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INDEX
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- From time to time, you should review your workers compensation payroll classifications. Ignoring them can cost you money. Your insurance professional can help.
- Company stationery should be treated like any other valuable asset. Mischievous or malicious persons can use it in ways that can hurt your company. Forging letters of recommendation is one of the more innocuous uses. Keep personal stationery under lock and key. Embossed stationery is a good forgery preventive: it's more difficult to forge.
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| Workplace violence: signs and statistics |
Although there are always exceptions, workplace violence offenders typically fit a pattern. You have seen the character in movies: male, 25 to 40 years old and generally a misfit. Throw in antisocial tendencies (withdrawn, possibly paranoid) a manipulative personality and a chronic complainer and… you get the picture.
Because the traits are relatively easy to spot, one would think that workplace violence would be relatively easy to prevent. However, according to the Bureau of Labor Statistics there were 902 workplace fatalities resulting from assaults and violent acts in 2003 (latest data available). There were many more injuries. According to the Bureau of Justice Statistics, the number of persons who were on-the-job violence victims averaged 1.7 million annually from 1993 to 1999.
Injuries to employees are not the only negative outcomes of workplace violence. Property damage is caused by disgruntled employees, hostile competitors or others with an axe to grind. Examples are damaged electronic systems or data (e.g., virus downloads or malicious programs), threats and extortion, and product tampering.
The most important elements of a prevention program are a written policy, employee training, risk analysis (vulnerability assessment) and well developed security systems. According to the American Society of Safety Engineers, however, only 1% of the respondents to a 2004 survey reported having written policies.
NIOSH, the National Institutes of Occupational Safety and Health, has a wealth of information about preventing workplace violence at its website, including sample written policies. The site is www.cdc.gov/niosh/injury/traumaviolence.html. Be sure to check all the links.
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| Terrorism coverage in peril, again |
According to a recent survey by a major insurance industry firm, in 2004 nearly twice as many companies bought terrorism coverage as part of their property insurance as in 2003. The percentage of purchasers rose from 27% of property insurance buyers to 49% in the one year.
Against this backdrop of increasing use of the coverage is the sobering fact that once again, federal support for the coverage may soon disappear. If that happens the possibility exists that the coverage will no longer be available after this year or will be significantly more expensive.
Even if available at a higher price, use of the coverage could drop. The survey found that the average quote to those who did not buy the coverage was 35% higher than rates quoted to those who did. This implies that cost is a major factor in the decision.
Many industry experts have cautioned that the private insurance market cannot meet the needs of insureds for terrorism coverage. Federal government support through the Terrorism Risk Insurance Act (TRIA) expires at the end of this year.
Representative Paul Kanjorski, D-Pa along with other House members has introduced legislation to extend TRIA through the end of 2007. Action on the bill has been delayed awaiting a study of the TRIA insurance market place by the Treasury Department. Kanjorski, in a recent speech, warned insureds that without forceful advocacy, an extension to TRIA is in severe jeopardy. Public demand is not there, he stated, noting that his office has not received more than five telephone calls regarding TRIA in the last three years.
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| Study examines return-to-work outcomes |
A new study by the Workers Compensation Research Institute examines the effect of certain factors on employee return to work. Factors include type of injury, worker demographics and employment patterns. The study included data from four states: California, Massachusetts, Texas and Pennsylvania. Among the key findings of the study are the following:
- Older workers (over 55) are between 12% and 35% less likely to return to work after an injury and are out of work from 62% to 272% longer.
- Education is a factor. Those workers with only grade school education were out of work 2 to 4.5 times longer than high school graduates.
- Part-time workers are less likely to return to work than those on full-time employment.
- Back injuries produced 35% to 108% longer disability periods than other major causes of injury.
- Worker perception of initial severity of injury and perception of effectiveness of recovery were the most consistent predictors of outcome in all four states.
The study suggests that programs that strive to minimize severity of injuries and promote effective recoveries and programs that target back injuries are able to improve return-to-work outcomes. The study (or an abstract) is available at www.wcrinet.org. Click on "search our studies."
The Workers Compensation Research Institute is an independent, not-for-profit research organization providing high-quality, objective information about public policy issues involving workers compensation systems. Organized in late 1983, the Institute does not take positions on the issues it researches; rather, it provides information obtained through studies and data collection efforts, which conform to recognized scientific methods.
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| Covering property in transit |
Shipping property requires a little thought and some attention to insurance implications. If your company is in the business of shipping product, you probably have a program in place to cover your risk. This article is for those who ship (or receive) only occasionally or rarely.
Common carriers (those who offer transportation services to the general public) are strictly liable for the goods in their charge. However, many seek to limit the liability by contract. Sometimes this is through a "released bill of lading" negotiated between the parties, other times by a written declaration from the carrier. Your first risk management action regarding a shipment should be to read carefully any related documentation. Sometimes the carriers will not negotiate, other times you may be able to win concessions.
Your regular property insurance program covers property in transit but probably is quite limited. The standard Insurance Services Office form limits coverage to $5,000 and covers only property on vehicles you own, lease or operate. Some insurers enhance this coverage as a marketing tool, but even those generally offer only a relatively small limit such as $25,000. Also, the coverage usually is "named perils" and not as broad as can be obtained in a special policy. If you seldom ship and the values are low, you can consider relying on this coverage although you still should read the policy and consult with your insurance professional.
If you are shipping (or receiving) property through a transaction (e.g., you ordered steel for a construction project) the point at which ownership transfers is critical. If you are the buyer, you generally should try not to take ownership until the material arrives at your site. Again, depending on bargaining leverage, this is not always possible. However, even if you can arrange delayed ownership, some shipments may be time-critical so that the cost of the delay associated with a lost or damaged shipment can be worse than the property loss. If you are the seller, you usually would prefer to transfer ownership at the shipping point.
If you are a frequent shipper, you probably have an annual transit insurance policy. If your company is just starting to ship more frequently and you do not have such a policy, it is worthwhile to consult with your insurance professional as to whether this coverage is for you.
If you ship infrequently or only occasionally have a particularly valuable piece of property in transit, you may wish to inquire about a "trip transit" policy to cover the specific shipment. If you ship over water, you may need a type of insurance known as "ocean marine." There are many possible choices. Your insurance professional can help you choose the best option.
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| Claims for damaged property |
Now is a good time to pull out your property insurance policy and look at the section entitled "Insured's duty after loss." That is, you do not want to wait until after a loss occurs to read about what you need to do. Here is a brief list of the types of things you need to address after a big loss occurs.
- Preserve the property. Protect it from further damage.
- Establish security. Be mindful that catastrophes often bring out the worst in some people and certain individuals may attempt to take advantage of the situation.
- Notify the insurer (and your insurance professional) as soon as possible and enlist their help.
- Separate damaged property from undamaged property. Of course, this statement applies to business personal property or inventory, not real property.
- Take an inventory of damaged and undamaged property.
- Keep and maintain good records. Find whatever you can to prove the value of the loss (this is the insured's burden), such as receipts, canceled checks and prior inventories. Take photographs of the damage.
- Prepare a proof of loss within the time limit required by the policy. Be careful to get it right, however. You may not get a second chance. Your insurance professional can be very helpful at this phase.
- Check all your policies to see which may apply and in what way.
- Provide the insurer with any information it asks for, even if the request duplicates a prior one.
- Consider professional help in determining values lost. Many policies provide a benefit (usually $10,000 or less) covering the cost of hiring someone to do just that.
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| Changes to additional insured endorsements could pose problems |
Many businesses rely on insurance of others for their protection. This protection occurs when one party in a contract agrees to indemnify and insure another. Usually, the one agreeing to indemnify requests an additional insured endorsement on its liability policy to protect the other party. This arrangement is common in many businesses.
Insurers do not like issuing these endorsements. The practice is allowed out of practical business necessity. However, in most cases the insurer does not have an opportunity to "underwrite" the risk it is taking on and may not get any premium or other compensation for the additional exposure. If they do not issue the endorsements, however, their insureds might not be able to get some of the business they want.
In July of 2004, the Insurance Services Office issued a number of new additional insured endorsements that have a common element: they significantly reduce coverage to an additional insured. There are several characteristics these endorsements share:
- They eliminate coverage for the additional insured's sole negligence
- The use of the words "arising out of" has been eliminated
- The loss must be attributable to the actions of the named insured (the party indemnifying)
- Coverage for the additional insured ceases when the work is completed or when that part of the work out of which the loss arises has been put to its intended use
The endorsements affected by these changes are some of the most commonly used forms. Although the intent of the new forms is to reduce insurer liability, this may come at the expense of the insured. Indemnity agreements and insurance requirements in contracts are likely to be out of line with the coverage provided under the new forms. The result may be breach of contract by the party providing indemnity and increased litigation between the insured and additional insured.
These forms are still in the process of being implemented. Older forms are available from many insurers. If contracts and transfers of risk play an important role in your business, you may want to be careful about the forms you will accept if you are the one being indemnified. If your role is the opposite, indemnifier, you should be careful not to assume a responsibility you cannot meet.
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Store backup media for your computers away from the operating area so a single fire will not destroy all copies of your data. Many operators violate this rule because they like to keep backups "handy."
Dispose of unwanted computer equipment properly, not in the dumpster. CPUs, printers and even computer monitors contain toxic substances that are not permitted in landfills.
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