adjust and modify hand positions, as well as adjust key tension. Most have a split or slanted keyboard that places the wrists at an angle.
Employees should make sure that their computer mouse is comfortable to use and doesn’t strain their wrist.
Provide wrist rests, which fit under most keyboards and can help keep the wrists and fingers in a comfortable position.
Helping sufferers
You should caution your susceptible staff that curing carpal tunnel syndrome is a lengthy and painful process and many cases require surgery that can be performed on an outpatient basis. If they develop the condition on the job, it may be considered a workers’ compensation insurance claim and could involve medication and, in serious cases, surgery.
After surgery, the employee will need to wear a brace and not use their hand(s) for a significant period of time. And rehabilitation may also be in order to ensure their hand(s) heal properly.
If you are starting to see dollar signs reading this, you are right. The process will cost your company time, lost productivity and money. If the claim includes surgery, it could affect your workers’ comp experience as well and possibly result in a rate increase.
Why It Is Important to Review Your Business Insurance Annually
One of the keys to managing risks when you first start a business is getting the right insurance to cover your operations, property and potential liabilities.
Unfortunately, many business owners fail to update their policies and just renew them year after year even if the company has grown, expanded operations and facilities, and added new equipment and property. If this is the case, the old coverage would be insufficient.
Business owners should review their policies every year to catch any omissions and make sure they are not underinsured. It is common for smaller businesses to secure a basic business owner’s policy (BOP) and workers’ comp when they first get started. A BOP includes:
- Property insurance for buildings and contents owned by the company.
- Business interruption insurance, which covers the loss of income resulting from a fire or other catastrophe that disrupts the operation of the business.
- Liability protection, which covers your company’s legal responsibility for the harm it may cause to others. This harm is a result of things that you and your employees do or fail to do in your business operations that may cause bodily injury or property damage due to defective products, faulty installations and errors in services provided.
Outgrowing BOP coverage
As your business expands, you may outgrow the BOP and need additional coverage to manage your risks. Some examples include the following:
- Workers’ comp. While you likely added a workers’ comp policy when you made your first hire, you will need to update it as you add more staff. If you don’t, when your insurer audits you, you may face a hefty bill for additional premium. Be diligent about your policy and inform your insurer as you grow.
- Excess umbrella or liability coverage. You should consider this insurance to cover claims that exceed your BOP’s limit, providing you with an added layer of protection to protect your assets.
- Professional liability insurance. These policies provide coverage for mistakes for any professional services you provide. This used to be mainly for doctors, attorneys and accountants, but as our service sector has expanded it includes services provided by coders and software developers, appraisers, consultants, real estate brokers, graphic designers and home inspectors, among others.
- Auto, non-owned and hired coverage. This protects business owners if an employee has an accident while driving a rental or personal vehicle on the job.
- Employment practices liability insurance. This covers human resources issues related to discrimination, harassment and termination.
- Commercial auto insurance. This coverage protects autos that are not under a personal policy.
- Directors and officers liability coverage. This protects officers and directors in the event they are sued for wrongful acts while on duty.
Depending on the business, some or most of these insurance options may be required for adequate protection. Annual reviews with us are ideal for discussing your options. Make sure these elements are considered:
- If computers, equipment or other types of property have been added, this would be reason to increase policy limits.
- While revenue is an important consideration, it is also important to remember that it is a potential liability.
- A general liability or BOP may be affected if the owner has moved, added or closed locations.
- Hired and non-hired auto insurance is necessary if workers are driving frequently in rented vehicles.
- For specific types of work and services, employers may need additional endorsements for their general liability policies.
- People who are serving new industries or clients may have problems with their professional liability coverage if they have large amounts of high-risk industries or customers.
- If you experience an increase in the number of workers you have, or there is a higher turnover rate, it is important to think about employment practices liability coverage. And as mentioned, your workers’ comp policy should be updated to reflect any staffing changes and that you categorize your workers properly.
Businesses Suffer as Employee Theft Grows
Organizations around the world lose an estimated 5% of their annual revenues to occupational fraud, according to a survey by the Association of Certified Fraud Examiners (ACFE).
The association estimates that U.S. businesses lose some $50 billion a year to employee theft, and that 75% of employees have stolen at least once from their employer — and 37% have stolen at least twice. It also estimates that about 33% of business bankruptcies are in part due to employee theft.
So, what can your organization do to avoid falling victim? The U.S. Small Business Administration and the ACFE recommend that companies:
Use pre-employment background checks — Making the right hiring decision can greatly reduce the risk of future heartache.
Basic pre-employment background checks are a good business practice, especially for employees who will be handling cash, high-value merchandise, or having access to sensitive customer or financial data.
But be aware that laws on background checks vary from state to state and if you go too far in your check, you may be in breach of the law and risk being sued. Recently the U.S. Equal Employment Opportunity Commission raised concerns that criminal background checks may disproportionately discriminate against some racial groups.
Check candidate references — It’s surprising how few employers check candidates’ references. Make a practice of calling all references, particularly if they are former employers or supervisors.
If your candidate has a history of fraudulent behavior, then you’ll want to know about it before you hand them a job offer.
While some former employers may be loath to tell you anything bad, they will often give you cues in the conversation that the employee may have had some problems.
Implement a fraud hotline — Occupational fraud is far more likely to be detected by a tip than by any other method.
More than 40% of all cases were detected by a tip — with the majority of them coming from employees of the victim organization. There are several providers of hotline services that can help implement an anonymous tip-reporting system for businesses of all sizes and industries.
Conduct regular audits — Regular audits can help you detect theft and fraud and can be a significant deterrent to fraud or criminal activity, because many perpetrators of workplace fraud seize opportunity where weak internal controls exist.
You should identify high-risk areas for your business and audit for violations on a six- to 12-month basis. Items to look at include business expense reports, cash and sales reconciliation, vacation and sick day reports, and violations of e-mail/social media or Web-use policies.
Recognize the signs — Studies show that perpetrators of workplace crime or fraud do so because they are either under pressure, feel underappreciated or perceive that management behavior is unethical or unfair.
They rationalize their behavior based on the fact that they feel they are owed something or deserve it.
Some of the potential red flags to look out for include:
- Not taking vacations. Many violations are discovered while the perpetrator is on vacation.
- Being overly protective or exclusive about their workspace.
- Employees that prefer to be unsupervised by working after hours or taking work home.
- Financial records sometimes disappearing.
- Unexplained debt.
- An employee living beyond their means.
Set the right management tone — One of the best techniques for preventing and combating employee theft or fraud is to create and communicate a business climate that shows that you take it seriously. You may want to consider:
- Reconciling statements on a regular basis to check for fraudulent activity.
- Holding regular one-on-one review meetings with employees.
- Offering to assist workers who are experiencing stress or difficult times.
- Having an open-door policy that gives employees the opportunity to speak freely and share their concerns about potential violations.
- Creating strong internal controls.
- Requiring employees to take vacations.
You should also treat unusual transactions with suspicion and trust your instincts.
Secure employee theft insurance
Employee dishonesty insurance coverage — sometimes referred to as fidelity bond, crime coverage or crime fidelity insurance — protects a small business employer from a financial loss as a result of fraudulent acts by employees.
The financial loss can be caused by an employee’s theft of property, money or securities owned by the small business.
Cal/OSHA Proposed Workplace Violence Prevention Rules Muddy the Waters
Cal/OSHA has proposed new regulations that would incorporate California’s new workplace violence prevention law — which took effect July 1 — into Title 8, the set of regulations that covers workplace safety in the Golden State.
However, the proposed rules add a number of new requirements that some safety observers say would be unworkable in many workplaces and may create burdensome new standards for employers to follow.
Under the law passed last year, SB 553, virtually all California employers are required to establish, implement and maintain an effective workplace violence prevention plan and effective procedures to respond to “actual or potential” workplace violence emergencies.
The proposed additional requirements surpass those set out in state Labor Code as a result of SB 553. Here’s a look at some of the most significant changes.
Workplace controls
The proposed regulations list a number of acceptable procedures and rules that can be used to effectively reduce workplace violence hazards, including:
- Appropriate staffing levels,
- Hiring dedicated security personnel,
- Effective means to alert employees of the presence, location and nature of a security threat,
- Control of visitor entry, and
- Methods and procedures to prevent unauthorized firearms and weapons in the workplace.
Engineering controls
The proposal adds a number of suggestions for engineering controls that can help prevent violence in the workplace. These include:
- Electronic or mechanical access controls to employee-occupied areas,
- Weapon detectors (installed or handheld),
- Enclosed workstations with shatter-resistant glass,
- Deep service counters,
- Spaces configured to optimize employee access to exits, escape routes and alarms,
- Separate rooms or areas for high-risk persons,
- Locks on doors,
- Affixing furniture to the floor,
- Opaque glass windows (which can protect privacy, but allow employees to see where potential risks are),
- Improving lighting in dark areas, sight-aids, enhancing visibility and removing sight barriers,
- Video monitoring and recording, and
- Personal and workplace alarms.
The proposed rules also list situations or locations that have a higher risk of workplace violence. These include:
- Employees working alone or in locations isolated from other employees,
- Areas with poor illumination or blocked visibility (such as blind spots),
- Entries to places of employment where unauthorized access can occur,
- Work locations that lack effective escape routes,
- The presence of money or valuable items such as jewelry or luxury goods,
- Frequent or regular contact with the public,
- Working late at night or early morning, and
- Selling, distributing or providing alcohol, marijuana or pharmaceutical drugs.
The draft language would bar employers from requiring or encouraging employees to confront individuals suspected of theft or of engaging in violence in the workplace, except for dedicated security staff.
Finally, the proposed regulations outline steps employers can take when responding to and then investigating a case of workplace violence, post-incident:
- Provide immediate medical care or first aid to workers who have been injured in the incident,
- Identify employees involved in the incident,
- For employers with more than 25 employees, make available individual trauma counseling to those staff affected by the incident,
- Conduct a post-incident debriefing as soon as possible after the incident with employees, supervisors and security involved in the incident,
- Identify and evaluate workplace violence hazards that may have contributed to the incident,
- Identify and evaluate whether appropriate corrective measures developed under the firm’s workplace violence prevention plan were effectively implemented, and if any new or additional corrective measures should be made, and
- Solicit from employees involved in the incident their opinions regarding the cause of the incident, and whether any measures would have prevented it.
The takeaway
The proposed rules are just the first step. They still have to go through a public comment period and the Division of Occupational Safety and Health, which writes new regulations.
However, the rules have already received plenty of pushback from employers.
Karen Tynan, an attorney specializing in workplace safety and health for the Ogletree Deakins law firm, told the Cal-OSHA Reporter that there are potential pitfalls in the added provisions. The examples of engineering and work practice controls “may be helpful to employers, but certainly we don’t want to see inspectors demanding these examples in every workplace,” she said.
She also criticized the post-incident response procedures as “overbroad and overly burdensome. The demand for a post-incident investigation report will be incredibly difficult for even mid-sized employers or employers who do not regularly face workplace violence hazards.”