Blog - Tag: Measured Risk Insurance Services
Ransomware Escalates: Physical Threats Against Company Leaders
A new survey has found that in 46% of ransomware incidents in the U.S., CEOs or other executives were physically threatened if their organizations did not pay the ransom demanded by hackers.
The findings in Semperis’ “2025 Ransomware Risk Report” highlight other pressure tactics, such as ransomware criminals threatening to file regulatory complaints to force payment. The study’s findings emphasize the need for businesses to remain vigilant against ransomware threats that can completely shut down their networks and websites until they pay ransom.
Many organizations cited a lack of experienced personnel or employee training as top challenges, opening the door to mistakes like clicking malicious links in e-mails that trigger ransomware.
Additionally, hackers are using new tactics to increase pressure on their victims.
Study findings
- 78% of organizations reported being targeted within the past 12 months.
- 55% of those that paid a ransom did so more than once, with 29% paying three or more times.
- 15% of organizations that paid never received usable decryption keys, or received corrupted ones, leaving equipment and data inaccessible.
- Less than one quarter (23%) recovered within a day, compared with 39% last year. Meanwhile, 18% needed between one week and one month, up from 11% in 2024.
- 42% paid ransoms of $500,000 or less, while 50% paid between $500,000 and $1 million.
New tactics
Physical threats — Ransomware actors are resorting to extreme measures to pressure victims into paying, including threats of physical harm to business executives. In the past 12 months, 40% of incidents involved physical threats against executives, according to the Semperis report.
Threats of reporting to regulators — in 47% of attacks, ransomware criminals threatened to file regulatory complaints against victim companies if they refused to pay.
This tactic was especially common against U.S. companies, likely due to cyber incident reporting requirements, including the Securities and Exchange Commission’s four-day disclosure rule for publicly traded firms. For example, ransomware group BlackCat reported one of its victims to the SEC in 2023 in a bid to pressure payment.
Other tactics — In early 2025, Cisco Talos reported that the Chaos ransomware group threatened additional damage by launching DDoS attacks and spreading news of the breach to competitors and clients if payment was withheld.
What businesses can do
- Address vulnerabilities and strengthen defenses to improve the ability to recover if an attack occurs.
- Regularly back up your data to an offline or secure location.
- Train staff to spot e-mails that may contain ransomware and avoid opening attachments or clicking on links from unknown or suspicious senders. Run cross-functional tabletop exercises every six months so executives, managers and technical teams know their roles.
- Ensure your organization has well-documented, clearly communicated crisis response and recovery processes, and practice them in test scenarios that mirror real-world conditions.
- Hold vendors and partners with system access accountable to the same security and recovery standards you require internally.
- Install updates to your operating system, web browsers and other software as soon as they become available and use a firewall.
If you are hit
- Contain the attack quickly. Isolate affected networks, revoke and rotate credentials, and preserve forensics. Then restore from clean, verified backups.
- Call your incident-response partner and legal counsel immediately. Parallel communication, legal and technical workstreams speed recovery and help limit secondary harm.
- Notify your cyber insurer right away. Expect tighter underwriting and potential premium impacts; nearly half of respondents reported coverage disruption after attacks.
- Treat ransom payment as a last resort. Require proof that a decryptor works on samples before transferring funds, and plan for the possibility that keys may never arrive.
The takeaway
Consider purchasing cyber insurance, which can help your organization recover from a ransomware hit or other cyberattack. In some cases, the insurer can help you avoid paying the ransom without compromising your ability to continue operating.
If you have questions about cyber insurance, give us a call.
Cumulative Trauma Claims Driving Workers’ Comp Costs
One of the largest writers of workers’ compensation insurance in California recently sounded the alarm about the growth of costly cumulative trauma claims in the state.
In a recent earnings call with analysts, the insurer, Employers Holdings, highlighted the drag these claims have on its results. This came a month after the Workers’ Compensation Insurance Rating Bureau noted in its recent rate filing the oversized impact of CT claims on overall workers’ comp claims. While some claims are legitimate, many are filed by workers after they are terminated, thanks to lawyers who approach them after they are laid off.
The typical claims allege gradual injuries sustained over years of repetitive motions, exposure or strain, rather than from a single accident or incident. They’re common in industries involving repetitive motion, heavy lifting or prolonged exposure to harmful conditions.
California is the only state that allows cumulative stress claims in workers’ compensation and one of only a few to permit claims after termination.
In 2023, CT claims accounted for 21.8% of all workers’ comp claims in the state, compared to 18.5% the year prior and 15.6% in 2021, according to the Rating Bureau.
CT claims often have similar characteristics:
- They are more likely to involve multiple injured body parts,
- Long delays between the time of injury and when the claim is filed, and
- Involvement of an applicant’s attorney hired by the claimant.
The Rating Bureau report found that:
- 40% of CT claims in California are filed after a worker is terminated.
- 98% of CT claims are litigated.
- Fully denied CT claims still end up costing over $10,000 on average, and many remain open even after five years.
The main injuries that workers claim when alleging CT:
- Soft tissue disorders 25%
- Dislocation and sprain 20%
- Carpal Tunnel Syndrome 13%
- Multiple injuries, including CTS 13%
- Mental & behavioral disorders 9%
The Rating Bureau found in a recent report that post-termination CT claims were initially less costly, but the longer they stay open, the more quickly costs accelerate.
That’s compared to regular CT claims filed by workers who are still working for their employer, which start off more expensive but tend to develop more slowly over time.
Example
The owner of a produce company said he had to lay off 46 workers, and a few of them started filing CT claims using the same attorney. Eventually, word got around among the other laid-off workers, and 16 of them had filed claims alleging CT injuries.
The firm’s workers’ comp carrier eventually set aside more than $500,000 in reserve for these claims. The employer’s X-Mod shot up to 350, and his premiums increased significantly as a result.
The takeaway
While these claims have long been a persistent problem in Southern California, they are spreading to other parts of the state, including the Bay Area and Sacramento, Katherine Antonello, CEO of Employers Holdings, said during the company’s earnings call in August 2025.
They’ve become such a burden on the system that California Insurance Commissioner Ricardo Lara acknowledged the rising frequency of these claims when approving a recent workers’ comp benchmark rate increase.
Employers should strive to reduce the risk of repetitive motion and cumulative injuries as part of good safety practice. At the same time, it’s important to document all injuries and near misses.
If a CT claim is filed, employers should conduct thorough investigations, meticulously document workplace hazards and training, and assess possible links between the injury and work.
Also check with your insurer to ensure the claim was filed within the state’s statute of limitations, which is one year. For post-termination claims, the clock starts on the worker’s last day of employment. For claims by active employees, the statute of limitations has not yet begun.
How to Implement an Effective Safety Incentive Program
Although not required by OSHA, some employers have shown that one of the best ways to positively motivate employees is through a safety incentive program that rewards safe behavior and participation in workplace safety efforts.
These programs need not be complicated, and some of the simplest have proven most effective. The best ones encourage safe behavior, teamwork and hazard recognition, while discouraging non-reporting of legitimate accidents or frivolous claims.
How safety incentive programs work
At their core, safety incentive programs offer rewards or recognition to employees or teams for meeting specific safety goals. These might include:
- Zero injuries over a period of time
- Reporting near misses
- Completing safety training
- Using personal protective equipment consistently
- Identifying and correcting safety hazards
Avoid “everything or nothing” goals, and ensure the prize is not the main motivator, as both are potential pitfalls that can discourage employees and promote cheating and under-reporting.
Getting started
Analyze past accident reports to understand the types of incidents that have occurred. Inspect your facility and correct all known hazards. Focus your incentive program on high-risk areas of operation.
Brainstorm with your safety team and employee representatives to develop goals that will promote increased workplace safety and measurable improvements. You’ll also need to decide what kind of incentives to offer staff who meet these goals.
When planning your program, your team should ask themselves:
Is it rewarding? The rewards must have a direct and immediate appeal to the targeted employees. If unsure, ask the employees.
Is it entertaining? The program should be something employees enjoy and want to participate in regularly.
Does it provide daily reminders? Communication is key to the success of a safety incentive program, so keep your staff updated on their progress. One popular method is to have a sign displaying the number of days since a safety incident.
Does the program allow rewards to grow? There should be milestones, such as every 100 days without an incident, that increase the reward over time.
Is it easy to understand? It must be clear, concise and easy for employees to follow.
Is it visual? Visual elements like safety signs or progress displays should be bright, colorful and attention-getting — and placed in conspicuous locations.
Is it flexible? An incentive plan that allows modifications gives management the latitude to keep it fresh.
Does it provide recognition? This applies to both group and individual achievements.
Is it easy to administer? Maintaining administrative records avoids potential confusion and ensures fairness.
Successful incentives
While cash rewards are frowned upon by safety professionals, you can still have appealing rewards, such as:
Gift cards: For various retailers, restaurants or online shopping sites like Amazon.
Bonus time off: An outstanding employee may get a Friday or half day off.
Recognition awards: Certificates, plaques or public acknowledgment of safety achievements in company newsletters or meetings.
Wellness rewards: Gym memberships, spa vouchers or other health-related perks.
Team celebrations: Lunches, outings or other social events that boost morale and foster camaraderie.
Experience-based rewards: Tickets to sporting events, concerts or other entertainment options.
Personalized safety gear/tools: High-quality safety equipment or tools customized with the employee’s name or initials.
Company swag: Items like shirts, hats or mugs with the company logo are often seen as a symbol of belonging and recognition.
How New U.S. Trade Policies Affect Insurance Costs
President Trump’s sweeping return to tariff-heavy trade policies in 2025 is sending ripples across the economy, including the cost of property insurance claims.
The latest round of tariffs, which include steep duties on imported construction materials and auto parts, many of which are sourced from China, threatens to drive up claims costs in both personal and commercial lines, particularly property and vehicle insurance. The result is likely to be higher insurance rates to account for higher claims costs.
Here’s a look at the effects on vehicle and commercial property insurance under the turbulent and constantly changing tariff regime.
Vehicle insurance effect
Depending on where they come from, vehicle parts face tariffs as high as 50% (in the case of China), which is hitting both original equipment manufacturer and aftermarket parts. Since more than half of all U.S. vehicle parts are imported, the cost of repairs has increased sharply, even for minor collisions.
According to the American Property Casualty Insurance Association, this could raise auto insurance claims costs by $7 billion to $24 billion annually.
The website Insurify predicts that full-coverage auto insurance premiums could rise 19% by year’s end on the back of higher repair costs and delays in parts availability, which also increase settlement times and costs.
For commercial fleets, this dynamic is particularly problematic. Businesses may face longer vehicle downtimes and delayed operations after an accident, and higher deductibles or premiums to account for elevated risk.
Commercial property insurance effects
Many of the main construction materials are also subject to tariffs:
- 25% across-the-board on steel
- 20% on Canadian lumber
- In early July, the president promised a 50% tariff on copper (used in wiring).
- Trump increased tariffs on steel and aluminum imports to 50% on June 4 and expanded them to include household appliances like refrigerators and dishwashers on June 12.
With these tariffs in place, the cost to rebuild or repair damaged property has increased significantly. The National Association of Home Builders estimates that tariffs have added $7,500 to $11,000 to the average cost of constructing a new home.
Business interruption risk
If tariffs inflate raw material costs, this could create uncertainty across supply chains. Therefore, businesses may be more vulnerable to supply chain breakdowns and related operational delays, increasing the risk of business interruption.
If tariffs cause delays in material inputs, they could slow down or stop manufacturer operations.
Industries like electronics, automotive parts, construction materials and apparel are especially exposed. Many of these businesses rely on components or raw materials from Asia, where even slight delays or cost increases can disrupt production and reduce profitability.
What business owners can do
What makes the current situation especially difficult for insurers is the unpredictability of Trump’s tariff policies. With frequent changes and shifting targets, insurers struggle to accurately model future claims costs, which complicates underwriting and risk pricing.
The lack of clarity around how long tariffs will remain in effect or whether additional duties will be imposed introduces pricing volatility that’s not easily absorbed by carriers. In some cases, insurers may respond by tightening underwriting standards or increasing premiums in advance to safeguard against future cost surges.
With tariffs driving up claims costs and likely hitting insurance costs, business owners are faced with several considerations:
- Review replacement costs and policy limits: Ensure the policy reflects current rebuilding costs, accounting for inflation from materials and labor. We can help you review your replacement cost.
- Consider higher deductibles: A higher deductible can reduce a policy’s premium, but it means the business will have to pay more out of pocket if it incurs a claim.
- Plan for longer claims cycles: Understand your carrier’s average claim timelines and adjust your business continuity plans accordingly.
- Find new vendors: If a business relies on parts or products from a high-tariff country and is concerned about resulting supply chain interruptions, it may want to explore new sources in other countries.
Insurance Commissioner Approves Workers’ Comp Rate Increase
California Insurance Commissioner Ricardo Lara has ordered an 8.7% average advisory pure premium rate hike for policies incepting on or after Sept. 1, 2025.
The rate follows a substantial uptick in claims and claims adjustment costs over the past four years, resulting in a $1.3 billion underwriting loss for the industry in 2024, the first since 2014. However the market is still competitive and carriers and carriers may price their policies as they see fit.
The 8.7% increase is an average across nearly 500 class codes, and according to the Workers’ Compensation Insurance Rating Bureau (WCIRB), employers in several industries may see premiums begin to rise after hitting a 10-year low last year.
The pure premium rate is a benchmark insurers use to price policies. It only accounts for the cost of claims and adjusting those claims, not expenses such as office operations, personnel costs outside of claims representatives, marketing or other overhead.
What’s driving costs
The main drivers of the rate increase, according to the California Department of Insurance and the WCIRB — which had recommended an 11.2% hike — include:
Rising medical costs. The average medical cost per claim has been steadily climbing since 2016, and reached $36,488 in 2024, up 9% from $33,573 the year prior and 28% from $28,500 in 2016. These costs are for claims that include wage replacement payouts and medical costs, meaning the injured worker was unable to work for a period of time.
Rising costs for medical-legal reports. These are prepared by a qualified physician to assess an injured worker’s condition and its relationship to their workplace injury. This report is crucial for determining eligibility for benefits. As medical costs have increased, there has been a corresponding increase in requests for these reports, which adds to the cost of a claim.
Growing effects of cumulative trauma claims. These are injuries that develop over time, typically from repetitive motions. There is an entire industry in Southern California that helps injured workers file these types of claims, which are growing significantly in frequency. The WCIRB now estimates that over one-fifth of indemnity claims involve cumulative trauma.
Rising claims adjusting costs. The average cost of adjusting workers’ comp claims that include indemnity payouts rose to $12,600 in 2024 from $9,800 in 2021, an increase of 28%. The Rating Bureau projects it will reach $14,300 in 2027.
The effects
The premium an employer pays depends on their claims experience.
According to WCIRB, more than 280 classes are projected to face a higher-than-average pure premium increase next year. Conversely, some sectors will see lower pure premium hikes, while others may see decreases.
But thanks to a robust workers’ comp market, employers with strong safety records and low X-Mods are likely to continue receiving favorable pricing.
How Fleet Managers Can Combat Distracted Driving
For companies that rely on fleets of vehicles to deliver goods, transport equipment or provide services, distracted driving is a risk that can pose an existential threat to the company.
Collisions resulting from inattentive driving can lead to serious injuries, costly vehicle damage and insurance rate hikes or cancellations. Most fleets are comprised of vehicles that are significantly larger than most passenger vehicles, and when they are in accidents, they can cause significant property damage and injuries.
The scope and types of distractions
Distracted driving contributed to 3,275 deaths in 2023, according to the National Highway Traffic Safety Administration. While mobile phone use is often the most cited culprit, distractions come in many forms and are typically categorized into three types:
- Manual distractions — Activities that take a driver’s hands off the wheel, such as eating, adjusting controls or reaching for objects.
- Visual distractions — Taking one’s eyes off the road, such as checking a GPS screen or looking at a phone.
- Cognitive distractions — Anything that pulls mental focus away from driving, including fatigue, conversations or emotional stress.
Fleet drivers face unique risks as they often spend long hours on the road, operate under tight schedules and interact with in-cab technology — all of which can increase exposure to distraction.
Insurance and liability risks
A single distracted driving incident can carry far-reaching implications. For businesses with commercial auto insurance, collisions caused by distraction can result in:
- Higher premiums after claims are filed.
- Increased scrutiny or loss of coverage from insurers.
- Legal liability, including lawsuits and settlements.
- Downtime and repair costs for vehicles.
- Reputational harm, especially in service-driven industries.
Insurance carriers are particularly wary of distracted driving trends. Companies with multiple incidents may find it difficult to renew policies or face steep rate hikes. That’s why taking preventive steps is a smart way to safeguard both coverage and financial health.
What fleet managers can do
To reduce the risk of distraction-related incidents, fleet operators should implement a layered approach that combines technology, training and culture. Here are some key strategies:
Establish and enforce a distracted driving policy — Every fleet should have a clear, written policy that prohibits manual phone use and limits other in-cab distractions. This policy should outline acceptable behaviors, consequences for violations and the procedures for reporting incidents. Importantly, leadership must model this behavior and ensure the rules are consistently enforced.
Educate drivers regularly — Driver training should go beyond onboarding. Schedule mandatory safety refreshers, include real-world case studies and highlight new technology or trends contributing to distraction. Emphasize the consequences of distracted driving, both personally and professionally.
Invest in telematics and monitoring — Modern telematics systems allow fleet managers to monitor driver behavior, flagging actions such as hard braking, erratic lane changes or extended screen time. Some systems offer in-cab alerts or coaching tools to help drivers self-correct in real time.
Use hands-free tools wisely — Voice-activated controls and Bluetooth devices can reduce the need for physical interaction, but they don’t eliminate risk. Even hands-free calls can be cognitively distracting. Encourage drivers to keep communication brief and never make calls while driving unless necessary.
Schedule wisely to reduce fatigue — Driver fatigue is a major contributor to cognitive distraction. Make sure schedules allow for adequate rest, limit overtime driving and rotate assignments when possible. Encourage drivers to take breaks and report fatigue honestly.
Incentivize safe behavior — Recognize and reward drivers who demonstrate safe, distraction-free driving habits. Safety incentive programs can help reinforce good behavior and build a culture where attentiveness is the norm.
Measure success — Tracking and measuring distracted driving incidents can help refine your program. Look at metrics such as the frequency of risky events flagged by telematics, crash rates and insurance claims. Use that data to make informed adjustments, whether it’s tweaking driver schedules, updating training materials or revisiting enforcement practices.
The takeaway
By prioritizing safety through clear policies, proactive monitoring and ongoing education, companies can:
- Reduce the likelihood of costly accidents.
- Lower their commercial auto insurance premiums or preserve access to coverage.
- Protect their drivers, the public and their reputation.
Proactive fleet management can make the difference in reining in distracted driving and protecting your company’s bottom line and ongoing viability.
How to Prepare for Blackouts During Wildfire Season
During wildfire season, utilities with equipment in at-risk areas will often cut power during high-wind events to reduce the risk of ignition from downed power lines.
While the practice can prevent a fire from starting, it can put businesses in a bind by hampering operations and even putting perishable items at risk of spoiling if the outage lasts for an extended period.
With the specter of multiple-day power outages always looming during wildfire season, businesses need to be prepared to keep their operations going and prevent losses that may not be covered by insurance.
Fortunately, businesses can take steps to ensure resilience and the ability to function during power outages, especially if they last a few days. The following is good advice for any business since blackouts can also occur during heavy storms and natural catastrophes which can hit anywhere.
Identify business processes that would be most affected
These processes will differ from business to business, but once you put them all down on paper, it will be easier to plan how to keep those functions going.
Create a continuity plan
Once you’ve identified your key processes, brainstorm how you can keep them going without your typically reliable power supply.
Write up an emergency response plan and share it with employees so they know what to do in a power outage and the steps to take to protect equipment. Employees should also know where to exit the building if they need to evacuate.
As part of your plan, build an emergency kit and include first aid supplies, flashlights, batteries, water, nonperishable food, safety gloves, a battery-powered radio and anything else your business might need.
Set up a backup power system
Consider investing in a backup generator that is right for your business needs. With a generator, you can continue to run critical aspects of a small business during a power outage. This is especially important if you have perishable inventory, like a restaurant, food distributor or grocery store, to avoid spoilage.
Make sure to keep backup generators and fuel in a safe location. Generators need to be used with adequate ventilation to avoid the risk of carbon monoxide poisoning. Never use a generator under wet conditions and always let them cool off before refueling.
Cloud storage and Wi-Fi
If you have not done so, you should secure a means of paperless document and file storage in the cloud. If there is a power outage and an accompanying surge, you could quickly lose your data.
You should also prepare a system of battery-powered mobile wireless hotspots that connect via cell towers, so that even when the internet goes down, you can finish important tasks requiring web access, such as setting up an e-mail auto-response.
Protect your electronic equipment
Equipment that contains sensitive components and plugs into a wall outlet, like a computer, could benefit from a surge protector, which protect them from the powerful rush of electricity when the power comes back on.
Buy an uninterruptible power supply unit
This is essentially a portable battery with power outlets, allowing you to plug in electronics and continue using them during an outage. They come in numerous sizes, and the more they cost, the more power they can store and deliver.
Some of these units can supply power to a small building, and you may be able to purchase a solar panel that can recharge the unit.
Invest in the right insurance
If you’ve got business interruption insurance, you may be covered for losses related to the outage, but it all depends on the specific wording in your policy. The cause of the outage might matter, and your coverage might only kick in if the outage lasts for a certain duration.
However, if the loss is the result of a power outage due to the public utility, you may not be able to get compensated for these losses by a business interruption policy. Also, while most commercial property policies include business interruption coverage, it only kicks in in the case of physical damage to the property.
That said, some policies cover power outages by default. If you are in a state that is susceptible to wildfires and there is a possibility of blackouts by your public utility, give us a call to discuss your current coverage.
Business Growth Can Lead to Increased Risk
Growing companies often overlook the importance of properly managing their risk.
Increased activity can result in additional losses. For example, more trucks driving more miles may result in more accidents. However, other kinds of risk can increase more than the jump in business activity. We look at three such areas here.
Workplace safety
Typically, when employers expand their workforce to meet growing demand for their products and services, the number of workers’ compensation claims tends to rise disproportionately.
New employees with less experience are more likely to sustain a workplace injury and overworked experienced staff may also overlook safety or cut corners to get the job done.
What you can do: One option is to hire a temporary-staffing firm to fill positions. But under OSHA’s “dual employer doctrine” the hiring employer and the temp agency are both responsible for temporary workers’ safety.
Check to make sure the temp agency has workers’ compensation insurance.
Litigation
Your workers may be putting in extra hours due to production pressures, but fatigued workers are more prone to making mistakes that can injure third parties or result in shoddy workmanship. In both cases, that opens your firm up to being sued.
What you can do: Conduct thorough interviews, check references and carry out background investigations when appropriate to avoid hiring people with known problems. You are responsible for the actions of your employees.
Also, make sure to provide regular breaks, especially in jobs that require attention and strength.
Labor law violations
As you grow you have more employees to keep track of, which means a greater chance of failing to comply with labor laws. In addition, many state governments have cracked down on wage and hour law violations.
As well, some companies may try to add to their worker pool by using more independent contractors to avoid hiring new workers. You will need to ensure that you comply with the U.S. Department of Labor’s rules on independent contracors or with your state’s laws, if any.
What you can do: Pay close attention to your payment systems and audit them to make sure you comply with wage and hour laws as well as meal and rest break laws.
The takeaway
Growing companies need to be vigilant about managing risk and should review their existing risk management strategies for gaps due to business growth.
What you can do: Consider the following steps to reduce your chances of increased claims:
- Maintain high standards when hiring new employees, such as conducting thorough interviews, checking references and, where appropriate, investigating backgrounds;
- Properly train and supervise new employees during a growth phase;
- Consider your current policies on temporary workers and weigh the benefits of a flexible workforce against liability issues that temporary workers pose;
- Revisit your policies about independent contractors;
- Ensure you pay workers properly for overtime work to ensure compliance with the law; and
- Keep shareholders informed as much as possible about any mergers or acquisitions, including terms of the transaction.
Cal/OSHA Making Changes to Heat Illness Prevention Rules
Cal/OSHA has released draft language that would require employers of outside workers to take additional steps to ensure their safety when working in high heat conditions.
The proposed rules were written to implement legislation — AB 2243 — signed into law in 2022 to address heat and wildfire smoke protections for workers. The draft rules, which address only heat, will complement existing heat illness prevention regulations that employers of outdoor workers are already required to follow.
The draft would require some employers to implement extra high heat illness prevention steps when temperatures reach 80 degrees for both indoor and outdoor employers. Under current rules, employers must provide shade for outdoor workers when temperatures reach 80 degrees, but additional high heat protections aren’t required until the mercury reaches 95 degrees.
Acclimatization
One part of the draft heat rules revises acclimatization procedures. Under current rules, a supervisor or designee must closely observe all employees during a heat wave, and workers who are newly assigned to a high-heat area must be closely observed during their first 14 days on the job. The draft language changes the term “high heat area” with “an area where the temperature equals or exceeds 95 degrees Fahrenheit.”
The draft also would require employers to either implement high-heat procedures for five working days or adopt a proposed work schedule for new and returning employees assigned to an area where the temperature is at least 80 degrees.
If an employer chooses the work schedule option, an employee’s heat exposure would be restricted for the first four days as follows:
- 20% on day one,
- 40% on day two,
- 60% on day three, and
- 80% on day four.
Employers would not need to implement these acclimatization procedures if they can prove that the new employee has consistently worked under the same or similar conditions in the prior 14 days.
Additionally, the proposed rules would require employers to distribute a copy of their heat illness prevention plan:
- To new employees upon hire,
- During heat illness prevention training, and
- To every employee at least once a year.
At no time is an employer required to furnish a copy of the HIPP more than twice a year.
Current rules refresher
For outdoor workplaces, shade must be present when temperatures are greater than 80°F. When temperatures are less than 80°F, shade must be available upon request.
For indoor workplaces, provide access to at least one cool-down area that is kept at a temperature below 82°F and shielded from high-radiant heat sources.
Shade and cool-down areas must be:
- Blocked from direct sunlight.
- Large enough to accommodate the number of workers on rest breaks so they can sit comfortably without touching each other.
- As close as possible to the work areas.
Employers shall encourage workers to take preventative cool-down rest periods and allow those who ask for one to take it. Employers are also required to monitor workers during rest periods for symptoms of heat-related illness.
When the temperature reaches 95°F, employers are required to implement high-heat procedures which must include:
- Observing and communicating effectively with workers.
- Reminding workers to drink water and take cool-down rest breaks.
Employers are also required to:
- Establish, implement and maintain an effective written outdoor HIPP that includes procedures for providing drinking water, shade, preventative rest periods, close observation during acclimatization, high-heat procedures, training and prompt emergency response.
- Provide first aid or emergency response to any worker showing signs or symptoms of heat illness, including contacting emergency medical services.
- Closely observe new workers and newly assigned workers in hot areas during a 14-day acclimatization period, as well as all employees working during a heat wave.
- Provide training on the HIPP to both workers and supervisors.
How Tariffs Are Affecting Construction and Insurance Costs
President Trump’s far-reaching tariffs are starting to bleed into building costs as many of the main materials used in construction are now subject to import taxes.
And as construction costs increase due to tariffs, so does the cost of repairing or replacing materials if damage occurs during construction. Rising repair and replacement costs make claims more expensive, and, in turn drive up the cost of property and casualty insurance for contractors.
Inputs for construction have already been on the rise for the last six years — particularly in 2020-2022, when the COVID-19 pandemic devastated global supply chains — and now many materials used in building or to build equipment and tools have been hit with hefty tariffs:
- Aluminum — 25% tariff, effective March 12.
- Lumber and timber — There is a 14.58% tariff on Canadian lumber, a rate that could rise to nearly 35% in coming months. The administration is studying whether to impose a 25% tariff on lumber from all nations.
- Steel — 25%, effective March 12.
Prices for building inputs may rise even higher if tariffs start snarling supply chains, which is a possibility. Higher tariffs can make imported goods harder to source and more expensive, forcing contractors to find new suppliers or wait longer for deliveries.
That can slow down a construction project, which costs money and increases exposure to a number of risks, including:
- Fire,
- Weather damage,
- Theft, and
- Vandalism, among others.
Effects on insurance
Here’s a look at how these tariff-driven cost increases may affect two types of insurance used by construction firms.
Builder’s risk insurance — These policies’ premiums are tied to the cost of materials and the length of a project. If building materials like lumber and steel cost more due to tariffs, the insured value of the project increases.
Example: A contractor is constructing a $25 million office building. If the tariff on imported steel and lumber increases the project cost by 10%, the insured value would increase by $2.5 million. The insurer accounts for that higher replacement value in its premium calculation, which will result in a larger premium.
Another factor that could result in higher claims costs is snarled supply chains — builders will have to wait longer for materials. That, in turn, can increase the building timeline, and if that happens, the contractor will need to extend their builder’s risk policy.
That will cost more as well, as the insurer will charge for the extension due to the longer exposure it will face.
General liability coverage extension — If delays occur, so will the exposure to increased worksite injuries, damage or third party claims. If a project takes longer to complete, it will mean the extended presence of workers, subcontractors and equipment. For each additional day a project takes to complete, the risk of an accident also increases.
Example: If a project extends past its deadline, the general liability policy would need to be extended for the additional time. And it’s unlikely that extension will be priced at the same rate as the original liability policy. Insurers will often reprice the policy extension based on the extended exposure and the kinds of subcontractors or equipment that will be on site.
The insurer may also require additional documentation and/or endorsements for the policy extension.
The takeaway
Higher costs of materials and insurance will make their way into project budgets, bids and profit margins. Another risk is that insurance certificates are delayed or found to be noncompliant, which can delay payments, result in expensive work stoppages and breaches of contract.
With all this in mind, you will need to work closely with your broker well in advance of new projects to ensure your coverage reflects the reality of higher material costs, the possibility of delays due to procurement issues and more.