Tag: 2014

Implementing a Drug-Free Workplace Program

Though many believe substance abuse is not a problem in their workplace, statistics suggest otherwise. According to the National Institute on Drug Abuse (NIDA), nearly 75% of substance and alcohol abusers are employed. In addition to costing employers billions of dollars per year, substance abusers are more likely to:

  • Change jobs frequently
  • Be late to or absent from work
  • Be less productive
  • Be involved in a workplace accident
  • File a workers’ compensation claim

To help combat the problem, many employers have implemented a Drug-Free Workplace program. These programs incorporate various elements designed to prevent substance abusers from entering the workplace, identify and assist those already in the workplace, and eliminate continuing abusers from the workplace.

According to NIDA, employers with Drug-Free Workplace programs:

  • Report improvements in morale and productivity, and decreases in absenteeism, accidents, downtime, turnover, and theft
  • Report better health status among employees and family members and decreased use of medical benefits by these same groups

Employers can also reduce their workers’ compensation insurance premiums by implementing a Drug-Free Workplace program. For example, a 5% premium credit is available in Alabama, Florida, South Carolina and Virginia. Employers can save up to 7% in Ohio, and 7.5% in Georgia. Additionally, employers with fewer workplace accidents can also see reduced premiums due to an improved experience modification rating.

States have their own requirements for determining whether a Drug-Free Workplace program qualifies for a workers’ compensation premium credit. Since they can be very specific and technical, it is important to consult with a licensed professional prior to implementing a Drug-Free Workplace program.

If you have any questions about implementing a Drug-Free Workplace program or you would like to learn more about reducing your insurance premiums, please contact us.

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Preparing an Association’s Financial Reports

For many condominiums and homeowners’ associations, the end of the calendar year is also the end of the fiscal year. This means that associations should be well on their way to completing their statutorily required financial reports.

Unless a different date is specified in the bylaws, Florida condominium and homeowners’ associations have 90 days after the end of their fiscal year to prepare and complete or hire someone else to prepare and complete the association’s financial report for the preceding fiscal year. Once completed, associations have 21 days to either provide a copy of the financial report to unit owners and members or notify them that they can request a copy free of charge. This entire process must be completed no later than 120 days after the end of the fiscal year.

Though all financial reports must be prepared in accordance with generally accepted accounting principles (GAAP), the manner in which a financial report is prepared usually depends on the association’s total annual revenues. Financial reporting requirements are determined by statutory revenue thresholds, which were changed in 2013. These thresholds are the same for both condominium and homeowners’ associations.

  • Associations with total annual revenues of less than $150,000 must prepare a report of cash receipts and expenditures
  • Associations with total annual revenues of $150,000 or more, but less than $300,000, must prepare compiled financial statements
  • Associations with total annual revenues of at least $300,000, but less than $500,000, must prepare reviewed financial statements
  • Associations with total annual revenues of $ 500,000 or more must prepare audited financial statements

Condominium associations with fewer than 50 units and homeowners’ associations with fewer than 50 parcels must prepare a report of cash receipts and expenditures, regardless of their total annual revenues.

Though associations may vote to change their financial reporting requirements, the process is technical and strict requirements must be followed.

To learn more about your obligations as a board member, take our affiliate’s recently updated online course Condominium Operations: A Primer for Board Members, which has been approved by the Division of Florida Condominiums, Timeshares, and Mobile Homes.

To learn more about your obligations as a board member, take our affiliate’s recently updated online course Condominium Operations: A Primer for Board Members, which has been approved by the Division of Florida Condominiums, Timeshares, and Mobile Homes.

If you would like to discuss how Setnor Byer Insurance & Risk can serve you and your association, please contact us. Clients of Setnor Byer’s Condominium Program enjoy access to various risk management services, such as Setnor Byer’s Risk Management Group and Unit Owners’ Report Line, as well as our affiliate’s Board Member Education Certification.

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Let’s Talk About Data Security Breaches

The theft of credit and debit card information from Target’s computer systems should serve as a reminder that the risk of a data security breach must be taken seriously. Every organization must have a plan to not only prevent data security breaches, but to respond to them as well.

The first step is to identify vulnerabilities with a risk assessment. Unfortunately, this can be difficult because data security breaches can come from pretty much anywhere, including employees, laptop computers, copy machines and wireless networks. To make the process easier, organizations can perform a self-audit.

The Online Trust Alliance has come up with a series of risk assessment questions that are designed to help organizations identify vulnerabilities and gauge their level of preparedness. For example:

  • Are there any regulatory requirements that are specifically applicable to your business operations or geographic location?
  • What customer-specific data is collected? How, where and by whom is this data stored, maintained and archived? Can you identify points of vulnerability and risk?
  • Is the kind of customer-specific data you collect necessary for business operations? For example, is it necessary to request drivers’ license information or social security numbers?
  • Do you follow best practices for encryption and de-identification processes?
  • Is there an incident response team in place? Is there a clear reporting process in the event of an accidental data loss or a breach?
  • Is there a plan for communicating to employees, customers, partners, stockholders and the media in the event of a breach?
  • Are generally accepted security and privacy best practices followed? If not, why?
  • Is there a privacy policy reflecting current data collection and sharing practices, including the use of third-party advertisers and cloud service providers? Have systems been audited to confirm compliance with written policies?
  • Is there a contact person in the event of a breach? Has a person been assigned to work with the authorities, such as the FBI, Secret Service and State Attorney General Office?
  • Are you willing to sign off on your Data Incident Plan and represent to board members, investors and regulators that it contains best practices for preventing and responding to data security breaches?

This kind of self-audit should encourage discussion and evaluation of an organization’s specific data security risks. And, since the questions are general in nature, they can be used by most organizations, regardless of industry or location.

As we have seen, preventative measures are not foolproof, so organizations should also consider protecting against data security breaches with insurance. Various cyber liability products are available to protect against privacy injuries, such as identity theft, and to cover the cost of complying with various data breach notice laws.

Given the complexity of the risk, an experienced insurance agent should be consulted to ensure that adequate coverage is obtained. If you would like a professional audit please contact us to learn more.

If you would like to learn more about insuring against data security breaches, contact us.

If you would like to learn more about preventing data security breaches, take our online course Information Risk Management: Strategies for Preventing and Mitigating Information Security Breaches.

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Affordable Care Act’s Employer Mandate Delayed…Again

On February 10, 2014, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) issued final regulations implementing the employer responsibility provisions under the Affordable Care Act (ACA). Despite being previously delayed, the final regulations provide transition relief to employers with 50 or more employees, which, according to the administration, should ensure a gradual phase-in of the employer mandate.

Since the employer mandate does not apply to employers with fewer than 50 employees, small employers are not required to provide coverage or fill out any forms in 2015, or in any year, under the ACA. For employers with 50 or more full-time employees, the final regulations provide the following transition relief.

Large Employers (100 or more employees): The final regulations reduce the percentage of full-time employees that must be offered health coverage. To avoid paying a penalty, large employers must offer coverage to 70% of their full-time employees in 2015, and 95% in 2016 and beyond. Large employers that do not meet these standards will have to make employer responsibility payments beginning in 2015.

Medium Employers (50 to 99 employees): The employer responsibility provisions will not apply to employers with 50 to 99 full-time employees until 2016. However, to be eligible for this transition relief, employers must certify that they meet the following conditions:

  • Limited Workforce Size. The employer must employ an average of at least 50 but fewer than 100 full-time employees (including full-time equivalents) on business days during 2014. The number of full-time employees (including full-time equivalents) is determined in accordance with the otherwise applicable rules in the final regulations for determining status as an applicable large employer.
  • Maintenance of Workforce and Aggregate Hours of Service. From February 9, 2014 to December 31, 2014, the employer may not reduce the size of its workforce or the overall hours of service of its employees in order to qualify for the transition relief. However, an employer that reduces workforce size or overall hours of service for bona fide business reasons is still eligible for the relief.
  • Maintenance of Previously Offered Health Coverage. From February 9, 2014 to December 31, 2015 (or, for employers with non-calendar-year plans, the last day of the 2015 plan year), the employer does not eliminate or materially reduce the health coverage, if any, it offered as of February 9, 2014. An employer will generally not be treated as eliminating or materially reducing health coverage if: (i) the employer contributes at least 95 percent of the dollar amount or at least the same percentage of the cost of coverage that was offered on February 9, 2014; (ii) any changes in benefits to employee-only coverage continue to provide minimum value; and (iii) the employer does not narrow or reduce the classes of employees (or the employees’ dependents) to whom coverage under was offered on February 9, 2014.

Since the final regulations cover a number of different topics and are highly technical, employers looking to take advantage of the transition relief should consult with a licensed professional.

Though many welcome the transition relief provided in the final regulations, it doesn’t look like 2014 will bring stability and predictability to health care under the Affordable Care Act. At Setnor Byer Insurance & Risk, we are committed to guiding you through the changes coming in 2014. Check back with us periodically for future informational updates about the Affordable Care Act. If you have specific questions about the Act or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, contact us.

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The Risk of Fire Facing Homeowners

Though often overshadowed by hurricanes and earthquakes, fire remains one of the greatest risks facing homeowners. Consider the following:

  • U.S. fire departments responded to an estimated 1,375,000 fires in 2012
  • Residential fires caused 2,450 deaths and 13,900 injuries in 2011
  • On average, 7 people per day die in U.S. home fires
  • Home fires occur more frequently in the winter and on the weekends
  • Cooking is the leading cause of residential fires, followed by heating, electrical malfunction, unintentional/careless conduct, intentional and open flame

Statistics show that residential fires are not only becoming more frequent, but more expensive. According to FEMA’s U.S. Fire Administration, there were 364,500 residential fires in 2011 that caused over $6.5 billion in losses. To avoid becoming another statistic, homeowners must take effective protective measures, such as:

  • Installing smoke alarms, preferably those with both photoelectric and ionization sensors, on every level of your homeIand outside bedrooms, testing them monthly, replacing batteries yearly, and teaching children what they sound like and what to do when they hear it
  • Placing properly maintained fire extinguishers strategically throughout the home, and making sure children know where they are and how to use them
  • Maintaining and repairing electrical systems, such as wiring and outlets
  • Inspecting and cleaning chimneys, fireplaces, furnaces, etc. annually
  • Using appliances, especially space heaters properly
  • Cooking safely
  • Properly using and storing flammable materials

Since it is impossible to completely eliminate the risk, homeowners and renters should check with their insurance agent to make sure they are adequately insured in the event of a fire. In some cases, a personal property floater or ordinance and law coverage may be necessary.

If you would like more information about homeowners’ insurance or would like to discuss your insurance needs, please contact us.

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Vehicle Sales Can Be Risky Business for Self Storage Facilities

Dealing with delinquent tenants is an unavoidable part of operating a self storage facility. Strict legal requirements make enforcing storage liens and selling tenants’ property a risky proposition. The risk is even greater for those facilities that permit the storage of motor vehicles.

Unlike other kinds of personal property, certificates of title are used to establish ownership of motor vehicles. This means that operators of self storage facilities must take the right steps to make sure the certificate of title will reflect the transfer of ownership from the delinquent tenant to the buyer. Unfortunately, re-titling a vehicle may not be quick or easy, particularly because the process isn’t always obvious and it can vary significantly from state to state.

For example, Florida requires an Application for Certificate of Title with/without Registration, though this requirement is not found in the self storage statute. By contrast, California requires an Application for Lien Sale Authorization and Lienholder’s Certification, a Certification of Lien Sale, an Application for Title or Registration, a Notice of Pending Lien Sale, a DMV letter of authorization to conduct the sale, postal receipts of all notices sent, and a Notice of Transfer and Release of Liability.

The lack of a uniform process for re-titling motor vehicles means that operators of self storage facilities must refer to and abide by their state-specific laws and requirements. However, regardless of what the process involves, operators can still take steps to make things easier while reducing the risk. For example, operators can collect vehicle-specific information and documentation when the tenant signs the lease, such as:

  • Vehicle Identification Number (VIN)
  • Vehicle registration information
  • Copy of Certificate of Title
  • License plate/tag number
  • Lien and lienholder information
  • Name and contact information for all owners of the vehicle

Operators of self storage facilities need to understand the increased effort and risk that come from storing and disposing of motor vehicles. Various insurance options specifically designed for the self storage industry are available, such as Sale and Disposal Liability Coverage.

If you would like more information about Setnor Byer Insurance & Risk’s Self Storage Insurance Program can help protect your facility, please contact us.

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Understanding the National Flood Insurance Program

Property damage caused by flooding is not covered by standard homeowners’ insurance policies, so those facing a flood risk need a separate flood insurance policy. The National Flood Insurance Program (NFIP) provides access to affordable, federally backed flood insurance.

What is a Flood?

The NFIP defines a flood as a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property) from:

  • Overflow of inland or tidal waters;
  • Unusual and rapid accumulation or runoff of surface waters from any source;
  • Mudflow; or
  • Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above.

What is Covered?

A flood insurance policy generally covers physical damage to building or personal property directly caused by a flood. The NFIP offers coverage for Building Property and Personal Property (contents), which must be purchased separately.

Building Property coverage generally insures:

  • the building and its foundation
  • electrical and plumbing systems
  • central air conditioning equipment, furnaces and water heaters
  • refrigerators, cooking stoves and built-in appliances
  • permanently installed carpeting over an unfinished floor
  • permanently installed paneling, wallboard, bookcases and cabinets
  • window blinds
  • detached garages (up to 10 percent of Building Property coverage)
  • debris removal

Personal Property coverage generally insures:

  • personal belongings such as clothing, furniture and electronics
  • curtains
  • portable and window air conditioners
  • portable microwave ovens and portable dishwashers
  • carpets not covered by the Building Property policy
  • washers and dryers
  • food freezers and the food in them
  • certain valuable items such as original artwork and furs (up to $2,500)

What is Not Covered?

Neither type of coverage protects against:

  • damage caused by moisture, mildew or mold that could have been avoided
  • currency, precious metals and valuable papers
  • property and belongings outside of a building, such as trees, plants, wells, septic systems, walks, decks, patios, fences, seawalls, hot tubs and swimming pools
  • living expenses, such as temporary housing
  • financial losses caused by business interruption or loss of use of insured property
  • most self-propelled vehicles such as cars, including their parts

If you would like more information about the National Flood Insurance Program or are interested in obtaining flood insurance, please contact us.

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Data Security Breaches: Lessons from 2013

They say that those who fail to learn from history are doomed to repeat it, and 2013 provided many lessons for those wishing to avoid a data security breach. Let’s review some of 2013’s data security breaches so that they do not have to be repeated in 2014.

Target. During the peak of the 2013 holiday season, Target suffered what may be one of the largest data security breaches in U.S. retail history. Target’s breach involved the credit and debit card accounts of about 40 million customers. Though Target believes the data remains safe because it was strongly encrypted, it may be used to gain access to customers’ accounts. There are estimates that this breach may end up costing Target billions of dollars.

Adobe. Adobe Systems, Inc. suffered a data security breach that compromised nearly 3 million records. Hackers were able to access customers’ IDs, encrypted passwords, names, encrypted credit or debit card numbers, expiration dates and other information related to their orders.

Facebook. Facebook was targeted in a sophisticated attack when a handful of employees visited a website that was compromised. This website hosted an exploit which allowed malware to be installed on employee laptops, even though they were running up-to-date anti-virus software. Facebook analyzed the source of the attack and discovered a previously unseen way to bypass security measures and to install the malware.

Washington State Courts. The Washington State Administrative Office of the Courts suffered a security breach on its public website. Though no court records were altered and no personal financial information is maintained on the website, the breach may have exposed up to 160,000 social security numbers and 1 million driver license numbers.

Twitter. After detecting unusual access patterns, Twitter discovered unauthorized attempts to access user data. According to Twitter, approximately 250,000 users may have had their information accessed by the attackers, including their usernames, email addresses, session tokens and encrypted/salted versions of passwords. These users had their passwords reset and their session tokens revoked by Twitter.

New York Times. Chinese hackers infiltrated The New York Times’ computer systems and obtained corporate passwords for its reporters and other employees. According to The New York Times, over the course of three months, 45 pieces of custom malware were installed on their network and used to gain access to computers. To get rid of the hackers, The New York Times blocked the compromised outside computers, removed every back door into its network, changed every employee password and wrapped additional security around its systems.

Evernote. Evernote appears to have been the victim of a coordinated attempt to access secure areas of its network. Their investigation revealed that hackers were able to access user information, including usernames, email addresses and encrypted passwords. Though Evernote believes that the passwords remain protected by encryption, all users were required to reset their account passwords.

These incidents show that data security breaches can happen to any organization, and that they can be very costly. Every organization must be proactive in protecting against data security breaches. Though protective measures should cover everything from the wireless network to the copy machine, organizations should also consider protecting against data security breaches with insurance.

If you would like to learn more about insuring against data security breaches, contact us.

If you would like to learn more about preventing data security breaches, take our online course Information Risk Management: Strategies for Preventing and Mitigating Information Security Breaches.

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