Gary Sorenson - Insurance Brokers of Minnesota

Being a business owner involves a lot of responsibility.  When you have commercial autos, you become responsible for the safety of your drivers and other road users.

That can be a lot to take on, so the best way to deal with it is to share the responsibility.  To create a culture where everybody shares the need to do the right thing.  That’s especially important for driving.  If you can create a safe driving culture in your business, you make everyone responsible for road safety. So how do you create a safer driver?

Talk About Safer Driving

The first step is to open up an internal dialogue about driver safety.  You can do this through internal newsletters, emails, brochures or even workshops.  Include your employees in the conversation.  Let them share their stories and their concerns.  The more included your employees feel, the more they’ll get involved in pushing that safe driving culture.

Monitor Driving

It’s important that you understand how your employees drive when they are representing your business.  Driver training can only tell you so much about how an employee drives on a daily basis. Arrange regular monitored driving sessions or use GPS driver behavior monitoring systems and get a read on how safe your commercial fleet really is.

Reward Safer Driving

You want your commercial drivers, and your staff that drive to work, to be safe on the road.  So reward the ones who overachieve in this area.  Drivers that demonstrate a clear commitment to safer driving or show real improvement earn prizes or work-related benefits.

Lead by Example

The most important thing is to lead by example.  If you want to encourage safer driving  in your business, you need to drive safer too.  Whenever you want to influence your employees, you need to practice what you preach.  Any campaign to encourage safer driving will be derailed if you’re spotted speeding on your way into work.  This kind of culture change needs to be all-inclusive and all-inclusive includes you.

At Insurance Brokers of MN, Inc. we have detailed programs we can assist you in implementing.  Contact our home office and we will be happy to provide information.

If workers compensation rates are designed to predict future losses, why use experience rating?  How does experience rating benefit employers?  Implicit in most risk-specific programs of experience rating is the prospect of both debits and credits. Since experience rating gives individual employers some influence over the final premium they pay, it provides an  incentive for employers to develop loss prevention as well as incentives to have the injured employees return to work as soon as reasonably possible. In this way, experience rating benefits employers by promoting occupational health and safety.  Experience rating represents a refinement in the premium determination process. It benefits employers by producing a net premium cost that is the best indicator of an employer’s own potential for incurring claims. This means that the insurance premium will be appropriate for the coverage being provided by using sound insurance principles and an employer’s own payroll and loss data. 

What Does Experience Rating Do?

Insurance spreads, or shares, the cost of a loss with members of a group that are likely to experience similar losses. While the cost and probability of injuries for the whole group can be predicted with a fair degree of accuracy, it is impossible to determine which member of the group will actually be responsible for these costs.  This is why insurance exists. If predictability were perfect, the members of the group that do not expect to experience a loss would have no incentive to purchase insurance, while the premium charge for the members that will experience the loss would need to include the value of the loss. Historically, we know that serious individual injuries generally are rare and that the cost could vary from very minor amounts to millions of dollars. The simplest rating method for workers compensation and employers liability insurance is “manual rating.”  Under manual rating, all employers are grouped according to their business operation or classification. The estimated losses of the group are added together and an average cost is obtained. The rates determined for manual rating are averages which reflect the normal conditions found in each classification. An employer is assigned to a classification to ensure that the rates reflect the costs of all employers with similar characteristics.  Although each classification contains “similar” risks, each individual risk in a class is different to some extent. Experience rating is designed to reflect these individual differences in loss potential.

If the rating system went no further than manual rating, insurance providers could seek employers with lower-than-expected costs and possibly avoid employers with higher-than-expected costs. To avoid this scenario, the rating system must be further refined. Experience rating is one such refinement. In workers compensation experience rating, the actual payroll and loss data of the individual employer is analyzed over a period of time.  Usually, the latest available three years of data is compared to similarly grouped risks to calculate the experience modification.  In general, an employer with better-than-average loss experience receives a credit, while an employer with worse-than-average experience carries a debit rating. Experience rating takes the average loss experience and modifies it based on the individual’s own loss experience.

The two primary benefits of experience rating are:

• It tailors the cost prediction and final net premium cost to the individual employer more closely

than does manual rating alone.

• It provides added incentives for loss reduction that are absent from manual rating alone.

The next issue I will continue with further information on “HOW to reduce your experience modification factor.”

My firm and myself are now Certified Work Comp Advisors and have joined the Institute of Work Comp Professionals, a firm dedicated to helping their certified agents reduce work comp expenses.  WE HAVE  25 WORK COMP MARKETS!

Nine million. That’s how many Americans have their identities stolen each year, estimates the Federal Trade Commission.

Identity Theft a Common Risk

From January 2005 until November 2011, a staggering 543 million personal records were breached, reported the Privacy Rights Clearinghouse. The FTC noted that, in half of the criminal incidents in 2005, thieves obtained goods or services worth $500 or less. In 10% of cases, thieves stole at least $6,000.

ID theft has only been a crime since 1998, when Congress passed the Identity Theft and Assumption Deterrence Act, but it’s escalated as a problem. Not only do criminals use identity theft to steal assets, they also commit crimes in the name and character of the victim.

The FTC urges a “deter-detect-defend” approach to battle ID theft, which costs consumers and businesses plenty of money and time. Deterring means safeguarding personal data to make it harder to steal and misuse. Detecting means monitoring and becoming aware of irregularities that indicate data has been stolen. Defending means reporting the crime and then taking steps to regain data security, recover stolen assets and fix misused information.

Identity theft criminals commonly use six methods to steal consumer and business information:
1. “Dumpster diving” for papers with personal information
2. “Skimming”—stealing credit/debit card numbers when a card is processed
3. “Phishing”—pretending to be a financial institution or company and sending spam e-mail messages to get people to reveal personal information
4. Changing an address by completing a change of address form to divert bills to a criminal’s location
5. Stealing wallets, mail, checks, employer personnel records and other paperwork—through breaking-and-entering physically or electronically or bribing employees who have access to information
6. “Pretexting”—using false pretenses or tricks of social engineering to obtain personal information from consumers, financial institutions, telephone companies and other sources.

Identity theft robs a victim of time that must be urgently spent to alert police, credit bureaus, financial institutions, medical providers and others. A victim has to prove an identity loss or financial loss; close accounts; write letters to government entities; and even work with a legal advocate to recover and rebuild a stolen identity.

Likewise, the costs for legal fees can quickly add up and overwhelm a stressed victim. The loss of work time also can be costly, at the very time when financial resources are under attack by a criminal.

Personal and business insurance can play a key role in the “defend” stage of the identity theft battle. Insurers offer services to help consumers and businesses report identity theft and recover from it. Sometimes these services are included as part of a homeowners insurance package or even a business insurance package; the cost may be included or additional.

An identity recovery package may include reimbursement of legal fees related to identity theft, as well as costs of credit reports and postage, phone, shipping fees, lost wages and child/elder care for those forced to spend time away from family to resolve the situation. The ID package also might include a limited benefit for mental health counseling for crime victims.

The first step in checking on whether you’re covered for identity theft? Contact your Trusted Choice^® independent insurance agent. All facts supplied by trusted Choice.

Contact your Trusted Choice^® independent insurance agent at Insurance Brokers of MN, Inc.

Many Americans are struggling financially in the current economy, particularly those struck by lay-offs, and are faced with tough decisions about how to reduce expenses. As a result, much has been written in recent months about how to reduce insurance premiums as one aspect of a belt-tightening strategy. Unfortunately, too much of this advice has been BAD and much of this bad advice comes from consumer web sites and publications that have little understanding of insurance and risk management. The purpose of this article is to identify some of the bad advice being bandied about and to reinforce some of the good advice. It concludes with 10 reasonable things you can do to reduce your insurance costs.

The first myth we want to dispel is that all policies are alike, the difference only being the price. Insurance policies are legal contracts and, aside from some industry standards, each insurer’s policy is unique. Some cover far more or less than others. For example, some auto policies do not cover no owned autos. Do you ever drive someone else’s car? Some auto policies do not cover business use. Do you ever run by Office Depot, the post office, or the bank on behalf of your employer? Some auto policies exclude undisclosed household residents. Is it possible that a child might move back home for economic reasons and you forget to tell your insurance agent? Might you drive that resident child’s car after they move in? Did you know that some auto policies won’t cover you while driving a resident family member’s car? Has a family member taken on a second job delivering pizzas to make ends meet? Some auto policies cover this, some don’t.

These are all very real examples of coverage shortcomings that the “low cost” auto insurance advertisers don’t tell you about. In fact, if you ask to see their policies before buying, chances are you won’t get a copy. Consumers shop for most things based on value, not just price. The same should be true for insurance which is far too often portrayed as some sort of homogenous commodity. So the next time you see a cute or clever sales pitch from a lizard, cave man, or giggling Wal-Mart-like “pick your price” aisle clerk, ask what you’re buying. The amount of coverage you need depends on your exposure to loss and what assets and income you need to protect today and in the future, not what you’d like to pay.

A second myth is that you can rely on insurance advice from consumer web sites and publications. Sadly, consumers often accept insurance advice from attorneys, plumbers, roofers, cops, and accountants before they’ll listen to their own insurance agent. A major national publication included advice from a “consumer expert” that recommended dropping replacement cost coverage for “actual cash value” coverage, something that is likely to save the insured little in exchange for much in the way of lesser coverage. In the late 1980s and early 1990s, Charles Givens made a name for himself, in part, by recommending that consumers drop various kinds of insurance. Lawsuits ensued when consumers who followed his advice suffered catastrophic uninsured losses.

One popular consumer insurance website recommends that consumers consider reducing their liability coverage to the state minimum requirements. At a time when consumer assets are at their greatest peril, now is not the time to be reducing or eliminating critical coverages that protect you from catastrophic loss. The article shows that by dropping your liability limits from 100/300/50 to 30/60/10 and eliminating the physical damage.

What they don’t show is that the average values of the autos they used in the examples ranged from $12,000 to $22,000 according to Kelly’s Blue Book. How many economically depressed or out-of-work families can afford even a $12,000 loss, much less a 6- or 7-figure liability claim? Auto liability limits of 30/60/10 mean that each person you negligently injure in an auto accident gets no more than $30,000 ($60,000 total for all injuries) and any property damage you cause, such as damage to the other vehicle, is limited to $10,000. Is it possible that a hospital bill might exceed $30,000? Is it likely that the other vehicle you total is worth more than $10,000? Of course, particularly considering that all of the autos they used in their examples of how you can save money by dropping physical damage coverage were worth more than that!

A third myth is that you can drop some coverages because others exist to pay in their absence. For example, so-called financial experts may recommend reducing uninsured motorists and medical payments coverage on an auto policy to minimum limits if you have health or worker’s compensation insurance. Uninsured motorists insurance covers much more than just medical expenses. Given the growing number of uninsured motorists, removing or reducing this coverage can expose you, your family members, and passengers to catastrophic loss.

In the case of business insurance, many business owners are looking, if the law permits, to drop worker’s compensation insurance or have officers with strong health insurance plans exempt themselves. Worker’s compensation typically pays UNLIMITED medical benefits, plus disability, rehabilitation and even burial benefits. In addition, some health insurance plans exclude work-related injuries or work injuries that could have been covered by worker’s compensation. Some businesses are considering eliminating business interruption insurance even though studies have shown that few businesses survive a major loss long enough to be able to reopen their doors.

A fourth myth is that you should insure the market value of your business building or home. Market value is based not only on the cost to rebuild but also on the value of the location and land value. It’s also a function of how much someone is willing or able to pay for your property based on their financial position and the ability to obtain a loan. Your insurance limit is based almost exclusively on the cost to repair or replace the building. The market value can be significantly higher or lower and, just because the market value of your home or business building has declined doesn’t mean you should reduce your insurance limit. In fact, while home prices countrywide have declined measurably in the past year, the cost to rebuild those homes has risen about 4%.

These are just a few examples of what consumers and business owners are doing to reduce their insurance costs, many of these approaches coming from extraordinarily bad advice from consumer writers and others who lack the knowledge to understand what they are suggesting. Attorneys, for example, often suggest that youthful drivers be placed on their own minimum-limits policies (and their vehicle titled in their name if possible) in order to insulate the parents’ assets from a lawsuit. Many, if not most, auto policies have an exclusion that would result in the parents having NO coverage under their own policy for some claims, an unintended consequence that arises from advice given by someone who lacks the intimate understanding of the insurance contract necessary to provide sound insurance advice.

So, what are some reasonable approaches that CAN be taken to reduce or control insurance costs?

10 Things You CAN Do to Control Insurance Costs

1. Investigate coverage and product options with your independent insurance agent. One of the advantages of using an independent agent is that s/he represents a number of insurers with different products and can assist customers in fitting the right product at the right price for the unique exposures you present. Keep in mind that a lower price often means inferior service and lesser coverage, possibly lesser to a greater degree than the premium decrease. Also note that this tip deliberately avoids advising you to “shop around” because that implies price comparisons should drive the decision.
2. Carefully consider whether increasing deductibles NOW is appropriate. While increasing a deductible can save money, it’s important to do it at the right time. Don’t raise the property deductible well past the point of sensible premium reduction on the theory that “it will never happen to me”…insurance purchasing decisions are often made with little regard to post-loss consequences of our current buying decisions. A higher deductible could pay for itself in 3-5 years, but it could take 7-10 years and not be a good investment. The preferred approach is to increase deductibles during good economic times when you can afford a $1,000 – $2,500 loss while accumulating a deductible fund that can be used during hard times if a loss actually occurs then.
3. Consider multiple-policy discounts. This is common advice and generally good advice. Having homeowners, auto, and umbrella policies in the same company will likely save money and, perhaps even more important, will make it less likely that a coverage gap will show up when more than one insurance company is involved in a claim. Likewise, in business insurance, having general liability and auto coverage in the same insurer using “ISO-standard” or superior forms is often critical.
4. Ask for credits. Too often, consumers are entitled to credits for alarms, extinguishers, good student driving discounts, etc. but the agent is not aware of them. Ask your agent for a list of everything that could reasonably reduce your premium and see if you can meet those standards. A good example is how your auto is rated for use. If you’re laid off from work or you’ve found a job closer to home, you might very well be entitled to a lower premium. Unless you tell your agent about these kinds of changing circumstances, you won’t reap the benefits of reduced risk.
5. If you’re going to drop coverages, consider dropping noncritical coverages. Examples include towing and rental reimbursement, credit insurance, etc. Your independent agent can assist you in making these decisions. Consider discontinuing high-risk activities such as using ATVs, jet skis, etc. Catastrophic injuries are common with vehicles of these types.
6. CAREFULLY consider dropping physical damage coverage on your vehicles. As outlined above, this is not always a good idea unless you can absorb a significant 4- or even 5-figure loss. Keep in mind, too, that as an auto loses value, the physical damage premium generally declines as well. Do not be fooled by any simple formula that says you should drop coverage when the value of the vehicle drops below “X” times the premium. You should base your decision on what you can afford to lose and, if your car was destroyed and you could not replace it, how would that affect you financially.
7. Weigh risk management alternatives to insurance. For example, you could place jewelry in a safety deposit box rather than scheduling it. Needless to say, this is probably more risky, but it’s a reasonable consideration. Also, do not cut back on maintenance and loss control procedures that yield long-term benefits like the reduction of frequent losses and those often excluded by insurance policies.
8. If necessary, sell some possessions. Can you get by without certain autos, motorcycles, ATVs, jet skis and boats, homes, jewelry, guns, etc.? If so, you can drop the insurance on those items. However, it is generally a good idea to not drop insurance on property until your exposure to loss no longer exists. This is especially true of any possession that has a significant liability exposure.
9. Seek expert advice. Start with your independent insurance agent who is familiar with you and your circumstances, not a consumer web site or publication that presents generalized, sometimes suspect, advice, nor someone who lacks the training and experience to provide sound insurance advice. Work with your agent to seek outside advice from other experts. If you are getting insurance advice from your attorney or accountant, run it by your insurance agent to see what impact it might have on your policy coverage’s.
10. Question any advice you get, even the advice in this article! It may not be right for YOU. Before you make decisions to reduce or eliminate insurance coverage’s, assess your risks of loss. What are your exposures? What can you lose? What exposures represent losses you cannot afford? What exposures can you retain? The quality of your decisions may be the difference between economic survival and bankruptcy. Carefully chose an insurance representative who can help assess risk with a degree of sophistication and business acumen.

Who could be sued for violating an employee’s rights?  Just about anyone who employs another person!  Discrimination, paying incorrect overtime amounts and sexual harassment are just three of many workplace situations that could lead to a lawsuit.  Some actions result from the employer being unaware of applicable laws while others arise out of cultural differences and misunderstandings.  Still others are the result of harmful intentional acts.  An employer may be aware of the actions and condone them.  In many cases, they are not aware and frequently fail to stop them due to a lack of adequate supervision.

It is also important to note that some actions are totally unfounded and are heavily affected by perceptions and misinterpretations.  False accusations made may be difficult to refute due to poor record keeping and lack of adequate procedural guidelines.

Employment-related practices liability can provide more than just monetary coverage.  Most specialists provide loss prevention techniques that could help an employer avoid being sued, if properly utilized.  More importantly, they can protect employees from abuse.

Employment-related practices losses are a broad category of claims that Commercial General Liability coverage forms specifically exclude.  They include discrimination cases where one individual is treated differently than another because of race, gender, age or other factors that should not affect one’s ability to perform a particular task.  Sexual harassment cases arise from a work environment that becomes unbearable because of a requirement to engage in sexual activities in order to keep a job or be subject or a party to sexually suggestive situations unrelated to job requirements.

Wage and hour disputes are a current major cause of action.  This could be considered cheating an employee out of earned compensation and revolves around both overtime and working hours without compensation.  Some cases involve individuals placed in “salaried” positions and exempt from overtime pay who are then forced to work additional hours to accomplish their assigned tasks.  Other cases involve hourly employees who work extra time and “choose” not to report it for a number of reasons.

The EPLI marketplace has many companies willing to write the coverage.  Who should buy EPLI coverage?  “Anybody who has at least one employee should consider buying this coverage.”  The experts all echoed this response.  “Given the current social and political climate, it behooves all employers, not just businesses, but schools, churches and other non-profits to consider this coverage.”

Consult your local Insurance Brokers of Minnesota agent for a complete analysis of your liability exposures.

Rising life expectancy means that the potential need for “long term care” grows with every passing year of your life. The likelihood is that you or a member of your family will need long term assistance due to a prolonged illness, a disability, or general deterioration of your health and ability to perform routine daily activities. Most long term care expenses are not covered by Social Security or Medicare, Medicare Supplement (“Medigap”), or private health insurance. Medicaid pays for nearly half of all nursing home care, but you must meet federal poverty guidelines and may have to “spend down” most of your assets on health care.

Today the annual cost of home health care ranges anywhere from $20,000 to $60,000 for three shifts per day. The annual cost of nursing home care is likely to be double that — and one year of high quality nursing home care can total well over $100,000!!! Because Medicare, Medicare Supplement (“Medigap”), and private health insurance plans generally don’t pay for nursing home care or home health care, your personal assets will be left unprotected. The long term care bills you incur can deplete them and possibly even eliminate them altogether!

Believe it or not, long term care is an issue that will eventually affect 8 out of 10 families and individuals directly or indirectly! That means there’s an 80% chance it will affect you and the people around you, and you may be risking the financial future of your family or heirs by not planning ahead! Several options are available, but the choice for many is Long Term Care (LTC) insurance. By trading off a small known cost now for an unknown, potentially unlimited one later, you can preserve your savings and other assets. Not only can you purchase long term care insurance for yourself, but also for other family members, such as a parent or your spouse. This is a very effective way to preserve an estate!

As an independent insurance agent, we can survey the marketplace on your behalf and then recommend a long term health care program that best fulfills your individual needs so you can pay for any necessary long term care while preserving your assets for your families. If you’ve ever considered what could happen to the security of your family’s financial future, you owe it to yourself and your loved ones to find out how such planning can work for you!