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Innocent employers go to court every day

Misunderstandings can lead to disastrous consequences for your company, but there are things employers can do to protect your business. Imagine these scenarios:

  • A manager terminates an employee based on negative performance evaluations. The terminated employee sues the employer for pregnancy discrimination, alleging she was fired based on her pregnancy and leave of absence.
  • The Equal Employment Opportunity Commission sues a manufacturing company for race and gender discrimination in their hiring procedures. The EEOC alleges Asian applicants were turned down for all positions except administrative ones.
  • A former employee alleges that after he informed his employer of the need for a kidney transplant, he was terminated.

Even if the employers in these examples were completely innocent and the allegations are unfounded, they may nonetheless incur significant defense costs. What would your company do if these claims were filed against it? Would your company have the resources to pay for litigation costs that may take months or even years to resolve?

HOW DOES INSURANCE FIT IN?

Employment practices liability insurance (EPLI) protects your company against the financial consequences of employment-related lawsuits and from allegations that an employee’s rights were violated. Lawsuits can result in defense costs and possible state or federal fines and penalties if your company is found liable. Complaints and charges could be brought by past, present or prospective employees.

Allegations could include:

  • Wrongful termination of employment
  • Wrongful failure to employ or promote
  • Failure to create and provide workplace employment procedures
  • Violations of the Family and Medical Leave Act, Americans with Disabilities Act, Age Discrimination in Employment Act and Title VII of the Civil Rights Act
  • Wrongful retaliation
  • Breach of oral or written employment contracts

Top-trending employment practice claims also include:

  • Pregnancy discrimination
  • Illegal background checks
  • Health-related employment discrimination
  • LGBT gender identity discrimination
WAYS TO REDUCE RISK

Take action to mitigate the risk in employment decisions:

  • Discuss employment practices liability insurance with your attorney, risk manager and local independent insurance agent.
  • Minimize the risk of lawsuits by educating your managers and employees.
  • Create employment procedures that extend from pre-employment all the way to termination and beyond.
  • Maintain accurate and thorough documentation regarding any employment action that occurs, including steps your organization takes to prevent and solve disputes.
  • Develop an employee handbook detailing company policies for discipline, termination and prevention of sexual harassment and discrimination in the workplace.
  • Ask interview questions that are nondiscriminatory when recruiting and selecting talent.

Employee-related complaints, charges and allegations could seriously damage the reputation and bottom-line results of your company or organization. Take action. Seek advice from your attorney and your risk management team, including your Ayres Group Agent.

Courtesy: Cincinnati Insurance

A checklist for safe snowmobiling

Whether it’s to enjoy the thrill of the ride or the beauty of nature, to go places unreachable by other means or just to spend time with family and friends, millions of people enjoy the outdoors on snowmobiles.

The International Snowmobile Manufacturers Association (ISMA), representing the four North American snowmobile makers, reports 1.3 million registered snowmobiles in the United States. Snowmobile-related activities account for $26 billion in economic activity annually, including accessories, supplies, gasoline and tourism. While some use their machines for work, about 80 percent use them for leisure activities.

Snowmobiles are generally registered and regulated by individual states, and no central system compiles reports on snowmobile accidents, injuries or fatalities. Of those tracked by several states, most are the result of collisions with trees or other fixed objects with excessive speed or alcohol impairment as the most common contributing factors.

ISMA promotes safe snowmobiling through its Safe Rider program, and cites dozens of ways to protect yourself and those around you.

SAFETY TIPS

  • Ensure your snowmobile is in proper mechanical operating condition before going on a ride. Check gas, oil, belt condition and carbides under the skis before each ride.
  • Dress for the conditions! Layering clothing, including a windproof outer layer, is the best way to stay warm on cold days. Fingers and toes typically get cold first, so be sure to wear warm gloves (mitts with liners are best) and insulated boots.
  • Wear a safety-certified helmet in the right size. You should have a clear face shield on the helmet or a pair of goggles to protect your eyes from the sun and wind.
  • Avoid riding alone, especially at night. If you do, make sure you tell others the route you will be taking so they will know where to look if you are overdue.
  • Stay on the marked route when riding trails on private property. Hidden objects, such as fences, tree stumps and stretched wire, may be concealed by snow.
  • Slow down! Speed is a contributing factor in nearly all fatal snowmobiling accidents. Drivers should proceed at a pace that allows ample reaction time for any situation.
  • Stay RIGHT when riding on trails, especially on corners or when cresting hills to avoid colliding with other snowmobiles coming from the opposite direction.
  • Carry a first-aid kit. At a minimum, it should include a flashlight, knife, duct tape, compass, map, tow rope and waterproof matches.
  • Carry a fully-charged cell phone; it can be a terrific asset if trouble arises, but keep in mind that cell phones have limited service range in remote areas.
  • Use caution when crossing roads — come to a complete stop, make sure no traffic is approaching from either direction, then cross at a right angle to traffic.
  • Don’t drink and ride! Drinking alcohol before snowmobiling or during your ride slows your reactions, impairs your judgment and is a leading contributor to snowmobiling deaths.
  • Stay next to the markers if a trail crosses waterways. Ice conditions are never guaranteed, as rapidly changing weather and moving water affect the thickness and strength of ice.

This loss control information is advisory only. The author assumes no responsibility for management or control of loss control activities. Not all exposures are identified in this article. See your local Ayres Group Agent agent for insurance coverage and advice.

Courtesy: Cincinnati Insurance

Ready for snow? Clear the path

Ready for snow? Clear the path 

As a property owner, you want to do whatever you can to welcome visitors to your home or business and keep your family, employees and customers safe. Snow and ice on walkways, roadways, driveways and parking lots can present extra challenges during winter months.

Have a plan to stay ahead on snow and ice removal to minimize slips, falls and automobile accidents outside your home or business. Also protect against slip and fall hazards in interior vestibules, entrances and walkways by removing water, placing rugs or adding signage. You may want to contract with a commercial snow removal service for larger properties or businesses.

AT YOUR BUSINESS
  • Create a snow removal plan that involves your staff, a contractor or a combination of the two to remove water, ice and snow.
  • Maintain adequate supplies of snow-melt chemicals and sand.
  • Mark all encumbrances and obstructions that may not be visible to snow-removal equipment.
  • Identify emergency equipment such as fire hydrants, standpipes and post indicator valves – cast iron vertical indicator posts designed to operate the control valve of an automatic fire sprinkler system.
  • Contract with a snow removal firm if your employees are not capable of adequately removing snow. Make sure the snow removal company has appropriate insurance coverage and adds you as an additional insured under its policy. .
  • Consider how you’ll remove snow accumulation from the roof. Will it be done by employees or by a contractor? If a snowblower is used, be sure to set the height of the snowblower shave plate high enough to prevent damage to underlying roofing material.
AT HOME
  • Be aware of local regulations about clearing sidewalks. Some communities have snow removal ordinances that require homeowners to remove snow within a specified time period (often 24 hours) from the part of the city sidewalk that adjoins their property. Homeowner and condo associations also may have specific rules about snow removal.
  • Take care when shoveling to protect your back. Occupational Safety and Health Administration guidelines suggest pushing snow rather than lifting it whenever possible and taking frequent breaks to avoid frostbite or exhaustion.
  • If you use a snowblower, protect yourself and others from carbon monoxide dangers. Don’t try to clear clogs by hand. Consult the Consumer Product Safety Commission’s Snow Thrower Safety guidebook.
  • You may choose to salt your sidewalk, driveway or parking areas for safety. If you are concerned about environmental effects of salt, the Utah State University Cooperative Extension Service has a guide to deicing compounds and environmentally friendly alternatives.

WC Rates on Downward Trend

Workers’ compensation rate decreases are encouraging, but may not translate into lower prices for employers right away.

Workers’ compensation rates are finally beginning to reverse an upwards trend. Fifteen out of 20 rate and advisory loss cost filings submitted by the National Council on Compensation Insurance (NCCI) so far this year have displayed decreases. Nine out of 10 filings submitted in the risk assigned market have also reflected decreasing rates.

“It really is a fascinating dynamic,” said Eric Silverstein, risk management leader at Lockton’s Dallas office. “We’re getting close to a tipping point where, if you look at the number of states that have passed through rate decreases, it’s getting close to a majority.”

Those decreases, however, may not translate into lower prices for employers right away.

“At our annual conference, we use certain buzzwords. A couple years ago, we said the numbers were ‘conflicted.’ Last year we called them ‘encouraging.’ This year they are ‘balanced,’” said Peter Burton, senior executive for state relations at NCCI.
Rate changes in NCCI-rated states range from an increase of 6.8 percent in D.C. to a decrease of 10.4 percent in Kansas. While a handful have posted increases or no change at all, the majority will propose rate reductions going into 2015.

“Florida just went down 2.4 percent. Oklahoma has significant reform and was down about 15 percent,” Silverstein said. “So it will vary by state and by class code within each state as well.”

“However, that doesn’t necessarily reflect into price decreases for all buyers,” he said. “Insurers have a certain amount of flexibility in their underwriting process, and they won’t necessarily use that filed rate, depending on what the particular state regulations are.”

The price that companies ultimately end up paying will be determined by their respective risk profiles. Those with positive profiles will reap the benefits of the decreased rates, while those with poor risk profiles could end up paying more.

Regulators, Silverstein said, file their rates based on results from preceding years, but insurers will ultimately price their products to anticipate future fluctuations as well.

Nonetheless, the rate decreases are encouraging signs of a softening and more competitive workers’ comp marketplace.

Economic and Market Forces

The improving economy is partly to thank. Rising employment means bigger payrolls and bigger premiums. $42 million in workers’ comp premiums have been written this cycle, which runs from July 1 to the end of next June, according to Burton.

“This is the third year in a row it’s gone up,” he said.

Good underwriting results have also contributed, as well as a decline in injury rates. According to the Bureau of Labor Statistics, “No private industry sector experienced an increase in the rate of injuries and illnesses in 2012.” The injury and illness incidence rate for 2012 was about 3.4 cases per 100 full-time workers, which “continues the pattern of statistically significant declines that, with the exception of 2011, occurred annually for the last decade.” According to Burton, some states have seen injury rates fall by as much as 58 percent.

“The frequency of loss is down,” Silverstein said. “We experienced that with our clients, and it’s now being recognized by the rating agencies.” As the economy improves, however, frequency could potentially climb up again alongside rising employment rates.

Medical and indemnity cost increases are also slowing down, contributing to the trend. Medical costs have risen an average of three percent, down from seven percent increases in past years; indemnity payments have risen only two percent, down from consistent five percent increases over the past 10 years.

The growing popularity of closed formularies could also be contributing to reduced medical costs, Silverstein said. Closed formularies deny coverage for any drugs not included in the program, such as brand name prescriptions for which cheaper, generic versions exist. Early results from states that have adopted them show reduced costs associated with prescription drugs.

“We have another 16 filings to go, and they could be different,” Burton said. “Every state is its own microcosm. But predominantly we are seeing decreases.”

Non–NCCI rated states are witnessing the same trend.

In April, the Pennsylvania Department of Insurance and Labor & Industry announced a 5.15 percent workers’ compensation rate reduction.

Pennsylvania Insurance Commissioner Michael Consedine said in a press release, “As a result of this action, we estimate that Pennsylvania employers will experience annual savings in workers’ compensation insurance costs of approximately $140 million.”

This is the third time the state has reduced rates since 2012, saving approximately $410 million for employers. Consedine called this a “very positive trend.”

In California, the Workers’ Compensation Insurance Rating Bureau (WCIRB) governing committee voted on Sept. 4 to reduce the rates originally recommended in its mid-August Pure Premium Rate Filing. The vote was based on the WCIRB Actuarial Committee’s review of new insurer experience complied in late June which shows “lower than anticipated loss development in the second quarter and some moderation in the 2013 indemnity claim frequency growth,” according to a statement from the Bureau.

The amendment to the filing proposes premium rates that average $2.77 per $100 of payroll, down from $2.86 per $100 that was recommended in August. Even with the decrease, however, the new rate is $0.20, or 7.9 percent higher than the overall industry average of $2.57 as of July 1, 2014.

Some states will see much more significant decreases. Oregon’s base rate, for example, will decrease by an average of 5.3 percent next year, on top of a 7.6 percent decline in 2014. Employers will pay an average of only $1.27 per $100 of payroll in 2015, seven cents down from 2014.

As Okla. Insurance Commissioner John D. Doak said, “When employers pay less for workers’ compensation insurance, they can more easily grow their business, hire additional workers and expand local economies.” Over the past two years, Oklahoma has decreased its loss cost levels by about 22 percent.

Katie Siegel is a staff writer at Risk & InsuranceÂź.