Blog - Tag: Measured Risk Insurance

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.

California Insurance Commissioner Ricardo Lara has ordered that the state’s average benchmark workers’ compensation rate be cut by 2.1%, starting Sept. 1.

The decision rejected the Workers’ Compensation Insurance Rating Bureau’s recommendation that the benchmark rate be raised by 0.9%, citing a slight uptick in claims costs and claims-adjusting costs.

The benchmark rate, also known as the pure premium rate, is a base rate that insurers can use to price their policies. It only includes only the cost of claims and claims-adjusting costs and does not take into account other forms of overhead and profits.

Each class code gets its own pure premium rate, and some classes may see increases and others further decreases. Every employer’s premiums will differ depending on their claims experience, industry and location.

Also, insurers are not required to use the pure premium rate and are free to price their policies as they see fit.

The decision is a further reflection of the low pricing environment for workers’ compensation, a rare bright spot in an insurance market that has seen hefty rate increases in other lines, such as commercial property and liability coverage.

The average benchmark rate will fall to $1.38 per $100 of payroll, down from the current $1.41.

Reasons behind Lara’s decision

Factors that the commissioner cited as influencing his decision include:

• The continuing decrease in the number of medical services associated with each workers’ comp claim, and
• A continuing decline in the percentage of claims with permanent disability benefits.

The new rate applies to policies incepting on or after Sept.1, 2024.

If you have questions about your coverage, please give your agent a call.

Each year, hundreds of construction workers suffer shock when handling electrical tools and equipment.

One of the big problems in understanding the dangers of electrical shock is the mistaken belief that only high voltages kill. It’s not the voltage that’s lethal, but the amount of current that passes through the body. The condition and placement of the body has a lot to do with the chance of getting a shock.

It’s important that employers train their workers about the basic facts regarding the causes of electrical shock when using these tools.

Water and electricity

Damp areas and metal objects can offer good shortcuts for electricity to reach the ground. If a worker’s hands are sweaty, if socks and shoes are moist or damp, if the floor is wet or they are standing in a puddle of water, the moisture may allow more current to pass through the body.

If work is to be done with metal objects or in damp areas, workers should recognize the hazards and take necessary precautions. These include:

• Rubber gloves and boots,
• Rubber mats,
• Insulated tools, and
• Rubber sheets that can be used to cover exposed metal.

Also, during times of rain, extra caution should be taken when working with electrical equipment or working near grounded objects.

Other precautions

It’s not just the presence of water that can cause a worker to be electrocuted. Electricity is always a danger, and workers should take all precautions necessary to avoid injury or death.

It’s important that you teach them the following:

• Treat every electric wire as if it were a live one.
• Inspect equipment and extension cords before each use.
• Take faulty equipment or plugs with bent or missing prongs out of service for repair.
• Only qualified electricians should repair electrical equipment or work on energized lines.
• If a plug doesn’t have three prongs or if the receptacle doesn’t have three openings, make sure the tool is grounded in some other way before use.
• Never try to bypass an electrical system by cutting off the third prong of a plug.
• Turn off the power and report the smell of hot or burning plastic, smoke or sparks, or the presence of flickering lights.
• Stop using a tool or appliance if a slight shock or tingling is felt.
• Never disconnect an electrical plug by pulling on the cord.
• Whenever working on an electric circuit, the circuit should be turned off and locked out at the circuit breaker or fuse box to ensure that it cannot be accidentally turned on.
• Those who regularly work on or around energized electrical equipment should be trained in emergency response and CPR.

The takeaway

The use of electrical tools requires additional precautions on the part of your workers. It’s important that you train them in proper usage and how to spot potential dangers of electrocution.

For the first time in 25 years, the Equal Employment Opportunity Commission has issued updated workplace harassment guidance for employers, increasing possible exposure to employee-initiated lawsuits.

The new guidance expands employee protections to include harassment based on sexual orientation and gender identity, as well as taking into account that harassment can be perpetrated virtually via text messaging, e-mails and other online or app-based mediums.

These are federal guidelines, meaning that they open a new avenue for potential employment practices liability exposure. Employers should understand this new guidance to ensure they don’t run afoul of the law and risk being sued by a worker.

Sex-based harassment

The new guidance expands the definition of sex-based harassment to include harassment related to breastfeeding, morning sickness, contraception and the decision to obtain — or not obtain — an abortion.

It also expands protections to include harassment based on sexual orientation and gender identity. An example of the latter would be an employer intentionally and repeatedly using a name or pronoun that is inconsistent with the worker’s gender identity, or denying access to bathrooms that are consistent with their identity.

Virtual harassment

The guidance notes that harassment does not have to be perpetrated in person to be illegal.

It states that harassment can also occur in the “virtual work environment,” such as through the company e-mail system, electronic bulletin boards, instant message systems, videoconferencing technology, intranet or official social media accounts.

The EEOC stated that while off-duty offensive social media posts sent on work systems generally don’t constitute harassment, they may if they impact the workplace, such as if the postings are directed at a particular employee or employer and are referenced at work.

The agency also stated that even if offensive material is sent while off-duty on non-work systems, like using personal phones or tablets to text harassing messages or making derogatory posts on their own social media accounts, it could be considered illegal.

The takeaway

The EEOC has designated workplace harassment as an enforcement priority.

Employers should update their anti-harassment policies and procedures in their employee handbooks to reflect the changes to EEOC guidance. Managers and supervisors should be trained in the new guidance as well.

The EEOC recommends that anti-harassment policies, at a minimum:

• Define what conduct is prohibited, and be widely disseminated;
• Be comprehensible to workers, including those whom the employer has reason to believe might have barriers to comprehension, such as limited literacy skills or proficiency in English;
• Require that supervisors report harassment when they are aware of it;
• Offer multiple ways to report harassment;
• Identify points of contact to whom reports of harassment should be made, including contact information; and
• Explain the employer’s complaint process, including the anti-retaliation and confidentiality protections.