Commercial Insurance Services

: : Louis Santelli, CPCU, CIC, Managing Director, Commercial Insurance Services
631.923.1595 ext. 330
G.R. Reid Insurance Services, LLC


Never Cut Corners When it Comes to Safety in The Workplace

Some employees are happy to take chances when it comes to safety. They take needless risks in an effort to save time or cut their work load. In reality, all they're doing is subjecting themselves and others to hazards that could cause a serious injury. Workers form bad habits when they repeatedly perform their jobs in an unsafe way and don't get injured. They become convinced that because of their skills they are incapable of being hurt. It's this attitude that usually ends up doing them in, because they take even more chances until eventually a serious accident does occur. Unfortunately, that one accident can turn out to be fatal.

Most of a chance-taker's careless acts can be broken down into one of the following categories:

• Failing to follow proper job procedure
• Cleaning, oiling, adjusting, or repairing equipment that is moving, electrically energized, or pressurized
• Failing to use available personal protective equipment such as gloves, goggles, and hard hats
• Failing to wear safe personal attire
• Failing to secure or warn about hazards
• Using equipment improperly
• Making safety devices inoperable
• Operating or working at unsafe speeds
• Taking an unsafe position or posture
• Placing, mixing, or combining tools and materials unsafely
• Using tools or equipment known to be unsafe
• Engaging in horseplay

Although OSHA does not cite employees for safety violations, each employee is obliged to comply with all applicable OSHA standards, rules, regulations, and orders. Employee responsibilities and rights in states with their own occupational safety and health programs are generally the same as for workers in states covered by Federal OSHA.

Employees should follow these guidelines:

• Read OSHA notices at the jobsite
• Comply with all applicable OSHA standards
• Follow all lawful employer health and safety rules and regulations, and wear or use prescribed protective equipment while working
• Report hazardous conditions to a supervisor
• Report any job-related injury or illness to the employer, and seek treatment promptly
• Exercise these rights in a responsible manner

If you are working with a risk-taker, ask him to stop and consider what jeopardy he is putting himself and others in. Then buddy up with him to find a safer way to perform the task. Remember, unsafe actions don't result in saving time if a worker gets injured in the process. 

Commercial Insurance Services

The Pros and Cons of Employee Leasing

: : Louis Santelli, CPCU, CIC, Managing Director, Commercial Insurance Services
631.923.1595 ext. 330
G.R. Reid Insurance Services, LLC

Employee leasing firms earned $68 billion in gross revenues in 2008, according to the National Association of Professional Employer Organizations. Their clients, primarily small businesses with fewer than 20 employees, outsource to leasing firms the responsibilities for payroll administration, employee benefits, workers' compensation claim management, human resource management, and related operations. Businesses trying to reduce costs and focus on growth may find employee leasing to be an attractive option. It is an option, however, that comes with advantages and disadvantages for both employer and employee.

The NAPEO cites a number of benefits from employee leasing. The benefits for employers include:

• Access to professionals with expertise in human resources, payroll, risk management, and employee benefits.
• Assistance with labor law compliance.
• Professional claim management.
• Reduced and controlled administrative costs.
• Professionally written employee handbooks, policies, and procedures.
• Relief from some employment-related liabilities.
• Reduced workers' compensation costs resulting from improved workplace safety.

Employees may also benefit from leasing in several ways.

• Access to benefits that might not have otherwise been available, such as 401(k) plans, cafeteria plans, insurance, and credit union membership.
• Timely and accurate paychecks.
• Protection under federal labor laws.
• Improved communication among and between employees.
• Employees who move from one leasing client to another do not lose eligibility for benefits.
• Efficient and timely claim processing.
• Assistance with employment-related issues.

Employee leasing carries some risks. A poorly managed leasing firm may mishandle payroll and benefits or may go out of business, leaving the client with its obligations. The employer may also be legally liable for the actions or inactions of the leasing firm. For example, if the leasing firm fails to comply with regulations, it may be the employer who bears ultimate responsibility. Also, the employer is ceding control of its workforce to a third party who may or may not do things the way the employer would. Employee relations may suffer during the transition to leasing.
From the employee's standpoint, the employer will have to fire and the leasing firm will have to re-hire him. Also, there is no guarantee that the leasing firm's benefits will be as good as those the employer offered. Some employers have also used leasing as a means to avoid dealing with unions, though federal rules may limit their ability to do this.

Employers who decide to lease their employees should carefully evaluate the leasing firms it considers. The financial stability of the firm and of the insurance companies providing its benefits are a major consideration, as the failure of either may leave the employer with unfunded obligations. The firm's experience in the employer's industry, track record of success, and safety record are also important. Another consideration is the range of benefits the firm offers; a plan that does not meet the employer's needs will not be worth the expense of hiring the leasing firm.

Employee leasing is a big step and not one to be taken lightly. Employers must weigh the upsides and downsides of leasing and make decisions that is best for their employees and their businesses.

Commercial Insurance Services

: : Louis Santelli, CPCU, CIC, Managing Director, Commercial Insurance Services
631.923.1595 ext. 330
G.R. Reid Insurance Services, LLC 

Five Questions to Determine Your Business Interruption Exposure

The losses resulting from businesses in the area having to shut down for extended periods of time as a result of Tropical Storm Irene are likely to be huge.

For many organizations, the loss of income coupled with continuing expenses after a fire or natural disaster can be even more devastating than the damage itself. To increase the chances that a loss will not shut operations down permanently, organizations must accurately asses their exposures by asking some questions:

• What is the most the organization could lose from a shutdown?
Commercial property insurance policies define "loss of income" as the sum of the expected pre-tax profit or loss and necessary continuing expenses. For example, if the expected profit is $300,000 and necessary continuing expenses are $100,000, the potential loss of income is $400,000. To calculate their exposure to business interruption losses, organizations should refer to their balance sheets, profit and loss statements and cash flow statements. Insurance companies also have worksheets available to assist with the calculation.

• How much insurance should be carried?
Once the organization knows the dollar amount of its exposure, it must decide how much business interruption insurance to buy. The key considerations are the length of time the insurance is likely to apply and the coinsurance percentage the organization must meet. Coverage usually begins 72 hours following the damage to the property and ends when business resumes at another location or when the building should be repaired with reasonable speed, whichever occurs first. If the organization decided that the coverage period would be around six months, it could buy an amount of insurance that would satisfy a 50 percent coinsurance requirement. If the interruption would last longer, higher coinsurance percentage and limits would be necessary.

• How long will it take business to return to normal?
Even after operations resume, it may be some time before revenue returns to normal levels. Customers who had gone elsewhere during the shutdown may be slow to return. The standard insurance policy extends coverage for 30 days after operations resume, but some businesses may need more time than that, especially if their businesses are seasonal. For example, an oceanside restaurant in New Jersey that makes most of its profits during the summer will need additional coverage even if it can re-open in November.

• How much of the normal payroll expense will continue during the shutdown?
The organization will need the continuing services of some employees while it attempts to re-open, but other employees may not be necessary. For example, accounting staff will be needed to pay mandatory expenses such as property taxes and collect receivables earned before the shutdown. Employees who stock shelves will not be needed if there are no shelves to stock.

• Does the business depend on other businesses for revenue?
A business can suffer a loss even if its own building is untouched. A loss that shuts down a key customer or supplier or damage to nearby property that causes authorities to close off access to the street can devastate a business's bottom line (this happened to many businesses affected by 9/11.) Special insurance coverage is available to protect against this possibility.

Business Interruption Insurance covers direct damage to your property. Enhancements to Business Interruption Coverage include Communication and Transmission Interruption Coverage which will cover off-premises power or communications failure including overhead transmission lines. This is an important safeguard to consider for hurricanes and natural disasters. A professional insurance agent can help a business owner answer these questions and identify insurance companies that can meet coverage needs. With some effort and planning before a loss happens, an organization can emerge from a shut down and return to profitability.