Positive quote of the day

I subscribe to an email entitled "Positive Quote of The Day". I thought I would share today's quote, worth some thought I think. "We come into this world crying while all around us are smiling. May we so live that we go out of this world smiling while everybody around us is weeping". -- Persian proverb

Mandated health insurance on the way?

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According to an article on BusinessInsurance.com, the Senate is putting together a bill that would mandate health coverage to be provided for employees for all business' except for "small" firms. The small firms would be those with 25 or fewer employees. In the latest health care reform proposal, firms would be required to pay 60% of their employees health premiums or be assessed annually $750.00 for each full time employee not covered and $375.00 for each part time employee not covered. Another bill be worked on would require employers to pay for employees health coverage or be assessed 8% of each employees pay for those not enrolled in health care coverage. This bill also exempts small firms but doesn't specifically state what a "small" firm is. Sounds like the run up to government run health care. Has the private sector messed it up that much that health care now needs to be run by the government? Another question is, can the government efficiently run health care? Lastly, what will this do to business' that will be mandated to provide the coverage or face the penalties these bills refer to? With the way the economy is lately I'm not sure that this won't prevent more workers from being added to the increasingly swelling unemployment rolls. Business are created, after all, to make a profit for those that create the business.

Insurance companies racking up big losses

It's not widely known by the general public but insurance companies have been steadily losing income the past couple years, mainly due to their self inflicted premium reductions which occur every few years. These premium reductions cause what's known in the industry as a "soft market". This has been the industry's way of increasing individual companies' policy holder share through premium reductions of 20 to 40%. The problem is that in the midst of their soft market the industry has been hit with some large losses and one of their primary sources of income, investments, has been severley damaged due to the recent economic downturn. They are in a bind currently due to this economic downturn since their usual remedy was increasing premiums. This remedy can't be their quick solution since many business are struggling with their own economic difficulties and can't afford the increased premiums. An article in Property-Casualty.com states that property & casualty insurers posted a $1.3 billion dollar loss for the first quarter, their largest loss in over 20 years. Looks like the industry has some difficult waters to navigate in the next few months.

Jackson's death and the event cancellation insurance nightmare

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It seems that the recent death of Michael Jackson has precipitated the start of not only one of the largest ticket refunds in history, but also raises the added issue regarding the payout of the event cancellation coverage purchased by the promoter, AEG Live. Insurer's had issued a policy, with a premium of $18 million, to cover the cancellation of the concerts in the event of an accident. The policy was also supposed to provide coverage if medical issues should arise causing cancellation. The problem is the wording of the policy and the actual cause of the singer's death. It is supposed to take up to several weeks for the reports to come back with a definitive answer on the cause of Mr. Jackson's death. Imagine the cost to the promoter if the policy should end up being denied. It's being written that they sold tickets with a face value of $85 million, gave Mr. Jackson $20 million upfront and spent close to $10 million on rehearsal costs.

AIG head steps down-too much government intervention?

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Recently the head of AIG, Edward Liddy, announced his intention to step down from the company's leadership post. As has been widely reported, AIG was one of the first companies to receive "bailout" money from the government and since then have been widely criticized for it's executive pay packages, bonuses, and other forms of compensation to it's executives. I guess when a company that large hits hard times due to numerous strategic "errors" on the part of it's leadership, and then receives a large infusion of cash from the federal government, it deserves the kind of scrutiny and micromanagement it has been under from the feds. However, there's a problem developing, not only at AIG, but at many other companies that are receiving federal funds. The problem is the compensation at these firms amounts to $1.00 a week. How are you going to get someone with the savvy and experience to come in and run these major corporations, and put up with the "hyper" scrutiny from the feds, in order to steer said companies to a more sound financial footing?

Stippers, private contractors and workers compensation - what's the connection?

Read an article today regarding a strip club out in Montana that tried to claim that it's nude dancers weren't employees but simply private contractors, thereby negating the need for the club to carry workers compensation. It seems the club required it's dancers to pay a fee for the use of the stage and various other fees for types of dances performed. I guess they figured this would somehow create the impression that the dancers were indeed private contractors and not employees. Well, the Montana Supreme Court found that this arrangement was designed solely to "circumvent the Montana wage laws" and benefit the club financially. The club ended up having to pay back to the dancers money paid to them. I cite this case because many contractors out there seem to think they can do the same thing by claiming their employees are actually sub contractors when they are in reality employees that are required to be covered by workers compensation. Many times they can get away with it, but if something should happen on the job requiring medical treatment, the employer can find themselves in quite a "pickle" if found out by their respective state workers compensation authority. Many times they can be required to not only pay medical expenses but also substantial fines. In the end it can cause more trouble than it's worth.

Economic stimulas money to benefit contractors?

The American Recovery and Reinvestment Act (ARRA)is sending down approximately $64.1 billion to the states. This money is targeting transportation infrastructure projects as mandated by the House Committee on Transportation and Infrastructure. This money started flowing in March initially with the release of $27 billion to states for transportation related projects. This is good news for contractors, especially with the general slowdown of housing related projects. The caveat is that this money can only go to existing plans already on the boards in the various states, not for new projects they might wish to undertake. Past experience has shown however that there are usually some types of projects waiting in the wings since the state governments have to keep their planning personnel gainfully employed. Keep an eye out, hopefully this can have a positive impact in your area and brighten prospects in a slow job market. At least until the economic engine gets some life back into it.

Contractor's have sufficient coverage?

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An article I read recently in National Underwriter pointed out a potential gap in coverage for many contractors. It seems that some drywall used in the repair of homes from damage caused by Hurricane Katrina and other hurricanes/storms, has been the culprit in lawsuits being filed on the behalf of homeowners whose homes had the been repaired using the specific type of drywall that was purchased through a German firm from China. It seems that drywall gave off a strong odor and caused damage to electrical equipment and copper piping when exposed to heat and/or moisture. The potential gap in coverage is the lack of environmental coverage in the contractor's policies. The attorneys are filing against everyone from the importer to the contractors. You can't cover every potential claim but this illustrates how important it is perform a proper risk management survey when putting together coverage for your business.

Time for a workplace safety checkup?

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When was the last time you took a few minutes to perform a quick safety inspection of your workplace? You might be a small business owner and don't have a risk manager on staff so it falls to you to ensure that there are proper safety procedures in place and risk is mitigated for customers and employees alike. After all, a simple slip and fall can have a disastrous effect on either your workers compensation policy, in the case of an employee mishap, or on your general liability policy, should a customer suffer an injury. Take a few minutes to inspect all signs for emergency exits, fire extinguishers and alarms to make sure they are clearly visible/lit in the event of an emergency. Also, look for trip and fall hazards, wiring looking frayed or worn, and make sure you have surge protectors installed. It might not sound like much, but just a few minutes paying attention to safety related details can save you a bunch of premium dollars down the road.

Don't get cancelled for nonpayment of premium

Just a word of caution to make sure that you don't let your policies end up being cancelled due to nonpayment of premium. During these tough times many business owners are choosing to not pay their premiums, which is usually the case when finances are being juggled. The problem with this is that when times turn around and the business owner can afford to pay their premiums they may have "burned some bridges" as far as having the opportunity to go back to their previous company to obtain coverage. If there have been too many incidences of payment problems many insurance companies will opt to not offer the coverage again in the future. Also, when your agent approaches other companies that might be willing, they are asked if the proposed insured has had any pay problems or cancellations due to non payment of premium. Take the long term view when facing financial difficulties and try to work with your agent to cut back as much as feasable in your coverage, allowing you still to cover essential areas, while still saving some dollars in insurance premium. Depending upon the area of the country you live in, the insurance market might be somewhat limited and you might not have as many options available. Try and take the emotion out of this process and focus on pragmatic, practicle solutions. Your agent will be willing to help.