The benefits of a Master Policy

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We have all heard the phrase “Cheaper by the Dozen." This means that things are handled more efficiently as a group than individually. This same principle can be applied to insurance as well. More specifically, property owner’s insurance and whether that be rental properties, apartments, or other commercial buildings, there are many benefits to an insurance consumer that can be achieved by combining multiple insurance policies into one master policy. 


The first benefit, and probably the one that consumer’s value the most, would be the premium saved by combining policies. Using the “Cheaper by the Dozen” example, say you own 12 rental properties and currently insure them all on their own separate policies, each costing you $1,000 for the year ($12,000 total). If you could combine them into one policy, the larger premium amount will allow you to gain a “bulk discount” of say, 10%. Your annual insurance premium would then drop from $12,000 to $10,800, saving you $1,200 per year. Over an extended period of time this kind of savings could really add up. With the larger premium for the portfolio you may be able to better absorb a loss vs. a single location premium.


In addition to saving you money, combining your insurance policies will make your life easier. Imagine reducing 12 separate renewal dates into just one common effective date. Handling everything once a year instead of 12 different times will make the task of managing your insurance portfolio much simpler and give you more time to focus on growing your business. 


To find out more about the many other benefits of combing your insurance policies into one master policy, I can be reached at 405-507-2734 or nbritten@pi-ins.com
 

Percentage deductible? What is that?

What is a “percentage deductible?”

A percentage deductible is a calculated deductible based off of the total insured value on your property policy.  For example: you have your hotel or apartment insured for $3,000,000; the contents insured for $250,000; and, your annual receipts/business income insured for $250,000. Your total insured value would be $3,500,000.  With a 1% wind/hail deductible, your deductible would be $35,000.  

I know this topic may seem elementary, but I’ve spoken with several clients and learned they had been misinformed on how a percentage deductible works. 

As your agent, I will always strive to get a flat deductible. Questions? Let’s talk. 

Sean

Mother Nature and Deductibles

If you live in the Midwest region of the country, or “Tornado Alley”, it is almost inevitable you have experienced some form of wind and hail that may or may not have resulted in an insurance claim. Whether it was your personal home, auto, or maybe a rental dwelling, you have seen the damage that Mother Nature can cause during the storm season.

As a landlord, these storms can impact to your bottom line and it is important to understand how your properties are covered against these perils. There are few different approaches to structuring your insurance deductible, and choosing the correct deducible for your portfolio could mean the difference in thousands of dollars to your bottom line. When explaining deductibles, the Insurance Information Institute says,

“A deductible can be either a specific dollar amount or a percentage      

of the total amount of insurance on a policy. Generally speaking,

the larger the deductible, the less a consumer pays in premiums for

an insurance policy.”

There is not a universally correct deductible option for everyone and it is not a certainty that you will have the liberty to choose which form will apply to your policy, but there are a few factors to understand how your deductible will affect your policy.

Percentage vs. Flat Deductibles

If you have a flat $1,000 deductible, that money would be deducted from your claim. So, if your insurance company has determined that you have an insured loss worth $10,000 you would receive a claims check for $9,000.

Percentage deductibles are based on a percentage of the property’s insured value. So if your house is insured for $100,000 and your insurance policy has a 2 % deductible, $2,000 would be deducted from the amount you are reimbursed on a claim. In the event of the $10,000 insurance loss, you would be paid $8,000.

Per Location vs. Per Occurrence Deductibles

Realizing how your deductible will apply to your property schedule is crucial. Say you have 10 rental dwellings and a single hail storm damages all 10 roofs. If you have a $1,000 per location deductible, that would equate to $10,000 in total deductibles you would pay if you were to file a claim to replace all your roofs.

Using the same situation where all 10 properties are damaged by one storm, if instead you have a $5,000 per occurrence deductible, you would only pay one $5,000 deductible if you were to file a claim to replace all your roofs.

Not all carriers will offer a per occurrence deductible, and depending on the number of locations you have and the total insurable value of your portfolio, it may not be the right fit for you. It is important that you consult your agent to explore all the possibilities that are available to you and figure out which deductible structure suits you the best.

If you have questions or would like to learn more about our unique programs for rental dwellings you can reach me at 405-507-2734 or nbritten@pi-ins.com

Understanding co-insurance in today's commercial property market

What is Co-insurance?
Most people associate co-insurance with health insurance; however, it’s not exactly the same thing when dealing with property coverage.  The co-insurance clause was implemented as a tool to ensure property owners were not under insuring their properties.  

How does it work?
Just like car dealers use the NADA Guide for car values, we use the Marshall Swift & Boechk (MSB) guide for commercial building values.  Now, these are not market values but rather rebuild estimates. At the time of a loss, our adjuster enters information in the MSB system to determine the rebuild cost of a property.

An example:
Let’s say your property is insured for $500,000 and the insurance policy has an 80% co-insurance clause, meaning you must insure the property for 80% of the cost to rebuild it.  If the adjuster determines that the cost to rebuild is $1,000,000 then the minimum you can insure the property for is $800,000 (80% of $1,000,000). Since the property is insured for $500,000, the claim check will now show a co-insurance penalty because the property was under insured. his is calculated by dividing what you should have insured the property for into the amount you did insure it ($500,000/$800,000 = .625). The penalty figure is multiplied by the loss amount, which let’s say is $50,000 and that amount is listed on the claim check ($50,000 x .625 = $31,250). A claim check for $31,250 on a $50,000 loss and that’s without even applying the deductible!

I say all this not to confuse you; but rather, to take the burden of calculating the building value of your property off your shoulders.

We know the questions to ask and the information to gather to provide you with the best insurance coverage for your property.

Let’s talk.

How A Wellness Plan can save you on Workers Comp premiums

wellness workers compensation plan

Many companies are now considering wellness plans and how they can help reduce health insurance costs. With health insurance costs on the rise every year, I can see how this becomes a topic for health insurance brokers and TPA’s (Third Party Administrators) to explore. What is seldom talked about, however, is how a wellness plan can reduce your Workers’ Compensation costs.

When we are looking at ways to cut costs, the addition of a wellness plan is an expense that just might pay for itself. Consider that a Duke University Medical Center analysis found that obese workers filed twice the number of Workers’ Compensation claims, had seven times higher medical costs from those claims, and lost 13 times more days of work from work injury or work illness than non-obese workers did. Further, smokers were absent from work 50% more and took longer to recover from injuries. With Workers’ Compensation costs continuing to rise, a wellness plan can promote the balance between treating injured workers and returning them to work with cost containment strategies.


By implementing a wellness plan and incorporating it into your workplace accident procedures, the ROI (Return on Investment) for Workers’ Compensation alone is estimated at 4:1. Knowing this, some companies are starting to involve the risk management department in the development and implementation of wellness plans and then offering it to injured workers as a way to get them back to work quicker.

Because the best, and easiest way to educate employees and get them engaged in wellness is through their health insurance, many companies are now offering incentives to encourage participation in wellness programs such as lower deductibles, additional employer contributions to HSA accounts, lower coinsurance, etc. On the flip side, others are introducing the “stick” approach whereby deductibles and co-payments are higher, etc. for not participating in wellness initiatives such as smoking cessation plans or health risks assessments.

The real savings derived from a wellness plan that is often overlooked is the cumulative savings when it is incorporated into a company’s benefit package. For example, add all the savings that the health insurance community describes with the Workers’ Compensation facts I just explained and the savings from both sides are exponential. If you are under a fully insured (standard) group health plan and a Workers’ Compensation fully insured plan, this could be a good savings. If you are self insured or insured in a captive or large deductible, the savings could be even more and would start immediately in this case as the cash flow is more rewarding early on with this type of plan.

Would all industries benefit from this approach? Since Construction, Oil and Gas, Service, and Manufacturing pay much higher Workers’ Compensation rates than industries primarily with office workers, they stand to benefit the most from implementing a wellness plan. If I were a CFO at one of these companies I would consider this immediately.

Chris Moxley, CIC

Do you have a Disaster Plan?

disaster plan oklahoma tornado

As we approach weather season, let's talk about your disaster plan. I have discussed in the past that a good Disaster Plan is critical to reduce your total cost of risk. When we ask clients about their disaster plan, I usually hear, “no we need to work on that” or, “yes our computer guy has us taken care of”.  The problem with the first response is obvious but when I dive into the latter scenario,  I often find many holes in their program.  As we know, having your computers backed up is very important and most of us think and expect that that is being done properly.  Even though you may find that the backup is not being done as good as it can be done, a bigger problem is what are you going to do with that data if your building is a total loss due to a fire, tornado, or ice storm?  Even if your data survives, most businesses never recover from a total loss at their property.  Below are some important elements of a complete Disaster Plan:

  • Data Backup and Recovery – This includes software and not just data.
  • Written plan with procedures,  and contacts.  Copies of relevant data for each key employee  should be kept at their houses.
  • Facilities & Power - If you are shut down, for many types of disasters, so is your power.  Who will provide power, computers, office space, warehouse space, and internet or phone connectivity if these are out.  A disaster can include a major cut in your internet service without any type of natural disaster being the cause.  We partner with firms that provide these services to our clients.
  • Testing – If you plan has not been tested, it will probably fail or not obtain it’s desired result.  Everyone we know that has tested their plan has found huge problems they had to fix after the test. When you test, you should simulate a complete loss and restore just like you would have to do in a disaster.
  • Funding – Now that you have the plan to take care of all of this, who will pay for it?  It’s important that your Risk Advisor structures your insurance to properly fund your plan.

Managing your Risk when you sign Sign Contracts

Risk management in Oklahoma and signed contracts.

 What you sign can impact your Total Cost of Risk as much as anything else you do.  Yes that signature you sign in haste just to get that invoice paid, or obtain that lease before anyone else, can be a huge risk to your business.  Many business owners do not have anyone review their contracts before they sign them.  Below are just some of the contracts business owners sign that should be reviewed by an attorney and insurance broker or risk consultant:

  • Leases (property)
  • Automobile or Equipment Leases
  • Construction or Service Contracts – This includes subcontract agreements with any subcontractors or service providers or contracts where you may be the owner of the property for work being performed.  An example of this might be you hiring a General Contractor to do a roofing project for you and he hires a subcontractor to do the work.  You should review this contract as well.
  • Distributor Contracts – whether you are the one selling the product or the buyer

What are we looking for?  An attorney should be looking at the entire contract including how you will be paid and when or how you can get out of the contract.  Your Risk Consultant or insurance broker should be looking at:

  • Indemnity Clauses or Hold Harmless agreements – are they fair? Are they insurable?
  • Does your insurance cover as many of the exposures that you are assuming as possible – (many are uninsurable)
  • Does the contract use modern Insurance Language -  Many are still patterned after policies first introduced in 1973.  Those were modernized in 1986 and much of the wording could be out of date if not modernized
  • What can be taken out or changed that benefits you – If we can suggest changes in language that reduces your exposures, many times that can be negotiated before you sign the contract(s)
  • What endorsements need to be added to your insurance to meet the requirements and how much will it cost you?

Commercial Umbrella Liability - What Limit should I carry?

Umbrellas and Excess policies are important because they give you additional (higher) limits on multiple policies by purchasing one policy.  Most cover General Liability, Automobile, and the Employers’ Liability part of Workers’ Compensation Insurance. Umbrellas are written on their own form and often contain broader coverage than their underlying policies plus they offer drop down coverage for these situations.  Excess policies follow the underlying policies and are only as broad as the polices they encompass.

I have been asked several times what Umbrella Limit a company should carry? While there is no definitive answer to this question, companies should begin their analysis by using the net worth of their company as a guideline.  For example, the more you have, the more you should carry. Companies with substantial property values that have appreciated over time should look to  more than just their financial statements to determine asset values. They should also look at the current market value of their properties. 

We all hear of large losses that put companies out of business, where there could not have been enough coverage purchased to cover the loss. I have personally seen accidents that exceeded $2,000.000 but I have not seen anything over $10,000,000.   This is why I am a proponent of dividing your companies into separate entities if it makes sense to do so. Whether or not you do this, keep in mind that the higher limits you obtain, the less each incremental layer will add to your premium. For example, let’s say the first $1,000,000 of the umbrella  costs $2,000.  The next $1,000,000 might cost $1,000 and the 3rd $1,000,000 might cost $500 for a total premium of $3,500 for a $3,000,000 umbrella.

Whatever you do, take the time to properly protect your company.  You spent a lot of time building your business, so spend the time to make sure you get to keep it.

Buying Personal Umbrella Insurance might save your Business

Personal Umbrella Insurance and commercial insurance solutions by Professional Insurors Business Insurance OKC

As a Business Risk Advisor, I am often looking over Business Insurance policies, doing risk management worksheets, and asking lots of questions to make sure my clients business' are protected properly.   We talk about carrying proper limits on General Liability, Auto Liability, & workers compensation.  We even talk about Umbrella coverage, that increases these limits even more. Since I and many advisors specialize in commercial only and don't provide  personal insurance, this is one thing that can get overlooked by your personal lines insurance agent.  There is a flood of Internet based insurance companies now providing coverage for Auto, and Homeowners.  There are equally, personal lines insurance agents that do not ask the proper questions to cover the Business Owner as he needs to be covered for his personal exposures.  As the Allstate commercial says, "your 15 minute insurance may not protect you".

Many business owners protect themselves by purchasing high limits of insurance and setting up multiple companies to keep their assets protected.  You need to spend equal time making sure you have your personal coverages set up properly.  (For Example:)

My employee is driving a delivery truck and causes a multi-car accident in which there are several serious injuries.  A large award is given and I have enough coverage with my auto and umbrella liability to pay the claim.  As a backup to keep them away from my personal assets, I have the protection of my corporation or LLC. 

What if I have this same accident on my way home in my personal vehicle and I don't enough insurance limits to cover this claim?  Once they get a judgement, they can go after my personal assets. 

If that is not enough they can come after my ownership in my company or it's assets.  The price to increase my personal auto limits is very reasonable and would seem cheap now.

I recommend you look at your personal liability limits under your homeowners insurance, personal auto, and any other recreational vehicles or boats you have, and increase them enough that you can buy a personal umbrella to extend all of those limits to between $1,000,000 and $10,000,000 depending on your needs.  Personal Umbrella's cost start at a couple of hundred dollars a year and go up from there.

Thanks to Chris Griswold, Attorney, for his help on this article.

Using Multiple Entities to Limit Risk Exposure

Question:  Why should a business owner use different LLC’s (or corporations) to help manage their risk and exposure?

Forming multiple companies, holding companies and Oklahoma business Insurance programs.

Answer:  First of all, legally speaking, it’s important to understand that LLC’s (or S-Corps or C-Corps, whichever one you use) are actually their own, separate, “legal persons.”  This means that, just like you or me, the LLC (or corporation) can actually sue and/or be sued as a separate, legal entity (Note: the only difference between you being your own, legal person and the LLC being its own, legal person is that you, as a human being, in addition to being a separate, legal person, are also what’s called a “natural person” who is, medically speaking, an entity that is alive and breathing!).    

Second of all, as a business owner, it’s important to understand the incredible importance of having your various interests owned by various LLC’s (or corporations) because doing this, in and of itself, is actually a great way to perform the critical function of risk management.  How does it work?  Read below.

For example, let’s say you’re a business owner who owns a plumbing company with 50 plumbers, 50 trucks and you own a 5 acre tract of land which contains your warehouse building and your administrative offices.  You own all the land, the offices, the trucks and the warehouse building.  Accordingly, you’d likely want to separate out your ownership of these various assets in the following manner:

 A)     You’d want to change the ownership of the trucks from your personal name (or from the one, single LLC or corporation that currently owns everything associated with your entire business) to a different, separate LLC - let’s call it “Truck, LLC.”  By putting your equipment into Truck, LLC, you’ve separated it from the other assets you own (i.e., the 5 acre tract of land, your warehouse and your administrative offices) so that, if an accident was ever caused by one of your 50 trucks, the other assets won’t be exposed or made vulnerable to any claims arising from such truck accident;

B)     You’d then do the same thing with your warehouse (i.e., Warehouse, LLC), your administrative offices (i.e., Administrative Office, LLC) and perhaps even certain pieces of plumbing related equipment (i.e., Related Equipment, LLC) which have their own unique, high liability risk factors such as: high voltage generators, tractors, backhoes, lift equipment, etc…).

This way, if any of these different categories of assets ever cause an accident (or are ever involved in an accident), all the other assets in the other LLCs will be neatly protected within their own separate, legal entity.  Is this method completely fail safe?  No.  But it’s a great way to begin doing some risk management for your company.  

Chris Griswold is an attorney in Oklahoma City. He specializes in Commercial Real Estate Law, Business Transactions, and Estate Planning. You can find him on the web at  www.chrisgriswoldpc.com


What You Don't Know About Work Comp

Oklahoma workers compensation insurance found at Professional Insurors Business Insurance in OKC.

Work Comp is a very complex policy.  Most people think they have no control over the costs of work comp costs.  However, work comp is very controllable if you are proactive and get involved.  Most importantly, hire an agent that specializes in work comp.  I want to cover just a few topics of work comp that most don't think about.

The Claims process.  When your employee got injured what did you do?  Did you send them to the Doctor who prescribed pain medication for a strained back and recommended they stay off work for a week?  Did you know that if your employee can be back at work, even light duty work, within 72 hours of his claim, you save 70% of the cost of that claim.  It's important to know the doctor you are using.  In case of a strained back, the employee could have probably been ok going home for the day, taking ibuprofen and coming back the next day for light duty. 

Did you know that when a claim occurs the insurance carrier sets a reserve amount for how much they think the claim will be?  That reserve amount counts the same as actual claim dollars spent.  It's important to always request your loss runs 5 months after the anniversary of your work comp.  After the 6th month the claims or reserve dollars shown will then effect your experience mod for the next year.  However if you get the loss runs and notice a claim should be closed, or you dispute the reserve amount, you could save money.

The longer your injured employee is out of work the worse your experience mod will be affected.  It's important that you or your agent are in constant contact with the:  Employee, Doctor, and Case Manager.  Believe it or not, sometimes work comp claims go unnoticed and you have an employee with a sprained ankle supposed to be out for a week, and he is still in the Work Comp system 4 weeks later. 

Transferring Risk.  If you use subcontractors you will always want to make sure they have their own work comp policies.  If they do not, you will be hit for their costs come audit time.   Not only do you want to collect certificates from them, you want to have them sign a contract which makes certain their insurance pays first.  In most policies, waiver of subrogation, primary non-contributory and indemnity clause are only enforced if there is a contract in place between you and your subcontractor. We have a method of protecting our clients in this area.

Hiring Practices.  You are probably thinking, how could my hiring practices affect my work comp?  First of all, are you hiring a criminal?  Are you hiring somebody that has figured out the work comp system?  You want to make sure you are at least doing background checks and drug tests.  These employees you hire are the face of your company, you want to make sure they are keeping the reputation you worked so hard for.

With regards to the recommendations I made above, we can help with all of these items.  We are setup to give access to our clients to run their own background checks for their employees.  We brought in an attorney to develop a contract for us to give to our clients who use subcontractors.  We would still advise our clients to have their attorney look over.  And relating to your claims process, we make sure we cover every angle when a claim occurs. 

If you have any Work Comp questions or would like us to take a look at your policy, please give us a call.  Sean Leigh

What Makes up your Total Cost of Risk

The Total Cost of Risk, Risk Management,and Commercial Insurance solutions can be planned at Professional Insurors Business Insurance in OKC.

Your TCOR (Total Cost of Risk) includes 3 major categories of Expenses:  Preventative Cost, Direct Cost, and Indirect Cost.  Together these equal your Total Cost of Risk.  Many people just think of their insurance cost alone but this is far from your total cost.  What is interesting is the cost you spend in one area can effect the amount you spend in another.  It is a proven fact that money spent in preventing claims or losses reduces your direct costs by several times the amount you spend.  Indirect costs are usually several times what the direct cost of a claim are so if you have some basic math skills, it doesn't take long to realize you should be spending more money in prevention of claims.  Here are some costs associated with each category that make up your Total Cost of Risk (TCOR):

  • Preventative - Safety & Risk Management, Pre-Employee Screening, Safety Equipment, Culture Management, Wellness, New Hire Training, salary of safety personnel & expenses, Personal Protective Equipment, Safety Meetings.
  • Direct- Insurance, Managed Care, OSHA Fines, Deductibles, Legal Expenses, Loss of Productivity post accident, Management time to administer Injury or attend hearings, Staff time to administer injury.
  • Indirect - Reputation with insurance carrier(s), reputation with vendors, loss of morale, loss of reputation, employee gossip, etc.

Considering all of these expenses why would anyone not want to spend more money on Preventative costs? 

Using Loss Data to Reduce your Workers Comp Cost

This is claims data on Workers Compensation in Oklahoma provided by Professional Insurors Business Insurance in Oklahoma City.

Using claims and loss data can be a helpful tool in reducing your future workers compensation losses.  Two types of forms that are readily available are your OSHA logs and your Loss Runs or Claims Reports from your Insurance Carrier.  
If you maintain your OSHA log year round, as required, it’s a great tool to provide you with information on where your claims are coming from.  It will give you dates, job titles, types of injuries, and days away from work.   The OSHA 301 will contain even more detailed information.  You can combine this with the Insurance company loss runs to obtain a good amount of information to track and trend.  I recommend an accident investigation form be used that contains all the needed information to complete all of your forms after an injury.   There are also several online OSHA tracking programs such as OSHATrac.com  and OSHA300Online.com  that will track your injuries and give various reports. 
If you have more than a few small claims, Insurance Carrier loss runs should be provided to you either quarterly or monthly.  The loss runs can be very basic so I would recommend asking the broker or carrier what reports are available.  Some will have very detailed reports available if you ask.  They will show many types of graphs and trends.  If your broker makes it hard for you to obtain this information, you could have the wrong broker.   In addition to trending, the loss runs will give you good information on what’s going on with the claim since the last loss run.  Look for changes in numbers such as paid (amounts already paid on a claim) and reserved (estimates of amounts expected to be paid on the claim) on all open claims.  We will discuss this in detail in another article.  
This information should be reviewed regularly by the CEO, HR Department, Safety Department, and Safety Committee.  They should all be looking at ways to improve your safety and prevent losses in the future by noticing trends.  An example might be that all claims in the certain department were from employees there under 1 year.  This would mean that they lack proper training and supervision and the training program could be altered to improve this situation.    
In addition to looking at past claims to identify a possible future claim, the claims information can be used for actuarial analysis to predict future losses.  This is very important if you are under a partially self funded plan or in a captive because it will allow you to predict your claims numbers in the future.  The more data that is available, the better the analysis will be.  Some auditors may request or require this information when performing your annual audit. 

 

Cyber Nightmare

Emerging Risks 

Cyber Liability Insurance - Professional Insurors Business Insurance OKC.

Data Breach or “Cyber Crime”

 As a Commercial Risk Advisor, I am seeing numerous stories and articles related to a new Emerging Risk that is affecting thousands of businesses and millions of people across the world.  What could a risk of this magnitude be you might be wondering?  The answer is Data Breach or Cyber Crime.  This has become such a problem that the cost of loss is the highest in history at around $5.5 million and climbing.  This type of risk comes in many forms such as viruses, internet fraud or identity theft, to name a few.  The hackers are becoming more deviant and savvy about how they attack organizations sensitive information.  One article indicated that a company overseas did not even know their system had been breached for nearly 7 months!  That is a long time for unwanted criminals to be inside a large organizations database collecting personal information.  A growing concern now is the amount of employees inside the organizations that are helping these criminals breach databases and assisting in their crime.  According to DataBreach Today.com, in 2011 the FBI charged 22 individuals in California for stealing $8 million from three large banks.  The individuals charged were either inside prison orchestrating the crime or worked for the banking institutions themselves.  That type of risk is very hard to catch even with the best security measures in place simply because employees will know their way around the system.  On October 3, 2012, Nationwide Insurance Company of Columbus, OH and Allied Insurance experienced a data breach and it affected 534 Oklahomans.  The compromised information included social security numbers, driver’s license numbers, birthdates and even their marital status.

In Germany, crime statistics compiled by the police indicate that about 60,000 cases of cybercrime were recorded in 2011.”  These are alarming statistics being released and as business owners and citizens we should be very concerned with the safety of our personal information and how it could affect the business itself due to such a loss.  If a person experiences identity theft they only have 90 days to dispute the charges, file police reports and resolve the crime.  If the theft goes unnoticed by an individual for more than 90 days, the debt becomes theirs to pay off.  Now let’s think about this for just a moment.  If a major organization doesn’t even notice they have been breached for 7 months, how would one individual know they are a victim within 90 days?  That means it is time to start being vigilant about this risk and protecting yourself, your business and your clients.   


Risk Management of Data Breach

What You Can Do

 An article posted on Entrepreneur.com in April 2010 reports the Federal Trade Commission posted these 5 steps you can take to help prevent a data breach.

 1.  Take Stock- know what information you’re keeping, how far back it goes and which records qualify as sensitive.

 2.  Scale Down- Only collect those pieces of data that you really need to make your business more efficient.  Do not store credit card numbers you don’t need or make the clients give their social security number as an identifier unless absolutely necessary. 

 3.  Lock it- Keep physical records in locked boxes and secure locations and digital records must have safeguards. 

 4.  Pitch it- Information such as paycheck stubs, bills and investment records etc. should only be kept for one full year.  After a year, get a shredder and shred the information.

 5.  Plan ahead- Prepare for the worst.  Put an action plan in place for how you will handle a data breach. 

 A risk such as this does not discriminate on the size of the business.  No business is too small or too large to be a victim.  Criminals don’t care where they get the information or how much they do get, as long as they achieve their goal.  As a Commercial Risk Advisor, I strive to advise you on these types of risks and how they could impact your business.  There is a financial risk due to these types of crimes.

With that information now being known, take the appropriate steps to minimize your exposure. First, I would consider is purchasing a Crime Policy and a Cyber Liability policy.  These polices can be called numerous other names such as Technology Liability, Data Breach Liability or Computer Fraud, to name a few.  It is very important that you are covered for your financial loss as well as the third party’s financial loss.  These policies are very inexpensive especially if you compare the numbers to what an actual loss could cost a company.

Insurance is about bringing you back to whole after a loss.  Risk Management is about being proactive, minimizing your risks and having strategies in place to make you more prepared to handle risks as they surface.  Make sure that you can recover from this widespread and now worldwide threat.  Educating yourself is crucial in protecting yourself.  The more you know, the better you will be protected.  There are other numerous ways that we can help you discover your risks and implement the best plan of action for you and your growing business.        

Traveling Abroad on Business

Professional Insurors provides this commercial insurance solution.

Below is a great article from Risk & Insurance magazine relating to traveling abroad while on business.  A good story for Oklahoman's with regards to the oil & gas industry. 

 

The steel door to the jail cell in the Mexican town of Tuxpan closed with a jarring “clank”.

On the other side, a police captain walked away, coughing once, before moving out of sight.

For the moment, Ernie Herrerra, a field engineer for a Fresno-based oil exploration company, was alone in that jail cell. He was alone and in acute pain.

He knew, above all else, that he had to stay calm.

He had to think, he had to. But it had all happened so quickly.

He felt like he was in a dream, but it wasn’t a dream. The throbbing in the back of his neck made that all too clear for him.

Ernie had just finished a day working with core sampling crews in the Mexican state of Veracruz. There were three crews in action, probing for the kind of crude find that would make his company and its business partner, a major multinational energy conglomerate, very happy.

It had been a long, hot day, driving dirt and gravel roads, visiting the test sites, talking to the drilling teams, gathering data for his report back to headquarters.

He was finished, driving down from the foothills to his hotel room in the town of Tuxpan, when he saw a jeep barreling towards him on the mountain road.

Ernie had almost no time to react before the jeep was on him; four young men, joyriding from the looks of it. Too late, the driver saw Ernie’s SUV.

The other driver overcorrected first one way, then, overcorrected the other way.

With the driver laying on the brakes, the jeep skidded head-on into the front of Ernie’s vehicle. It was going about 35 mph when it hit Ernie.

Even though he saw it coming, Ernie was whipsawed by the impact.

Lights flashed behind his eyelids as his head was thrown back against his headrest and then tossed forward into the deploying airbag. The force of the backward motion was so severe that Ernie heard something crack and felt a jolt of pain run through his upper neck and the back of his skull.

In intense pain, Ernie wasn’t sure if he should even move.

What he could see inside the jeep was harrowing. One of the passengers in the backseat was convulsing from what looked like a serious head wound. The driver was unable to move, seemingly pinned into his seat by the wrecked steering wheel.

One of the uninjured passengers was trying to tend to his badly injured friend in the back seat. The other uninjured passenger pulled out his cell phone and dialed feverishly.

Panic overwhelmed the scene as it appeared the severely injured young man in the back seat could be in his death throes

From the snippet of the cell phone conversation that Ernie was able to catch, it sounded like the uninjured passenger was talking to the police and blaming Ernie for the accident.

The Tuxpan police chief himself soon arrived, accompanied by an ambulance squad.

The squad was too late for the poor boy in the back seat of the jeep. He was motionless and not breathing.

As emergency crews worked to safely extricate the driver of the jeep, the uninjured passengers, apart from consoling each other, were on their phones, breaking the horrible news to the relatives of the deceased passenger.

Shocked as he was by the death of the young passenger, and weakened by his own injury, Ernie could never have been prepared for what happened next.

The police chief questioned him, asking if he had been drinking and whether he was speeding when the accident happened.

Next he asked for proof of financial responsibility.

“You mean Mexican auto insurance?” Ernie said.

“Responsibility, proof of financial responsibility!” the chief said to him in Spanish.

Ernie panicked a little, and didn’t grasp what the chief was asking for. He had just grabbed a co-workers’ SUV to get back to his hotel room and had no idea what sort of coverage, if any, had been purchased.

“No,” was all he said, repeating it three times to the insistent chief.

“It’s illegal, your driving here,” the chief said. “You are under arrest.”

The chief took Ernie’s cell phone and practically dragged him from the SUV, even though anyone could tell that Ernie had a serious neck injury.

Ernie felt that if he was moved at all without neck support the consequences could be dire.

Ernie was bilingual, had to be for this assignment. But that did him no good with this police chief.

 

Ernie told him he felt he was seriously injured and shouldn’t be moved. Ernie had to grind his teeth together to fight the pain when they threw him into the police cruiser and took him to this jail cell at the police station.

Now, in the cell, Ernie realized just how vulnerable he was. He had no cell phone, and even if he did, he was totally unprepared for this situation.

He had never been given any information on legal or medical assistance should he be injured or incarcerated in a foreign country.

He wracked his brain. He was young, only 32, and had a pretty good memory. There was nothing about this in the employee handbook that he could remember.

He had been briefed on the risks of foreign travel, but he felt given his health, his innate common sense and his language skills that he’d be okay no matter where he went.

There was no one in the country he could have called besides a drilling engineer, even if he had a cell phone. What had seemed like a manageable situation was now revealed for what it was, a nightmare in the making.

Most of his conversations with supervisors before he boarded the plane in Sacramento focused on communication protocols, cyber security for the highly valuable data he would be sending to headquarters and to the company’s partners in Houston on the potential for big oil finds.

As far as protection for him, any kind of safety net, there was none. His neck hurt, but his brain was going numb with the enormity of it all.

Ernie’s accident happened on a Friday afternoon. It took 48 hours for his geology team members to put together that he was missing.

No one at Ernie’s hotel knew where he was. The team tried local hospitals, fearing he’d fallen ill or been injured. They discovered nothing.

“You think he could have been arrested?” one of the team members said.

“Doubt it,” said another. Ernie was such a straight arrow.

But sure enough, when they went to the Tuxpan police to file a missing persons report, that’s where they found Ernie.

Ernie eventually got a visit from one of his team members, an oil geologist, in jail. The geologist called headquarters and told executives there that Ernie was in custody.

 

In the meantime, Ernie’s superiors had been able to convince local contacts for their industry partners that Ernie needed to be released from jail immediately on medical grounds.

Four days after the accident, and still with no pain killers in him, Ernie is transported by federal police to Veracruz, where an X-ray reveals that he sustained a fractured cervical vertebrae.

Ernie is on a plane to San Diego, his neck in a brace, and finally medicated, when the recognition of his company’s failure to provide him with adequate insurance, and by extension adequate medical and legal assistance in a foreign land, begins to dawn on him.

“There is no way I should ever have been in that position,” he says to himself as he pops another extra strength pain killer. The more he thinks about it, goaded by the pain he is in, the angrier Ernie gets.

When Ernie lands, he calls his buddy Mike Flaherty, with whom he attended undergrad at the University of Arizona.

Mike is now an attorney specializing in employment law and international business.

“I mean am I missing something here? Did this company leave me exposed unnecessarily?” Ernie asks Mike.

“I’m in a foreign country and I spend four days in jail with a broken neck. Literally, a broken neck,” Ernie says.

“I think they have a liability there,” Mike said. “The local car rental companies in Mexico can only give your company so much in coverage, about $55,000,” he said. “Your company should have known that and made more coverage available to you.”

“With that one passenger dying and the injury to the other, your company could be looking at a serious liability and I’m not even taking into account your pain and suffering,” Mike said.

Mike sees Ernie’s case as an open and shut instance where a company failed to adequately protect an employee traveling in a foreign country.

Ernie is seen by a specialist upon his reentry to the United States in San Diego. The specialist determines that the failure to immobilize Ernie’s neck when he was first injured, and the fact that he endured four days in that state with no relief, have added to the possibility that Ernie will suffer a permanent weakness in his neck.

 

Ernie was happy to have gotten the job he had. He viewed the oil industry as an exciting place, where a young engineering graduate could travel and make a good living. But the way the company let him down in Veracruz he could not let stand.

“Ernie, can we talk?” the executive who recruited him said in one of several voice mails to Ernie that go unanswered.

Ernie just sat and listened to the voice mails.

“I’m done talking to you,” he said to the phone and to no one.

In addition to the costs of medical treatment and patient transportation within Mexico, Ernie’s company is facing a civil action from Ernie alleging that the company failed to adequately protect him while traveling in a foreign country.

The story of Ernie sitting in a stifling jail cell in a foreign country with a neck injury plays very effectively with a jury. The jury finds that the combination of a permanent injury with the pain and suffering that Ernie endured as a prisoner resulted in significant monetary damages.

His former employer, apart from losing a valuable employee, is now looking at significant premium increases next year, if it can get coverage at all.  The appropriate types and limits of insurance, as well as appropriate training of its employees may have let the oil exploration company and Ernie avoid much of this entire nightmare.

Summary

A failure to secure adequate amounts of in-country coverage and a lack of crisis preparedness adds up to major losses for an oil exploration company that sees a valuable employee injured in a foreign country.

1. Educate beforehand: As our story shows, the failure to educate an employee about the coverage network available to him and the full range of risks he could be exposed to in a foreign land could have dire consequences. Making sure an employee is briefed on how to protect himself during a crisis on foreign soil should be every bit as important as briefing him on the revenue-generating possibilities of the trip.

2. Know the coverage requirements in every jurisdiction: Different nations have different laws in place when it comes to the actions and legal rights of employees that are traveling on business. Our protagonist Ernie Herrerra was jailed because of a provision in Mexican law which requires a driver in an accident to show proof of financial responsibility or face immediate consequences.

3. Establish protocols for international travel crisis management: The time for creating well-understood protocols for managing a crisis on behalf of a traveling employee is before the employee gets on the plane, not after the crisis develops.  An entire crisis management safety net should have been constructed for Ernie Herrerra and wasn’t.

4. Purchase coverage at adequate limits: Is insurance coverage for an employee who travels internationally really the place to cut corners? It is oftentimes our most valuable employees that we trust with traveling to meet with clients or to explore other types of business opportunities. On the one hand, we want to protect these clients. On the other, these talented, top-tier performers, are the ones we can least risk alienating, or in this example, litigating against.

5. Do not lose contact: Perhaps the most frustrating piece of this story for the injured, traveling employee was that he lost contact with his company and his co-workers after his accident. If companies get one thing right in their crisis management plans they should make sure they know how to reach an overseas employee and have options for finding him or her if they drop out of sight.

My Property Insurance Deductible

Risk Management for Oklahoma business insurance clients provided by Professional Insurors Business Insurance OKC.

What does your deductible mean to you?

We are all familiar with our insurance policies having deductibles whether it’s for health insurance, auto and home insurance or commercial insurance.  In the past our standard deductibles (what we are most familiar to selecting) would range anywhere from $0-$2,500 for auto and home insurance, $250-$1,000 for health insurance and $1,000-$5,000 for commercial insurance.  Have you looked at your deductible in the last year?  Did you notice any changes to the deductible?

Right now in Oklahoma our deductibles vary greatly due to the catastrophic wind and hail losses we have sustained.  The loss amounts are in the billions of dollars for our state alone.  You might still see the above mentioned deductibles in your policy listed under “All Other Perils except Wind and Hail” and then you will see another deductible listed that states 1%-5% W/H (Wind and Hail) deductible.  What does that mean exactly?  That means that for a loss that is classified as a Wind and Hail loss, your deductible amount will be 1%-5% of the dwelling or building value listed on your declarations page.  For example, if the dwelling (house) is insured for $150,000 with a Wind/Hail deductible of 2% and you suffer a hail loss to your roof, your out of pocket portion for the claim would be $3,000.00.  Imagine what that figure would look like if your business was insured for $1.5 million and you had a deductible of 3% on wind and hail.  That’s a $45,000.00 deductible that you would be responsible for!  If you are a business owner that owns multiple locations, that deductible could apply to each location as well.  That is an amount that none of us would be happy about in the event of a loss.

As we get closer to 2013, we are seeing insurance rates and deductibles rise because of the catastrophic weather we have suffered across the nation and especially in Oklahoma.  Now is the time to really inform yourself on your coverage’s and deductibles and what they mean to your bottom line.  Taking a proactive role in risk management for your business and/or home insurance is imperative now more than ever.  There are many ways you can help reduce your hazards, and control your own premiums and coverage’s.  Talk to your agent and reach out to companies such as TCOR, Total Cost of Risk, for advice and direction for your upcoming renewal.  Even though we cannot prevent Mother Nature and across the board rate increases within the insurance companies, does not mean you can’t help control your own risks, coverage’s and deductibles.  Stay proactive and informed about your policy!   

Business Seminar Series - Top 10 Must Haves for your Employee Handbook - May 30th, 2012

Commercial insurance solutions from Professional Insurors Business Insurance OKC.

This class will examine why it is necessary to have an employee handbook, primarily focusing on the TOP TEN items that should be included in every effective handbook using supporting examples of case law. Attendees will learn what subtopics should be included in each item and will receive a sample EEO Statement and AntiDiscrimination   Policy for their practical application on the job.

  • Effective Handbooks
  • Latest Updates
  • Must-Have Policies
  • New Drug Testing Law
  • Sample Policies:
    • EEO Statement
    • Anti-Discrimination Policy 

Class Taught by:

Laura Moxley, SPHR is Founder and President of Your HR Resource, a Norman-based human resources and benefits consulting company.

Your HR Resource specializes in Health Benefits, Employee Handbooks, Employee Relations, Compliance, Anti-discrimination training, Employee Complaint Investigations, and Payroll Administration. Laura has over 15 years of human resources experience serving much of that time as HR Director for a large privately held company. Laura earned a BA from the University of Oklahoma, has a Professional Certificate in Human Resource Management, and is certified as a Senior Professional in Human Resources (SPHR) through the Society of Human Resource Management (SHRM). She is also a licensed health insurance producer.

Laura frequently speaks to groups on various HR topics and currently serves as Director of the Oklahoma State Council for Human Resource Management.

Laura also currently serves on the State Chamber HR Committee and the Governor's Council for Workforce and Economic Development. In 2010, Laura was named as one of "50 Making a Difference" by the Journal Record's Woman of the Year program. The program recognizes Oklahoma women for leadership in business and service to their communities.

 

REGISTER NOW by CLICKING HERE

 


Chris began his career at a Norman insurance agency in 1988 serving as a Branch Manager for 3 years. He joined Professional Insurors in 1995 as a Producer and became Vice-President in 2004, where he overseas human resources and agency operations & technology as well as continuing to manage his client accounts and grow the business.

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Should my Company Consider a Captive Insurance Option?

Captive Insurance Option programs by Professional Insurors OKC.

There are several types of Captive insurance products available today.  If you are a Middle Market Customer (premiums over $150,000) it is something you should consider.  Other factors that make you a candidate:

  • Good Loss Ratio's over the last 5 years
  • Quality Safety programs in place
  • Profitable for most of the last few years
  • Entrepreneurial - you must risk "some" money to make some money

Typically these coverages can generally be placed in a captive or group captive:

  • General Liability
  • Workers Compensation
  • Commercial Auto
  • Commercial Property

You can also consider a Captive for a single line of coverage.  A good example of this is professional liability.  If you pay a high premium for this or have unfavorable terms (deductibles, and payment terms) you may want to consider a captive to insure some or all of this line of coverage or even to insure deductibles.