Risk Management Business Insurance – Setnor Byer Insurance & Risk

Florida’s Workers’ Compensation Insurance Rates Expected to Decrease in 2021

Florida employers may see lower workers’ compensation insurance premiums in 2021. The National Council on Compensation Insurance is proposing a statewide average rate decrease of 5.7 percent for 2021. NCCI is a licensed rating organization authorized to submit workers’ compensation rate filings on behalf of insurance companies in Florida. NCCI’s proposed rate decrease, which must be approved by Florida’s Office of Insurance Regulation, would apply to new and renewal policies effective January 1, 2021.

Why are rates going down? According to NCCI, the workers compensation system is experiencing unprecedented results nationwide. The frequency of claims continues to decrease due to technology, safer workplaces and improved risk management. NCCI also credits the combination of underwriting discipline, moderating severity, declining frequency and adequate reserves for controlling loss ratios.

It’s worth noting that the data used to calculate the proposed rate decrease does not include claims from coronavirus disease 2019 (COVID-19). NCCI is gathering and reviewing data, but it’s too soon to know how COVID-19 may directly or indirectly impact claims frequency, severity or duration. While it’s possible that COVID-19 could result in significant claims and deteriorating loss ratios, NCCI notes that the pandemic’s overall impact on system costs may be small. An increase in compensable claims for frontline workers, for example, may be offset by a decrease in workers’ compensation claims due to the increased number of employees working remotely due to the pandemic. Again, it’s too soon to know for sure.

Florida’s Office of Insurance Regulation is currently reviewing NCCI’s rate filing to ensure the proposed rates are not excessive, inadequate or unfairly discriminatory. The OIR is also evaluating potential effects on the insurance marketplace and on employers required by law to carry workers’ compensation insurance. Once the proposed voluntary rate level change is determined, NCCI separately determines rates for each workers compensation job classification (class code).

Please contact us if you have any questions about employee classification codes or want to discuss ways to lower your workers’ compensation insurance premiums.

Beware of Business Email Compromise (Whaling) Cyber Attacks in 2016

Business Email Compromise (BEC) attacks are sophisticated scams that compromise legitimate business e-mail accounts to conduct unauthorized fund transfers. These attacks are also called ‘whaling’ because they are similar to phishing, but on a larger scale. BEC attacks have grown in popularity in recent years, and are expected to pose a significant risk to businesses in 2016.

The FBI reported a 270% increase in BEC victims since January 2015, and nearly $750 million of actual and attempted U.S. losses since August 2015. Research conducted by Mimecast, an email security provider, found that 55% of organizations have seen an increase in BEC attacks over the last three months.

Using complaint data, the FBI identified four general versions of BEC attacks.

The Supplier Swindle. A business is asked by a current supplier to wire an invoice payment to a fraudulent account. Hackers use spoofed e-mails that appear very similar to a legitimate account.
CEO Fraud. Spoofed or hacked e-mail accounts of high-level business executives are used to request a wire transfer from an employee within the company who is normally responsible for processing these requests.
Fraudulent Invoices. An employee’s personal e-mail account is hacked and used to request invoice payments from multiple vendors identified in the employee’s contact list.
Attorney Scam. An employee is asked to quickly transfer funds by someone posing as an attorney who is handling a confidential or time-sensitive matter for the business.

BEC attacks are not random. Victims are specifically targeted by hackers using information that is made readily available on company websites and social media sites like Facebook, LinkedIn and Twitter. For example, LinkedIn can be used to map entire departments and reporting structures. Websites may also provide valuable information, such as email addresses, titles, responsibilities and even biographical information.

According to Mimecast, a BEC attack can be broken down into five phases.

Research: Criminals identify a target organization and its employees. Open source intelligence, social media and corporate websites are then used to build an accurate picture of the organization and identify key executives and finance team members.
Similar Domain Names: Criminals may then register a domain name that sounds or appears similar to that of the target company. For example, the domain ajaxcornpany.com could be used to spoof ajaxcompany.com. Were you able to spot the difference between the two?
Whale Emails: Criminals make initial contact by posing as a high-level executive and sending an innocuous email to a member of the finance team. These emails are typically innocuous, brief and to the point, such as “I need you to complete a task ASAP, are you in the office?”
Victim Tricked: Due to the research done before the attack, victims are likely to believe the email is genuine and respond accordingly. Criminals may then engage in email ‘small talk’ prior to requesting a wire transfer.
Wire Transfer: Victims, typically those with authority to initiate or approve financial transactions, are asked to transfer funds. Having no reason to doubt the authenticity of the request, the funds are transferred.

BEC attacks can be very difficult to identify. Since criminals don’t rely on emails with attachments or links, current barriers are often inadequate. Nevertheless, steps can be taken to protect against BEC attacks. For example, in addition to increased awareness, the FBI identified various preventative measures, such as:

Create detection system to flag e-mails with extensions that are similar to company e-mail.

Verify changes in vendor payment with two-factor authentication, like requiring secondary approval.

Confirm requests to transfer funds. If verifying over the phone, use previously known numbers, not the numbers provided in the e-mail request.

Know your customers.

Carefully scrutinize all e-mail requests to transfer funds.

Businesses should also consider cyber insurance coverage to protect against cyber attacks that could not be prevented. Unlike traditional commercial insurance, Cyber Liability and Security Breach (Cyber Perils) Insurance policies protect against privacy injuries, such as identity theft, and cover the cost of complying with data breach notice laws.

We would be happy to provide you with more information about insurance for existing and emerging cyber threats.

Additional information is also available in our weekly Risk Management Newsletters.

Perhaps these predictions explain the growing number of businesses purchasing new cyber insurance policies or increasing coverage under existing cyber policies.

Business Insurance 101

Insurance is an essential part of running a successful business. Though you don’t have to be an insurance expert, a general understanding of the following business policies and coverages can help identify and fill potential coverage gaps. It can also make you a more informed and better equipped consumer when the time comes to renew your insurance.

Property Insurance

Standard commercial property insurance covers loss or damage to buildings and structures caused by covered perils, such as theft, vandalism and fire. It also covers business property (contents), such as office furnishings, inventory, materials and computers. This coverage can help pay the costs of repairing or replacing property that is damaged or lost due to a covered event.

Since a property loss is likely to force a temporary suspension of operations, businesses should consider adding business interruption (business income) coverage. In the event of a covered loss, business interruption insurance will cover lost revenue and fixed expenses, like rent and utilities, during the suspension of operations. Extra expense coverage is also available to reimburse costs over and above normal operating expenses, like temporary relocation costs.

General Liability Insurance

Every business is vulnerable to claims of harm or damage brought by third parties. Standard commercial general liability insurance protects against liability claims for bodily injury and property damage occurring on the premises or arising out of business operations. Standard policies also cover personal and advertising injury, such as libel, slander and false arrest, and provide limited medical payments coverage for injuries sustained by non-employees.

Professional Liability Insurance

Businesses providing professional services requiring extensive technical knowledge or training must meet minimum standards of professional conduct. However, professional services, like those performed by doctors, lawyers, accountants, architects and engineers, are generally not covered under a standard general liability policy. Professional liability (errors and omissions) insurance is needed to protect against claims that a professional erroneously performed or failed to perform its professional services.

Commercial Automobile Insurance

Many assume that commercial automobile insurance is only necessary if a business owns one or more vehicles. However, if cars, trucks, vans or other vehicles are used or rented for business purposes, or if employees run business errands in their personal cars, commercial automobile insurance, including coverage for hired and non-owned vehicles, is needed to cover bodily injury or property damage resulting from an accident.

Workers Compensation Insurance

Whether a business is required to carry workers’ compensation insurance is typically determined by state law. In Florida, for example, a business in the non-construction industry that employs four or more part-time or full-time employees must obtain workers’ compensation coverage to provide medical and lost wage benefits to employees injured on the job. Even though some states, like Florida, set the premium for workers’ compensation insurance, a business can reduce its rates by maintaining a safe workplace or implementing a qualifying drug-free workplace program.

Flood Insurance

The average commercial flood claim is nearly $90,000, which may explain why approximately 25% of businesses never reopen after a flood. Damage caused by rising flood waters isn’t covered under standard property policies. A separate flood insurance policy is needed to cover direct physical loss to buildings and contents caused by an excess of water on land that normally is dry.

Employment Practices Liability Insurance

In 2014, the Equal Employment Opportunity Commission received 88,778 charges of unlawful discrimination. Unfortunately, employment-related lawsuits are becoming significantly more expensive to defend and resolve. Employment practices liability insurance is needed to protect against claims of discrimination, wrongful termination, harassment and other employment-related issues, like breach of contract.

Umbrella Insurance

An umbrella policy is designed to protect against an unusually high loss by providing coverage over and above other liability insurance policies. In addition to providing excess coverage limits, an umbrella policy can step in after the aggregate limit of an underlying policy is exhausted by the payment of claims. Umbrellas may also cover claims that are not covered by underlying policies.

If you have any questions or would like to learn more about insuring a business, please contact us.

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Office Holiday Parties: Revel without Regret

Many employers consider a company-wide holiday celebration an excellent opportunity for employees to mingle socially and get to know one another better. It’s also a chance for senior management to interact with employees they rarely see throughout the year. Though holiday parties can create a positive work environment, increase employee morale and promote teamwork, they can also expose employers to a number of potentially significant risks.

Perhaps the most significant risks involve alcohol. What happens if an employee becomes intoxicated and causes damage to something or someone? Though liability is determined on a case-by-case basis, employers may face a greater chance of being held responsible if:

Attendance is, or is perceived to be, mandatory (e.g., everybody knows that being seen by the Vice President will enhance one’s chances of a promotion);
The employer pays for or provides the alcohol; or
The employer conducts business during the holiday party.

Employers can take steps to reduce their potential liability, such as:

Collect car keys from all who drink. Toward the close of the party, assign designated drivers or call taxis for anyone who is too impaired to drive. If the party is in a hotel, reserve a block of rooms for the inebriated to spend the night.
Appoint someone in a position of authority to monitor alcohol consumption; including making certain that no alcohol is served to minors.
Serve a limited amount of alcohol, controlled through “drink coupons.” (i.e., two drinks per person). Close the bar once dinner begins.
Send a memo to all employees prior to the party stating clearly that a) employees who arrive inebriated will not be allowed in; b) employees cannot bring their own alcohol; c) excessive drinking will not be tolerated; and d) intoxication and inappropriate behavior at the party will be grounds for discipline.
Do not permit supervisors or managers to buy alcoholic beverages for employees.
Hold the party at an off-site location and use professional bartenders to serve and monitor alcohol consumption.

There are other risks employers should consider when planning and holding the annual office holiday party, such as:

Discrimination and Harassment: Lines are often blurred during an office party, so they are often crossed. Conduct that is inappropriate at work may be considered appropriate at a party, such as engaging in intimate conversations or acts, giving a racy gift or telling an off-color joke. Employers may be held liable for unlawful harassment or discrimination that takes place during a holiday party, even if it’s off-premises and off-the-clock. Consider redistribution of the sexual harassment policy, and remind employees that a holiday party is no excuse for inappropriate behavior, which will not be tolerated.

Premises Liability: Employees are often allowed to bring spouses and significant others to the office holiday party. Every ‘plus one’ accompanied by an employee is a potential slip-and-fall victim. Employers must make sure the workplace is safe before the party and keep it safe during the party.

Workers’ Compensation: Employees are typically covered by workers’ compensation if they are injured in the course and scope of their employment. Though getting hurt at a holiday party wouldn’t seem to be work-related, an employee may be covered by workers’ compensation if attendance at the party is explicitly or implicitly required (or ‘encouraged’). Tell employees the holiday party is purely a voluntary social event, and mean it.

Employers should review their insurance policies before the party to make sure they are covered in the event something happens during the holiday party. General liability, employment practices liability and workers’ compensation insurance may cover some of the risks created by the office holiday party. However, other risks may require additional insurance coverage, such as a policy that covers one-time events, including alcohol-related liability, which may be available for a small additional premium.

If you would like more information about how Setnor Byer Insurance & Risk can help protect your business during the holidays and year round, please contact us.