As fall approaches each year, it triggers our strategic thinking about our company goals for the next year and how we will achieve them as an organization. I am sure if you are taking valuable time to read this, you also have the foresight to plan, budget, and execute a Profit & Loss Statement.
Most businesses that operate today compete primarily on their unit cost structure. Their adjusted gross profit is the difference between the cost of goods and services and the delivered price for the product or service. The lower your unit cost structure, the higher your profit margin—or the more competitive your price or service—allowing you to grow market share.
Simple concept, yet we still find an unrelenting focus on top-line growth (sales/revenue) coupled with penny-wise, dollar-foolish cost cutting. Generally, the companies that consistently dominate their respective marketplaces do so by strategically cutting costs and investing in strategies that ultimately lower their cost of doing business long term.
In over 23 years of consulting with businesses of all sizes, one of the most common mistakes we have seen is the perspective that insurance is a costly expense that is only managed by shopping around to get the best price. If you are one of these folks, you are not alone, as this is how the overwhelming majority of businesses attack their insurance conundrum. That’s actually great news for you.
As the New Year approaches, our suggestion is to look at insurance as a smaller component of an overall risk reduction strategy that will substantially lower costs across your Profit & Loss (“P&L”) Statement, year in and year out. What number would you rather have—a 10 percent reduction in your insurance premium, which fluctuates up and down each year, or a consistent, sustainable three points in your profit margin?
9/19/14 UPDATE: [OSHA has issued a final rule requiring employers to notify OSHA when an employee suffers a work-related hospitalization, amputation, or loss of an eye. Under the revised severe injury rule, employers will be required to notify OSHA of work-related in-patient hospitalizations, amputations, or losses of an eye within 24 hours. Previously, OSHA’s regulations required an employer to report only work-related fatalities and in-patient hospitalizations of three or more employees. Reporting single hospitalizations, amputations, or lose of an eye was not required under the previous rule. The new rule, which also updates the list of employers partially exempt from OSHA record-keeping requirements, will go into effect on January 1, 2015 for workplaces under federal OSHA jurisdiction. The new rule maintains the exemption for any employer with 10 or fewer employees, regardless of their industry classification, from the requirement to routinely keep records of worker injuries and illnesses.]
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This is a question we get all the time. So we figured it was time for a blog post.
Employers are sometimes confused by the differences in what they need to report to their workers’ compensation carrier and what they need to record on their OSHA 300 log.
At Met Risk we recommend to our clients that you submit a First Report of Injury to us even if the employee needed only minor treatment. Having this “Incident Only” report will be helpful if the employee reports symptoms or needs treatment later on. Our Claims Advocates will also let you know if you need to report it to your workers compensation carrier or not.
However that does not mean everything needs to be recorded in your OSHA 300 log.
In today’s evolving marketplace, many best practice firms are leveraging their vendor partners for extra services, driving extra value to their organization. The insurance brokerage relationship is one of the primary areas these firms are mining in order to drive down their unit costs and gain a competitive advantage.
Listed below are a few examples of the services these companies are leveraging through their insurance brokerage relationship.
Three services you should look to take off your plate next time you’re in the market for a new insurance broker.
In a business world taking advantage of all that new and advanced technology has to offer, it might be easy to forget the vulnerability associated with displaying so much private and valuable information on accessible sites. As with all types of risk, data information leakage will drive up your company’s costs due to the actual loss in value of leaked information or a failure to meet data protection requirements mandated by the state. Companies that use online resources can reduce this inevitable increase in their unfunded exposure by utilizing cyber liability insurance.
One of the primary costs concerning data breaches is notifying affected users of a hacked online resource. The cost of maintaining a data breach notification system can be very high and has only increased since the escalation of hacking in recent years. Without cyber liability insurance, a company is liable for all of the costs associated with creating and maintaining a breach alert system.
One might ask why this system is necessary? 46 out of 50 states have mandatory requirements for data breach notification (Contact a Risk Advisor for information into your state’s particular mandates). Furthermore, a notification system markets your company as reliable, so that your customers and everyone whom you work with can trust the online resources that you provide. Cyber liability insurance can cover a significant amount of the expenses associated with maintaining an alert system and can help your company reinvest those saved dollars into other business operations.
In a state with as many practicing lawyers as New York, does anyone really need to be told about the importance of liability insurance in the Empire State? Discussions about liability insurance in New York may have more to do with how much you need, rather than the minimum amount available.
Does your business operate vehicles in New York? Many of the roads in New York State were designed long before the modern age of high motor vehicle volume and the need to share the road. It is not uncommon to encounter little or no bike lanes or jogger paths. As you would expect, there are higher incidents of pedestrians being struck by cars when there is a shortage of bike lanes and wide roads. The abundance of trees in New York State also shade and darken some roads, making it harder to spot a person.
Having numerous narrow, dark, winding roads may be enough challenge for drivers. When you also consider wet or icy conditions, and distracted drivers who may be texting, the challenge becomes even more daunting. Distraction for just a second or two combined with an unwary pedestrian or cyclist can be a disastrous combination. Without the protection of a vehicle exterior, pedestrian and cyclist injuries can be serious and permanent.
When it comes to liability insurance New York, you have the perfect mixture of difficult conditions to create an elevated need for extra coverage. Speak to one of our agents about finding a suitable liability policy for your financial protection.
Are you in the process of establishing a new enterprise in New York? Among other things on your list of ‘things to do’ will be insurance. While coverage for property and other assets may be first to spring to mind, just as important is liability insurance. New York start-ups are well advised to have liability coverage in place, but those unfamiliar with this type of coverage should discuss the nature of their business with an agent. Why? Because liability related risks are diverse and not all of them are covered by a general liability policy.
The danger for new business owners is that taking out a general policy when their type of enterprise requires more specialized coverage could be an exceptionally costly error in the event of a law suit.
Some of the other types of liability coverage include employment practices liability insurance, media/publishing related liability, errors and omissions (sometimes called professional indemnity) and malpractice insurance.
When purchasing business and liability insurance New York, particularly if you’re new to business, having a lengthy chat to your insurance agent is a good idea. That way, your agent can get to know your business and help you consider the risks you face and the types of coverage that may best protect your newest asset.
With the economy being at an all-time low, residential builders may be facing hard times. However, whether you have no work, or are building 5 homes a year, it is still important to know about risk management. NY builders, you work hard for your money and you deserve to keep your earnings. However, without NY risk insurance, you could lose hundreds or even thousands if something were to go wrong on the job-site.
Here are a few scenarios to show you what we mean:
#1: One of your newest builders is not familiar with a nail-gun but decides to give it a go. Ten minutes later he is on the way to the hospital due to a nail through his hand.
#2: Your roofers have been working hard in the sun all day. One of them suddenly gets dizzy and falls off the roof. Oh no!
#3: One of the home owners comes by the site to check out your progress. Dressed in heels, she slips over an extension cord and hit her head…hard.
Believe it or not, these types of scenarios are not as rare as you may think. It is important that you go over safety guidelines with your employees and anyone else who is going to be around the job-site. It is also important to go over risk management. NY insurance agents will be happy to speak with you about the right policies for your business. Most essential policies include general liability, workers comp, builders risk insurance and even commercial vehicle insurance. No matter what policies you choose, you will be taking a huge step towards safety and protecting your company. At Metropolitan Risk, we hope you never have to deal with a lawsuit or expensive medical costs. Take our advice and look into risk management today before an accident puts a dent in your business.
For those of you late to the dance, this is part 3 of the issue. We suggest you click on the two previous posts to understand exactly what the issue is. This latest post is our potential solution:
As stated previously we believe the intent of the new rule being imposed
by the New York City Buildings Department was to be certain there was a
vertical pool of insured capital (NY Construction General Liability
Insurance ) to pay for catastrophic property and injury losses on all
permitted New York City Construction sites requiring certain permits. We
get it, this rule change was born from the two crane collapses in
Manhattan that were woefully under insured. Not only is the Buildings
Department increasing the limit of insurance on the job sites, they are
dictating to the building & insurance community the mechanism for how that is
delivered without understanding the full impact on the market.
Impact:
The impact by changing the mechanism of which type of insurance contract to
buy omitts the products & completed operation component of
past projects distorting their P&L by doubling if not tripling their insurance costs. Further Builders balance sheets are exposed as many will opt not to purchase insurance to cover the products & completed ops exposure, or warranty work, leaving them to retain the exposure and pay for future losses from either current cash flow or retained earnings. As written project
specific insurance liability contracts which are mandated to cover all
future jobs will not provide this critical coverage for past projects which is the gaping whole. Where will the completed ops coverage come from as it relates to past projects and at what cost if it’s available. This is a huge problem for the NY General Contracting / NY Development Community.
The bane of all NY General Contractors and NY Developers is punch list items that need
to be dealt with once the tenants, or end user begins to utilize the
building or structure. This too will not be provided coverage under the
project specific insurance policies once the building has been put to it’s intended use. The cost to deal with this exposure
increases the overall cost of the insurance NY General Contractors, NY
Builders, and NY Developers must pay, on top of the increased limits.
See where this is heading!?
NO Practice NY General Liability Insurance = No Products & Completed Operation Coverage AND No Warranty Work Coverage for Past Projects!! Builders must purchase this coverage separately (if available) at a substantial increased cost basis PLUSpurchase NY Project Specific Insurance w increased limits. Projected impact is at the very least doubling the insurance costs for small & mid sized builders.
Proposed Solution:
Understanding the New York City Building Department’s true intent which is to
increase and secure the insured pool of capital ( NY General Liability
Insurance); may we suggest another way to achieve the same goal without
having a major disruptive impact on a community of businesses already
reeling from slack product demand, tight financing , high land
costs, high labor costs, taxes, and arguably the highest
overall bureaucratic and administrative costs in the country.
Instead of mandating “NY Project Specific Construction General Liability
Insurance” , as the mechanism to deliver the insured pool of capital or
NY General, give the NY General Contractors, NY Builders, NY
Developers the choice to satisfy the requirement with either:
1) NY Construction Project Specific General Liability Insurance as is currently reflected in the rule.
OR
2) The ability maintain the same NY Construction General Liability Insurance Policy they have been purchasing for years Except for the Following: Add the following Endorsement: CG 25 03 03 97 or it’s equivalent
DESIGNATED CONSTRUCTION PROJECT(S) GENERAL AGGREGATE LIMIT
This endorsement modifies insurance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART
SCHEDULE
Designated Construction Projects:
(If
no entry appears above, information required to complete this
endorsement will be shown in the Declarations as applicable to this
endorsement.)
A. For all sums which the insured becomes legally obligated to pay as damages caused by “occurrences” under COVERAGE A (SECTION I), and for all medical expenses caused by accidents under COVERAGE C (SECTION I), which can be attributed only to ongoing operations at a single designated construction project shown in the Schedule above:
1. A
separate Designated Construction Project General Aggregate Limit
applies to each designated construction project, and that limit is equal
to the amount of the General Aggregate Limit shown in the Declarations.
2. The Designated Construction Project General Aggregate Limit is the most we will pay for the sum of all damages under COVERAGE A,
except damages because of “bodily injury” or “property damage” included
in the “products-completed operations hazard”, and for medical expenses
under COVERAGEC regardless of the number of:
a. Insureds;
b. Claims made or “suits” brought; or
c. Persons or organizations making claims or bringing “suits”.
3. Any payments made under COVERAGE A for damages or under COVERAGE C
for medical expenses shall reduce the Designated Construction Project
General Aggregate Limit for that designated construction project. Such
payments shall not reduce the General Aggregate Limit shown in this
Declarations nor shall they reduce any other Designated Construction
Project General Aggregate Limit for any other designated construction
project shown in the Schedule above.
4. The
limits shown in the Declarations for Each Occurrence, Fire Damage and
Medical Expense continue to apply. However, instead of being subject to
the General Aggregate Limit shown in the Declarations, such limits will
be subject to the applicable Designated Construction Project General
Aggregate Limit.
B. For all sums which the insured becomes legally obligated to pay as damages caused by “occurrences” under COVERAGE A (SECTION I), and for all medical expenses caused by accidents under COVERAGE C (SECTION I),
which cannot be attributed only to ongoing operations at a single
designated construction project shown in the Schedule above:
—Any payments made under COVERAGE A for damages or under COVERAGE C
for medical expenses shall reduce the amount available under the
General Aggregate Limit or the Products-Completed Operations Aggregate
Limit, whichever is applicable; and
2. Such payments shall not reduce any Designated Construction Project General Aggregate Limit.
C. When
coverage for liability arising out of the “products-completed
operations hazard” is provided, any payments for damages because of
“bodily injury” or “property damage” included in the “products-completed
operations hazard” will reduce the Products-Completed Operations
Aggregate Limit, and not reduce the General Aggregate Limit nor the
Designated Construction Project General Aggregate Limit.
D. If
the applicable designated construction project has been abandoned,
delayed, or abandoned and then restarted, or if the authorized
contracting parties deviate from plans, blueprints, designs,
specifications or timetables, the project will still be deemed to be the
same construction project.
E. The provisions of Limits Of Insurance (SECTION III) not otherwise modified by this endorsement shall continue to apply as stipulated.
The beauty of this endorsement is that it achieves the goal of the NYC Department of Buildings by creating a vertical pool of insured capital ( NY General Liability Insurance) , AND it can be added to the NY Construction General Liability Practice Policy, which contemplates both the warranty work we highlighted in the previous articles, as well as providing that critical Products & Completed Operations coverage the NY General Contractors, NY Developers need to cover events that may occur as it relates to alleged construction defect claims on past projects that were built. The NYC Buildings Department mandates that this coverage must be reflected on the Certificate of Insurance, which is then accompanied by the Notarized Certification By Broker.
This in our estimation is a home run as everyone wins. Yes there is an increased cost to adding this endorsement to both the underlying NY construction insurance policy as well as the NY Construction Excess Liability policy, or NY Construction Umbrella insurance, however the cost pales in comparison to the cost of trying to comply with the rule as currently written. In our estimation for a NY General Contractor the rule as presently written would more than double the overall insurance cost for NY Builders, NY Developers, & NY General Contractors to maintain the same or similar level of coverage.
In the several times I have met Robert Limandri and his staff at the NYC Buildings Department I have found them to be very open minded and receptive. It’s my hope that their wisdom will once again prevail serving both citizens and business alike. We shall see………
A cement truck driver fell and injured himself while climbing down from his truck after checking the cement to be delivered at the construction site. Although the man was one hundred feet away form the site, he was protected by the Labor Law. Ordinarily, the Labor Law does not protect workers from incidents that happen outside the construction site. However, the driver had been directed by the construction site to wait outside the entrance in a line of trucks, extending the construction site’s liability and putting the cement truck driver under the protection of the Labor Law.
The NY Labor is very specific, and quite ownerous to both New York property owners, NY Developers, and NY General Contracting firms. We specifically reference NY because it’s only in NY where this onerous responsibility occurs. I won’t get into the specifics of the Labor Law.
This case was critical for a myriad of reasons. There are a lot of construction projects in New York City that are insured under a project-specific general liability insurance policy OR are covered under a Wrap Insurance Program, (Owners Contractors Insurance Program) where there is a clear demarkation line geographically where coverage ceases and begins unlike a “Practice Policy” which insures the general contractor wherever he is working and is not specific to a project. An appellate division victory affirming the right of an employee of a “vendor” which typically does not have the same stringent coverage obligations as will your sub contractors pose a difficult task to insure risk transfer away from the NY Developer, NY General Contracting Firm, or NY Project owner.
Some Risk Management Tips To Mitigate This New Exposure:
Broaden the language in your contracts that impose defense and indemnification for both sub contractors & vendors/suppliers.
Include language defense & indemnity language within your purchase orders that you may lean on if this type of event happens on your project.
Broaden the language or defintions within the NY Project Specific Liability Policy that widens the coverage zone. (This is a frequent mistake by the NY Insurance Brokerage Community in that they take the geographic limitation of 50 feet the carrier intially offers and fail to negotiate a larger coverage zone).
Buy your supplies from reputable suppliers who have strong safety track records and a strong insurance program such as Casa Building Supplies . (Pardon this unabashed plug: under full disclosure, Jack Dragone is a good personal friend of mine, and I like his employer.)
To find out other startegic ways to reduce the high cost of insurance claims to your New York Construction business or information about New York General Liability Insurance and New York Workers Comp Insurance, speak to a Risk Advisor @ Metropolitan Risk Advisory . If you want to buy brick, call Jack (718) 842-8650. Tell him Mike Stoop told you to call.
