Large corporations often use “alternative risk financing” – assuming some of their own risks, in addition to buying insurance – as a way to improve cash flow and lower their total costs. However, this technique can offer substantial benefits for medium-sized companies that face significant potential risks from one line of insurance, such as Workers Comp, General Liability, or Auto Liability.
Basic alternative risk financing methods include:
- Guaranteed cost insurance – the company pays a premium based either on a rate, such as payroll or property values, or a flat amount.
- Incurred loss retrospective rating plans (“retro) – use a standard premium adjusted after policy expiration based on loss experience.
- Large-deductible plans – the organization assumes a substantial (often $50,000 to $250,000) per-accident or per-occurrence deductible.
- Self-insurance – the firm retains its loss obligations and pays them as they become due.
- Captive insurance – this variation on self-insurance pre-funds risks through an insurance subsidiary (“captive”) usually owned by the parent company.
Because each of these methods has advantages and disadvantages, your choice should depend on the situation and needs of your business. For example, a guaranteed cost plan minimizes the upside risk, but won’t help your cash flow; while a captive usually costs the least to finance, but can be expensive to administer.
Whichever alternative risk financing option you choose, make sure your accounting and human resources departments educate managers on their responsibilities in daily hands-on administration of the program. The more widespread their “buy-in,” the stronger your bottom line.
We’d be happy to help you select and develop an alternative risk financing program that’s tailored to your needs. Just give us a call.
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Once employees have gone through safety training, make sure that they use what they’ve learned. When every worker knows and chooses the safe way on a daily basis, you’ll have a workplace with less chance of accidents and injuries.
This four-step approach to job safety will pay dividends:
- Team up to solve problems and improve safety. Create employee teams in every department to gather information on potential hazards, analyze problems, develop and test solutions, and implement and monitor results. Being part of a team makes workers feel that they share responsibility, which keeps your safety message top of mind.
- Talk up safety every day. Update employees on information that affects their safety. Provide ongoing feedback, praising safe performance, correcting unsafe behavior, and pointing out areas for improvement. Make sure that communication flows both ways. Urge workers to offer suggestions, identify problems, and pose questions – for example, through a safety suggestion system.
- Encourage employees to become hazard detectives — and reporters. Make every worker responsible for finding hazards. Create an effective system for reporting problems, and respond promptly to correct hazards that employees identify. This is harder than it sounds because it means that management has to listen when workers discuss safety concerns.
- Create a “want-to” safety culture. Encourage your workers to do the safe thing, not because they have to, but because they want to avoid injuries. Remind them of how many safety-related decisions they make every day – and how one bad decision is all it takes to get hurt.
For professional advice on creating or updating your workplace safety program, just give us a call.
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Given the dramatic impact of social media on the speed and delivery of news and information, it makes sense to make this fast-growing technology part of your risk management program.
More and more reputational crises — such as the recent stranding of the Carnival Triumph cruise ship — are born on social networking platforms and can grow exponentially if mishandled. Consider how Apple Inc. responded to consumer displeasure with the iPhone 4 shortly after its 2010 introduction. Negative comments about the product spread quickly over social media channels, but were largely ignored by Apple executives until mainstream news outlets began reporting on its flaws.
Failing to actively engage social media users in conversations about crisis or business practice of your company means losing an invaluable opportunity to protect your reputation. Otherwise, you risk having other people tell your story.
Social media participation gives you a way to enhance this reputation through regular interaction with customers, business partners and the public. Using this tool to develop relationships and help people, rather than just sell products and services, can create some valuable allies.
Encouraging your employees to participate in social media offers a great way to use them as advocates for your company. A 2012 poll of more than 1,000 registered voters by Hill+Knowlton Strategies found that a corporation’s employees are the second-most trusted source of information about its business practices, second only to friends and family members.
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Non-traditional voluntary employee benefits are becoming increasingly popular with workers because they address their real-world lifestyles and financial needs. If you’d like to offer your workers a benefit that can help them invest in their future, advance their careers – and make them more productive – all without costing you a dime, consider online learning programs.
According to a recent nationwide study by Harris Interactive, more than half (53%) of workers and their spouses surveyed would be at least “somewhat likely” to use educational services for themselves or their families through an employee purchase program.
While higher education has become essential to get ahead in today’s high-tech world, skyrocketing costs have made it increasingly difficult for workers to afford. More than nine in ten college students have taken out loans to earn their bachelors degree – and the value of student loan debt has topped $1 trillion ($300 billion more than credit card and auto loan debts combined)!
Many employers currently offer some form of tuition assistance for the continuing education of their workers. However, online learning can provide a more affordable and convenient alternative for your employees to fund their education and that of their family members (through tutoring programs and SAT/ACT preparation programs) while learning at their own speed. Workers would pay through convenient pain-free payroll deductions, providing a responsible way to budget, together with the opportunity to graduate free of debt. What’s more, the program won’t burden your employee benefits budget.
To learn more about how you can offer this creative benefit to your workers, just give us a call.
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A recent nationwide study found that more and more businesses and workers are benefiting from voluntary employee benefits programs. According to the Prudential Insurance Company State of Group Voluntary Benefits survey:
- More than six in ten employees surveyed (63%) believe that voluntary benefits increase the value of their company’s benefits program.
- The percentage of employees who would like to receive more benefits grew to 34% from 24% a year ago.
- One in three employees feels that losing their voluntary benefits would be disruptive and expensive.
“Employers and employees agree on the value of voluntary benefits,” says Bob Patience Prudential Group Vice President, Voluntary Benefits Insurance. “Employers see an increase in employees’ satisfaction with these programs, while employees appreciate their employers’ endorsement of the products offered, and believe they get good value because of their employers’ involvement and diligence.”
Voluntary benefits offers workers a number of advantages, including the education and resources they need to make informed decisions based on their needs. Taking full advantage of these programs is a great way for employees to improve their “wellness” – both physical and financial. What’s more, voluntary benefits offer workers the convenience of employer-based enrollment systems and “pain free” payroll deduction.
What employees saw as the primary advantage of voluntary benefits varied based on age, education, and gender. More than three in five workers (62%) over the age of 60 focused on the guaranteed coverage feature. More than half (56%) of college graduates preferred the wide range of available products. A slightly higher percentage (53%) of women than of men (45%) chose the convenience of payroll deductions.
Our agency’s professionals would be happy to advise you on creating or updating, your Voluntary Benefits program – just give us a call.
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Product Liability Insurance helps protect your company from damages for losses related to manufacturing or selling products or other goods.
These claims can, and do, put businesses out of business – just ask the officers of any asbestos manufacturer.
Companies are vulnerable to three types of products claims
- Manufacturing or production flaws that create an unsafe defect in the product. For an example, just recall the recent claims against Chinese manufacturers for using dangerous chemicals in their products.
- Design defects that make the product inherently unsafe. (The series of lawsuits against Toyota vehicles for defective acceleration controls during the past two years comes to mind.)
- Inadequate warnings or instructions, such as failing to label a product properly or advise consumers about potential risks. A famous example is the McDonald’s “hot coffee case.”
Damages can include medical costs, compensatory damages, economic damages, and (in some instances) attorney fees and costs, as well as any punitive damages.
Some sellers and retailers choose not to buy Product Liability Insurance because they don’t actually “manufacture” anything. However, most states follow the “stream of commerce” model of liability, meaning that if your company sells a product, you can be held liable for damages to the end user.
“Business Owners” and Commercial General Liability policies usually include some type of Product Liability Coverage (Sometimes known as Product/Completed Operations Insurance).
Premiums are based upon the type of product and sales volume. If you try to reduce premiums by underreporting sales or insuring only a percentage of your sales, you’ll probably face a hefty “underinsurance” penalty. Make sure to identify your products properly, too. For example; if you supply stepstools, you don’t want them categorized as ladders, which have a higher premium because of their greater risk potential.
For more information, feel free to get in touch with our Business Insurance professionals.
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