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- As the workforce ages, employers will have many issues to deal with. One may be older drivers using vehicles on company business. For information on how to measure and improve driver safety in older drivers and others, visit www.aaafoundation.org/home/ for free educational materials.
- Some insurers are becoming stricter about accurate property values. Inaccurate values could result in premium overcharges or in underinsured losses. Consider an independent property valuation, especially if you have been adjusting your values only by an inflation factor for years. Companies offer valuation services and software that can get the job done and will be accepted by insurers.
- Newly employed drivers account for 40% of the accidents in a company's vehicle fleet, according to some studies. One way to deal with this is to require all new employees who may use company vehicles to take driver training courses shortly after beginning employment.
- Employees bring their personal property to work at times. Sometimes it is for the employee's benefit, other times for the employer's. Whatever the reason, it is best to have policies clearly stating when this practice is allowed and what happens if the employee's property is lost or damaged. Usually, your company's property insurance won't cover such property.
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| Model law could reduce insurer oversight |
On March 17, 2002, the National Association of Insurance Commissioners (NAIC) approved a model law that would reduce the need for regulatory approval of insurance rates and policy forms. Prior regulatory rate approval under the law would not be needed for commercial insurance coverages. In addition insurers could begin using new policy forms within 30 days after filing with regulators, with or without approval.
The NAIC is an organization comprised of state insurance administrators. Its model laws are not binding and must be approved by each state legislature. Some states already have laws similar to the model proposed. Others, however, are considerably more involved in oversight of rates and policies. Adopting this model law in such states may reduce some of the oversight.
Insurers say such laws are necessary. They argue that the proposed laws allow quick introduction of new insurance products. They say such rapid response is necessary in today's market place. On the other hand, consumer advocates have expressed fear that less regulation may hurt smaller businesses that rely on protection from regulators.
In a rapidly changing business environment that increasingly involves deregulation of many industries, including insurance, awareness of risks is critical to a business. Knowledgeable, informed advisors can be among the organization's most valuable resources. This is especially true in the field of insurance. Less regulation makes it ever more important to have available sources of knowledge about policy coverage, costs and quality of insurers.
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| Patent infringement suit sets new boundaries |
In February 2002, a jury awarded $28.5 million against the largest U.S. manufacturer of hair dryers. The jury found that the defendant had deliberately and willfully infringed on the patented safety device of a German inventor. Because of the deliberate nature of the infringement, the award is subject to treble damages. With interest, this could increase the entire judgment to $107 million, one of the largest recorded for this type of case.
The defendant corporation had been contacted about possible use of the device in 1987 by the inventor, who holds a doctorate in physics. He had obtained a patent in 1986 for a device that automatically shuts off a hair dryer when it comes in contact with water. The corporation declined to acquire rights to the device. But in 1991 it called the inventor back for further discussions. By that time, the defendant was already selling a safety device similar to the inventor's. The defendant revealed this information to the inventor, who determined that the device clearly infringed on his patent. In 1994 he sued the corporation. Eight years later he won his case.
Further complicating matters is the fact that a separate company provides the safety devices to the hair dryer manufacturer. That supplier has an agreement with the manufacturer to indemnify the manufacturer for patent infringement losses. However, lawyers for the supplier have already alleged that the manufacturer may have violated an agreement to cooperate in opposing suits by failing to challenge certain testimony during the trial.
The manufacturer plans to appeal the award. That trial and the potential of an action between the manufacturer and supplier over the indemnity agreement almost assure escalating legal fees. The size of the award and the scope and length of the litigation (and the costs) in this case clearly illustrate the importance of patent infringement/intellectual property coverage for manufacturing organizations.
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An old maxim among some loss prevention professionals is that 90% of all accidents are caused by human behavior. While many dispute this sweeping generalization, others still argue that behavior is a major factor - perhaps THE major factor contributing to losses.
If that is true, focusing on behavior in safety training may yield impressive results. If it is not true, employers may waste money trying to modify behavior in their workers when some other approach would be more effective.
Here are several sources, pro and con, for information and training programs on behavior-based safety (BBS).
There is a lot of information on this controversial topic on the Internet. Any good search engine looking for the words "behavior based safety" will yield thousands of sources - both for and against the concept. You decide what is right for your company.
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| Still think you don't need employment practices liability coverage? |
Many small business owners don't feel the need for employment practices liability coverage. They feel it is too expensive or that their workforce is too loyal or that there is a "family" atmosphere at work. Business owners should consider the following statistics gathered from several web sites that address the issue:
- Employment related suits are the fastest growing civil cases in the United States.
- During the 1990s, U.S. Companies paid over $1 billion for employment related claims.
- Statistics show an employer is more likely to have an employment claim than a property or general liability claim.
- Employees win over 65% of all claims.
- 10% of all awards in cases involving discrimination and wrongful termination are in excess of $1,000,000.
- Over 15,000 sexual harassment claims are filed each year.
- Defense costs alone can run from $50,000 to $250,000
- A 1996 survey found 70% of working women have been subjected to some form of sexual harassment, and 52% of working women have either been fired or forced to quit because of sexual harassment
- States with most complaints/claims per the EEOC:
- Texas
- Florida
- California
- Illinois
- Georgia
Company managers should think about the possibility of employment practices liability claims within their own organizations. If the risk seems real, review your current coverages to see if any would respond. If needed, consider a stand-alone policy or possibly an amendment to your Directors and Officers liability coverage.
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| Workers compensation - the pendulum swings |
Last decade, employers seemed to have the upper hand in workers compensation insurance. Reform laws designed to curb abuse and limit contested claims passed in many states. The "soft" insurance market kept premiums and rates down. Improved safety measures resulted in declining injury frequency rates for many occupations as measured by the Bureau of Labor Statistics. Health care costs stabilized somewhat - or at least the rate of increase slowed.
The new millennium has ushered in a change. The workers compensation pendulum appears to be swinging back in the opposite direction in a number of ways.
- Health care costs are jumping at rate increase levels not seen since the late 1980s
- Partly because of rate cutting, many insurers have experienced severe losses, necessitating significant rate hikes
- Some of the weaker insurers did not survive the rate cutting, further reducing competition
- The decline in accident frequency appears to be slowing if not stopped
- Forces opposed to reforms have gained momentum to roll back some of the gains
- Many states are looking at or have already passed significant benefit increases
- New ergonomic and other rules will cost employers money
The clear implication for employers is that it is time to start paying closer attention to workers compensation costs once again. "Back to the basics" may be the rallying cry as companies try to avoid getting caught in an upward price spiral.
If you have not paid attention to your workers compensation and safety programs lately, now may be the time to take a closer look at ways to keep costs down. Safety programs, ergonomics programs, return to work programs, case management and consideration of loss-sensitive premium plans are all proven ways to control costs. Call us if you need help in any of these areas.
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| Corporate cell phone liability confirmed |
Distractions from cell phones while driving are well documented. Many authorities have held a lingering concern about potential liability for companies whose employees use cell phones while traveling. Two recent cases remove any doubt that cell phone usage by employees constitutes a serious liability exposure for businesses.
In Florida, a lumber company employee was using his cell phone in his car when he struck another vehicle, injuring a 79-year old female passenger. The severely injured person was still on a respirator nine months later when a jury awarded $21 million dollars to her and her husband. The lumber company reportedly had a $16 million auto liability policy limit. The case is Alicia Bustos & Ruben Bustos vs. Lazaro Luis Leiva & Dyke Industries, Inc., Miami-Dade County Circuit Court No. 01-13370 CA30.
In Virginia, a judge has allowed a $30 million wrongful death lawsuit to proceed against a law firm. A firm associate struck and killed a 15-year old girl. The associate was using her cell phone while driving. The suit alleges both vicarious liability and direct negligence on the part of the law firm for two reasons. It contends that the firm encouraged employee use of cell phones to conduct business. The suit also argues that the firm failed to adopt a policy about the safe use of cell phones while driving. The case is Youn vs. Wagner et al., Loudon County Circuit Court; CL 24892.
You can help protect your company from the risk of liability lawsuits for this growing problem. Adopt a safe use of cell phone policy for your employees. Make sure that you communicate the policy to them. Obtain evidence that they are aware of it and understand the requirements. For a perspective on what should go into a cell phone policy, try these web sites: www.louisville.bizjournals.com/louisville/stories/2001/10/01/editorial2.html, or www.hklaw.com/newsletters.asp?ID=233&Article=1327.
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