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July 2009

Jul 01
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GENERAL CONTRACTORS: PROTECT YOUR COMPANY WITH COMPLETED OPERATIONS COVERAGE FOR ADDITIONAL INSUREDS

By Construction Insurance Bulletin

Construction contracts typically require a subcontractor to name the general contractor as an additional insured on the sub’s Liability insurance policy. It is not unusual for the contract to require this coverage for claims arising out of both the sub’s ongoing and completed operations. The GC is vulnerable to lawsuits arising out of the sub’s ongoing work and from flaws in the finished project. Consequently, subcontractors need Completed Operations coverage for additional insureds.

However, the insurance industry several years ago took steps to eliminate Completed Operations coverage from the policy form most commonly used to cover additional insureds. The 1985 edition of ISO form CG 20 10 provided coverage for the person or organization listed on it for “liability arising out of ‘your work’ for that insured by or for you.” The Commercial General Liability policy defines “your work” as work or operations performed by the named insured or on its behalf and materials, parts and equipment furnished in connection with the work. Courts interpreted this to mean that additional insureds had coverage for the contractor’s completed operations. In 1993, ISO announced that it was revising the CG 20 10 form, stating that it had never intended for the form to provide this coverage. The form now stated that it provided coverage for liability arising out of the named insured’s ongoing operations. ISO also introduced a new form, CG 20 37, which covers the additional insured for liability arising out of the named insured’s work and occurring away from premises the named insured owns or rents.

To illustrate how these endorsements apply, assume an electrical contractor is responsible for installing the wiring in an office building under construction. Part of the job involves connecting automatic thermostats in each individual office to a master heating and cooling control. The contractor’s employees secure the wiring to building studs using staple guns. While securing wire, an employee becomes distracted by a colleague who interrupts him to ask where a tool is. He accidentally squeezes the trigger on the staple gun while it’s pointed at another contractor’s employee, causing painful injuries. The injured employee sues the general contractor and the electrical contractor. The electrical contractor’s CGL policy includes endorsement CG 20 10 and lists the GC as an additional insured. Because this accident happened during the electrical contractor’s ongoing work for the GC, the policy will cover the GC.

Now suppose that the electrical contractor finishes the job and leaves the site with no plans to return. The GC accepts the electrical work as delivered. As the building nears completion, the GC tests all its systems. During the electrical test, loose wiring on the second floor sparks and ignites insulation in the wall, causing a fire that damages parts of two floors. The building owner sues the GC for the damage and rents lost due to the delay. Because the electrical contractor no longer had ongoing operations for the GC, endorsement CG 20 10 will not apply. Instead, the policy would have to include endorsement CG 20 37 to cover the GC.

Note that neither of these endorsements would cover the GC if the GC was entirely responsible for the losses. For coverage to apply, the electrical contractor must be at least partially liable.

All contractors should discuss their contractual obligations with our experienced insurance agents. The agent can advise on which insurance companies are willing to provide the needed coverage, what they will charge, and how they will handle claims. Most contractors need completed operations coverage for their additional insureds. Make sure that you have it before the job starts or the loss occurs.

Jul 01
Love2

AVOID THESE UNSAFE BEHAVIORS TO PREVENT WORKPLACE ACCIDENTS

By Workplace Safety

Approximately 80 out of every 100 accidents are directly attributable to the person involved in the incident. In fact, unsafe work behavior causes four times as many accidents as unsafe work conditions.

Workplace accidents occur for many reasons. After an accident, people tend to look for someone or something to blame rather than identifying the root cause. Below are some of the unsafe workplace behaviors that can lead to accidents. As you read them, ask yourself whether you have ever been guilty of any of these. It may not have resulted in an accident the first time, but you might not be so lucky in the future.

  • Taking Shortcuts: It’s only natural to look for ways to do our jobs faster and more efficiently. But do these time savers come at the expense of your own safety, or that of other workers? Shortcuts that reduce your job safety are not shortcuts at all, but an increased risk of injury.
  • Being Over Confident: Confidence is never a bad thing. But too much confidence in one’s work ability can lead to improper procedures, tool mishandling, etc. which could lead to an accident.
  • Beginning a Task with Incomplete Instructions: To perform a job safely and correctly you need complete information. Never be shy about asking for further explanations about work procedures and safety precautions. The only dumb question is the one that goes unasked.
  • Poor Housekeeping: When clients, managers or safety professionals walk through your workplace, cleanliness is usually an accurate indicator of everyone’s attitude about quality, production and safety. Poor housekeeping creates hazards of all types. A well maintained area sets a standard for others to follow. Good housekeeping involves both pride and safety.
  • Ignoring Safety Procedures: Purposely ignoring known safety procedures can endanger not only you but your co-workers too. Being indifferent about safety is a death wish.
  • Mental Distractions: Letting your personal life keep you from focusing on your work is a hazardous situation. Dropping your mental awareness can pull your focus away from safe work procedures.
  • Failure to Plan: Hurriedly starting a task, or not thoroughly thinking through the process can put you in harm’s way. As the old saying goes “People Don’t Plan to Fail, They Fail to Plan!”
Jul 01
Love0

CHOOSE THE RIGHT HARD HAT AND MAINTAIN IT PROPERLY TO ENSURE WORKER SAFETY

By Workplace Safety

A hard hat not only protects your head from falling materials, but it can also soften the blow to your head if you accidentally bump into a piece of machinery, equipment or another potentially harmful item.

Here’s how a hard hat protects you:

* The rigid outer shell resists and deflects blows to the head.
* The suspension system inside the hat acts as a shock absorber by distributing the impact over a large area.
* Some hats serve as an insulator against electrical shocks.
* The hat shields your scalp, face, neck and shoulders against hazardous splashes, spills and drips.
* Some hard hats can be modified, allowing you to add face shields, goggles, hoods or hearing protection to them.

Even if your hard hat gets dented or shattered, it still takes some of the force of a blow off your head. If a blow is powerful enough to shatter a hard hat, just imagine what it could do to your unprotected head.

CHOOSING THE BEST HARD HAT

When you’re shopping around for a hard hat, consider what kind of work you’ll be performing. Choose the most suitable hard hat for your line of work and only find an approved hard hat that has been manufactured to meet required standards. This ensures that your head will receive the utmost protection.

You should also make sure your hat properly fits your head. The hard hat will offer you maximum protection only if you have the proper shock absorbing space between your hat and the suspension system. You should adjust the sweat bands and suspension straps to ensure the hat sits comfortably and securely on your head. Your hard hat shouldn’t slip when you bend your head forward and you should not wear it tilted back on your head.

TAKING CARE OF YOUR HAT

Once you find the right hard hat, be sure to take good care of it. Do not leave your hard hat resting on the dashboard of your car because sunlight and heat can damage the sweatband and suspension straps. Try not to drop or throw your hat, and don’t ever drill holes in it. You should check your hat for cracks, gouges and strap frays or breaks every single day.

Although some workers might think that wearing a hard hat is nothing more than nuisance, it could save their life one day. Every time you step onto a jobsite, shield your head with a protective, well-fitting hard hat.

Jul 01
Love0

TAKE PRECAUTIONS TO ELIMINATE WORKER FATALITIES

By Workplace Safety

In 2007, the number of workers killed on the job dropped to an all-time low, according to the U.S. Bureau of Labor Statistics’ annual Census of Fatal Occupational Injuries. That year, there were a total of 5,488 worker deaths — the fewest since the Bureau began keeping track in 1992. That is down 6% from the 5,840 deaths reported in 2006.

Although this is great news, the Bureau also discovered a significant increase in a few specific types of fatal injuries. For example, a record number of workers died from falls in 2007. Therefore, experts say there is still a drastic need for an increase in violation fines as well as more intense safety training programs for construction and transportation workers — two of the riskiest jobs in the United States.

Here are a few more of the eye-opening findings from the 2007 fatality census:

  • The construction industry once again had the most deaths of any private sector, with 1,178 fatalities in 2007. However, there was a 5% decrease in construction worker deaths from 2006, when there were 1,239 fatalities.
  • The overall rate was 3.7 fatal injuries for every 100,000 workers in the U.S., the lowest annual rate ever reported by the bureau. That’s down from a rate of 4.0 deaths for every 100,000 workers in 2006.
  • Transportation incidents continued to be the No. 1 cause of on-the-job fatalities, accounting for two-fifths of all worker deaths. However, the number of transportation-related fatalities dropped to an all-time low of 2,234 in 2007.
  • The number of fatal falls grew to a record 835 in 2007. Fatal falls have increased by a whopping 39% since the BLS started tracking data in 1992.
    • Workplace homicides skyrocketed to a total of 610, up 13% from 2006. This includes a substantial increase in homicides involving police officers and retail supervisors.

According to Elaine L. Chao, U.S. Department of Labor’s Secretary of Labor, this decrease in overall fatalities are “continued evidence that the initiatives and programs to protect workers’ safety and health, designed by an implemented in this administration, are indeed working.”

Other experts say that while a 6% decrease is certainly an improvement, 5,488 worker deaths are still 5,488 too many. Some say the government needs to enforce a stronger penalty system under the Occupational Safety and Health Act, which could help decrease worker deaths even more. Under current law, committing a willful violation of worker-safety laws that causes the death of a worker results in a mere six-month misdemeanor. The maximum administrative penalty of $70,000 per violation has not been increased since 1990. Many experts say these penalties are simply not severe enough.

Also, some point out that it’s difficult to gauge the number of fatalities by looking at just a two-year period. Many believe you must look at the statistics over five to 10 years to understand the actual trends.

Despite how you look at the numbers, one thing is certain: Strong safety-training programs are vital to the well-being of workers. Companies must continue to focus on good safety practices to ensure their workers return home safely each and every day.

Jul 01
Love0

TODAY’S TOUGH ECONOMY NECESSITATES 401(K) PLAN REVIEW

By Employment Resources

A sputtering economy and declining stock market have been taking a huge toll on investors’ portfolios, including employees’ 401(k) accounts. According to Fidelity Investments’ annual State of the 401(k) update, drops in the stock market resulted in the average workplace 401(k) account balance falling 27% in 2008. This drop occurred despite participant contribution levels that continued at slightly higher rates than in 2007.

Such losses can be frightening to any investor, but are likely to be particularly so to employees. For many 401(k) participants, their plan account represents their largest single asset outside their home and a primary expected source of retirement income, but also their only experience in stock market investing. Such high stakes, coupled with fear and inexperience, can be fodder for lawsuits, as employees look to recover losses. Although ERISA Sec. 404(c) can protect plan fiduciaries from liability for the consequences of participants’ investment decisions — if the provisions of that section are followed — fiduciaries continue to have the duty to act prudently and solely in the interest of plan participants when selecting the investment options offered by the plan and when selecting investment managers. Furthermore, both investment offerings and investment managers must be monitored to ensure that they continue to be prudent choices. With the 2008 U.S. Supreme Court case of LaRue v. DeWolff, Boberg & Associates permitting a plan participant to sue plan fiduciaries to recover individual losses alleged to be caused by a breach of fiduciary duty, an increasing number of lawsuits may be forthcoming, to test the extent of the ruling in that case.

Clearly, present-day circumstances should provide ample motivation for 401(k) plan sponsors to take steps to make sure they have adequately protected themselves in the event of a lawsuit by a plan participant. The following are among the issues to consider in conducting such a review:

  • Investments. Review your plan’s investment line-up to determine whether the selection available to participants is appropriate. Does the line-up offer choices along the risk and return spectrum to all ages of participants? Are any pre-mixed funds based on age or expected retirement date appropriate for your employee population? If the plan includes a default investment for participants who have failed to direct the investment of contributions, review this option to ensure that it continues to be an appropriate choice. If your plan currently does not have a written investment policy in place, or does not use an independent outside consultant to assist in selecting and monitoring investments, take steps to incorporate these into your investment procedures.
  • Fees. Determine the amount of current participant fees associated with your plan’s investments, and benchmark them against industry standards.
  • Investment managers. Review — or create if you don’t already have them — the written processes you have in place for the selection and monitoring of investment managers.
  • Administrator. The plan administrator is the face of the plan to employees. Solicit and monitor participant feedback on the administrator so that you know of any problems before they grow into headaches for you, or worse. Further, have criteria in place to assess the plan administrator’s performance on an ongoing basis and to benchmark performance against industry standards.
  • Compliance. Are your plan’s administrative procedures in compliance with current regulations? If you intend your plan to be a participant-directed individual account plan, are all the provisions of ERISA Sec. 404(c) being followed?
  • Communications. With the market changing so much over the past year, and the effect this will have had on participant accounts, it’s likely that communications that were appropriate during times of surging account values may not be so appropriate today. Revisit your plan communications materials and assess them accordingly. Saving for retirement remains vital to employees’ future financial security, but different messages may be needed to convey this, given today’s uncertain economy.
Jul 01
Love0

KEEP YOUR BENEFIT PLAN SPDS UP-TO-DATE

By Employment Resources

Employee benefit plans undergo changes constantly. Claims procedures are revised, benefits provisions modified, and new administrators or trustees named or their addresses or telephone numbers changed. Whenever such changes occur, plan sponsors have the obligation to communicate these to participants through a revised Summary Plan Description (SPD) or through a Summary of Material Modifications (SMM).

All ERISA-governed plans must communicate their terms to participants in the form of an SPD. Department of Labor regulations specify SPD format and content. Content requirements include, for example, contact information for the plan administrator; eligibility requirements for participation and benefits; a description of how benefits may be forfeited, suspended, etc.; how the plan is funded and the source of contributions; and procedures for claims and appeals. This is just a partial listing of content requirements, and these requirements vary to some degree depending on whether the plan is a pension or a welfare benefits plan.

As to format, the SPD must be written in a manner that the average plan participant can understand. Many plans fall short of meeting this requirement. According to an analysis from the Employee Benefit Research Institute (EBRI), important information contained in SPDs frequently is written at a level that is too high for the average plan participant. In the SPDs examined in the EBRI study (both single employer and multiemployer plans), information on eligibility, benefits and participation rights and responsibilities were written, on average, at a first-year-of-college reading level. Although an employer should take its workforce into account in drafting an SPD, with adults in the United States reading on average at an 8th or 9th grade level, an SPD written at a first-year-of-college reading level would be appropriate for very few employee groups.

As noted at the beginning of this article, when changes are made to an employee benefit plan, the SPD must be revised to reflect this. If the change has been material, an updated SPD, or an SMM, must be issued not later than 210 days after the end of the plan year in which the material change was made. (A shorter time frame of within 60 days of the change applies if the plan is a group health plan and the change is a reduction in covered services or benefits.) In any case, an updated SPD must be issued at least every five years if the plan has undergone material changes, and at least every 10 years if it has not.

Given the specificity of the SPD requirements, prudence dictates that employers review their SPDs periodically to ensure they remain current, and reflect plan provisions accurately. Also, changes in law or the issuance of regulations might require an SPD review and revision.

When a benefit plan is insured, the carrier will supply a certificate of insurance or other booklets or documents that describe the benefits. However, do not assume that these documents fulfill the SPD requirements. These could be generic documents that do not reflect specific provisions that apply to your company’s plan; they also were probably written with state insurance laws in mind, not ERISA. The SPD requirement is a plan sponsor obligation, so that is where the penalties will attach in the event that an SPD is found to be lacking.

Jul 01
Love0

FOUR KEYS TO REDUCING STRESS IN YOUR WORKPLACE

By Risk Management Bulletin

Stress costs American businesses more than $300 billion a year in terms of poor performance, absenteeism, and health care costs.

Common sources of stress include:

  • Personal problems. Concern about finances, the illness of a family member or friend, struggles with children, or relationship problems.
  • Lifestyle changes. Getting married, having a baby, starting a new job, the death of a loved one, or even moving to a new home or neighborhood.
  • Job problems. New assignments, a new boss, performance appraisals, relationships with co-workers — even a promotion!
  • Everyday hassles. Commuting, screaming children, crowded stores, cooking, cleaning, and chauffeuring the kids to their activities, and so forth.

Here are four proven methods that can help you, and your employees, reduce, eliminate, or manage stress:

  1. Lifestyle Management: Exercising or even basic stretching or yoga will give you endurance and energy to get through stressful events. Proper diet and adequate sleep are essential to successful stress management.
  2. Stress Avoidance: Do something about the minor annoyances of life. For example, taking an alternate route to work or leaving a few minutes earlier could mean you miss the traffic. Understand your limits: Accept that some things are — and might always be — out of your control.
  3. Stress Therapy: Keep a sense of humor about stressful situations. Try to make some time each day for relaxation. That could just mean some quiet time doing something you enjoy. Talking over the things that stress you with someone you trust and respect can also be a big relief.
  4. Organization: Set priorities. Develop a basic routine for your life – a daily framework for what you’ll be doing. Use a calendar or personal organizer to write everything you have to do each day. Finally, stay flexible; the best laid plans will often need to be changed due to any number of reasons.

Follow these steps and remove your distress!

Jul 01
Love0

VACANT PROPERTY PRESENTS UNIQUE HAZARDS

By Risk Management Bulletin

Thanks to millions of jobs lost and thousands of facilities shut down during the recession, empty or partially vacant buildings are becoming increasingly common in both cities and suburbs. Office vacancy rates in most cities topped 10% in 2008 — and are projected to hit 16.7% this year.

Compared with the multitude of risks that come along with managing a fully functioning commercial building, one might conclude that a vacant property would present substantially fewer hazards. However, vacant properties face unique hazards that, unless properly managed, could lead to costly losses at a time when money is already tight for building owners. Even though these buildings are unoccupied, by no means, should they be left unattended!

If you own vacant commercial property, make sure to evaluate your exposure to such losses as:

  • Undetected Damages: When everyday functions are removed from an office building or retail property, small hazards like an exposed electrical wire or a slow water leak are less likely to be corrected and can quickly snowball into much larger problems. An average of 14,900 fires a year (40 a day!) occur in vacant buildings, causing more than $118 million in direct property damage.
  • Crime and Liability Risks: When tenants move out of a building, property owners might be tempted to reduce security or surveillance activities to cut costs. However, the owner can be held liable for such activities as arson or theft from criminals attracted to the vacant premises.
  • Environmental Red Flags. A facility used to store chemicals or other pollutants must have these materials removed or adequately stored to prevent leaks or seepage. Building owners can be held liable for cleanup if hazardous materials contaminate nearby groundwater or natural resources (including wildlife). Manufacturers, dry cleaners and medical facilities are especially vulnerable to these types of risk.

To help you prevent or reduce claims from vacant properties, our risk management specialists are available to recommend a variety of loss control measures.

Jul 01
Love0

IS YOUR WORKPLACE DISASTER READY?

By Risk Management Bulletin

When an emergency strikes your workplace, there’s no time for hesitation. You need to have a comprehensive and well-rehearsed plan ready at a moment’s notice — to keep your employees safe, no matter what.

That “what” could be a lot of things:

  • Fires. This most common workplace emergency, costs American businesses more than $12 billion a year.
  • Explosions. From fires, chemical reactions, combustible dust, etc.
    Toxic chemical releases. Often require emergency response in the workplace and in the surrounding community.
  • Natural disasters. Earthquakes, floods, or windstorms can strike with little or no warning.
  • Workplace violence. Dangerous, life threatening, and often unpredictable – even terrorism.

To help keep this “multiheaded monster” at bay, we’d advise you to:

  • Determine a comfortable degree of preparedness. At a minimum, your emergency plan should involve evacuating workers, controlling any hazards to them, the environment, or the public – and leaving the rest to outside responders. On the other end of the spectrum, you might prefer to have all the equipment and supplies to provide comprehensive disaster response on your own.
  • Develop a disaster preparedness checklist. This list, which should include all aspects of emergency response, will help ensure that you anticipate all essential details.
  • Evaluate the “what ifs.” Walk around with your checklist and try to imagine how different emergencies could actually impact your workers and your operations.
  • Build your plan step-by-step. Don’t wait until you have all the “i’s” dotted and all the “t’s” crossed. Create a comprehensive strategy, piece by piece, until you’re satisfied.
  • Document policies and procedures. Write up all emergency policies and procedures and make them available to supervisors and employees.
  • Keep your plan up to date. Review it at least once a year, and revise as necessary when circumstances, hazards, etc., change.

Our risk management professionals would be happy to work with you on designing and implementing an effective disaster management plan – or put you in touch with qualified professionals who can help Just give us a call. And like a good Scout, you’ll “be prepared!”

Jul 01
Love0

RECENT STUDY CONFIRMS EMPLOYEES’ HEALTH RISKS CAN DECREASE PRODUCTIVITY, INCREASE COSTS

By Employment Resources

Although logic tells us that healthier workers are likely to be more productive than those with health risks, a recent study confirms this, finding that individuals with a number of health risks have seven times more lost productivity than those with no identified health risks. Health risks most strongly associated with on-the-job productivity loss were back pain, mental well-being (depression) and stress. Also, the chances of productivity loss rose as the number of health risks increased.

The study, published in the Journal of Occupational and Environmental Medicine and conducted by StayWell Health Management researchers and John Riedel, a health and productivity expert, included data from 106 companies in five industry sectors, representing responses from nearly a quarter of a million individual employees. Questions on health and work performance were incorporated into the companies’ health risk assessments to collect the data. Employees considered to be at low risk were classified as a NIF (Normal Impairment Factor) group. According to the study, “NIF captures the amount of productivity loss experienced by individuals who are at low risk … thus representing the level of productivity loss that health improvement initiatives targeting these risks will not affect.” Thus, the NIF essentially serves as a benchmark to gauge the amount of productivity loss that could be eliminated through various health risk reduction strategies.

The study included eight health risk areas: Alcohol use, back pain, driving, physical activity, stress, tobacco use, weight and mental well-being (depression). Productivity loss was associated consistently with “at risk” health status for all of these factors, with the greatest productivity loss observed for those at risk for back pain, stress and mental well-being. Individuals at elevated risk for back pain reported 13% more productivity loss than those at low risk; those at risk for depression reported 7.4% greater productivity loss; and those at risk for stress reported 4.8% greater productivity loss. When measured as lost time, ongoing back pain was responsible for 5.7 weeks of lost productivity each year, depression for 2.4 weeks, and stress for 1.1 weeks. Thus, according to the study, these three areas present the greatest potential for productivity improvement through intervention, such as targeted wellness initiatives.

Greater productivity loss also was observed among individuals who had multiple health risks. Individuals in the study had an average of 2.4 health risks each, and each additional risk increased productivity loss by 2.4%. An individual with all eight risk factors experienced a productivity loss of 24%.

How do these estimates of productivity loss impact an employer’s bottom line? The researchers calculated that an employee with low health risks experiences an average of $1,472 per year in lost productivity, while a “more typical” employee with three health risks averages $5,952. The study estimates that if 100 people with three health risks were to eliminate just one health risk, this could mean productivity gains worth $149,400 for an employer.

For employers, a study such as this one provides ample financial justification for investments in wellness initiatives. Be sure to contact our office today for more information. Looking at the dollar cost of productivity losses brought about by employees’ health risks, it’s easy to see that targeted interventions aimed at reducing employees’ health risks for identified conditions or behaviors can readily result in a return that exceeds the investment made in such initiatives.

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