Business Briefs

• Commercial insurance prices kept falling in the third quarter of 2007, according to the RIMS Benchmark Survey. As has been the case in recent quarters, only property insurance showed an increase in the average renewal premium, which was driven largely by companies in earthquake regions. Average property premiums rose 2.1 percent. Once again, directors and officers liability posted the largest decrease at 3.9 percent, while average general liability premiums decreased by 3.2 percent. Workers’ compensation averages, while still falling, are decreasing at a slower rate; they experienced a drop of 1.5 percent. Reform measures in several large states are credited with causing that drop, according to an Advisen analysis.
• In a decision that brought cheers from the U.S. Chamber of Commerce and businesses across the country, a California court has ruled that the Department of Homeland Security may have overstepped its bounds with a program to crack down on illegal immigrant workers. A federal judge stopped enforcement of the department’s “no match” program, which would have required employers to check with the government on the legal working status of their employees, and fire those whose names and social security numbers didn’t match. "Today, the court reaffirmed its concern about the government’s authority to act and its failure to adequately consider the costs it imposes on small businesses" said Robin Conrad, executive vice president for the chamber's National Litigation Center.
• As the U.S. population ages, California’s Department of Motor Vehicles is considering a program that could become more common elsewhere. The Los Angeles Times reports that the department is running a pilot program that puts drivers through much more rigorous testing before they get their license renewed. The DMV tests an applicant’s memory, reaction time and vision in a much more systematic way than has been done in the past. If the pilot program is a success, drivers in the state could face the new tests by 2012.
• In an attempt to fix shortcomings of the government’s National Flood Insurance Plan, the House of Representatives passed legislation that would revamp the system. For business owners, there is good and bad news. The good news is that the House bill includes protection against wind damage and adds an option to buy business interruption insurance. The bad news is that the bill cuts long-time subsidies to commercial properties and second homes. The legislation still faces an uphill climb before it can become law. The Senate has only just started work on the issue and the president has vowed to veto the bill if it comes to him in its current form.
• A man was sentenced last month to five years in prison and ordered to pay $340,000 after prosecutors say he and his wife intentionally ate glass fragments in order to participate in a huge insurance fraud scheme, according to a report by The Associated Press. The Boston-area man collected $200,000 in compensation by claiming the glass was in the food they ate. An arrest warrant has been issued for the man’s wife, but she is still at large.

Protecting Yourself From Data Breaches

Technology has made it easy for companies to quickly gather and store volumes of information about their employees, customers and financial transactions. But the same technology has made it easy for thieves to steal that data or for careless companies to inadvertently expose it to the world. To put the size of the problem in perspective, the Privacy Rights Clearinghouse has counted more than 167 million records that have been exposed in security breaches since 2005. The consumer group says that number is conservative and doesn’t include data breaches where the number of records exposed is unknown. That is a massive potential liability for companies that keep computerized records, but there are some simple things you can do to keep your business out of trouble and out of the newspaper.

• Take inventory: You need to know what kind of records your keeping, where they are and who has access to them. You should be keeping only the information you need, it should be in a secure place and only those who need access to it should have it. Your business should also have a policy on the handling of such information.
• High-tech solutions: Just as technology and computers have made information more vulnerable, they can also make it more secure. Businesses should make sure they have a trained employee or vendor who is responsible for data security. Any information moving over the Internet should be encrypted. And employees must regularly change their passwords and have the latest anti-virus and spyware software installed on their computers.
• Low-tech solutions: While hackers get most of the attention, it is simple carelessness that often leads to embarrassing and potentially costly data breaches. The theft of laptop computers crammed with personal information is one of the more common ways a company loses information. Another common problem is companies that don’t adequately destroy files. Thieves go through dumpsters looking for unshredded files. The mailbox is another favorite target. Simple, commonsense approaches to handling these sensitive files can go a long way to alleviating the problem.
• Getting covered: While traditional insurance policies typically have not handled this emerging problem, the Insurance Information Institute reports that in recent years limited coverage under traditional policies has become available and specialized cyber insurance products have been developed to help businesses protect their bottom line.

The Benefits of Depression Programs

A recent study shows offering more substantial depression treatment for employees might not be the bottomless money pit that some employers worry it could become. In fact, the National Institute of Mental Health funded report shows it likely is a money maker.

Previous studies have shown that employees who are depressed are less productive and are absent more often. Other studies have shown that organized screening and enhanced depression treatment can significantly improve health. However, few employers have implemented such programs.

“This study provides compelling evidence of the importance of workplace depression screening, outreach, and enhanced treatment,” said institute Director Thomas R. Insel. “It is in the interest of workers’ health and the company’s bottom line to ensure depressed employees are effectively treated.”

The study took about 600 employees identified as having clinical depression. Half were put in a program that included telephone support from a care manager and their choice of telephone psychotherapy, in-person psychotherapy or antidepressant medication. The rest were simply told of their depression and advised to talk to their doctor about it.

After a year, those in the intervention group were 40 percent more likely to have recovered from their depression. They also were 70 percent more likely to stay employed, and worked an average of two more hours per week than those in usual care. Researchers said that just the value of more hours worked among those in the intervention group who were employed, estimated at $1,800 per employee per year, far exceeds the $100 to $400 per person costs associated with the type of outreach and intervention program used in the study.

Dependence on Internet a Potential Liability

The Internet has become a boon to businesses. But as businesses become more reliant on it to do day-to-day work, they become more vulnerable to potential losses if anything was to happen to their computer networks or to the Internet itself.

A recent report from the Business Roundtable highlighted these vulnerabilities and the fact that many businesses are not prepared to deal with a significant disruption. Among their findings:

• Lack of awareness: Business leaders are not sufficiently aware of their Internet dependencies and the impact of these dependencies on their ability to conduct vital business functions.
• Planning shortfalls: Business continuity plans often do not address the comprehensive risk of a significant Internet disruption to their companies or their supply chains.
• All companies affected: An Internet disruption will affect nearly every U.S. company directly or indirectly, and the efforts to respond will create stress points that will hinder recovery.
• Misplaced expectation of government: Contrary to the belief of many businesses, government does not have the primary role in restoring business operations following a major Internet disruption.

And any disruption could be devastating. A report earlier this year from the World Economic Forum found that one of the most costly and probable economic disasters would be a massive breakdown in the world’s “critical information infrastructure.” The group estimated that there is a 10 to 20 percent chance of such a breakdown in the next 10 years and that it could cost the worldwide economy almost $250 billion. And while there might be little you can do on a global scale, you can certainly take steps to reduce the risk to your business. Including:

• Know where you are vulnerable: If you know the risks to your company you can better plan for a system meltdown.
• Plan for a meltdown: Many businesses have plans to deal with natural disasters of all sorts, but most don’t have plans to deal with computer disasters. Make your computer systems part of your overall business continuity plans.

Scientists Note Increase in Hurricanes

About twice as many Atlantic hurricanes form each year on average than a century ago, and global warming is largely to blame, according to a new analysis.

The study, by Greg Holland of the National Center for Atmospheric Research, and Peter Webster of Georgia Institute of Technology, identifies three periods since 1900 during which the average number of hurricanes and tropical storms increased dramatically and then remained elevated and relatively steady. The first period, between 1900 and 1930, saw an average of six major storms, of which four were hurricanes and two were tropical storms. From 1930 to 1940, the average increased to 10, consisting of five hurricanes and five tropical storms. In the final study period, from 1995 to 2005, the average reached 15, of which eight were hurricanes and seven were tropical storms.

The increases over the last century correlate closely with rising sea surface temperatures, which have risen by about 1.3 degrees in the last 100 years. The authors note that other studies indicate that most of the rise in Atlantic surface temperatures can be attributed to global warming.

Bad Bosses Hurt Bottom-Line

In another reminder that the way managers handle their subordinates can have a significant effect on a company’s bottom-line, a new study out of Florida State University shows that bad managers can drive good employees away while also hurting productivity.

“They say that employees don’t leave their job or company, they leave their boss. We wanted to see if this is, in fact, true,” said Wayne Hochwarter, an associate professor of management in FSU’s College of Business. The researchers talked to more than 700 people in a variety of jobs about their relationship with their boss to see if having an abusive boss actually had any effect on their job performance.

According to the researchers, “Employees stuck in an abusive relationship experienced more exhaustion, job tension, nervousness, depressed mood and mistrust. They also were less likely to take on additional tasks, such as working longer or on weekends, and were generally less satisfied with their job. Also, employees were more likely to leave if involved in an abusive relationship than if dissatisfied with pay.”

And having a boss worth complaining about was fairly common. Here are some of the results of the survey:

• Thirty-one percent of respondents reported that their supervisor gave them the "silent treatment" in the past year.
• Thirty-seven percent reported that their supervisor failed to give credit when due.
• Thirty-nine percent noted that their supervisor failed to keep promises.
• Twenty-seven percent noted that their supervisor made negative comments about them to other employees or managers.
• Twenty-four percent reported that their supervisor invaded their privacy.
• Twenty-three percent indicated that their supervisor blames others to cover up mistakes or to minimize embarrassment.

The results of the study are scheduled to be published in an upcoming issue of The Leadership Quarterly.