January 2022 - Competitive Edge Insurance

Risk Mitigation: What Is It and How Can You Do It?

In the world of insurance, you often hear the term ‘risk mitigation.’ But what does it mean? Let’s talk about risk mitigation: What is it and how can you do it well?

There’s no one better to ask than Brenda Jo Robyn, Founder of Competitive Edge Insurance. Here, we hand over the mic as she tells you what you need to know about risk mitigation as a business owner.

What is Risk Mitigation?

In its simplest terms, risk mitigation is anything an employer can do to make sure that they’re low-risk and not high-risk. When we say low-risk here, we mean not likely to result in failure, harm, or injury.

Still not sure about what high-risk is? Check out our blog to learn what classifies high risk.

Common Business Risks

According to American Express, the most common types of risk when it comes to running a business include:

Economic Risk
Compliance Risk
Security and Fraud Risk
Financial Risk
Reputation Risk
Operational Risk
Competition (or Comfort) Risk

We know, it sounds scary knowing that there are so many risks out there. But don’t worry—below we’ll explain tangible steps you can take to mitigate your risk.

What Can Business Owners Do to Mitigate Risk?

So, how can you mitigate risk as a business owner? There are many things that you can do to mitigate risk within your company.

Below we are going to list the top five most impactful things you can do to mitigate your risk.

Ensure You Have a Stable Employee Population

Firstly, ensuring that you have a stable employee population is crucial to your risk mitigation strategy. Having a secure and stable employee base also includes having a low turnover rate.

But how can you achieve this?

Brenda Jo recommends putting incentives and benefits in place to retain your employees. As an employer, you should additionally emphasize training.

Secondly, give your employees accolades when they’re due. Tell them how appreciated they are, and give them more responsibilities as their time with you increases.

“A lot of employees just want to know that they’re wanted,” says Brenda Jo.

Prioritize Safety

The second piece of the puzzle is to make sure that you’ve implemented a strong safety program. Depending on your industry, this might include:

Safety Meetings
Safety Tests
Proper Safety Equipment and Tools (i.e. safety goggles, safety shoes)

The bottom line here is to provide resources and do whatever you can to prevent employees from getting hurt or sick.

Take a non-construction environment for example. You might work in an office building. As an employer, it would then be your responsibility to make sure that carpets are stapled down or secured with sticky tape underneath so that employees don’t trip. Easy!

In general, when it comes to safety, “what I would suggest,” says Brenda Jo, “is that you work on it with your broker starting 90 days out.”

In general, a good rule of thumb to follow is DON’T wait until the last minute to mitigate your risk. (Trust us, it’s not worth it!)

Here are some questions to get you started. Ask yourself:

What’s coming?
How are things changing?
What can we do to save money?
What can we do to place ourselves in the best risk?

Invest in Insurance

Making sure your business is properly insured is arguably the best way to mitigate risk. There are many different types of insurance that your business might need or benefit from.

Some types of insurance for businesses include:

General Liability Insurance
Commercial Property Insurance
Workers’ Compensation Insurance
Commercial Auto Insurance
Cyber Liability Insurance
The list goes on!

Insurance requirements vary on a state-by-state basis as well as an industry basis. Be sure to speak with a professional—like our team at Competitive Edge—to learn what you need to protect your business. Read on if you’d like to hear about four types of insurance coverage for your business.

Consider Planning that Can Be Done in Advance

Considering carriers, what kind of planning ahead can you do as an employer? Do you want to partner with a carrier that is going to help you year-round to make you more risk-tolerant?

If so, this carrier might be coming in to do inspections every other month, giving you recommendations on how to improve your site or how to improve your training, and the list goes on. The best part? Brenda Jo says that this type of support is typically free of charge if you get with the right carrier.

Take advantage of the resources available to you!

Implement a Safety-Incentive Program

What is a safety-incentive program?

The Occupational Safety and Health Administration, more commonly known as OSHA, recommends safety-incentive programs, which reward “workers for reporting near-misses or hazards.”

Safety-incentive programs typically reward employees for reporting unsafe conditions, making the workplace safer altogether.

Programs as such “provide positive reinforcement for reporting illnesses and injuries.”

A Final Word

Don’t let risk mitigation slip by the wayside. After all, proper risk mitigation helps to reduce your insurance costs. And let’s face it, who doesn’t want to benefit from lower insurance costs?

Interested in learning more? Read on to learn what to expect in terms of premium increases and risk mitigation this year or about insurance requirements for business owners.

infographic of how business owners can mitigate risk

What Does Workers’ Comp Look Like for Remote Employees?

in General Business Insurance, News, Video, Workers' Compensation

Due to the COVID-19 pandemic, remote work is more common than ever, but how does workers’ compensation work for remote employees? How can an injury be proved when the individual is not in a corporate setting? What does workers’ comp look like for remote employees, and what does it cover?

Brenda Jo Robyn, founder of Competitive Edge, joins us on video to answer all of these questions.

Are Employers Required to Provide Workers’ Comp Coverage for Remote Employees?

Yes. Employers are required to provide workers’ comp for all employees, whether they’re in the office, out in the field, or in their homes working.

What Does Workers’ Comp Cover for Remote Employees?

“Workers’ comp covers everything the same across all policies and all carriers,” says Brenda Jo. “What’s different are the rates that are charged based on the payroll, the industry, and the number of employees per class code within that industry.”

All of these elements dictate the rates based on which carrier takes the coverage for the employer.

Interesting to note is the new class code that was created when remote work skyrocketed. In California, a new class code was created for telecommuting. With this new class code, you have to be at home working or in a remote workplace 50% of the time or more.

If you are coming into the office for work, you will still be considered an office employee; otherwise, you’ll be in the new class code at a very inexpensive rate. Regardless, all employees will still be covered.

How Can Employers Prevent Claims From Being Made?

It’s tricky. “It’s been a really difficult thing for employers to make sure that all of their employees are set up ergonomically for remote work,” says Brenda Jo.

Setting up ergonomically includes:

Ensuring cords are not in the way of tripping
Identifying where remote employees are sitting
Identifying how remote employees are sitting (as to not strain their necks, etc.)
And more

Some employers have hired ergonomic consultants who help remote employees set up their workplace correctly, in an attempt to avoid workers’ compensation claims.

How Can Remote Employees Make Workers’ Compensation Claims?

Things get tricky when it comes to a claim made at an individual’s house or a local cafe, for example.

Let’s say a remote employee is working at a Starbucks when they slip, fall, and get injured. Brenda Jo tells us it’s going to be hard to see where that claim will fall.

“There’ll be a lot more investigation depending on how severe the injury really ends up being,” says Brenda Jo. “You can make that claim [as a remote employee], valid or not. Then it’s up to the carrier to decide whether the claim is valid through their inspections, investigations, as well as doctor’s reports, etc.” In some cases, it might include an applicant attorney getting involved.

Read on to learn more about what to expect this year from workers’ compensation policy renewals.

Payment and Performance Bonds Explained

in Bonding, Construction, General Business Insurance, High-Risk Insurance, News

Payment and performance bonds… The two are an odd pairing—unique in their own way yet dependent on each other.

Although payment and performance bonds have their differences, both are essential in protecting yourself in the world of insurance. Let’s explore the differences below.

Payment Bonds

What is a payment bond? Simply put, a payment bond guarantees payment for subcontractors and payment for materials once a project is completed.

Payment bonds are most commonly seen in construction. Payment bonds are a type of surety bond and are required for most state projects based on the Miller Act.

Surety Bonds

What is a surety bond?

A surety bond is a contract where one party (the surety company) guarantees the performance of certain obligations in a contract of the second party (the principal or the insured) to a third party (the obligee).

When Do You Need a Surety Bond?

Surety bonds are needed for most licenses in the state of California and other states as well. Some examples of who might need a surety bond include:

Contractors
Real estate companies and agents
Financial institutions
Janitorial staff

Why Do You Need a Surety Bond?

Licensed bonds are required in many states to do business and are put in place by the state to protect consumers.

The insured, or principal, purchases these bonds in an amount prescribed by the state to pay the obligee (the state), in case there’s a claim against somebody’s license.

The Miller Act

As previously mentioned, surety bonds are required for most state projects based on the Miller Act.

The Miller Act was passed by the U.S. General Services Administration Public Buildings Service (GSA) to explain how payment bonds protect subcontractors and suppliers.

The GSA responds to any reports of nonpayment, following the legal action needed and protected by the Miller Act.

The GSA states that “the Miller Act requires that prime contractors for the construction, alteration, or repair of Federal buildings furnish a payment bond for contracts in excess of $100,000.”

There are legal consequences for breaking a contract through the Miller Act.

The GSA expands: “Failure by a contractor to pay suppliers and subcontractors gives such suppliers and subcontractors the right to sue the contractor in the U.S. District Court in the name of the United States.”

Performance Bonds

The main difference between payment and performance bonds is that a performance bond ensures that the employer is satisfied with the job.

While both payment and performance bonds are surety bonds, performance bonds are visible in industries outside of construction.

A performance bond, according to Investopedia, “ensures the completion of a project.” A performance bond covers the ability of the contractor to perform and finish the job as per contract requirements.

If the contractor doesn’t perform, the contract bond kicks in and helps to pay for the completion of that performance.

A performance bond involves three parties:

The principal: The primary contact in the performance bond; responsible for performing the contract
The obligee: The person receiving the obligation
The surety: Responsible for making sure each party complies with the performance bond obligations

A Final Note

If these bonds are used and there’s a claim on a bond, the contractor who purchased the bond has to pay that back.

This considered, surety companies look for strong financials in a company, including assets, lines of credit, and letters of credit.For more information, watch this video about surety bonds and contract bonds. There, Brenda Jo Robyn, founder of Competitive Edge, lays it all out on the table in a way that’s easy to understand.

Workers’ Compensation Policy Renewals: What to Expect

in General Business Insurance, News, Video, Workers' Compensation

January 1st sees the most number of workers’ compensation policy renewals. What does this mean, and what can we expect during the first month of 2022 as a result? Let’s talk about what to expect in terms of premium increases and risk mitigation.

Today, we’re handing over the mic to Brenda Jo Robyn, founder of Competitive Edge Insurance. Here’s what she has to say.

What Does January 1st Mean for Businesses?

January 1st is typically the day when the highest volume of workers’ compensation policies will renew.

Right now, there’s a backlog of quotes, which results in stressed underwriters and quotes coming out late.

According to Brenda Jo, the one thing you can expect is premium increases this year. “There is going to be quite a significant adjustment in several areas in which companies can expect to see,” says Brenda Jo. “Ten to up to 80% increases in their premiums based on the class code.”

Why Is This Increase Important?

People should be talking about this.

“I think for many, it’s going to come as a shock,” says Brenda Jo. “However, if they’re working with their broker, they’ll have already known about this since October and make plans accordingly.”

If your business is going to have that much of an increase, you need to decide how your pricing structure for your services or products will change in the next year to compensate.

“It’s really important to know what you’re walking into,” says Brenda Jo. “The rate increases will start on 01/01 and it’s carrier by carrier.”

What Determines Premium Increases?

There’s a base that’s put into play by The Workers’ Compensation Insurance Rating Bureau of California (WCIRB), which is our rating and statistical bureau for data. The WCIRB gives us the trends and where to go.

It’s important to note, however, that carriers can apply a lot of credits.

Elements that might bring about credits include:

Risk mitigation
Safety policies in place
Safety training
Low turnover

Some carriers can give credits from five to 40%, depending upon the class code.

For those of you who are interested in learning more about changing costs in 2022, check out this video when Brenda Jo speaks about what to expect from changing contractor costs.

How Small Businesses Fall Victim to Cyber Attacks

in Cyber Insurance, High-Risk Insurance

Cyber attacks are on the rise—and no business, big or small, is immune to the devastating financial loss that a cyber attack can have. So, let’s discuss a few aspects of cyber attacks to look out for, including:

What is phishing?
Why is it a problem?
Why are small businesses targeted?
How can your business prevent becoming the victim of a cyber attack?

Let’s dive in.

What is Phishing?

Phishing is an ever-growing concern defined as the “technique for attempting to acquire sensitive data, such as bank account numbers, through a fraudulent solicitation in email or on a website, in which the perpetrator masquerades as a legitimate business or reputable person.”

According to Brenda Jo Robyn, founder of Competitive Edge Insurance, phishing is “any activity that compromises your organization’s security.”

For more on phishing, read our article: “Why Is Phishing the #1 Thing Killing Small Businesses?”

Why is Phishing a Problem?

Let us provide an example of the dangers of phishing.

On February 5, 2021, according to The Pew Charitable Trusts, “a plant operator for the city of about 15,000 on Florida’s west coast saw his cursor being moved around on his computer screen.”

The cursor continued to move, “opening various software functions that control the water being treated [and boosting] the level of sodium hydroxide—or lye—in the water supply to 100 times higher than normal.”

If you didn’t know, the consequences of this breach could have been deadly if not caught immediately, as lye poisoning can result in:

Burns
Vomiting
Severe pain
Bleeding

While most cases might not involve the extremes of lye poisoning, this example shows the severity of phishing today. As a result, governments, states, businesses (big or small), and individuals should act accordingly to strengthen their cybersecurity efforts.

Why Do Data Thieves Focus on Small Businesses?

The consequences of a cyber attack on a small business are particularly severe. 60% of small businesses that have been hit by a cyberattack end up shutting down within six months of the attack.

Despite the irreversible aftermath of falling victim to a cyber attack and the fact that 43% of online attacks are now aimed at small businesses, CNBC reports that only 14% are prepared to defend themselves.

Interested in some more statistics?

20% of small businesses have experienced a cyberattack in the last two years.
Last year there was a 424% increase in small business breaches.
The median ransomware payment is up 52% to $71,664.
On average, businesses experience 22 days of disruption as a result of a ransomware attack.

Cyber attacks are not only extremely expensive to recover from but they also damage your business’s reputation and productivity, and can even be dangerous in the event of personal data being stolen.

This is why it is crucial to protect your small business from cyberattacks. But how can you protect yourself? What can the Florida plant case study teach us?

How Can You Prevent Phishing?

Luckily, there are measures you can take to prevent phishing as a business owner. Let’s discuss some options.

Training

Training your employees: To be vigilant; educate them on common phishing traps, email scamming tactics, and how to send data securely (In the Florida case study mentioned earlier, the employee who noticed the breach reported it immediately).
Training IT: To know what to look for

Be sure to document your training and review it on a weekly or quarterly basis with employees and staff.

Due Diligence

Ensure your business is conducting thorough, routine cybersecurity due diligence.

According to Security Scorecard, cybersecurity due diligence is “the process of identifying and addressing cyber risks across your network ecosystem.” Doing so provides “insights into potential gaps in network security so that they can be addressed before they are exploited by cybercriminals.”

For those who are interested in seeing where their business is in terms of safety, read on to learn how you can measure your company’s cybersecurity risk.

Have a Planned Crisis Response in Place

When it comes to cyber risk, there’s nothing worse than being ill-prepared. Of course, we couldn’t write about cyberattacks without mention of investing in a cyber liability insurance policy for your business.

A cyber liability policy might include:

Data Breach Coverage
Business Interpretation Loss Reimbursement
Cyber Extortion Defense
Forensic Support
Legal Support
Coverage beyond a General Liability Policy

As a small business, you must be prepared—because the consequences can be insurmountable. Interested in learning more about cyber insurance and why you need it? Read on in our article “Why Does My Business Need Cyber Insurance?”