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5 Simple Ways to Improve Return-to-Work Incentives & Reduce Workers' Comp Costs

5 Simple Ways to Improve Return-to-Work Incentives & Reduce Workers' Comp Costs

Workers' compensation can be confusing. However, the system is built on one thing: mutual accountability. As an employee, you put trust in your employer and insurer to promptly pay out your benefits. As an employer, you expect your employees to return to work as soon as possible. Everyone expects honesty.

While there are expectations, the workers' compensation system offers disincentives to employees who come back early. Many small businesses have workers' compensation systems that encourage employees to stay out of work as long as possible.


What You Need to Do

As a small business owner, you need to find a way to get your employees back to work as soon as possible. The quicker your employee gets back, the less money your workers' compensation program will cost you.

Here is how to reduce workers' comp costs and incentivize employees to come back quickly:

  • Remove All Disincentives

If your employees have no reason to come back to work quickly, they won't. Look into your workers' compensation program and see where you can encourage employees to come back promptly by removing the benefits of staying out of work.

  • Get Proactive

Look throughout your company and see how you can make improvements to the workers' compensation system without infringing on your employees’ rights. Many companies find the benefits employees receive when injured to be excessive upon further examination. Once you identify excessive benefits, it's easy to take proactive action and cut them out.

  • Be Detailed

Employees will find a way to take advantage of any system – that is just human nature. Thus, you need to clearly communicate all policies regarding work injuries and set firm expectations. Give every employee written procedures and policies the day they are hired. Create guidelines to report an injury.

  • Communicate Through the Process

It is imperative that small business owners communicate with the employee throughout the injury, recovery, and return. Find out how your employee is recovering and healing. Get updates. While you should never put pressure on an employee, you need to maintain contact and show support. Then, once the employee comes back, make sure you communicate what they can do through the healing process and what their transitional duties will be.

  • Contest Claims If Need Be

If you believe one of your employees is abusing the system, do not be afraid to contest the claims that come in. This is especially true if the employee is non-compliant or seems to be extending the disability too much. Small business owners should also contest claims where new conditions develop after the injury. Just understand that contesting a claim will often require investigations, documentation, and medical examinations. These things will often require your resources as the business owner.


Encourage Your Employees to Work

The best way to manage your workers' compensation costs is through encouraging employees to get back to work. If you remove the incentive to stay away from work, you'll find employees come back faster than ever before. If you keep offering excessive incentives to employees who don't come back to work, your costs will continue to rise.

Have an employee or two abusing their right to workers compensation? Contact Skyline Risk Management, Inc. at (718) 267-6600 to voice your concerns. 

4 Steps to Mitigate Risk In Your Supply Chain

4 Steps to Mitigate Risk In Your Supply Chain

It's becoming increasingly difficult to avoid litigation in today's society. Many businesses, big and small, have been hit with lawsuits that hinder profits. Some firms even have to file for bankruptcy as a result of these claims.

To avoid such lawsuits, it's important to use common sense. Make sure your workplace is as safe as it can be. Fall into compliance with any and all regulations. Write out all your safety policies and procedures, and then make them readily available for all to read.

Just Imagine

Think about a scenario where a company hires a contractor to remove natural gas lines. This contractor is known and trusted, but he then hires two subcontractors to help with the project. One of these contractors makes a grave error, which results in two employees suffering from severe burns.

So who is on the hook for medical bills and the forthcoming lawsuit? In this example, the original company that hired the contractor is now responsible. Now, this may not be a big deal. If your company has workers' compensation and employer liability insurance, then you might be all set.

The Scary Thing About Contractors

Contractor lawsuits can be scary ordeals, and they're becoming increasingly common in today's contractor economy. In industries where the majority of employees are contractors (say 50-75 % of employees), the risks are greatly magnified.

It's hard to manage employees and ensure safety when the workforce is out of your company’s immediate supervision. In those cases, employees complying with your company's safety procedures and policies cannot be guaranteed.


The First Step to Protection

If you own a company or manage a supply chain, then protecting your business should be high on your priority list. While contractors can bring vulnerabilities, you understand that it's impossible to get many jobs done without them. Using contractors is just a part of doing business these days.

To keep your company protected, there is one thing you can do – create a verification process. Had the perfect contractor pre-qualification process been in place, the situation described above could have easily been avoided.

Here's how to implement a verification process:

1. Emphasize Safety

Create safety expectations and standards. Communicate these rules to any contractor before hiring. Hold meetings with your regular contractors regarding safety. Offer safety policies and procedures in written format for all involved.

 

2. Dig Deeper

Dive into the data. Look at objective measures to grade the contractor's performance. Use supply chain risk management audits with written protocol to ensure objectivity.

 

3. Create Criteria

Once you have settled on criteria by which you will judge your contractors, clearly communicate these criteria to any contractors you may hire.  Let each contractor know that safety is more important than price and your company will select the safest people to work with, not just the cheapest.

 

4. Manage

Keep company-wide rules and standards in place by maintaining a real-time database of every contractor. Continually update this database. Any possible user should be able to access the information at any time of the day.


Your Verification System

By keeping an up-to-date database of verified and reliable contractors, your company will avoid the vast majority of frivolous lawsuits that are a result of the contractor economy.

Your system can verify that every contractor has the necessary insurance and endorsements. This would remove a company's liability if an issue and lawsuit were to occur. In this scenario, both the contractors would be fighting a lawsuit – not the company.


It's Worth It?

If you keep updating your contractor verification system, you will mitigate a significant amount of risk in your supply chain. Not meeting contractual requirements and regulatory issues will become a thing of the past. In the present, you'll find reduced risk and often cost savings. 

 

If you have questions about sub-contractor insurance standards contact Skyline Risk Management, Inc., (718) 267-6600 to voice your concerns. 


4 Builders Risk Coverage Trends Affecting Contractors

4 Builders Risk Coverage Trends Affecting Contractors

Construction of the Twin Towers - NYC - Early 1970s

Construction of the Twin Towers - NYC - Early 1970s

Construction is big business in the United States, and it's booming. Due to this fact, the market for builders risk insurance has soared. Yet many insurance agencies have not been able to turn this potential source of considerable revenue into any type of profit.

Many cite the lack of insurance agencies offering builders risk insurance to the unique nature of these policies. Every single carrier offers different types of policies, and many find that builders risk plans tend to be significantly more complicated than other property policies.

Plus, a single construction company may be required to hold numerous different types of policies. This can be confusing for even the most knowledgeable contractors. As such, it's important to pay attention to recent trends in the industry. This will ensure you can accurately obtain builders risk coverage for your business:


1. Flexible Limits

Demand has skyrocketed for flexible limits regarding builders risk coverage. Changeable limits are vital for ordinance, law, landscaping, and temporary structure projects. You can wrap the heightened sub-limit into a premium charge for your business if you seek this type of coverage. Builders love increasing the sub-limit above the traditional $100,000 average, and the premium is usually worth paying for such a feature.

 

2. Soft Costs and Delays

Agents and brokers have a job to scrutinize any project that seeks builders risk insurance and ask every "what if?" possible. Many items are only examined after a loss, especially when soft costs and delayed expenses are considered. Investigate these issues by conducting meetings regularly and educating your workforce on builders risk hazards. 

 

3. Policy Warrants

Many insurance companies are now requiring warrants to go along with builders risk insurance. For example, a company will say there are certain things you must have as part of the project to ensure your builders risk policy will kick into effect in the event of an emergency. Most of the time, these warranties are loss prevention techniques that a contractor or builder may not have had on the job site initially.

 

4. One-Stop Shopping

Back in the day, there were dozens of different types of coverage forms constructions companies and builders could utilize. These coverages included separate installation, general liability, riggers liability, and so many more. Different sectors within the construction market could get what they needed quickly and easily.

However, things have changed. With crossover between markets and trades increasing in the construction industry, there is a need for a one-size-fits-all policy for builders. To that end, insurance companies have come through. Complex construction operations now require a builder's policy that covers any and every construction operation and project.


Understanding Builders Risk Coverage

By diving deep into builders risk and noticing current trends, you'll stay ahead of the game and ahead of competitors Remember to read the fine print and understand that every builders risk policy is unique.

 

If you have questions about Builder's Risk policies contact Skyline Risk Management, Inc., (718) 267-6600 to voice your concerns. 

Understanding Risk Management

Understanding Risk Management

For any organization to appropriately manage the risks involved with being in business, the management has to be more than simply renewing insurance policies. Yes, your insurance is always a key part of any risk management strategy, but there is more than one piece to the puzzle.

Identification

To properly approach the task of risk management, the first thing that has to happen is the identification of any existing risks that can jeopardize your business financially.  Although simple to say, this task can be difficult. After all, risk management involves predicting the future based on past experience and expertise. A risk manager must look to their key employees and management staff for insights and look externally to professionals you trust and other specialists.

Risk Appetite

Before the risk management strategy begins, the organization will need to determine how much risk you're willing to afford and accept, or your "risk appetite." After which you'll need to identify the measures the organization currently has in place and what is still needed in order to help manage the risk. Once the risks have been identified and prioritized, the organization will then determine how they should be managed. There are three options to consider:

1.      Avoidance - Avoidance is when the organization decides not to embark on a certain activity because the risks exceed the expected benefits

2.      Acceptance  - Acceptance happens when an informed decision is made to accept a potential risk because the benefit is significantly greater than the risks.

3.      Transfer  - This takes place when the organization elects to transfer the risk to a third party insurance company or by contract with a non-insurance organization, however, when transfer is elected, it is typically not 100% because of the deductibles involved

When risks are transferred to an insurance company, the deductibles act as a motivator because the insured will typically attempt to reduce the risk because of their responsibility to accept a portion of it. For example, if your business that is acting as a General Contractor, requires all subcontractors to obtain and pay for their own insurance, the subcontractors are motivated to reduce risks that could result in a claim where they will have to pay deductibles out-of-pocket.

In cases where a General Contractor is purchasing Wrap-Up insurance that covers the General Contractor and its subcontractors, the limits and deductibles will be significantly higher which increases the exposure for the General Contractor. As the general contractor, your deductible responsibility would could be increased to $50,000 or $100,000. Knowing this, you could build this risk into your project bid or transfer it to your insurer who could pay the difference between your chosen deductible and the higher deductible under Wrap-Up policy.

Every industry contains unique risks and exposures that must be properly managed to avoid the inherent financial consequences that can result. It's important for the risk manager to be able to call on experts in the industry to define and ultimately mitigate them. After implementing a comprehensive quality assurance and safety practices program that are targeted to minimize the identified exposures, the risk manager can make an informed decision to avoid, accept, or transfer the risks that remain.

For professional advice about your organization's exposures, contact Skyline Risk Management, Inc. (718) 267-6600 for help with identifying your exposures and how to mitigate them in the best possible manner.

Best Practices for Buying Builders Risk Insurance

Best Practices for Buying Builders Risk Insurance

Many contractors and real estate investors are somewhat familiar with Builders Risk Insurance but rarely are they familiar with determining their limits of coverage. The coverage was designed to insure against the risk of loss for damage to property under construction or renovation. Although the coverage covers business and residential buildings, it also provides coverage for issues not normally associated with a commercial or residential building.

Before deciding on limits of insurance, the property owner, risk manager, or other responsible party must thoroughly review the construction documents. There is a very important relationship between the insurance policy and the construction documents. The documents will determine certain insurance coverage requirements, including indemnity provisions, who is to be listed as named insured(s), any waivers of subrogation required, and limitations on liability.

Although certificates of insurance are typically provided by the agent or broker, it's recommended that you do not rely on them for coverage accuracy. A certificate will not guarantee that the coverage in place represents the coverage required by the construction documents. Always compare the construction document insurance requirements with the quote, binder, and then the issued policy. If discovered, any coverage discrepancies should be immediately addressed with your agent or broker.

Covered Property

Typically the very first question is what property needs to be insured? For renovations, this is very important since the policy needs to insure both the existing structure along with the new construction. As an example, if a project is designed to convert industrial space to residential or retail space, the existing building is usually gutted, and all new systems and interior space are constructed. The current exterior envelope will be a key component of the project which means this portion as well as the interior construction will need to be insured.

A problem that could exist is that many builders risk policies insure at cash value for the existing structure, not at the replacement cost. This means if a fire causes severe damage to the existing structure, the claim would be settled at the depreciated cost to repair the exterior envelope, which would result in a significant shortfall. This shortfall could certainly be enough to ruin a project that is operating on a very tight budget

For new construction, it's important to insure foundations, underground pipes, costs of site preparation, scaffolding, and temporary structures. Each item, if uninsured, could be very expensive to replace in the event of a covered loss. Depending on the needs of the parties involved, the builders risk policy should also provide coverage for tools and equipment, or materials that won't become part of the structure.

Persons or Entities Insured

Certainly, the named insured(s) are as important as the property being covered. Typically, the construction documents will require that the general contractor and the project owner be covered under the policy. Subcontractors should also be covered which will eliminate the need for waiver endorsements among the contractors and subcontractors. Just as in the case of property being covered, the construction contract should specify who should be listed as named insured and who should be listed as additional insured.

Time Element

Time element coverage is made up of business interruption, expediting expense, extra expense, and coverage for "soft costs." Soft costs, which can be significant, represents the economic risks associated with project delays brought on by a covered peril. This is important because depending on the policy language, normal business interruption coverage may not pay for all economic losses resulting from a delayed project.

Builders Risk Insurance should never be considered "cookie-cutter" coverage. Each project has its specific risks that need to be mitigated, and the best place to start is with the construction contract.  If you have questions about purchasing builders risk insurance contact Skyline Risk Management, Inc. at (718) 267-6600 to discuss your concerns.