Business Briefs

• A study by the Workers Compensation Research Institute shows that the reforms instituted by California aimed at bringing down the cost of workers’ compensation are working. The organization found that California experienced the largest drop in average workers’ compensation costs per claim among the 14 states the group examined. The costs per claim dropped 15 percent between the beginning of 2005 and the first quarter of 2006. Medical costs and indemnity benefits also dropped substantially. This decrease in costs stands in stark contrast to years of double-digit increases earlier this decade. Costs began to come down after a series of reform measures were put into place between 2002 and 2004.
• You’ve heard of insuring key employees. But what about a key body part? That’s just what one Dutch winemaker did. Ilja Gort, the owner of Chateau de La Garde in Bordeaux, insured his nose through Lloyd’s of London for about $8 million. He says the nose, which can distinguish millions of different scents, is the most important asset in his profession. He says a good sense of smell is essential to guarantee the constant quality of his wines. As strange as this might seem, it’s not. Insurance like this is a common purchase, according to Lloyd’s. Watkins Syndicates, which co-insured the policy, is working on a policy with a U.S. perfume consultant who develops new fragrances for perfume houses.

It's that time of year again

It’s almost hurricane season again. And for business owners on the gulf and Atlantic coasts, this means making sure your company is prepared in case the big one makes landfall near you. And even for those not in a hurricane-prone area of the United States, this might be as good a time as any to review your disaster preparedness.

The last two hurricane seasons have been fairly quiet in the United States. Few storms made landfall and damage was light. But forecasters are predicting a heavy 2008 season. William Gray, a professor at Colorado State University, is predicting eight hurricanes and 15 named storms. Similar numbers are predicted by Tropical Storm Risk of England. The predictions are only that, predictions, but it’s always good to be prepared for the worst.

About 25 percent of all businesses never reopen after a disaster, according to the Institute for Business and Home Safety. There is no good reason for that. Simply being prepared can help the vast majority of businesses cope with all but the most devastating of disasters. And the first and most important thing to have before a disaster strikes is a plan.

The U.S. Department of Homeland Security, which has some responsibilities for disaster response and has within it the Federal Emergency Management Agency, has issued some tips to help businesses prepare for a disaster:

• Make an assessment of your business to see what people, equipment and supplies are absolutely critical to keeping your business operating. This includes making plans for a succession of management, in case some portions of the business are out of communication. You should also make sure every employee knows their responsibilities in case of a disaster. Some might be instructed to come to work, others to wait at home for a call. You should also have a way to contact everyone at your company, so you can keep them up-to-date on when it is safe and necessary to return to work.
• Make sure you have back up suppliers and contractors. You don’t want to be out of business because a vital supplier also is temporarily shut down.
• Have a backup plan in case your main workplace is inaccessible. Can some work be done from home? At a secondary site? Could you work out a plan in advance to work out of another business for a short time?

And you always should have adequate insurance. This includes having more than just flood, fire, hurricane, earthquake and other kinds of property insurance. Business interruption insurance is often vital to getting a business back on its feet. Talk to your insurance representative if you have any questions.

Cell phones and company cars don't mix

We’re all aware by now that talking on a cell phone while driving a car probably isn’t a good idea. Many states and local governments have stepped in to ban non-hands-free phones while driving. But the scientific community is coming to a consensus that driving while talking on a cell phone -- even a hands-free phone -- is more dangerous, and potentially more expensive for your company, than you might think.

First, let’s quantify just how much worse people drive when they are talking on a cell phone. David L. Strayer, a leading researcher in the area of cell phone driving and a professor at the University of Utah, Salt Lake City, showed in a study published in 2006 that people talking on cell phones performed just as poorly in a driving simulator as those who were drunk. “Just like you put yourself and other people at risk when you drive drunk, you put yourself and others at risk when you use a cell phone and drive. The level of impairment is very similar,” Strayer said.

OK, so talking on a hand held phone is bad, but what about a hands-free phone? Sadly, the results are very similar. Researchers at Carnegie Mellon University recently found that driving accuracy was seriously diminished when volunteers were asked to listen to sentences while they drove and respond to them as being true or false. Scans of their brains also showed that there was a major decrease in activity in the part of the brain that controls spatial processing while the drivers were asked to listen and drive. Similar research by Strayer has produced similar findings. It seems that having your hands free doesn’t keep your brain focused on driving.

This danger presents a problem for employers whose workers talk on the phone while doing company business. There have been a slew of recent lawsuits against companies whose employees caused car accidents while talking on cell phones. International Paper recently settled for more than $5 million after one of its employees rear-ended a woman while talking on a cell phone. The victim had to have her arm amputated. There have been other cases where simply using a company provided cell phone while commuting to work opened up the company to a lawsuit.

But there are things you can do to at least minimize the liability threat. First, have a clear company policy on cell phone use. The Insurance Information Institute reports that some companies are beginning to prohibit the use of cell phones while driving. They say ExxonMobile and the Shell Oil Company are among the larger companies that have banned the use of cell phones while driving on company time. This is especially important if you operate in a state or city that bans the use of hand-held cell phones behind the wheel. You don’t want to be in a position of having an employee who broke the law while on company time. Also, make sure employees know that the use of a company car or company phone requires the same care and responsibility as operating any other piece of large, dangerous company equipment. It is doubtful many of these employees would be so careless operating a power tool.

But having a company policy won’t completely protect you. Some employers have been found liable even when the employee was violating company rules by using a phone while driving. So, having adequate insurance to cover your company in the event of an accident is crucial. Multi-million dollar judgments have the potential to ruin small- and medium-sized companies. Talk to your insurance representative if you have any questions.

Quake danger quantified

For the first time, scientists have taken a comprehensive look at the risk Californians face of being hit by a major earthquake in the next 30 years, and the results aren’t good.

The state is almost certain to be hit by a 6.7 or larger earthquake before 2038. And there’s about a 50-50 chance that a 7.5 quake hits the state in the next 30 years, according to the study sponsored by the U.S. Geological Survey, the California Geological Survey and the Southern California Earthquake Center. The biggest danger is in Southern California, where the likelihood of being hit by the “Big One” is higher.

“This new, comprehensive forecast advances our understanding of earthquakes and pulls together existing research with new techniques and data,” explained USGS geophysicist and lead scientist Ned Field. “Planners, decision makers and California residents can use this information to improve public safety and mitigate damage before the next destructive earthquake occurs.”

And earthquakes aren’t confined to hotspots like California and the Pacific Rim. A mid-April quake rocked Illinois. The 5.2 temblor hit about 125 miles east of St. Louis, according to the U.S. Geological Survey. News reports said the quake swayed buildings in Chicago and caused damage as far away as Ohio and Kentucky.

Planning for a quake, whether in California or elsewhere in the country, is similar to planning for most other large-scale disasters. Have a plan, have adequate supplies on hand and make sure you have all the insurance you need before the ground starts shaking. The difference between earthquakes and something like a hurricane is that with quakes you get no warning. That makes proper planning even more critical.

Premium drop continues

With all the economic doom and gloom out there, there is some good news in the latest Risk Insurance Management Society Benchmark Survey on insurance premiums: Commercial lines insurance premiums experienced the largest quarterly drop since 2005 during the first quarter of 2008.

Directors and officers liability premiums are down the most. The survey found that D&O insurance premiums fell 19 percent. This came despite the mortgage meltdown, which some had feared would lead to an uptick in liability in this area. General liability coverage was down only slightly, but workers’ compensation prices were down 11 percent and property premiums fell 6 percent.

And some predict that the drop in premiums will continue in the near future, barring some kind of major catastrophe.

“We expected to see the soft market continue into 2008,” says John R. Phelps, member of RIMS Board of Directors and director of business risk solutions for Blue Cross and Blue Shield of Florida, Inc. “Not only are soft market conditions on-going, they appear to be accelerating, due in no small part to the excellent combined ratios for key markets. This bodes well for insurance buyers this year.”

Danger lurking in plain sight

Heavy industry, manufacturing, construction. These kinds of businesses are usually what people think of when they think about workplace dangers. But the reality is that the lowly file cabinet or bad posture lurk as dangers in even the most ordinary of offices. The National Safety Council recently issued a reminder about the dangers of seemingly benign office environments.

One of the more dangerous pieces of office equipment highlighted by the council is the file cabinet. The cabinets can tip over if too many drawers are opened and open drawers are also easy to run into. Boxes and other equipment should be kept out of aisles where people walk. Trip-and-falls are an all-too common result of improper storage of supplies and equipment. The council also reminded employees that moving heavy office furniture is probably not a good idea. Thousands of office workers every year are forced to miss work after trying to hold, move or lift heavy objects that they probably had no business moving in the first place.

Also of concern are the wires, surge protectors and other myriad electrical devices that clog the modern office. Many fires are started when over-taxed electrical outlets and wires come in contact with the paper, boxes and general clutter that often inhabit cubicles. Other dangers involve how employees sit and work. Chairs are not ladders, though that often doesn’t stop an employee from using one as such. Work stations should also be ergonomically fitted to the employee to avoid various strains. Proper lighting can alleviate one of the most common complaints of computer users: eye strain.

Being aware of these dangers and keeping vigilant in stopping office injuries is the best way to avoid expensive workers’ compensation claims and keeping your employees on the job.