How to COPE in an Inflationary Environment

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Recently, Hartford did a study that showed that 75% of all commercial buildings were underinsured. And of those that were underinsured, they’re at 40% underinsured. That means that if you have a property that’s worth a million dollars, you’re only having it insured for 600,000.

If you have a catastrophe, you’re only going to get paid the 600,000 for the rebuild costs now, and not the million dollars that it’s going to cost to make you whole again. What’s really important for commercial building owners is to understand how the insurance carriers rate your properties and it’s called COPE, C-O-P-E: construction, occupancy, protection, and exposure.

In this blog, we’ll discuss COPE and learn more about it directly from the founder of Competitive Edge Insurance, Brenda Jo Robyn.

What is COPE?

As a commercial building owner, it’s important to understand how your property is being rated for insurance purposes. The four main factors that go into this rating are construction, occupancy, protection, and exposure (COPE).

Construction is how your building is built. Things like the roof, walls, windows, and doors all factor into how well your building can withstand a disaster. 

  • What is the building made of? 
  • What is the age of the building? 

All commercial buildings are going to be rated on a scale of 1 to 10, with 1 being the best. So if you have a fire resistant building, that would be a 1. If you had a wood frame building, that would be a 10. 

Occupancy is what your building is used for. If you have a lot of people coming in and out of your building, or if you have hazardous materials inside, that will affect your rates.

  • Who’s in it? 
  • Is it manufacturing? Is it retail? 

So if you have a retail store, that would be a low hazard. If you had a chemical plant, that would be a high hazard. 

Protection is what you do to protect your building. Things like security systems, sprinklers, and alarm systems can help lower your rates.

  • What are the protections you have there? 
  • How far away is the fire department? 
  • Do you have a fire hydrant on your block? 

So if you have automatic sprinklers, that’s going to give you a better fire rating. 

Exposure is how likely your building is to be damaged in a disaster. If you’re in a high-risk area for hurricanes or tornadoes, your rates will be higher than if you’re in a low-risk area.

  • What is around your building? Fire brush, lakes, potentials for flood? 
  • What is the neighborhood like? Is it in a crime area? 

If you’re on a busy street, that’s going to be a high exposure. If you’re in the middle of a field, that’s going to be a low exposure.

All these factors are what carriers take a look at. Understanding COPE can help you make sure you’re getting the best possible rate on your commercial property insurance. 

Instability Caused By Inflation

Currently, insurance rates have been increasing and they have also been very unstable for the last year. The instability is being caused by inflation.

Supply Chain Issues

The raw material costs are all over the place. They don’t know how much they’re gonna cost when they get ordered by the contractor. Some can order it a week out and some are being told, “Hey, here’s your bill now, but when it comes in, we’re gonna give you what the real cost is.” Obviously, the sluggish supply chain issues haven’t gone away. 

Demand for Skilled Labor

There’s a high demand for skilled labor. Not only are we having people retire, but we don’t have enough people being apprentices and it’s not being able to translate to more people being able to do a job. 

Lingering COVID Effect

And lastly, the lingering COVID effect. Unfortunately, during COVID, people were placing insurance on buildings that were only looked at over the internet on your desktop. And what they come to find out later is that the building has not been maintained, that there’s storage of plastics in there and there’s no sprinkler system. So this has all led to an increase of rates.

What Can You Do?

And what can you do? In order to be a building owner that’s gonna continue to make money, you have to control your costs. And how do you do that? You have to make a commitment to do so, and you’re gonna do it by controlling your losses. 

Steps to control your costs: 

  • Maintain your buildings 
  • Update the electrical wire, heating, plumbing, roofing 
  • Have good housekeeping 
  • Perform regular safety checks 

What is it that’s been able to be implemented in the last three years so that it protects your office building better now than it was three years ago? All these things will go ahead and poise you into a place where the carrier will look at you favorably and give you more credits. 

When you are able to show the insurance company that you are in a mode of safety, maintenance, and security, carriers will give you rates that you can live with and you won’t have to pass on to your customers. It’s a win-win for everybody.

A Final Word

All of these things go into how the insurance carrier rates your property and what they’re going to charge you for premiums. As a commercial building owner, it’s important for you to understand how your property is being rated so that you can make sure you’re properly insured. If you have any questions about your commercial property insurance coverage, reach out to us today! 


Or if you’re interested in learning more from Brenda Jo, you can check out her other videos including, Why You Need to Audit Your Commercial Property Insurance.

Top Tips to Recession-Proof Your Business

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Over the past several months, most business owners, and individuals alike, have heard mutterings about a recession.

Although we in no way can predict what’s coming, at Competitive Edge Insurance, we thought it’d be helpful to provide business owners with the top three tips they can take to recession-proof their businesses.

Let’s dive in; first, with an overview of what’s going on.

What Is Going On?

Many Americans might already be feeling the heat with decades-high inflation, record gas prices, and hefty grocery bills.

​​Bloomberg Economics says there’s close to a 75% probability there will be a recession by the start of 2024.

But how did this happen? And what is a recession?

What Is a Recession?

A recession, as defined by the National Bureau of Economic Research (NBER), is a “significant decline in economic activity that is spread across the economy and that lasts more than a few months.”

This period of time is when the economy contracts and business activity slows down. This can be caused by a number of factors, including a:

  • decrease in consumer spending
  • increase in taxes
  • decrease in government spending 
  • natural disaster

Businesses typically suffer during a recession, as there is less money circulating and people are more likely to save rather than spend. This can lead to layoffs, closures, and decreased profits.

As a business owner, it is important to recession-proof your business as much as possible. This means taking steps to ensure that your business can weather a recession and still remain profitable.

Contributing Factors

There are many contributing factors that have led the U.S. economy to tip its way toward a recession—inflation, supply chain issues, a nationwide labor shortage, the list goes on.

Moreover, The Washington Post notes that the Federal Reserve’s efforts to temper demand and tame prices have also been a contributing factor.

Oracle writes that “since 1950, recessions have lasted between two and 18 months.” This period can be “stressful for business owners, since they don’t know how long it will last. A business can freefall without an end in sight — if it isn’t ready.”

So let us help you prepare.

How Can You Recession-Proof Your Business?

There are many things you can do to recession-proof your business. For example, business owners can create a business emergency fund, assess their risk tolerance, reduce overhead, and more.

Minimize Workers’ Compensation Claims

One thing you don’t want in the midst of, or prior to a recession, is workers’ compensation claims being filed against your business. Why? It’s expensive.

Employers face both direct and indirect costs when a workers’ comp claim is filed.

Most obviously, when an employee is out on workers’ compensation, a business owner essentially “loses” their work. You then have to pay for another employee to pick up the slack (overtime in some cases), which can be costly.

Additionally, workers’ compensation claims can:

  • Increase your insurance premiums
  • Damage your public reputation, and
  • In some cases, a business can be penalized up to $136,532 per person by the Occupational Safety and Health Administration (OSHA) for repeated or willful violations

(Yikes, that’s a lot of money!)

This considered, it’s crucial (especially during this time of teetering toward a recession) to do everything you can to make your workplace safe, and therefore, reduce workers’ compensation claims.

Interested in learning how workers’ compensation plays out for remote workers? Read our article “What Does Workers’ Comp Look Like for Remote Employees?”

Create Trust and Safety Among Employees

Significant layoffs can already be observed across the nation. This considered, a recession can be an especially scary time for your employees.

During this time, as a business owner, it’s especially important to create trust and safety among your employees. Consider doing the following to build employee retention:

  • Keeping an open, honest line of communication
  • Listening to your employees
  • Utilizing employee engagement data
  • Offering consistent and effective feedback
  • Recognizing a job well done
  • Not letting team building fall to the wayside
  • Encouraging health and wellness and work-life balance

Invest in Insurance

The last thing you want during a recession is to get hit without the proper insurance. Typically, business profit is already top-of-mind during a recession.

If a cyber attack occurs, you receive high levels of workers’ comp claims, or an injury takes place on your commercial property, you want to be sure that you have the right insurance in place to keep your business financially protected.

Without proper insurance, a business owner may have to pay out-of-pocket for costly damages and legal claims against their company.

Additional Steps to Help

Minimizing workers’ comp claims, creating trust and safety among employees and investing in insurance are our top three tips, but there are so many other steps that you can take to help your business during a recession, such as: 

1. Diversify your revenue streams

Don’t rely on just one source of income. If possible, try to have multiple, different streams of revenue coming in. That way, if one or two of them dry up, you’ll still have money coming in from the others.

2. Cut costs where you can

During a recession, every penny counts. Take a close look at your budget and see where you can cut costs. Even small savings can add up over time and make a big difference.

3. Build up your cash reserves

Having a healthy cash reserve is always a good idea, but it’s especially important during a recession. This will help you weather any tough times and keep your business afloat.

4. Focus on customer retention

During a recession, it’s more important than ever to hang onto your existing customers. Keep them happy and they’ll stick with you, even when times are tough.

5. Invest in marketing

Marketing is vital for any business, but it’s especially important during a recession. Why? Because that’s when people are scaling back their spending and being more particular about where they spend their money. If you want to stay top of mind, you need to keep marketing.

Keep Your Eye On the Prize

It’s easy to get discouraged during a recession, but it’s important to remember why you’re in business in the first place. Stay focused on your goals and don’t let tough times get in the way of your long-term success.

As a business owner, recession-proofing your company is vital to ensuring that success.

Interested in learning more about how to keep your business safe? Read on to find out what types of insurance your business needs during a recession.

Cyber Liability: Mitigating BYOD and E-discovery Risks

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The prevalence of employee-owned smartphones and other devices in workplaces across the country has grown considerably in the last few years and shows no sign of stopping. A recent study by Bitglass found that 85% of organizations surveyed allowed their employees to use their personal devices for work functions. If it wasn’t obvious already, the “bring your own device” (BYOD) era is here to stay. While there are numerous benefits of implementing a BYOD policy at your workplace, it can be problematic from an e-discovery standpoint, should your company enter litigation.


E-discovery Basics
Electronically stored information, or ESI, can be subject to discovery, which means it can be requested as evidence in court cases. ESI is a category of discoverable information separate from print documents, and includes both structured and unstructured data such as emails, instant message logs, Word® documents, PowerPoint® presentations and scanned documents.

In litigation, e-discovery is the process of identifying, collecting, preserving, reviewing and producing relevant electronic data or documents as evidence. Determining which ESI is relevant is not simple due to the lack of precedence and established standards; however, it is important to be able to quickly access the right ESI. While failing to produce all required ESI can be considered negligence, handing over too much data could mean disclosing privileged competitive information and jeopardizing corporate strategy or product plans.


BYOD’s Skyrocketing Popularity
Allowing employees to use their personal phones, laptops, tablets or other devices for work purposes has quickly become the new norm. Employees enjoy being able to use their own devices for several reasons:


· They can get more work done on their own devices with a more flexible schedule.
· They may prefer the operating systems of their own devices.
· Company-provided devices may lack the functionality that employees desire.
· Bringing personal activities into their work lives can lead to happier employees and more productivity.

Employees aren’t the only satisfied party. Employers can save money by not having to buy company-owned devices for employees to use, including technical support costs associated with diagnosing problems employees may have. In addition, many employers can save on telecommunication costs, as employees are often willing to self-fund their own mobile plans.


BYOD Litigation Risks
Allowing employees to bring their own devices can seem like a pretty good deal for both sides. However, there are inherent risks with the practice, especially from a legal standpoint. Employers must consider the following risks that may hinder the e-discovery process:

· Since you do not own employees’ devices, you do not have total control over the devices and how they’re used.
· There are many different types of data on devices, depending on the operating system, applications used, etc., and
· separating personal data from business data may be difficult.
· Data on devices can be stored in several locations.
· It is difficult to protect data on employees’ devices from harm, including theft and hacking.
· Employers cannot just seize an employee’s device for discovery—they need consent from the employee.


Best Practices for BYOD Policies and the E-discovery Process
If you have a BYOD policy at your workplace, or are planning to implement one, consider the following to ensure it is comprehensive and e-discovery-friendly:


· Have employees sign an agreement that lets them know how e-discovery requests will be handled, should the need arise.
· Consider using Mobile Application Management (MAM), which allows employers to control how applications perform on employee devices. It can control application encryption and even wipe sensitive data off the phone of a former employee.
· Consider purchasing and implementing one of the many applications capable of separating business data and personal data, making it easy for employers to locate discoverable data.
· Mandate that employee devices be configured to save certain information directly to the company servers.
· Create an acceptable use policy that lets employees know how you want them to handle company data on their personal devices.
· Prohibit employees from uploading sensitive company data to any third-party cloud storage system, such as Dropbox, Google Drive or Box.
· Sync data between employee devices and company servers regularly.
· Educate employees on best practices for keeping all data on their devices safe—the devices may contain sensitive company information.
· Mandate that employee devices be password-protected.
· Ensure that your BYOD policy is forthright and outlines the exact process for e-discovery, including a clear chain of custody.
· Ensure your IT and legal teams are on the same page. Your IT team should be able to advise the legal team on exactly what kinds of data are stored on employee devices and the best way to retrieve the data. The legal team, whether employed or contracted, should be familiar with the e-discovery process to advance the procedure as quickly as possible.
· Require compliance with your BYOD policy. In addition, keep the policy flexible to keep up with the ever-changing data landscape.
· Determine how you will handle the data on phones of former employees. Some companies remotely wipe former employees’ devices, but that can bring up questions about the ethics of deleting personal data from a device.
· Carefully decide which employees can use their own devices. BYOD may not be relevant or useful for all employees.
· Consider listing what devices are and are not acceptable. BYOD does not mean employees are free to use whatever device they wish. Employers may not want to offer support for certain devices due to the particular operating system or inherent security issues.
· Always put data security ahead of employee device security. Your company’s data should always be your number one concern.

Contact Competitive Edge Insurance today for more ways to help make sure your BYOD policy properly protects your company’s data.

Parametric Risk Insurance: What You Need to Know

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What if you could have insurance that paid out when a specific event occurred, regardless of the cost of the damages? This is what parametric risk insurance is all about.

In this blog post, we will discuss what parametric risk insurance is, how it works, and who can benefit from it. 

What is Parametric Risk Insurance?

Parametric risk insurance is a type of insurance that pays out a predetermined amount of money when a specific event occurs. The benefit of parametric risk insurance is that it does not require an assessment of the damages caused by the event in order to make a payout. This can be helpful in situations where traditional insurance would not cover the entire cost of the damages.

Why Do You Need It?

Parametric risk insurance can be used to cover a variety of risks, including natural disasters, business interruptions, and even political risks. In many cases, parametric risk insurance can provide coverage that would not be available through traditional insurance policies.

One of the key benefits of parametric risk insurance is that it can help businesses to manage their exposure to risk. By having a parametric risk insurance policy in place, businesses can be sure that they will have some financial protection in the event of a major loss. This type of insurance can also help businesses to avoid the hassle and expense of making a claim on their traditional insurance policy.

What is Catastrophic Risk Insurance?

Catastrophic risk insurance is similar to parametric risk insurance in that it pays out a set amount of money when a specific event occurs. However, catastrophic risk insurance is designed to cover much more severe events than parametric risk insurance. Catastrophic risk insurance is typically used to protect against natural disasters, such as earthquakes or hurricanes. It also protects against riots or terrorist attacks.

An example of a business that has used parametric catastrophe risk insurance is an airline. In the event of a plane crash, the airline would receive a payout that would cover their losses without having to go through the process of filing a claim.

What is Parametric Home Insurance?

Parametric risk insurance has many benefits over the standard homeowners insurance. One of the main advantages is that parametric risk insurance can cover a broad range of events that are not typically included in homeowners insurance policies, such as flooding.

Another advantage of parametric risk insurance for homeowners, is the speed of a claims payment. With a standard home insurance policy, you need to have your home inspected, get cost estimates from contractors, and in some cases wait for work to be completed before receiving full reimbursement. However, parametric policies pay out as soon as the insurer can verify that the event occurred.

Another benefit is that parametric risk insurance claims can be paid out much more quickly than traditional insurance policies. This is especially useful in widespread disasters, where the claims process can be delayed for months. In addition, parametric risk insurance policies do not have deductibles or exclusions, so the process of making a claim is much simpler.

Why is Parametric Insurance Important?

Parametric risk insurance is important because it pays out a benefit when certain conditions are met, without the need for a detailed claim process. This can be incredibly useful in situations where traditional insurance would be impractical or too expensive.

Some parametric policies can provide cover for things like natural disasters, business interruption, and even death. This means that they can offer protection against a wide range of risks.

Parametric insurance can be used to supplement traditional insurance, or as a standalone policy. Parametric insurance can help to protect against unexpected events and give peace of mind in knowing that you have some financial protection in place.

Examples of businesses that have used parametric risk insurance include manufacturers, government agencies, and airlines. In each of these cases, the policyholder was able to receive a payout that covered their losses without having to go through the process of filing a claim.

What is One of the Main Advantages of Parametric Insurance?

One of the main advantages of parametric insurance is that it can help to transfer risk from one party to another. This can be particularly helpful if the party who is taking on the risk is better able to manage it. Additionally, parametric insurance can help to reduce the overall cost of risk. This is because parametric insurance typically pays out a fixed amount of money, regardless of the actual loss that is incurred. As a result, parametric insurance can help to stabilize costs and protect against large losses.

Parametric risk insurance can be particularly helpful for businesses that are exposed to catastrophic events. For example, it can be used to protect against losses that occur as a result of a natural disaster. Parametric insurance can also be used to protect against other types of risks, such as the failure of a key supplier.

How Big is the Parametric Insurance Market? 

The parametric insurance market is growing rapidly. As reported by Business Wire, “the parametric insurance market was valued at $11.7 billion in 2021, and is estimated to reach $29.3 billion by 2031, growing at a CAGR of 9.9% from 2022 to 2031.”

Why is Parametric Insurance Growing?

There are a few reasons why parametric insurance is growing. One reason is that traditional insurance can be difficult and time-consuming to file a claim with. Another reason parametric insurance is growing is because it can be used to cover a variety of risks. This type of insurance provides businesses with a way to manage their exposure to these risks.

A Final Word

Utilizing parametric risk insurance can be an effective way for your business to address and cope with risks, but it is important to understand how it works before purchasing a policy. If you are interested in learning more about parametric risk insurance, contact one of our advisors today. They will be able to help you determine if this type of insurance is right for your business.

Additional Insured vs. Loss Payee: What’s the Difference?

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There are a lot of terminologies to keep track of in the commercial insurance world—two of them being additional insured and loss payee.

While additional insureds and loss payees are endorsements that extend insurance coverage to a third party, there are key differences in the scope of coverage provided in each.

Below, we’ll discuss the difference between an additional insured vs. a loss payee.

Additional Insured

An additional insured is a third party—either an individual or business entity—who is added to an insurance policy at the request of the named insured because they have a liability exposure in the relationship.

Typically, an additional insured would be someone who is working with the named insured on a project. For example:

  • A business partner
  • Contractor 

Insureon provides a great example: Say “the owner of an office building hires a janitorial company to clean its premises. If a visitor gets injured after tripping on a box the owner left in a hallway, the janitorial firm could be exposed to litigation.”

Therefore, “to protect itself, the janitorial company would ask the property owner to list it as an additional insured on the owner’s general liability insurance or business owner’s policy (BOP). That way, if the injured visitor sues the janitorial services company for negligence, the building owner’s insurance policy will defend the company.”

When listed as additional insured, the party is then protected under the terms of the policy just as the named insured.

Loss Payee

A loss payee, on the other hand, is a third party who is entitled to receive payment from an insurance policy in the event of a loss.

The loss payee is typically a lender (i.e. bank, mortgage company, the lender who financed the purchase of a piece of equipment insured under the policy) who has a financial interest in the property that is insured under the policy.

If that property is damaged or destroyed, the loss payee will receive compensation from the insurance policy.

Sound a little complex? Here’s a great example from Embroker:

You own a pizza restaurant (yum!) To make your delicious pizzas, you’ve rented “your pizza ovens from another company. If you add that company to your commercial property policy as a loss payee, both you and that company could receive payments if a fire breaks out in the restaurant and damages… the rented ovens.”

Why do both parties receive payments? “Because both have insured interest in the property that was affected.” It’s important to note, however, that the loss payee has first rights on insurance claim payments rather than the named insured.

A loss payee is added to a policy via a “loss payable clause,” which is typically added to a commercial auto or a commercial property insurance policy.

Key Differences: Additional Insured vs. Loss Payee

While additional insureds and loss payees are both parties who are protected under an insurance policy, the scope of coverage that each provides is quite different.

The key difference between an additional insured and a loss payee is that additional insureds receive liability protection whereas loss payees receive property damage coverage.

Additional insureds are protected in the same way as the named insured, while loss payees are only entitled to receive payment in the event of a loss.

Moreover, additional insureds are typically added to a policy at the request of the named insured, while loss payees are typically lenders who have a financial interest in the property that is insured under the policy.

When deciding whether to add an additional insured or loss payee to your policy, it’s important to understand the difference between the two so that you can choose the endorsement that properly protects your interests.

Learn More

In any project, it’s important to make sure you have the proper insurance to protect yourself and all parties involved.

A Certificate of Insurance (COI) gives a summary of what coverages someone has, whether it be general liability, workers’ compensation, or property. A COI can also include a description of coverages that might be there or attached; such as additional insured status or waivers of subrogation.

Read on for more on what you need to know about certificates of insurance.

Don’t Create Your Own Labor Shortage

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Since even before the pandemic, millions of Americans have left their jobs. In fact, we have more than three million fewer Americans participating in the labor force today compared to February of 2020, according to the U.S. Chamber of Commerce.

So, how can you ensure you don’t create your own labor shortage as a business owner? Read on for our best tips.

Create a Strong Company Culture

What are the signs that a business has great company culture? High employee retention, transparent communication, employee benefits, employee recognition, opportunities for development… The list goes on.

But how do you get to this level? To create a strong company culture, you should consider the following:

  • Determine what this culture looks like
  • Ask for employee input and LISTEN to what they have to say
  • Hire for culture
  • Encourage (and model!) work-life balance
  • Make sure employees know your expectations regarding culture

Of course, this is a shorthand list of things you can do. Building a strong company culture is crucial to ensuring you maintain the workforce you do have, and don’t create a labor shortage for your own business.

Ensure Your Workplace is Safe

Your workplace, regardless of your industry, needs to be safe. This includes big-ticket items like following any regulations and codes as well as small things like ensuring rugs are adhered to the floor to prevent tripping, for example.

Ensuring your workplace is safe will help increase employee retention and lower your risk of receiving workers’ compensation claims against your business. It’s a win-win.

Read on to learn more about rising workers’ compensation claims and what you can do.

Provide Growth Opportunities for Employees

What opportunities are you providing to help your employees grow? Are you paying for outside training? Seminars they’d like to attend?

Increased employee retention is one of the best benefits of a successful learning and development (L&D) strategy. In fact, according to a LinkedIn study, “94% of employees would stay at a company for longer if the business was investing in their career development.”

Implementing learning and development opportunities for employees can help:

  • Retain top talent
  • Increase job satisfaction and morale
  • Improve productivity, and
  • Earn more profit…

In fact, research shows that “businesses that have actively interested and dedicated employees see 41 percent lower absenteeism rates, and 17 percent higher productivity.”

Consider: What training and development might your employees benefit from?

Invest in the Right Insurance Coverage

Of course, we wouldn’t be who we are without mentioning insurance. Having the proper coverage for your business makes for safer operations and employees.

Although the types of insurance your business needs vary on a case-by-case basis, most businesses need the following types of coverage at a minimum:

  • General Liability Insurance
  • Workers’ Compensation Insurance
  • Commercial Property Insurance
  • Cyber Liability Insurance
  • And more

Read on to learn how much business insurance should cost.

Focus On What Matters Most

Our biggest overarching rule is this: Focus on what matters most. Employee retention is all about making your workforce feel special, valued, and safe. Take some time today to think about how your specific business might achieve this.

Interested in learning more about the labor shortage? Read on to see how the California labor shortage is affecting the construction industry.

Workers’ Compensation Rates are Rising: What Can You Do?

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As many business owners may have noticed, workers’ compensation rates are rising. What does this mean? Why is this happening? And most importantly, what can you do as a business owner in response?

Read on to find out.

Why Workers’ Compensation?

If you’re a business owner or an individual who is planning on employing workers when starting a new business, California state law requires you to invest in workers’ compensation insurance.

Why? Employers purchase workers’ compensation insurance to cover the medical costs and lost wages for work-related injuries and illnesses of employees. In turn, workers’ compensation protects your company against employee lawsuits.

Worker’s compensation coverage can help pay for:

  • Immediate medical costs (i.e. emergency room expenses)
  • Ongoing medical costs (i.e. physical therapy)
  • Partial lost wages while the employee is unable to work

Lack of proper coverage can result in fines and even criminal exposure.

Workers’ Compensation Rates Are Rising

Over the past couple of years, workers’ compensation rates have been steadily increasing across the board. They’ve been rising by 7% on average; however, this figure depends on each industry.

Moreover, in July 2022, the Workers’ Compensation Insurance Rating Bureau of California® (WCIRB) submitted its September 1, 2022, pure premium rate filing to the California Department of Insurance (CDI).

The CDI regulates California workers’ compensation rates with the help of the WCIRB, who makes recommendations based on the state’s loss ratio.

In this July 2022 filing, the WCIRB proposed a set of increased premium rates. On average, these rates are 7.6% higher than those approved the year prior on September 1, 2021.

According to the WCIRB, the average of the proposed September 1, 2022, advisory pure premium rates is $1.56 per $100 of payroll.

Read on for the WCIRB filing.

Why Are Workers’ Compensation Rates Rising?

So, why have these premiums been increasing in the first place?

The bottom line is that workers’ compensation rates are rising because there are simply more workers’ comp claims being filed.

Research shows there are many reasons why claims might be increasing, including:

  • Medical inflation
  • Workforce changes
  • The increasing average age of the workforce
  • Increased indemnity costs, and
  • Rising wages

Moreover, as individuals have begun to return to work in person, the number of claims regarding health and safety in the workplace has increased as well. These claims typically include:

  1. Employee concerns about exposure to COVID-19 due to unsafe working conditions, or
  2. Situations where employees allege they were wrongfully denied a request for workplace accommodation or leave

What Can Business Owners Do?

With this rise in claims, what can you do to protect yourself as a business owner? You can prevent workers’ comp claims by:

  • Prioritizing risk mitigation
  • Maintaining a safe workplace
  • Supporting mental health awareness to reduce burnout
  • Emphasizing  proper employee training
  • Developing and distributing an employee handbook and code of ethics policy
  • Implementing a handbook auditing procedure

While this list only showcases a few of many ways to avoid high workers’ compensation premiums, it’s important to remember that it’s up to all employers collectively to keep their employees safe—thus, lowering the number of claims being filed annually.

How Much Risk Does Your Business Hold?

If writing your hefty workers’ compensation check has begun to pain you, at Competitive Edge Insurance, we challenge you to ask yourself a question: “Am I, as a business owner, doing everything in my power to create the safest workplace possible?”

If the answer is no (which it typically is), get in touch with our team today to learn what else you can do.

Learn more about 2022 workers’ compensation changes by reading our article “Insurance Trends in 2022: What to Watch For.”

Why an Advisor Should Work with an Insurance Broker

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Wealth advisors who seek the support of an insurance broker not only set themselves up for success but most importantly, they also do so for their clients looking to purchase real estate.

An insurance broker provides a wealth of knowledge to help understand what potential liabilities ensue from the real estate purchase, as well as mitigate risk. 

This partnership will help you as an advisor, guide your client to make the best financial decision as well as plan for the future with the guidance of an insurance broker. Let’s dive into why an advisor should work with an insurance broker.

Infographic of Why an Advisor Should Work with an Insurance Broker

Types of Insurance Needed

The right insurance to cover your client’s upcoming real estate purchase depends on a variety of factors.

  • What kind of real estate is your client purchasing?
  • Where is the real estate located?
  • What is the size of the real estate?
  • What is the purpose of the purchase (personal or for business)?
  • Is the real estate located in a climate that requires additional coverage (i.e. fire zone, earthquake zone, etc.). 
  • And more

All of these answers will help advisors understand potential additional costs that may go towards insurance coverage (or even potential damage should an unforeseen issue arise). 

The different types of insurance policies your client may need for their real estate purchase include: 

  • Homeowner’s insurance 
  • Fire insurance 
  • Flood insurance 
  • Earthquake insurance 
  • The list goes on

The Benefits of Working With an Insurance Broker 

An insurance broker can assess the real estate property to see what potential risks the property has. If the piece of real estate is located in a fire zone, the insurance broker can identify what coverage would look like.

Essentially, working with an insurance broker helps list out all of the different insurance possibilities your client needs. Basic homeowners insurance or umbrella insurance may come with exclusions for coverage for fires, floods, etc.

Knowing what additional policies may arise allows you to sit with your client and discuss their financial strategy to help them maintain their goals.

Once you have the full picture from the insurance broker you’ve partnered with, you can then budget appropriately. You then have all of the materials necessary to make sure you can give a holistic overview to your client and tell them, “this is a financially smart decision” or, “let’s find a different route for you.” 

The main benefits of working with an insurance broker can be boiled down to these three factors:

  1. You help your client mitigate risk
  2. You save your client money both short term and in the long run 
  3. Your client will have better knowledge of the real estate investment they are making 
  4. As a broker, you will then understand where you can save your clients money and where they may have to invest more

Read on for more information on risk mitigation.

The Coverage Pitfalls of Insurtech

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With the rise of technology comes the rise of a new sector disrupting the insurance industry: Enter insurtech.

But what is insurtech, and what are its coverage pitfalls? Here, we have Brenda Jo Robyn, founder of Competitive Edge Insurance, on video to discuss the coverage pitfalls of insurtech.

What is Insurtech?

First, what is insurtech? Insurtech is a combination of the words “insurance” and “technology,” and refers to “technological innovations that are created and implemented to improve the efficiency of the insurance industry,” according to TIBCO.

Research shows that the insurtech industry is expected to reach a market size of $114 billion by 2030. This doesn’t come as a surprise considering that this tech helps large insurance companies explore new insurance options without the need for human efforts. Using information gathered from observed behavior, TIBCO says this could include:

  • “Dynamically-priced insurance policies
  • Small business insurance, and
  • Social insurance options

Insurtech also provides insurance companies access to data streams from IoT devices.”

An internet of things (IoT) device is a physical object “with sensors, processing ability, software, and other technologies that connect and exchange data with other devices and systems over the Internet or other communications networks.” 

Read on for more information on IoT devices.

The Pitfalls of Insurtech

Insurtech’s technological innovations can scour the internet, pulling information from a host of websites to make an informed insurance assessment.

While technology can sometimes work smarter than traditional insurance methods of insuring a business, insurtech also has its pitfalls.

Insurtech and Underinsurance

When it comes to evaluating and preparing property insurance, insurtech might be able to provide you with information including:

  • When the building was constructed
  • Permitting information
  • When there were last upgrades or renovations completed

Insurtech, however, cannot give you the details of what is inside a specific building. It will not be able to tell you information regarding:

  • The tenancy inside a building
  • Rooms of high value inside of a building that might require additional coverage (i.e. computer rooms)

So, because of this lack of information, you have a lot of very underinsured individuals when it comes to using insurtech.

Insurtech and Human Touch

As it’s been made clear, you do not receive the same human touch when you opt for insurtech.

At Competitive Edge Insurance, we believe it is helpful to have a professional as your advocate to take a look and give you options—not a technological innovation!

The most important thing that you receive with that human connection, according to Brenda Jo, is that this professional can share that an individual has options.

They can:

  • Cover their property at certain limitations, or
  • Decide to self-insure

A traditional insurance professional can help determine what self-insurance might look like. For example, what will they be insuring? Is the self-insuring simply increasing the deductible or not having that type of coverage altogether?

Our team at Competitive Edge can help take a look at your unique circumstances to help determine your areas of risk, where you’re covered, where you’re underinsured, and how to amend these pitfalls.

Interested in learning more? Read on in our article “How Does a Building Owner Know if They Are Underinsured?”

Understanding D&O Insurance: What You Need to Know

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While the term ” D&O insurance” may seem like just another one of the many acronyms floating around the insurance world, this form of liability insurance is essential in protecting corporate directors and officers. 

Let’s chat about directors and officers liability insurance, also known as D&O insurance. We’ll break down what it covers, who needs it, and why all corporate directors and officers should be familiar with this little acronym.

What is D&O Insurance?

Directors and Officers (D&O) liability insurance is insurance coverage that helps protect “the personal assets of corporate directors and officers, and their spouses, in the event they are personally sued… for actual or alleged wrongful acts in managing a company.”

The parties suing a director and/or officer could include:

  • Employees
  • Vendors
  • Competitors
  • Investors
  • Customers, or
  • Other parties

What Does D&O Insurance Cover?

Typically, D&O insurance helps not only protect your business but also helps pay for lawsuit-associated losses (i.e. legal fees, settlements, etc.) when the insured is found liable.

There are, however, three types of insuring agreements—titled Side A, Side B, and Side C—in a typical D&O policy. Read on for more on the different types of directors and officers liability insurance.

What Does D&O Insurance Not Cover?

While “breaches of fiduciary duty, failure to comply with regulations, lack of corporate governance, creditor claims, and reporting errors” are typically covered by D&O insurance, according to Investopedia, D&O insurance does NOT cover the following:

  • Outright fraud
  • Illegal profits
  • Criminal activity, and
  • Lawsuits between managers within the same company

Who Needs D&O Insurance?

So, when do D&O claims pop up? Most often, directors are officers are sued for:

  • “Breach of fiduciary duty resulting in financial losses or bankruptcy
  • Misrepresentation of company assets
  • Misuse of company funds
  • Fraud
  • Failure to comply with workplace laws
  • Theft of intellectual property and poaching of competitor’s customers
  • Lack of corporate governance”

This considered, you might be wondering: “Does my business need D&O insurance coverage?” The answer might be yes—depending on the size and nature of your business.

Any business that has a board of directors or similar corporate or advisory committee—whether you’re private, public, or even a nonprofit—should consider investing in D&O insurance.

Why? Claims against businesses and their directors are increasing. Plus, if you work with vendors or government entities or even just have employees or customers, you are prone to exposure that could make your organization vulnerable to costly D&O claims.

Interested in learning more about what insurance you need as a business owner? Read on in “how does a building owner know if they are underinsured?”

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