These two coverages are crucial to the safe running of a small business such as a physician’s practice. Fiduciary insurance relates to the Employee Retirement Income Security Act of 1974 (ERISA), which imposed new responsibilities on managers of employee retirement benefits plans and/or welfare plans. ERISA not only broadened the way fiduciaries may be held personally responsible for breaches of responsibility, but it also made it easier for plan participants and their beneficiaries to sue and win in court. Basically, this means that you, as an employer providing a retirement program, could be sued successfully by an employee or group of employees or their beneficiaries.

Fidelity insurance, on the other hand, is crime coverage. Basically a fidelity policy can cover loss resulting directly from dishonest or fraudulent acts committed by your employee acting alone or in collusion with others. It also complies with the bonding requirement of ERISA, which requires that at least 10 percent of your plan’s assets be insured. The difference between crime coverage and fiduciary coverage is that a crime policy insures against dishonesty not suits arising out of ERISA. Basically, you need both.

Two other types of coverage are related to fiduciary liability insurance.
• Fidelity bonds are required by law (ERISA bonding). This is a form of insurance for dishonesty situations. When dishonest administrators or trustees have financially harmed an employee benefit plan, these bonds may be used, but only for the benefit of the plan and the plan’s beneficiaries. This bonding insurance will not protect the trustees themselves from liability claims and is completely distinct from fiduciary liability insurance.
• Employee Benefit Liability Insurance. Employee Liability Insurance policies cover many claims arising out of errors or omissions in the administration of a benefit plan, including the failure to enroll an employee in the plan as well as the administration of improper advice as to benefits.

Under ERISA, fiduciaries may be held personally liable for breach of their responsibilities in the administration or handling of employee benefit plans. Fiduciary Liability Insurance is not required by ERISA. However, it is strongly recommended if you are a fiduciary of a welfare and/or pension plan because your personal assets are at stake. Many fiduciaries believe incorrectly that their ERISA fidelity bond protects their personal assets.

Furthermore, many think that this type of coverage is included in their D&O policy. Most D&O policies exclude fiduciary liability exposures as well as those exposures pertaining to the Employee Retirement Income Security Act (ERISA).

ERISA also broadly defines the types of employee benefit plans for which fiduciaries are responsible. This extensive list can include pension plans, profit sharing plans, employee stock ownership plans (ESOPs), and even health and welfare plans.

Moreover, designated fiduciaries are not the only targets of such lawsuits; targets can also include the employer and even the plan itself. Claims can be brought by plan participants, participants’ legal estates, the Department of Labor, and the Pension Benefit Guaranty Corporation. Such claims may include allegations of:

• Improper advice or disclosure
• Inappropriate selection of advisors or service providers
• Imprudent investments
• Lack of investment diversity
• Breach of responsibilities or fiduciary duties imposed by ERISA
• Negligence in the administration of a plan
• Conflict of interest with regard to investments

A private company can help mitigate the personal liability of its fiduciaries by following the advice of outside experts and by selecting diverse, financially sound investments. But, it cannot entirely eliminate their personal liability .

In order to help protect private companies, their fiduciaries and the benefit plans they manage, against fiduciary liability claims, UNICO Group, Inc. offers Fiduciary Liability Insurance coverage. Please contact Carl Zeutzius at czeutzius@unicogroup.com if you have any questions.

This is probably the one risk area that is often overlooked and most likely to put a company out of business shold they suffer a loss that causes an interruption. Time and again we see examples of companies not understanding this coverage and not having the proper coverage at the time of a loss.

When business is interrupted by a disaster, business interruption insurance will help get it up and running again as soon as possible, but if your building is heavily damaged and your equipment and materials are gone, how do you do that? Your main concern is to keep your employees, keep your existing customers, and to maintain your excellent relationship with your suppliers.

Business Interruption Insurance is designed to replace the loss of business income and to help pay for at least a portion of the extra expenses which you encounter in restoring your business operations after a covered loss.

Business Income Coverage In a Business Interruption Policy:
This portion of the policy provides for the replacement of lost business income which would have been earned had their been no loss. Business income for insurance purposes is the net profit or loss of your business, before taxes. The replacement of ordinary operating expenses and payroll are also covered by this section of the policy.

Your business may be required to prove your claim by submitting business records, such as financial statements, income and expense reports or other business reports.

Extra Expense Coverage In a Business Interruption Policy:
In order to get your business up and running sooner, you may be required to pay extra for overtime hours or the extra cost of expediting equipment or inventory. The extra expenses which actually reduce the amount of a loss are covered by this section of the business interruption policy. If this coverage is desired, you may have to specifically ask for it, since it may not come already packaged in a standard policy.

Contingent Business Interruption Coverage:
Does the continued success of your business depend on the continued operation of another business? How would the operation of your business be affected if your key supplier experienced a devastating fire and was shut down for a few months? If the operation of your business is affected by a loss experienced by another business, you might have a claim for Contingent Business Interruption. Again, if you want this coverage, be sure and tell your business insurance agent.

Coverage Should Be Adequate:
When you buy Business Interruption Insurance you really need to take a close look at the business income and expense history of your business. Your coverage should be in an amount which is sufficient to pay for everything you need to continue business operations, including:
• Mortgage or Rent Payments
• Utilities
• Employee Salaries
• Equipment Lease Payments
• All other operating expenses

Don’t hesitate to contact UNICO about this very important coverage. Contact Carl Zeutzius at czeutzius@unicogroup.com

While employers spend money on loss control efforts, incentive programs and safety programs they often fail in one of the key areas to help control workers’ compensation costs. Yes, it is important to focus on injury prevention but that isn’t enough. There are two more areas that employers need to focus on, managing the injury and managing the return-to-work process.

Injury reporting is a key factor in shaping the outcome of an employee injury. The sooner an injury is reported, the sooner medical assessment can be made available, and the sooner an employee is on the right track to recovery. It has been proven in several studies that lag time directly impacts the costs of claims. It is imperative that you stress to employees and supervisors that any employee injury be reported immediately. This not only benefits the employer but it will benefit the injured worker as well.

Does your injured employee understand what will happen when they are injured? If you are not providing them with a pre-made injury packet you should contact us to learn more how effective they can be. This can help the employee understand the process, your expectations, return-to-work policies, and help reduce any possible frustration with you, the doctor, or the insurance company. It can help develop trust and show the employee that you care as well in addition to demonstrating to them your commitment to work related claims. There are other key components to the injury packet but it is important to remember that outlining the expectations can help you lower claim costs.

When the injury is reported what steps are you taking to ensure the injured worker can return to work as soon as possible? It is crucial that communication is set up with the injured worker, the doctor, the claims adjuster, supervisors, and your agent to help ensure the injured worker can get back as soon as possible. If this isn’t done correctly it directly impacts the cost of the claim and your company’s bottom line.

Did you know something as simple as sending a card or making a phone call to an injured work at home can help get that person back to work sooner? Often after an injury the employee may not feel wanted or cared about and showing them that you do care can help. More often than not the reason an injured employee seeks an attorney is because they feel they weren’t wanted by their employer.

The communication channels must be along several fronts. Communication from top management to supervisors, supervisors to employees, employee to doctor, return-to-work coordinator to doctor, return-to-work coordinator to employee, return-to-work coordinator to claim adjuster and so on. Does your current agent/broker have a claims advocate assisting you the injury management process from start to finish like UNICO does?

There is so much more to workers’ compensation than just having a policy. Take steps to look for a broker that is considered an expert with workers’ compensation. It will help you increase your profitability. UNICO Group is proud that we were named the National Work Comp Agency of the Year in 2010 by the Institute of Work Comp Professionals.
Don’t hesitate to contact us to learn how we can help you. There are many companies that can attest to how we have helped them.

The following checklist suggests some approaches for minimizing friction between contracting parties (or the possibility of unknown breaches of contract requirements) while still securing realistic protection for risk transferors.

• Update your insurance requirements to reflect modern insurance terminology. If your contract still requires “comprehensive” general liability insurance with a broad form property damage endorsement, it was written in the dark ages.

• Construct your additional insured requirement to deal with the other insurance issue in a manner that works with the standard industry approach instead of requiring special language that achieves nothing more but is very difficult to obtain.

• Don’t require a waiver of subrogation endorsement on the transferee’s general liability policy. Include a waiver of subrogation in the contract if you wish (though it is probably unnecessary if you are an additional insured), but don’t require an endorsement to the policy.

• Evaluate whether you really need a workers compensation waiver of subrogation. If you decide to require one, be prepared for push back from transferees who can’t get their insurer to comply (or to be asked to help pay an additional premium for it).

• Don’t require that additional insured status apply to completed operations coverage. This is a thing of the past, and you should be able to rely on other ways to transfer the risk (i.e., the indemnity clause).

• Prequalify those with whom you do business to make sure they can be relied on to perform all their contractual duties, including buying the insurance they promise to obtain, so you don’t feel compelled to seek a modified certificate of insurance which often only provides a false sense of security.

• Accept the standard insurance certificate without modification and simply require a copy of the additional insured endorsement adding you to the transferee’s policy. If you must have it modified, require only that “endeavor to” be crossed out.

• Don’t try to get a contractual commitment for a longer notice of cancellation than required by the state’s law in the event of cancellation for nonpayment of premium.

More than 20 percent of injury crashes in the United States involve reports of distracted driving, according to the National Highway Traffic Safety Administration (NHTSA). Of those killed in distracted-driving related accidents, 18 percent involved the usage of a cell phone. Another study indicates that using a cell phone while driving, whether it is a hand-held or hands-free device, delays a driver’s reactions as much as having a blood alcohol concentration at the legal limit of .08 percent.

Cell phones, and particularly smart phones, are considered one of the leading driver distractions. As a result, more and more communities are placing restrictions on drivers’ use of cell phones. The following tips are offered to motorists with regard to cell phone use in vehicles.

You should wait until the car trip is complete before placing a call. Your cell phone’s voicemail feature should answer a call while you are driving.

Absolutely essential calls should only be performed while stopped. However, it is not wise to pull over on the side of the road where a rear-end collision is possible. Instead, you should pull into a parking lot to perform this task.

The phone should be placed where it is easy to see and reach.

You should take advantage of speed-dialing capabilities.

You should never drive and talk on the cell phone during stressful, emotional, or complex discussions since the risk of an accident is heightened.

You should consider using a hands-free cellular phone since some studies indicated that these are safer to use.

You should never text message while driving.

Copyright 2011
International Risk Management Institute, Inc.

http://www.irmi.com/newsletters/hidden/personal-lines-tips/2011/10-shun-those-cell-phones-while-driving.aspx

 Ordinance and law coverage is not included as a standard part of a business policy as it actually improves a business’ pre-loss condition. If a business does not opt to add this useful coverage they could end up paying the difference between the covered loss and the cost of bringing the building up to code, or if necessary demolishing the undamaged portion of the old building and the costs to remove the debris. These costs could be much higher than you would anticipate.

 Coverage A – Coverage for Loss to the Undamaged Portion of the Building With respect to the building that has sustained covered physical damage; the policy will pay under coverage A for the loss in value of the undamaged portion of the building as a consequence of enforcement of an ordinance or law that requires demolition of undamaged parts of the same building. Coverage A is included within the limit of insurance shown in the Declarations as applicable to the covered building. Coverage A does not increase the limit of insurance.

 Coverage B – Demolition Cost Coverage With respect to the building that has sustained covered direct physical damage, the policy will pay the cost to demolish and clear the site of undamaged parts of the same building, as a consequence of enforcement of an ordinance or law that requires demolition of such undamaged property.

 Coverage C – Increased Cost of Construction Coverage With respect to the building that has sustained covered direct physical damage; the policy will pay the increased cost to: repair or reconstruct damaged portions of that building; and/or reconstruct or remodel undamaged portions of that building, whether or not demolition is required; when the increased cost is a consequence of enforcement of the minimum requirements of the ordinance or law. However, this coverage only applies if the restored or remodeled property is intended for similar occupancy as the current property, unless such occupancy is not permitted by zoning or land use ordinance or law. The policy will not pay for increase cost of construction if the building is not repaired, reconstructed, or remodeled. If you’d like more information, please contact Carl Zeutzius at UNICO Group. 402-434-7275 czeutzius@unicogroup.com

Remember, the experience rating modification is affected by small losses more than by large ones because small losses are more frequent and predictable than large losses. The portions of all losses that are $5,000 (split point) or less, which are termed “primary losses”, have the greatest influence in determining the experience modification. Losses in excess of $5,000 go into the “excess losses”.    

Every loss is divided into a primary and excess portion. Since small losses – those less than the split point – have NO excess value, primary losses work as an indicator of loss frequency. For example, three $3,000 losses yields $9,000 in primary and $0 in excess. Since large losses – those over the split point – always generate some excess value, they work as an indicator of loss severity. For example, one $11,000 loss yields $5,000 in primary and $6,000 in excess. Primary losses are used at their full value in the mod calculation, while excess losses are reduced by the weighting factor.

This follows the simple concept in insurance that “severity follows frequency.” So in the sample above, a company with several small losses will have a higher mod than a company with only one large loss. And, in the sample above, after the split point has moved to $15,000, both examples would have all primary and no excess losses.

This primary and excess split point will be increased to $15,000 over the next three years. After that, it will indexed for claim inflation annually, so you will potentially see a change in the split point each year.

What does this mean for you? It is too early to give concrete information because NCCI hasn’t released final data on how the change will officially be implemented. They will likely adjust rates as well as other factors in the experience mod formula. The main reason of the change is the split point is that medical costs are much higher now than they were the last time the split point was changed in 1993.

The split point change is slated to start being filed in the 3rd quarter of 2011 at the earliest. The first effective date will likely be on January 1st of 2013 with data released in the fall of 2012.    

1. The plan is to increase the primary loss split point to 10K in 2013, to 13.5K in 2014 and 15K in 2015.

2. This 15K could be adjusted up or down depending on how claims costs trend during that time.

3.Based on 2009 information 78.4% of all intrastate mods will move five points or less either way.

The main point of this will be the continued goal to try and keep claims medical only with no indemnity (lost wages, permanency rating, vocational rehab). Nebraska is one of many ERA(Experience Rating Adjustment) states that allow medical only claims to be discounted by 70% when they go into the experience rating formula. 

If you don’t understand how this works don’t hesitate to contact us. When we speak at seminars on this subject we are amazed at how many people don’t know this. This simple rule is the backbone to your work comp program and why it is so important to make communication a key factor with your injury management programs as well as striving to have an effective return-to-work program. We will continue to monitor this and update you when more information becomes available. If you have any questions don’t hesitate to contact UNICO Group at 434-7200 or email Carl Zeutzius at czeutzius@unicogroup.com.

As we face this face with difficult financial situation many companies will be forced to reduce their workforces. Whenever a downturn hits one area that we see dramatically affected are the number of Employment Related Practices Liability claims that businesses are hit with.

Virtually every business has insurance to cover a fire, theft, automobiles, and general liability exposures. Did you know if is far more likely that a company will face an employee lawsuit than the terrible effects of a fire? Almost 75% of all litigation against companies today involved employment disputes, and the typical expense of a lawsuit exceeds $250,000 in judgments, attorney’s fees and costs.

Over the past ten years, an average of more than 79,000 EPL charges have been filed annually with the EEOC, resulting in more than $2.2 billion in benefits for complainants. Monetary awards increased 73% between 1996 and 2004, when the total amount awarded topped $250 million.

Not only are the numbers of employment-related claims increasing, but so is the potential financial risk to your business. Defending a wrongful termination or discrimination claim whether you are innocent or guilty, or even if the claim is groundless or fraudulent can be expensive. The potential exposure for a money damages award threatens your company’s financial resources.

First off, EPLI coverage is not included in general liability coverage. EPLI policies are issued either as a stand-alone policy or in conjunction with another insurance policy (such as part of a package policy or directors and officers liability insurance). These policies provide insurance coverage for the cost of defending a claim and indemnity for liability.

EPLI covers many different types of exposures including:
• Sexual harassment
• Wrongful Termination
• Discrimination
• Statue Violation/Federal employment laws
• Negligent Hiring
• Negligent Supervision
• Negligent Promotion
• Negligent Retention
• ADA
• Breach of Contract
• Loss of Consortium
• Emotional Distress
• Invasion of Privacy
• Drug Testing
• Mental Anguish
• Libel
• Slander

We often hear from business owners that they don’t need this coverage because their employees would never sue them. Are those business owners surprised when they are sued and disappointed that they didn’t have a policy in place to cover them. Don’t make this mistake. This is a growing area and the premiums are very reasonable for the protection they provide.
All employers no matter what size should develop preventive strategies to address exposure to employment lawsuits. Part of any preventive strategy should be policies and procedures that promote an issue-free workplace. However, no program is fail-safe. Employers must take action to limit this exposure which is undeniably a cost of doing business. Practical and cost effective, EPLI is on option to address this risk.
Let’s look at a claim example. A terminated employee sues for harassment, wrongful termination, retaliation, and discrimination. A female employee alleged that a supervisor made abusive and sexually explicit comments to her, as well as sexual advances. She was terminated soon after. She sued the company and two managers alleging sexual harassment, intentional infliction of emotional distress, wrongful termination, retaliation and sex discrimination for $275,000, plus recovery of legal fees. In defense, the company stated she was a problem employee (tardy for work, conflicts with managers, patchy performance, talked about her sex life, made vulgar comments) and her termination was part of a broad reductions in force. During discovery, it came to light that management tolerated sexual jokes around the office but assumed no one was offended.
The result was a court panel ordered the company to pay the plaintiff approximately $100,000 plus legal fees. The company also accrued more than$30,000 in defense costs.
We have several tools available for a business to understand their exposure as well as improve their risk management in this crucial area. Don’t overlook this coverage because the odds are against you in having an employee sue you. If you would like to learn more or get a quote please email Carl Zeutzius at czeutzius@unicogroup.com or call 402-434-7200.