Money

Requiring a High School Degree might be an emerging employment liability

2011-12-06T14:04:00.000-08:00

The EEOC has issued a letter questioning the necessity of requiring a high school diploma. While this isn't a new law, the EEOC expressed concerns that requiring a high school diploma for certain jobs could be discrimination under the American with Disabilities Act (e.g. for students with learning disabilities that are unable to obtain a high school diploma).

This should be of concern to any company that has this requirement and any policy in force that requires such should be reviewed. I expect this to be another emerging employment liability as this will surely open the door to more lawsuits.

Read the article here: Business Insurance

Now that's Money!

Wage & Hour - Yes there is an iPhone app for that!

2011-06-07T07:25:00.000-07:00

The Department of Labor now has a smart phone application for employees to independently track their time worked. From their press release " This new technology is significant because, instead of relying on their employers’ records, workers now can keep their own records. This information could prove invaluable during a Wage and Hour Division investigation when an employer has failed to maintain accurate employment records" The DOL also has a printed version that will employees without a smart phone to track there hours worked, breaks, and overtime.

With the release of this new application business owners must have their records, policies, and employee classifications up to speed. There is nothing to prevent an employee from entering false information or incorrect data.

What can you do as a business owner?

1. Make sure your employee classifications of exempt and non-exempt are correct
2. Review your non-exempt breaks & overtime policies for compliance with federal and state law
3. Have your attorney review your wage and hour & employee classifications, annually
4. Talk to an agent/broker to purchase as much Wage & Hour insurance coverage you can get (which is often limited in the marketplace)

The bottom line is the DOL iPhone applications make it easier for an employee to not only track their wages due to them, it also makes it easier for them to file a compliant. So business owners need to be aware and ready for when that suit comes.

Now that's Money!

DOL Extends date to comply with Fee Disclosure Rules

2011-06-01T11:30:00.000-07:00

Good news! The department of labor has extended the deadline to comply with their fee disclosure rules. Businesses will now have 120 days after 1/1/2012 ( which is 4/30/2012 for plans on a calendar year basis).

These are exciting changes and include requirements for a comparative graph that can better help participants compare options.

Here's a link to the fact sheet regarding this ruling.

Now that's money!

D&O and the Risk of Going Green

2011-01-05T07:12:00.000-08:00

Check out this short video in regards to the risk publicly traded companies face with disclosing liabilities associated with greenhouse gas emissions: Business Insurance Video.

While the Securities and Exchange Commission requirement doesn't apply to private or non-profit companies, the underlying risk remains with environmental exposure. Directors and Officers have a responsibility to their stakeholders to know and mitigate environmental concerns.

Now that's money!

Labor Department requires 401(k) fee disclosure | Business Insurance

2010-10-14T12:17:00.000-07:00

Here's another good reason to buy fiduciary liability insurance if you are a plan trustee:
Labor Department requires 401(k) fee disclosure Business Insurance

Essentially the DOL is now requiring by 2012 that companies provide their participants with information on fees like administrative and investment fees that are charged to their accounts. I'm sure it won't be long before comparisons happen. If you sponsor a plan and don't monitor it closely, look out, you're just asking for trouble these days!

Now that's money!

Sally Hogshead on How to Fascinate Your Clients (and Goldfish)

2010-07-27T17:26:00.000-07:00

Check out this video on how short your customers attention span is: Now that's money!

Can your Non-Profit stand to lose $116,000.00?

2010-07-15T13:40:00.000-07:00

Another employee dishonesty loss in Central PA. Read about the loss here (Patriot News) if you haven't already heard about it. This individual is accused of embezzling more than $116K, from a local fire company. The money was supposedly used for fund the individuals other business which was a marina along with other various items.

Two important takeaways from this article-even non-profits have exposure to crime from employee dishonesty. In my opinion they often have the most significant exposure since they have limited resources to put in necessary checks and balances. And secondly, the loss wasn't discovered until the individual was sick and another volunteer took over.

Don't let your non-profit become the next victim, be sure to get crime insurance!

Now that's money!

More examples of Employee Theft!

2010-07-07T06:04:00.000-07:00

If you've been following this story it probably isn't that much of a surprise. Murray Insurance Agency, in Scranton, former owner is being charged with trying to steal more than $1.3M in premiums. He faces eight counts (four felony counts of insurance fraud and four felony counts of theft by failure to make required disposition of funds). Each charge carries up to seven years in prison and potential for a $15,000 fine. ($120K and up to 56 years behind bars). Check out the Best Wire here.

Another example hitting the local Patriot News today, is the Moose Lodge in Steelton. The theft occurred in 2001 where a former administrator stole almost $300,000. This later resulted in its closing on May 5, 2010, with $500,000 in liabilities and only around $200,000 in assets. As quoted in the article, the employee theft was likely the downfall of the lodge. Too bad there was no crime insurance to help make them whole. Check out the article here.

Now that's Money!

Buffett wins $30 Million Dollar Insurnace Bet

2010-06-23T07:38:00.000-07:00

For all the world cup soccer and insurance fans, check out the article on bloomberg on this insurance policy. Either someone or company needed a policy to insure against a French victory in the World Cup. So they contacted Ajit Jain, who runs one of Berkshire's insurance companies.

I wonder what they charged for the use of capital in this case, either way, that had to be easy money.

Now that's money!

Creating a Culture of Safety

2010-06-22T11:54:00.000-07:00

Check out the video on creating a Culture of Safety from Robert Cartwright, Jr. Mr. Cartwright spoke on Enterprise Risk Management at the last Central PA I-Day. He's the loss prevention manager of Bridgestone Americas Holding, Inc. It's a four minute video with great insights on getting your business thinking safety first! "Most successful organizations start with safety..."

Now that's money!

Using "the price" to get beyond focus on the bottom line

2010-04-27T13:02:00.000-07:00

I read an excellent article out of the Harvard Business Review May issue, entitled "How to Stop Customers from Fixating on Price". (sorry the online edition is only a teaser, you'll have to pay to look at the full edition online or find it on your local magazine dealer).

The article gave several currently used strategies for getting customers past the bottom line. This is important for anybody in sales or that thinks their industry is perhaps 'matured' so much as to say their product is a commodity. And anybody who's been through any sales training knows the message is all about value and getting the discussion off of price and back to value. This article is just the opposite and frankly is very refreshing to see.

Four pricing strategies are given and each strategy is supported by actual products and companies that are using each strategy. So how does it work? Well essentially all the strategies in my mind work by showing a price in a way that accomplishes two objectives almost simultaneously: it shows the bottom line and it shows it in a way that the customer understands the value of what they'd be receiving.

Some of the examples from the article:

Goodyear prices their tires by how many miles their tires are expected to last. When I'm buying tires that makes sense to me as a customer, I want to know how long they'll last. You can willfully price your product higher than others like Apple or Starbucks does. Instead of just dismissing higher priced products, I'll actually look and ask questions as to why they are so much higher priced (admit it, you do it too). Partition your prices like Comcast does instead of bundling. You can do both, just like Comcast does, but with partitioning I actually know how much my broadband service costs, and understand the value better. The last strategy is to have a single price point, like Apple Itunes does. It makes sense, I don't really want to have piecemeal together different albums with my focus on saving as much as possible. With a single price, my focus is on buying the music I want.

Now that's money!

Racism Rampant in Texas Factory

2010-04-15T13:31:00.000-07:00

If you haven't seen this article over at CNN, "Feds slam Texas factory over discrimination claims", take a second to read it. Racism, unfortunately, is alive and well. Workers allegedly were subjected to harassment by upper management, denied promotions, subjected to racial graffiti, nooses, and other discrimination.

Interesting is that there is no mention of formal charges. It appears that the EEOC has only issued a letter to Turner Industries and has call on them to join in talks at producing a "just resolution". I imagine that this is just a first step in the process of bringing some justice for the workers in Texas. But of course Turner management issued statements disagreeing with the EEOC findings, despite several pictures to the contrary.

Hope Turner has employment practices coverage!

Now that's Money

Know when to fold 'em...Another Large Crime Loss in Central PA

2010-03-24T08:30:00.000-07:00

A CFO of a local company, Morrison Informatics, has been charged with stealing $450,000. Interestingly, the charges includes counts of theft by unlawful taking, counts of receiving stolen property, and a count on receiving a bet. The individual stole money from 2007 through 2009, and the money was used for personal use.
This is yet another large theft in Central PA, that would likely leave most companies in the red for the year. A few good lessons, CFO's steal money too!, losses happen over time, and (although not explicitly stated) gambling often leads to thefts.

check out the article here: Cumberland County man charged with stealing $450,000 from employer

Now that's Money!

Soprano like thefts in PA

2010-03-15T08:57:00.000-07:00

If you missed it, read up on this insurance journal article here: Tractor-Trailer Cargo Thefts on the Rise in Pennsylvania. Interesting to note that there were 859 thefts in 2009 and PA ranked as the eighth most targeted state with 32 thefts reported in 2009. Hot spots in PA are located right in central PA-routes 81, 83, and the turnpike. I would have thought this number would have been much higher, given all the truck traffic around central PA, but this report may be limited as it is only detailing reported thefts. I'd imagine many trucking companies wouldn't want their reputation tarnished by reporting thefts.

The stat in the article came from Freight Watch International. Their US Cargo Theft report for 2009 is worth a quick read (a total of 5 pages). The good news is most of the crime is non-violent. The bad news is there was a sharp increase in thefts from secured distribution centers and terminal lots. Of note is their were a total of 5 driver thefts. Interesting to note that the organized cargo theft gangs will actually drop their stolen trailer for a couple of days in order to determine if there is any tracking devices. Though law enforcement has begun to wait as well.

Now that's money!

Market Scout-rates continue to soften

2010-03-08T12:18:00.000-08:00

If you haven't seen market scout's latest release, check it out here. Note that even d&o, which held steady in 2009 even slipped in January. The market continues to be soft and doesn't show any signs of changing. When will it end and how will it end? Post a comment and let everybody know!

The Street.Com Bank Ratings

2010-02-15T11:40:00.001-08:00

Unsure if your bank will be in business after 140 closings in 2009? (see the list of failed banks here from the FDIC Failed Bank List)

Check out the bank ratings at The Street.Com here: Bank Ratings.

These are easy to use ratings, as banks are graded on a basis from A to E. Hope you're not in E!

Now that's Money!

Pa. insurer’s bookkeeper gets 32-month sentence for 246 check forgeries

2010-02-09T06:45:00.000-08:00

Still don't think crime coverage is important to have? Check out this article on how an employee (obviously a trusted employee being employed for 27 years) stole nearly $400K.

Article here: Pa. insurer’s bookkeeper gets 32-month sentence for 246 check forgeries.

How did this scheme work? The employee typed out checks made payable to herself and her husband for cash. Then altered bank statements and destroyed checks. The checks were endorsed by the president’s stamp. This is a classic case of a trusted employee with lack of segregation of duties.

Now that's money!

Retirement Plans-it's all about the ROI

2010-02-03T07:09:00.000-08:00

If you own a company and want to have an edge with attracting top talent, you'll want to offer a good 'old fashioned' pension plan. Why? Towers Watson (the newly combined company of Towersperrin and Watson Wyatt) recently updated their study on defined benefit plans returns vs 401K Investment Returns and it shows that once again pension plans have outperformed defined contributions plans (often 401K or similar plans).

How much better have defined benefit pension plans performed? They averaged 1% higher returns in each of the years between 1995 and 2006 (from the analysis from Towers Watson). In their most recent update the pension plans have maintained the 1% average better performance and some even had reported positive returns.

However, size does matter and the study only focuses on employers with 100 plan participants or higher. This likely plays a part as larger defined benefit pension plans can average out plan administration expenses over all participants whereas mutual funds (which are the typical offering in a 401K plan) can contain large administration fees that will take away from returns. The fees with mutual funds of course would be in addition to any fees associated with setting up a plan and having a third party administer the plan as well.

Check out the study here: Defined Benefit vs. 401K Investment Returns: The 2006-2008 Update.

Now that's Money!

An underwriters perspective on Social Media

2009-12-30T13:21:00.000-08:00

After reading a great article in the Harvard Business Review, I was reminded of a favorite saying-"if your so great why haven't I heard of you (your product, services, etc) before?" The article talks about how some folks game social media and in a sense devalue it. Now if anything has been hyped more than social web 2.o in 2009 I'm not sure what that is. Everybody that's anybody has a facebook, twitter, linked-in, blogs, etc. And that goes for business and individuals. But much like anything else, it's all in the value provided. I predict soon that social web 2.0 will become so diluted that it will begin to lose it's value. How many companies and individuals can each of us really follow?
Don't get me wrong though, I have all of those accounts and use them (and try to update them with value). Now that's Money!

Soft Market Continues

2009-11-09T11:53:00.000-08:00

It looks like the holiday's won't be coming anytime sooner this year. MarketScout's composite rate for October showed a rate reduction of 5% compared to September. It shows D&O rates were flat, epli was down 3%, fiduciary was down 2%, and crime coverage was down 2%. Large accounts continue to see the most drop in premiums, while small accounts continue to give up less.

Personally, I think this trend will continue of slightly moderating rate decreases until there is a shock to the system and/or a consolidation (M&A) of capital in the marketplace. Much like Gresham's Law, bad and irresponsible capital drives out capital that is good and responsible. Underwriters continue to do what is needed to keep good accounts on the books while allowing the bad capital to win on marginal accounts.

Now that's money!

Directors and Officers Liability and Shareholder Agreements

2009-10-28T06:08:00.000-07:00

After reading an excellent blog post from the Exuberant Accountant regarding the importance of shareholder agreements, I thought I would expand upon the topic to include the importance of also having directors and officers liability. More often than not agents are hesitant to bring up D&O insurance because of one owner or family owned business's or even companies that are owned by a couple of partners. Many agents state there is no need. So while there are many reasons to buy d&o, I'm just going to focus on shareholder exposure with tightly held private companies. (And why that statement is not an oxymoron!)

Even if companies have shareholder agreements, life insurance with readily available funds upon a shareholder passing, regular valuations, etc., there is still significant exposure. For example, if a key partner passes and held key business relationships, what's going to happen to share prices if other partners can't keep those relationships? With a regular stock valuation (which most private companies don't have) there could be a desire to give the surviving partners spouse and children more for the company stock than it would otherwise be its true market value. Is overpaying for stock in the best interest of the company and the other existing shareholders? What happens if they set up a shareholder agreement, bought life insurance to buy back shares, but hadn't reviewed the amount of insurance available to buy back shares? That is often the case when there is a sudden passing of a valued partner and owner of a company.
Then there is always divorces, which can get really messy. Especially if the spouse of an owner didn't work and was counting on retirement from the owners shares.

The easy solution? Buy Directors and Officers Liability insurance, today. That's right, buy it now when you don't 'need' it now. It can cover costly litigation and shareholder suits, because you can't always be certain who might end up owning shares of a company you spent years to build.
Now that's Money!

Large Central PA Crime Loss of $479K

2009-10-16T06:54:00.000-07:00

A cyber attack hit locally in Cumberland County, Pennsylvania (article here) on the first day of fall and resulted in a loss of $479,000. Unfortunately, the Cumberland County Redevelopment Authority didn't have cyber crime insurance (computer fraud coverage). The good news is this has triggered an insurance review, prompting the Authority to put coverage in place.
This also is a good time to review your coverages and do the same. Could your company take an almost half a million dollar loss? Are you keeping up to date with your computer security?
Now that's Money!

Chicken Wings

2009-10-13T13:05:00.000-07:00

Who doesn't love chicken wings? Apparently, almost everybody does love chicken wings. CNBC & the New York Times are reporting that "in seven of the last 11 months, wholesale wing prices have been higher than breast prices." So if demand has increased greatly (thing of all the places you can get your wing fix) and the supply is diminishing, guess that means prices will increase.

What's that have to do with management liability? Well it's just the opposite these days of the wing phenomenon, there is quite a supply of capital and products. Add-on's are popping up everywhere and capital is being thrown in by folks that probably shouldn't be in the market. So like 7-Eleven trying to break into the chicken wing market (who thinks of a gas station to go get really good wings?), ubiquitous management liability won't create its own demand. You still have to sell it.

Now that's money!

Market Scout

2009-10-12T13:16:00.000-07:00

Check out Market Scout if you haven't already. They have a nice quick market Barometer showing the rate changes for insurance. They also break it down by line. For September it shows d&o was flat at 0%, epli was down 2%, fiduciary was down 3% and crime was down 2%. I like this tool because it started tracking essentially the same time I came into the business.

What a different market it is today as compared to June 2001. Enjoy, because that's money!

The re-emergence of D&O A-Side?

2009-10-09T13:31:00.000-07:00

In case you missed the Broadcom $118M derivative lawsuit settlement, it was a landmark case for many reasons. One it is a derivative suit, which you don't see or read about all that often. Two it was settled for quite a bit of coin. And thirdly, it involved insurers paying out on A-Side Coverage!

So will this settlement and press help mark the return of A-Side and will it trickle down to private companies? It probably won't be overnight, but I look forward to which savvy buyers (and sellers) start picking up on this opportunity.

So in case you always wondered what A-side is, here is a short primer: A-side coverage provides coverage to the individual directors and officers, when the corporation itself cannot indemnify their directors and officers. That happens when a wrongful act was illegal (keep in mind the act could have been perpetrated by one director and the lawsuit comes in against all directors) or typically when there is no money from the corporation to pay for claims (important that even financially solvent companies can't always reserve enough for an unexpected settlement or judgement to stay in business).

Now that's Money!