Category: Commercial Insurance

Cyber Liability: A BIG Risk for Small Businesses

Did you know that small businesses experience cyber incidents at roughly the same rate as drivers experience car accidents? Though most of us would never go without auto insurance, a majority of small businesses don’t have cyber liability insurance coverage. According to the 2018 Small Business Cyber Insurance and Security Spotlight Survey conducted by the Insurance Information Institute and J.D. Power:

  • 10 percent of the small businesses surveyed suffered at least one cyber incident in the prior year.
  • The average cyber-related loss was $188,400. In 2016, the average loss was $73,000.
  • Nearly 60 percent of small businesses are very concerned about cyber incidents.
  • 59 percent do not have cyber insurance coverage.

The potential impacts of a cyber incident that most concern small businesses include:

  • financial loss (47 percent);
  • information breach / theft (35 percent);
  • reputation / brand image issues (14 percent); and
  • regulatory / governance and legal issues (4 percent).

According to the survey, businesses with cyber insurance often had similar coverages, including coverage for:

There is one last thing to consider if your small business still doesn’t have cyber insurance coverage. According to the survey, 97 percent of the insured small businesses that experienced a cyber incident indicated that their cyber insurance policies adequately covered their losses. Please contact us if you would like more information about insurance specifically designed to protect against cyber threats and data security breaches.

Did you know that small businesses experience cyber incidents at roughly the same rate as drivers experience car accidents? Though most of us would never go without auto insurance, a majority of small businesses don’t have cyber liability insurance coverage. According to the 2018 Small Business Cyber Insurance and Security Spotlight Survey conducted by the Insurance Information Institute and J.D. Power:

Every Small Business Needs a Cyber Security Strategy

Did you know that more than 50 percent of small and medium-sized businesses (SMBs) experienced a cyber-attack in the previous year? Cybercriminals tend to be opportunistic. They target the unprepared. Unfortunately, far too many SMBs don’t have a plan to prevent or respond to cyber-attacks.

SMBs can significantly reduce the likelihood of falling victim to cybercriminals by preparing a cyber security strategy. Let’s look at the essential elements of an effective strategy.

Prevention. The primary goal of every cyber security strategy should be prevention. An effective prevention strategy requires:

Detection. SMBs must be able to detect cyberattacks when they happen. An effective detection strategy requires:

  • Technology. Cyberattacks are so sophisticated that SMBs need quality intrusion detection systems that are routinely updated to remain current with evolving threats.
  • Real-Time Alerts. Tracking attacks provides data that can be used to generate real-time alerts.
  • Documentation. Records make it easier to evaluate attack trends and characteristics and update strategies accordingly.

Mitigation. A rapid response to a cyberattack is critical to limiting the damage. An effective mitigation strategy includes:

  • Response Plans. Once an attack is detected, SMBs must be ready to contain, assess and respond to the threat. A response plan should specifically identify personnel and designate responsibilities in the event of an attack.
  • Periodic Evaluations. Remediation and mitigation strategies must be reviewed and updated periodically to remain current with constantly evolving cyber threats.

Insurance. Preparation is important, but it isn’t always enough. SMBs should have Cyber Perils Insurance Coverage to protect against various cyber threats and liability exposures, including the cost of complying with data breach notice laws.

Please contact us if you would like more information about insurance specifically designed to protect against cyber threats and data security breaches.

Florida Employers Will Be Paying Less for Workers’ Compensation Insurance in 2019

Great news for Florida employers! The Office of Insurance Regulation approved a statewide overall workers’ compensation rate level decrease of 13.8 percent for new and renewal policies starting January 1, 2019. This will be the second consecutive year that rates have gone down in Florida.

The rate decrease is due in part to declines in claim frequency resulting from safer workplaces, enhanced workplace efficiencies and an increased use of automation and innovative technologies. Reduced assessments and increased investment income also contributed to the rate decrease.

When combined with the 9.5 percent reduction that took effect January 1, 2018, Florida’s overall rate level will be nearly 25 percent lower in 2019. To offset this revenue loss, insurance companies may begin auditing employers to make sure employees have been assigned the correct job classification code.

Classification codes are used to categorize employees based on the type of work they do. Each code is assigned a rate that reflects the relative risk associated with that type of work. A higher risk means a higher rate, which ultimately means a higher premium.

A car dealership, for example, may have employees classified as salespersons. This may change if an audit reveals that these ‘salespersons’ also work in the dealership’s parts department. The rate used to calculate premiums for non-salesperson employees is nearly five time higher.

It’s unclear how aggressive insurance companies may be in conducting audits, but it’s something employers should be aware of. Please contact us if you have any questions about employee classification codes or want to discuss ways to lower your workers’ compensation insurance premiums.

Did You Know…Florida’s Minimum Wage is Going Up in 2019?

Florida’s minimum wage applies to those employees entitled to receive the federal minimum wage under the Fair Labor Standards Act. It is adjusted annually for inflation. According to the Florida Supreme Court, only upward adjustments are permitted.

Employers are required to pay the federal or their state’s minimum hourly wage, whichever is higher. Since Florida’s 2019 minimum hourly wage will be higher than the federal minimum hourly wage of $7.25, Florida employees entitled to minimum wage cannot be paid less than $8.46 per hour.

Florida employers must prominently display a minimum wage poster in a conspicuous and accessible place wherever minimum wage employees are employed. This poster must notify employees of the minimum wage and of their rights and protections under Florida’s Minimum Wage Act.

Employees can sue employers for minimum wage violations, but they must first provide written notice of their intent to sue, which must:

  • identify the minimum hourly wage to which the employee claims entitlement;
  • provide the actual or estimated work dates and hours for which payment is sought; and
  • state the total amount of alleged unpaid wages.

Upon receiving such notice, an employer has 15 calendar days to pay the total amount of unpaid wages or resolve the claim to the employee’s satisfaction. Otherwise, the employee will be allowed to file a lawsuit for unpaid minimum wages. The Florida Attorney General can also bring a civil action against employers. Each willful violation can result in a $1,000 fine.

To protect against employment practices liability claims, employers should implement a training program and explore their options for insuring against wage and hour claims.

Please contact us for more information about protecting your business from employment-related liabilities.

Affordable Care Act: Will Your Group Health Plan be Affordable in 2019?

Unlike the Individual Mandate, the Affordable Care Act’s Employer Mandate isn’t going anywhere in 2019. Employers with 50 or more full-time and full-time equivalent employees will still have to offer “affordable” health coverage to avoid ACA penalties. But, there is a sliver of good news. Next year, employers will be able to increase the required employee contribution for coverage under their group health plans.

To satisfy the ACA’s initial affordability requirement, an employee’s required contribution for the lowest cost, self-only coverage could not be more than 9.5 percent of the employee’s household income. However, the initial affordability percentage is adjusted annually by the Internal Revenue Service. In 2019, the affordability percentage will be 9.86 percent.

When compared to prior years, the 2019 affordability adjustment represents the largest percentage increase under the ACA.

2014    9.5

2015    9.56

2016    9.66

2017    9.69

2018    9.56

2019    9.86

We can use the ACA’s affordability safe harbors to translate this percentage increase into dollars and cents. These safe harbors provide various methods for calculating the most an employer can charge employees for the lowest cost, self-only health coverage option without exceeding the ACA’s affordability threshold.

  • W-2 Safe Harbor. The maximum monthly contribution for a federal minimum wage employee ($7.25 per hour) who works 40 hours per week for 52 weeks in 2019 will be $123.91 (+ $3.77).
  • Rate of Pay Safe Harbor. The maximum monthly contribution for a federal minimum wage employee ($7.25 per hour) in 2019 will be $92.93 (+ $2.83).
  • Federal Poverty Line Safe Harbor. Based on the 2018 single individual FPL of $12,140, the maximum monthly contribution in 2019 will be $99.75 (+ $3.03).

These increases may be modest, but they can add up quickly for very large employers. They can also provide some much-needed wiggle room for employers teetering on the edge of unaffordability. The ultimate impact of the 2019 affordability percentage increase can be inconsequential or substantial. Employers will need to reevaluate their cost-sharing structure to find out.

Please contact us if you would like to learn more about ACA-compliant group health plans.

Insurance 101: Do You Need Longshore and Harbor Workers’ Compensation Insurance?

Did you know that longshoremen aren’t the only employees covered by the Longshore and Harbor Workers’ Compensation Act? If you didn’t, you’re not alone. Identifying who is covered by the Longshore Act isn’t always easy. This can be a huge problem because violations of the Longshore Act’s compensation requirements can result in criminal prosecution, fines, and imprisonment. Corporate officers can also be prosecuted individually and held personally liable.

The Longshore Act is essentially a federal workers’ compensation law for employees engaged in maritime employment who work on the navigable waters of the United States. It generally provides medical benefits, lost wages and rehabilitation services to injured employees. Survivor benefits may also be available if a work-related injury causes the employee’s death.

Some employers are authorized by the Department of Labor to self-insure, but all other covered employers are required to purchase the Longshore Act (USL&H) insurance coverage. Two tests are used to determine whether coverage is required under the Longshore Act.

Status Test. An injured worker must meet the statutory definition of “employee” to possess the necessary employment status. The Longshore Act defines an employee as any person engaged in maritime employment, including:

  • Longshoremen;
  • Harbor workers;
  • Ship repairmen;
  • Shipbuilders;
  • Ship-breakers; and
  • Others engaged in ship loading or unloading operations and traditional maritime employment.

Some individuals, who must be covered under their state’s workers’ compensation law, are specifically excluded from the definition of employee, including those who are:

  • Employed exclusively to perform office clerical, secretarial, security or data processing work;
  • Employed by a marina who are not engaged in construction, replacement or expansion of such marina (except for routine maintenance);
  • Employed by suppliers, transporters or vendors who are temporarily working on the premises of a covered employer but who are not engaged in work normally performed by employees of that employer;
  • Employed to build any recreational vessel under sixty-five feet in length or to repair any recreational vessel or dismantle any part of a recreational vessel in connection with the repair of such vessel; or
  • Masters or crew members of any vessel.

Situs Test. The workplace injury or death must occur upon the navigable waters of the United States or any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other adjoining areas customarily used by an employer in loading, unloading, repairing, or building a vessel. Navigable waters may include:

  • Waters that are subject to the ebb and flow of the tide; and
  • Waters that are being used, have been used or may be used to transport interstate or foreign commerce.

Coverage under the Longshore Act isn’t always clear. Even the Department of Labor admits that coverage can be a complex issue, depending on both the location and the nature of the employee’s work. Statutory extensions, like the Defense Base Act and the Outer Continental Shelf Lands Act, can complicate matters further.

Nevertheless, employers need to know if they are covered by the Longshore Act. Employers should not rely on their state-required workers’ compensation insurance because standard workers’ compensation policies do not cover employees who are subject to the Longshore Act. Covered employers must have USL&H insurance coverage.

Please contact us if you have any questions about USL&H insurance coverage. You can subscribe to our newsletter to receive regular insurance and risk management informational updates.

Workers’ Compensation 101: What Does Employers Liability Insurance Cover?

Did you know that a standard workers’ compensation insurance policy has more than one part? It’s true, check for yourself. Part One Workers Compensation Insurance provides indemnity and medical benefits that employers are legally required to provide employees who are injured on the job. You probably knew that already.

But, if you keep reading, you will see that Part One is followed by…Part Two Employers Liability Insurance. What could that possibly cover?

Part Two of a standard workers’ compensation policy covers employers for liability arising out of an employee’s work-related injury, death or disease that is not otherwise covered under a state’s workers’ compensation laws. Unless otherwise excluded under the policy, Employers Liability Insurance will typically respond to a variety of claims that stem from an employee’s work-related injury, including the following common claims.

Third-Party Over. Despite providing workers’ compensation insurance, an employer may end up being held indirectly liable for an employee’s workplace injury. Third-party over claims occur when: 1) an employee sues a third-party to recover damages for their workplace injury; and 2) that third-party then turns around and attempts to hold the employer responsible for the employee’s lawsuit.

For example, assume an employee injured by workplace machinery sues the machine’s manufacturer for damages. A third-party over situation would occur if the manufacturer tries to recover money it paid to the employee by suing the employer for negligently failing to maintain the machinery.

Loss of Consortium. Consortium generally refers to one spouse’s legal right to the company, affection, assistance, service, companionship and marital relations of the other spouse. The spouse of an injured employee may bring a claim for care and loss of services.

Consequential Bodily Injury. An injured employee’s spouse, child, parent or sibling may sue the employer for their own bodily injuries that are a direct consequence of the bodily injury suffered by the employee. Examples may include a spouse who develops migraine headaches or a parent who has a stroke induced by the stress caused by their child’s workplace injury.

Dual-Capacity. Depending on the circumstances, an injured employee may be able to sue their employer in a nonemployment-related capacity. For example, an employer may be sued as the manufacturer of the machinery that injured the employee or the landlord that failed to adequately maintain the premises.

Employers Liability Coverage is automatically included in standard workers’ compensation policies available in most states. But, North Dakota, Ohio, Washington and Wyoming only allow workers’ compensation insurance purchased from a compulsory state fund. Employers in these ‘monopolistic’ states must purchase stop-gap coverage, which is essentially an Employers Liability Coverage endorsement added to a General Liability policy.

Please contact us if you have any questions about Worker’s Compensation and Employers Liability Insurance Coverage. You can subscribe to our newsletter to receive regular insurance and risk management informational updates.

Is That REALLY a Service Animal?

Are you ready to RRRUUMMMBLE? In this corner, we have a “No Pets Allowed” policy. And, in this corner, we have a patron with a service animal. Who wins? The answer is important because a number of laws protect individuals with disabilities, including the Americans with Disabilities Act. To avoid costly violations, businesses (and their employees!) need to know how to deal with service animals.

Title III of the ADA generally prohibits disability discrimination by public accommodations. ADA regulations issued by the Department of Justice generally require public accommodations to modify policies, practices or procedures to permit the use of a service animal by an individual with a disability. [Modifications that conflict with legitimate safety requirements or fundamentally alter the nature of goods or services provided to the public are not required.]

The ADA broadly defines public accommodation to include a wide-range of private entities that conduct operations affecting commerce. So, there’s a good chance that this requirement applies to your business.

What is a Service Animal?

A service animal is defined as any dog that is individually trained to do work or perform tasks for the benefit of an individual with a disability, including a physical, sensory, psychiatric, intellectual or other mental disability. The work or tasks performed by a service animal must be directly related to the individual’s disability, such as:

  • Assisting individuals who are blind or deaf;
  • Providing physical support or stability to individuals with mobility disabilities; and
  • Helping persons with psychiatric and neurological disabilities.

Dogs that provide emotional support, well-being, comfort or companionship are not considered service animals because they are not individually trained to perform a specific job or task. Other species of animals, whether wild, domestic, trained or untrained, are not service animals for the purposes of this definition.

Fun Fact: In some cases, a public accommodation may be required to let an individual with a disability use a trained miniature horse. Seriously.

What can you ask someone with a Service Animal?

If it’s obvious that an animal is trained to do work or perform tasks for an individual with a disability, you’re generally not allowed to ask anything. This would be the case if a dog is observed guiding someone who is blind or pulling someone’s wheelchair. If it’s not obvious, then you’re allowed to ask two, and only two, specific questions.

  • Is the animal required because of a disability? (But, you cannot ask about the nature or extent of a person’s disability.)
  • What work or task has the animal been trained to perform?

You cannot require or request proof that a dog has been certified, trained or licensed as a service animal, which doesn’t really matter because anyone can buy certification and registration documents online. It also doesn’t matter because these documents do not convey any rights under the ADA and are not recognized by the DOJ as proof that a dog is a service animal.

A growing number of states have actually passed laws in response to people lying about service animals. For example, in 2015, Florida made it a crime to knowingly and willfully misrepresent yourself as being qualified to use a service animal

Here are a few other things worth knowing about service animals.

  • Service animals don’t need to be professionally trained.
  • Service animals that are not housebroken or out of control can be asked to leave.
  • Any breed of dog can be a service animal.
  • Restaurants and bars are not required to permit service animals on chairs or tables.
  • State-specific laws, which can vary significantly, may also govern the use of service dogs in public accommodations.

Things can go very wrong very fast when service animals are not handled properly. They often require a delicate touch. Businesses that don’t know or follow the law governing service animals face potentially devastating reputational and financial harm.

Please contact us if you would like more information about insurance designed to protect your business…just in case.

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Social Engineering Fraud: What is It?

Social Engineering Fraud is the process through trick or scheme of gaining the confidence of someone, and inducing them to part with money or something valuable. This infographic shows you what to look for and some tips to avoid Social Engineering Fraud in your business. 

Continue reading “Social Engineering Fraud: What is It?”

Yahoo Data Breach Settlement Highlights Importance of Data Security and Cyber Liability

An inconvenient truth. That’s how a growing number of us view data security breaches. There are victims and soon-to-be-victims. However, despite the seemingly endless stream of data breaches, organizations cannot afford to take a passive approach to data security and cyber threats. Just ask Yahoo!

In 2016, Yahoo announced two separate data breaches that exposed personal information of more than 1.5 billion users. At the time, Verizon Communications was in the process of buying Yahoo’s core Internet businesses. Upon learning of the data breaches, Verizon sliced $350 million off the purchase price. Then, in early March 2018, Yahoo agreed to pay $80 million to settle a breach-related securities class action lawsuit.

Data breaches have become much more than an inconvenient truth in the business world. They are a very costly reality. Fortunately, a growing number of businesses are realizing that if they don’t adapt today, they may not be around tomorrow.

Microsoft participated in a 2018 Global Cyber Risk Perception Survey that found most organizations now rank cybersecurity among their highest risk management priorities. Companies of all sizes have started to estimate the financial impact of a cyber event. According to the survey, organizations were most concerned about:

Business Interruption
Reputational Damage
Breach of Customer Information
Data / Software Damage
Extortion / Ransomware
Liability to Third Parties
Disruption / Interruption of Systems
Loss / Theft of Intellectual Property
Organizations that conducted the following cybersecurity activities were more confident in their ability to manage cyber risk.

Cybersecurity assessments
Penetration testing
Benchmarking (peers / industry-wide)
Modeling potential cyber loss scenarios
Phishing awareness training for employees
Encryption and multi-factor authentication
Reduced external system connectivity
Improved vulnerability and patch management
The survey also revealed that organizations are more confident in their ability to understand and assess cyber risk than their ability to mitigate or respond to it. Perhaps this explains why cyber liability insurance continues to play an important role in protecting against cyber liabilities. According to the survey, organizations:

increased coverage limits under existing cyber liability insurance policies;
re-structured existing cyber liability policies; or
purchased broader cyber liability insurance coverage.
Please contact us if you would like more information about insurance specifically designed to protect against cyber threats.

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