Review your business life insurance policy

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We recognize and expect changes in the economy, but the uncertainty of those changes calls us to be vigilant in our business continuation plans. The ability to recover quickly after an unexpected event starts with building a policy that is tailored to the circumstances surrounding your business. An annual policy review is a simple way to review your coverage and identify needs.

Life insurance has long been valuable in the business market, and permanent policies can be even more beneficial in uncertain times:

  • Guaranteed cash values can help buffer against an economic crisis, keeping a company afloat in an emergency.
  • Policy loans are not dependent on credit history, and repayments can be scheduled on favorable terms.
  • Death benefits from a key employee’s policy may be used to purchase that individual’s share in the company, ensuring stability for the business.

Over the past few years, the impacts of COVID-19 have dramatically altered the business landscape. Companies with products in high demand, such as personal protective equipment, hand sanitizer, and masks, have seen their profits and net worth soar while others, like restaurants, are struggling. Death benefits from life insurance are more important than ever in planning for the succession of a business in the event of a premature death of an owner or key employee.

Here are two steps you can take when reviewing your coverage:

  1. Look for and analyze any significant changes since the last review.
    • Business valuation changes, primarily for businesses in which valuation may include a multiple of earnings. If earnings are dramatically higher, more insurance may be needed so surviving business owners can purchase the decedent’s interest.
    • Changes in ownership percentages for any owners. These updates may require realignment of coverages. Recent mergers or acquisitions could also require additional insurance or a transfer of existing insurance.
    • Changes in the family situation of any owner, including divorce, death, disability, or medical conditions. This includes circumstances affecting both the owner and his or her family members.
    • Changes in key employees, such as departing or retiring employees. Should an incentive program be designed to attract or retain key employees?
  1. Ask about current life insurance coverages:
    • Are current policies performing as expected? Lower credited interest rates, reduced dividend schedules or a change to guaranteed insurance charges could put policies in peril, especially universal life coverages.
    • Have the policies been borrowed against?
    • Are beneficiary designations still accurate and appropriate?
    • For life insurance owned by the employer, is the employer attaching Form 8925 annually to its income tax return so the death proceeds will not be taxable income?

This review can be done over the phone, so it’s still possible to complete it during times when face-to-face meetings aren’t possible. Don’t hesitate to contact your Ayres-Oak Insurance Services life insurance agent about a review of your business life insurance portfolio; you can help ensure your business remains adequately protected.

Technology enhances service but can’t replace relationships

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Lives change and businesses grow and transform over time. That’s why we feel people are best served by insurance agents who have the expertise to evaluate an evolving risk profile and offer educated advice and products. Building a relationship with an Ayres Group agent can provide you with a personal experience and ensure that you are offered the right coverage.

INFORMED DECISIONS, PERSONAL TOUCH

Why Ayres Group agents when our industry has online platforms that ask questions and provide quotes? In short, insurance is a relationship business:

  • Ayres Group agents represent multiple carriers with a variety of coverages and terms to choose from. An agent will listen and get to know you. Then, they’ll offer you choices based on your circumstances. This individual service brings additional value.
  • First-time insurance buyers are especially in need of guidance and independent agents are in a unique position to help assess risk and offer a personal touch.
  • We live in a complex world, and online quoting platforms lack the consideration, expertise, and emotional IQ that AYres Group agents bring to each client.

Consider homeowner insurance. Far more goes into determining the true cost to rebuild a home than the facts captured through a quick online questionnaire. It’s the deeper questions an agent asks that often reveal the client’s home’s unique and special features, such as highly customized buildouts, carefully selected fixtures, and other structural details.

PROACTIVE HOMEOWNER POLICY REVIEWS

Regular contact with your Ayres Group agent can reveal changes to your risk profile. Check-in annually with your agent and have a conversation as part of your policy renewal. You may discover changes relevant to coverage:

  • Renovations, additions, or new appliances that require additional coverage
  • Changes to driver status or garaging of cars by children at locations other than the home address
  • Purchases made that the homeowner policy doesn’t cover
  • Participation in ride-share services or renting a portion of the home
BUSINESSES CHANGE, TOO

Business clients evolve, too – whether growing or scaling back – and annual discussions around coverage are critical. Risk profiles will change with new endeavors, partnerships, investments, and growth. YourAYres Group agent’s ability to identify these risks and explain them surpasses the capabilities of a direct quote experience.

Discuss changes in your business that could alter your risk profile by reviewing:

  • Business income
  • Cyber risk
  • Buildings and property enhancements
  • Workforce
  • Transportation
  • Product Liability

For more information, contact an Ayres Group today – Call (269) 651-1761

Review your business life insurance policy annually

/in /by

We recognize and expect changes in the economy, but the uncertainty of those changes calls us to be vigilant in our business continuation plans. The ability to recover quickly after an unexpected event starts with building a policy that is tailored to the circumstances surrounding your business. An annual policy review is a simple way to review your coverage and identify needs.

Life insurance has long been valuable in the business market, and permanent policies can be even more beneficial in uncertain times:

  • Guaranteed cash values can help buffer against economic crisis, keeping a company afloat in an emergency.
  • Policy loans are not dependent on credit history, and repayments can be scheduled on favorable terms.
  • Death benefits from a key employee’s policy may be used to purchase that individual’s share in the company, ensuring stability for the business.

Over the past few years, the impacts of COVID-19 have dramatically altered the business landscape. Companies with products in high demand, such as personal protective equipment, hand sanitizer, and masks, have seen their profits and net worth soar while others, like restaurants, are struggling. Death benefits from life insurance are more important than ever in planning for the succession of a business in the event of the premature death of an owner or key employee.

Here are two steps you can take when reviewing your coverage:

  1. Look for and analyze any significant changes since the last review.
    • Business valuation changes, primarily for businesses in which valuation may include a multiple of earnings. If earnings are dramatically higher, more insurance may be needed so surviving business owners can purchase the decedent’s interest.
    • Changes in ownership percentages for any owners. These updates may require the realignment of coverages. Recent mergers or acquisitions could also require additional insurance or transfer of existing insurance.
    • Changes in the family situation of any owner, including divorce, death, disability, or medical conditions. This includes circumstances affecting both the owner and his or her family members.
    • Changes in key employees, such as departing or retiring employees. Should an incentive program be designed to attract or retain key employees?
  1. Ask about current life insurance coverages:
    • Are current policies performing as expected? Lower credited interest rates, reduced dividend schedules, or a change to guaranteed insurance charges could put policies in peril, especially universal life coverages.
    • Have the policies been borrowed against?
    • Are beneficiary designations still accurate and appropriate?
    • For life insurance owned by the employer, is the employer attaching Form 8925 annually to its income tax return so the death proceeds will not be taxable income?

Don’t hesitate to contact your Ayres Group insurance agent about a review of your business life insurance portfolio; you can help ensure your business remains adequately protected.

Protect your business with machinery and equipment insurance

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Practically every business relies on equipment. Regardless of how simple or complex, your equipment is critical to your business’ successful operation. For example, while an electrical panel is a very basic piece of equipment, imagine trying to operate your business without electricity.

Machinery and equipment insurance gives you financial resources to help you restore your business to full operation after an unforeseen equipment failure.

SIMPLE COVERAGE

If your business uses mechanical, electrical, or pressurized equipment, you need more than a property insurance policy. Standard property policies exclude losses caused by:

  • mechanical breakdown
  • electric arcing or power surges
  • the explosion of steam boilers, piping, engines, and turbines
  • loss or damage to steam boilers
  • loss or damage to hot-water boilers
  • indirect or consequential losses associated with the above causes

M&E coverage – also called equipment breakdown coverage – protects equipment such as transformers, electric panels, motors, air conditioning units, refrigeration units, production machinery, and boilers.

HOW DOES IT WORK?

M&E coverage reimburses you for expenses related to repairing or replacing covered equipment damaged by an accident. An accident is a sudden and accidental breakdown of the equipment (or a part of the equipment), manifested at the time of the breakdown by physical damage requiring a repair or replacement. Normal in-service deterioration and losses caused by corrosion or erosion are not considered to be accidents.

Mechanical breakdown loss does not stop with the repair bill. Consider the possibility of significant business interruption and consequential losses as well as extra expenses you may incur to keep your business running after a covered loss.

Your Ayres Group agent can review your company’s equipment breakdown needs and help determine how best to adequately protect your business from equipment breakdown losses.

Talk with your Ayres Group insurance agent to find out more about machinery and equipment insurance.

Tips to protect taxpayers from identity theft during and after the pandemic

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Taxpayers, beware of fraudsters out to trick you for your information.

Tax return identity theft has reached such epidemic proportions that it tops the list of the IRS’s Dirty Dozen Tax Scams. Here are tips the IRS wants you to know about identity theft so you can avoid becoming a victim.

  • Phishing: Taxpayers should be alert to potential fake emails or websites looking to steal personal information or other financial scams related to COVID-19. The IRS will never initiate contact with taxpayers via email about a bill, tax refund or Economic Impact Payments. Don’t click on one claiming to be from the IRS. Be wary of emails and websites that may be nothing more than scams to steal personal information.
  • Phone Scams: Phone calls or vishing (voice phishing) from criminals impersonating IRS agents remain an ongoing threat to taxpayers. The IRS has seen a surge of these phone scams in recent years as con artists threaten taxpayers with police arrest, deportation and license revocation, among other things.
  • Social Media Scams: Scammers use COVID-19 events and social media messaging to convince victims that they are dealing with someone’s family, friends, or co-workers. Instead, the email includes malware used to commit additional crimes.
  • Return Preparer Fraud: Be on the lookout for unscrupulous return preparers. The vast majority of tax professionals provide honest, high-quality service. There are some dishonest preparers who operate each filing season to scam clients, perpetuating refund fraud, identity theft, and other scams that hurt taxpayers. Check out the IRS’ special page for tips on choosing a preparer.
  • Fake Charities: Groups masquerading as charitable organizations solicit donations from unsuspecting contributors. Be wary of charities with names similar to familiar or nationally known organizations. Contributors should take a few extra minutes to ensure their hard-earned money goes to legitimate charities. IRS.gov has a search tool taxpayers can use to check out the status of charitable organizations.
  • Ransomware: Taxpayers should be alert to this growing cybercrime where malware targets human and technical weaknesses to infect a victim’s computer, network, or server. Once the system is infected with malware, ransomware looks for and locks critical or sensitive data with its own encryption. Victims receive an anonymous ransom request usually demanding payment in virtual currency such as Bitcoin. The IRS and its Security Summit partners advise tax professionals and taxpayers to use tax preparation software products’ free, multi-factor authentication feature to protect against data thefts.

Identity theft is scary and expensive for both individuals and businesses, but there are ways to protect yourself. Refer to the Taxpayer Guide to Identity Theft or the IRS Identity Theft Protection page on the IRS website, and then ask your independent insurance agent for more information about data compromise and identity theft coverage.

cinfin.com

Life insurance part of a business’s risk management

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Operating a business requires you to manage risks to preserve assets and prevent losses. You’ve ensured that you have appropriate commercial liability insurance and perhaps directors and officers coverage or employment practices protections.

Nevertheless, the biggest risk to your business could be the loss of you or other company leaders.

LEADERS ARE KEY

When evaluating risks, have you considered the impact of an unexpected death of an owner or one of your key employees – not just emotionally, but financially?

The cost of an unfunded buy-sell agreement could be just as devastating to your balance sheet as an uncovered liability claim. A properly designed life insurance policy can play a critical role in protecting the financial future of your business.

Losing a key employee could disrupt sales, hinder production and potentially create credit issues. Those costs might be difficult to overcome without adequate coverage. The employees you identify as needing liability coverage may be the same key leaders for whom you need life insurance. Purchasing life insurance can fund a business continuation plan, keeping your business financially attractive to those who might want to buy out a deceased person’s interest in your company.

PRIVATE OR PUBLIC

Whether your business is privately held by a few owners or has many shareholders with a complex ownership and management structure, both management liability and life insurance provide critical protection for the financial position of your organization.

A lack of coverage ultimately can impact your business’s ability to obtain credit or even continue operations. More importantly, adequate coverage protects your personal assets and the future value and security of your business.

With the help of an independent insurance professional, you can quickly tailor a solution to your specific needs.

Contact The Ayres Group

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Insurance helps hospice care providers focus on the patient

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Hospice organizations focus on the care – not a cure – for the patient, as well as support to the patient’s loved ones. If your organization operates a hospice, you are in a unique position to affect the quality of life in your communities.

By making sure your organization has appropriate insurance protection, you can keep your focus on the important services you provide to patients and their families. Take time to review the declarations page of your insurance policy. Many policies contain professional liability deductible. These deductibles can be sizeable, so it’s important to maintain a line item in your operating budget to account for this exposure.

Here are some insurance coverages to consider, but each organization is unique. Talk to your local, independent insurance agent and your legal adviser for information specific to your situation.

MANAGEMENT LIABILITY (D&O)

Healthcare Institutions Directors & Officers Liability (D&O) coverage protects the management of hospices and their subsidiaries – including past, present, and future directors, officers, trustees, administrators, employees, volunteers, and members of boards or committees – against alleged wrongdoings. In the hospice industry, managers must direct peer review committees and quality of care and staff privileges. Periodic training regarding the Health Insurance Portability and Accountability Act (HIPAA) and the Emergency Medical Treatment and Active Labor Act (EMTALA) is essential for healthcare-related organizations. These duties and others put hospices at risk for D&O claims, such as written demands for monetary damages, formal administrative actions, civil suits, and regulatory proceedings.

D&O claims cannot be taken lightly, as they can quickly become costly. Examples include alleged improper billing and collection practices, former business partner separations and severance disputes, breach of duty, and denial of clinical privileges.

EPLI

Employment Practices Liability Insurance is another crucial coverage for hospice organizations, along with third-party EPLI coverage. Claims can potentially include discrimination, harassment, retaliation and wrongful termination. Sex and race discrimination are the most common types of EPLI discrimination claims in the workplace. For example, in the hospice industry, a highly paid nurse replaced by a younger, lower-paid nurse could sue for age discrimination.

CYBER LIABILITY

Don’t overlook the threat of cyber-related incidents, and look for insurance coverage to protect the hospice from data breaches, identity theft, computer attacks, network security liability, and cyber extortion. Thousands of patient names and Social Security numbers have the potential to be exposed due to a security breach of a hospice computer server or as the result of a computer virus.

SEXUAL ABUSE

Sexual abuse and molestation coverage is an important area to review. Many policies provide vicarious coverage only, meaning only the hospice organization itself is protected; no coverage is included for a specific employee or volunteer worker. This can create a conflict if a claim against a worker goes to trial. You can determine if an employee or volunteer worker is covered by looking at the coverage form under “Who is an Insured.” Look to see if the sexual abuse molestation coverage is included within the general liability coverage of the policy or as a separate item. If it’s included, then sexual abuse and molestation coverage must share the limits with other liability losses. Separate coverage usually means separate limits exist. Ask your agent if you are in doubt.

By taking care of key insurance coverage, you can protect your hospice organization and turn your efforts to serve your patients, their families, and the community.

What business owners need to know about the CARES Act

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President Trump signed the $2.2T CARES (Coronavirus Aid, Relief, and Economic Security) Act into law to provide economic relief for those affected by the current pandemic. Here’s what small business owners need to know.

What is in the CARES Act?

The CARES Act consists of three major components:

Loans for struggling businesses (including $367 million specifically earmarked for businesses with 500 or fewer employees), called the Paycheck Protection Program.

Expanded unemployment benefits, including an additional 13 weeks of benefits, and up to $600 more per week in benefits for up to four months. Self-employed and gig workers will also be covered.

Payment of up to $1,200 to each individual or $2,400 to each couple, plus $500 for each child under 16. These payments would be phased out for those with incomes over $75,000 ($150,000 for couples).

How will the new stimulus package help small business owners?

For business owners, the part of this plan that may provide the most immediate relief is the Paycheck  Protection Program, which provides low-interest loans for small businesses being hit hardest by the outcomes of the pandemic. Here’s what business owners can expect:

Loans will be handled through the Small Business Administration’s existing 7(a) program. Loans are made by private lenders (banks, credit unions, and other lenders) and are guaranteed by the SBA.

The self-employed, including gig workers like Uber and Lyft drivers, are eligible.

The amount that can be borrowed is dependent on your payroll expenses, so you must have paid employee salaries and payroll taxes, or have paid independent contractors. You’ll need to show proof of these payments.

The purpose of these loans is to provide a cushion so that employers can continue to pay their employees, or can rehire those they have already let go. Part of the loan may be forgiven for employers who retain or rehire workers.

How to apply for a loan

To apply for a loan, go to your current bank and see if they can offer you a loan under this program. There are about 1,800 lenders who are currently authorized to make these loans, and Treasury Secretary Steven Mnuchin has said there are plans to allow any FDIC-insured lender (which includes virtually every bank) to offer these loans.

For more information on SBA loans and the CARES Act, visit the SBA website.

Unemployment expansion

The CARES Act increases unemployment benefits for those who have been laid off. The Act extends the period of time that out of work people can collect unemployment benefits for an additional 13 weeks. It also increases the amount of compensation they can get by up to $600 per week.

Unemployment benefits are managed by each state, but they all follow the federal guidelines. If you have had to lay off employees, encourage them to file for unemployment by visiting their state’s unemployment website. The Department of Labor website has information about unemployment insurance and a link to each state’s website.

The contents of this article are provided for informational purposes only and do not constituent, and should not be relied upon as, legal, business or insurance advice related to the needs of any specific person or business. 

 

What’s the best approach to the small commercial market?

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The small commercial insurance market is hot — there’s no doubt it. In fact, the entire small business environment is quite active, with around 11 million businesses that employ fewer than 20 people, according to the U.S. Census Bureau, and another 6 million with between 20 and 500 employees. Around 600,000 new businesses are started every year in the U.S. and almost as many fail each year.

As in every other segment, small business owners’ expectations have risen over the past decade, due in part to their daily experiences with digital and mobile capabilities.

In the insurance sector, the competition for retaining existing small business customers and acquiring new ones is intense. During this time of active industry transformation, a variety of approaches are being employed by commercial lines insurers, especially when it comes to distribution options. Which of these options are the best?

SMA identified five prevalent distribution strategies that are currently deployed by insurers. A synopsis of these strategies follows, along with recommendations for insurers.

  1. Existing agent channels … enhanced with tech: Many insurers are doubling down on their independent agent distribution channel. Agents, after all, still sell the lion’s share of the small commercial business. However, in this digital age, insurers must be aggressive in the tech capabilities they provide to agents, with modern portals, mobile capabilities, enhanced agent-carrier connectivity solutions, and more.
  2. Direct digital: The direct model, successfully deployed for years in the personal lines space, is moving to small commercial. Small business owners are more tech-savvy, and some want self-service capabilities to identify the coverages they need, get quotes, and finalize their policy — all online.
  3. New digital brand: Some insurers are establishing new digital brands for small commercial distribution. In most cases, the underwriting and back-office support remain with the insurer, but the front-end marketing and sales are done via a newly established, visible brand in the market. This allows insurers to distinguish the channel from their agent channel and go after different segments in new ways.
  4. Partnering with InsurTech: An appealing option to many insurers is to partner with InsurTechs that are capturing attention with their focus on the customer experience. These InsurTechs may be digital agents/MGAs or comparative raters. Many InsurTechs offer agent-focused solutions or enhance the agent/carrier relationship and support the approach in #1 (above).
  5. Establishing a marketplace: Several very large insurers are establishing their own marketplaces that support either agent or direct submissions. These marketplaces typically provide automated appetite matching, triage, and recommendations on coverage. In addition to traditional small commercial players, such as Chubb and The Hartford, large personal lines companies like Progressive and Nationwide are also going after small commercial business with this approach.

Which of these approaches will turn out to be the most successful in growing a small commercial book? Of course, there isn’t one definitive answer. The likelihood is that a combination of approaches will yield the best results for each specific carrier. The omnichannel world has come to small commercial, which means that most insurers will utilize at least two of these methods of reaching customers.

Perhaps the most important advice is to understand customer segments at increasingly discrete levels and adopt an outside-in approach. The commercial lines business has continued to move in the direction of more specialization, and small commercial is no exception. The deeper the understanding of the characteristics and risks of each type of business, the better-equipped insurers will be for creating products and programs to serve that segment. The distribution channel then becomes part of the customer expectations discussion. What methods will be most successful for each given segment? Will the business owners in a particular segment react most positively to experienced agents that they know and trust? Or are they more likely to prefer acquiring their insurance via a direct self-service approach (or one of the other options outlined here)?

One thing is certain: The distribution channel environment for small commercial will evolve over the next few years. And all of the five options in this article (and probably others) will be in the mix.

contact your Ayres Group Agent for more information on small business insurance.

It’s time to take third-party risk seriously

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A recent study of 600 IT and security decision-makers revealed that though 60% of organizations have formal third-party risk policies, 44% of them have experienced a significant breach caused by a vendor. This is disturbing in itself, revealing a major discrepancy between the third-party policies organizations espouse and those policies’ effectiveness. But what’s more, only half of firms discontinued their relationship with the guilty vendor, and 69% did not change the risk policies that had just failed them.

The Ponemon Institute found that on average, companies share confidential and sensitive information with approximately 583 third parties. That figure seems staggering, but this one is more so: Only 34% of companies keep a comprehensive inventory of their third parties. As companies increasingly outsource aspects of their business to third parties, their risk profile becomes increasingly complex.

The use of new technologies such as the Internet of Things (IoT), mobile and cloud by vendors add to the question: Where is my data, and how can I protect it when it is in someone else’s hands? In the hustle and bustle of daily business, third parties often become the overlooked or unwitting accomplice in criminal activities.

The perils of third parties

Third parties are in high demand because they enable companies to quickly scale and reduce costs. In the fervor to achieve business goals, many companies contract with third parties without considering data, operational and financial risks.

The majority of companies believe their third-party partners have adequate protection and could provide sufficient communication and mitigation measures in the event of a breach. However, though the majority of respondents felt confident in the vendor to keep their data safe, recall that nearly half (44%) of firms had experienced a significant, business-altering data breach caused by a vendor. Exposure at the third-party level can exponentially increase when considering fourth, fifth and sixth parties (or nth parties) with whom vendors (and their vendors) do business.

Enforcing security policy

In the study just cited, the majority of companies admitted that though they use a multi-step process to evaluate vendors, security is not always part of the criteria. The best way to protect a company from a detrimental breach is to avoid one in the first place — by doing all of the due diligence needed. Yet only 51% of companies in the evaluation process require a signed contract that obligates the third party to adhere to security and privacy practices. And less than half review the written policies of their third parties.

Clearly, due diligence needs to be enforced by putting company-wide policies in place that specifically take security into consideration when it comes to bringing on third parties.

Policies as necessities

Monitoring third-party connections at the operational level has become increasingly difficult due to the Web. More importantly, it has become difficult to create policies that effectively minimize the associated risk.

In evaluating third parties, most IT and security teams use a multi-step approach. But the report found that formalized data policies and senior management support for third-party risk are lacking. More than half (60%) of organizations have formalized third-party data risk management policies in place, but completeness and depth varied significantly. Most firms (90%) review their policies at least annually.

Though most respondent companies (81%) think their security policies regarding third parties are effective, this figure conflicts with reported breaches attributed to vendors. While they consider their policies effective, only a quarter of firms completely agree that their company allocates sufficient resources to manage third-party relationships. However, most keep an up-to-date inventory of all third parties with whom they share data.

Keeping your word

Companies need to follow through with their policies, though the statistics above show that this is often not the case. But business is built on trust. When a customer agrees to do business with you, there is a tacit promise of trust that must be kept. If that trust is broken, so is your business.

Taking action is part of that promise, which must be kept in order to continue as a successful company. Consequences include immediately firing the third party, legal actions including lawsuits, and financial reimbursement to cover breach costs — technical, legal and PR costs — and extra damages. These actions show that your company takes security seriously.

Bring it all together

It is unlikely that a company could function today without using third parties. So then, the answer to third-party risk cannot be to cut off all outside help. Nor can it be letting third parties slide when they are responsible for a security event. Policies need to be created and upheld. Customers are trusting you to keep their data safe, so you cannot apply assumed trust when it comes to third parties. Use the guidelines above to maintain customer trust, lower risk and improve overall security.Â