Tag Archive for: competitive edge insurance

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.

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.

Why Increases in Inflation Might Mean that Your House is Underinsured

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Reviewing “Rising Inflation Can Mean Your Home Is Underinsured”

It’s no secret that inflation has been on the rise lately. In fact, it’s been increasing at a steady rate for the last few years. This might have you wondering if your home insurance policy is still adequate. If your policy was purchased when inflation rates were lower, then it’s likely that your coverage is now worth less than it was before. 

With the inflation rate rising, that means that the cost of rebuilding a home after an insured event will also rise. Homeowners need to be aware of this and make sure that their home insurance policy provides adequate coverage. 

Don’t worry, though! According to a recent article entitled, “Rising Inflation Can Mean Your Home Is Underinsured” from Syracuse.com, there are a few things you can do to make sure that your home is properly insured despite inflation. 

One way to do this is to purchase extended or guaranteed replacement cost coverage, which will pay for more of the cost of rebuilding in the event that inflation has raised prices. 

Homeowners should also check their policy for inflation guard coverage, which will automatically raise coverage limits to account for inflation. Finally, if homeowners are worried about being underinsured, they should talk to their insurance company or agent to get a better understanding of their policy and what it covers. 

By taking these steps, homeowners can be sure that they are adequately protected in the event that their home is damaged or destroyed. 

Interested in learning more? Read on for the full article. 

Rising Inflation Could Mean Your Home Is Underinsured

By Ben Moore | NerdWallet

The cost of home construction is skyrocketing due to inflation, and this could spell trouble for homeowners. Increases in the cost of lumber and other building materials, in conjunction with continued supply chain issues and labor shortages, could leave many homeowners underinsured if they need to rebuild after a covered insurance claim.

Should disaster strike, homeowners without enough coverage could find themselves digging into their wallets to cover the shortfall. Now is the time to be certain you have enough insurance to pay the cost of what it would take to rebuild your home, also known as replacement cost. Here’s what you need to know.

Know your home’s replacement cost

Insurers use replacement cost calculators to determine how much dwelling coverage is needed to rebuild your home. Information about your home, like its square footage, construction materials and the year it was built, are all incorporated into the estimated replacement cost.

You can also take steps to determine your home’s replacement cost on your own. One method involves multiplying your home’s square footage by the current cost of construction per square foot in your area, said Alan Himmel, a public insurance adjuster in Florida, by email. “You can get an idea of per square foot building costs by calling the builders association in your area, an insurance agent, or even … contractors.” Most estimates will range from $100 to $200 per square foot, according to HomeAdvisor.

You can also hire a contractor to provide a construction estimate, or have an independent insurance agency pull multiple homeowners insurance quotes to get a sense of what each insurer believes it will cost to rebuild your home.

Be sure to check the declaration page of your policy to see if you’re covered by replacement cost or actual cash value, especially when it comes to your personal property. Replacement cost coverage pays to repair your home or replace your belongings up to your coverage limits, without factoring in depreciation, or the loss of value over time. This means that your insurance company will pay to rebuild your home to the condition it was in before the claim, plus replace your personal property with new items, like paying for a new laptop regardless of the depreciated value of the lost one.

Meanwhile, actual cash value does account for depreciation and will likely mean having to pay the difference between what your policy covers and how much it costs to fully replace your belongings. For example, if your sofa is lost in a covered fire, your insurer will only pay for what the sofa was worth when it was destroyed, not the amount it would cost to replace it with a brand new one.

Consider extended or guaranteed replacement cost coverage

Extended replacement cost coverage can be added to a home insurance policy to help offset such uncertainties. This coverage will pay a percentage over your dwelling coverage limit if that amount isn’t enough to completely rebuild. For example, if your policy’s dwelling coverage is $100,000 and you have 25% extended replacement cost coverage, your insurer will pay to rebuild your home up to $125,000.

If you want full assurance that your insurer will cover the entire cost to rebuild your home, regardless of how much construction costs increase, consider guaranteed replacement cost. “The most confident I ever am when I sell a policy is when the client has a guaranteed replacement cost endorsement,” says Peter Conte, an independent insurance agent in New York City. “They can sleep better because, come time for a claim, they know they’re getting their house back.”

Guaranteed replacement coverage typically comes with a higher premium. It may not be available from all insurance companies, and it may not cover older homes.

Check for other coverage options

Many home insurance policies come with an inflation guard, which can offset the possibility of being underinsured due to expected inflation increases. An inflation guard will automatically raise your coverage limits to account for inflation when your policy is renewed.

Your premium may rise due to the inflation guard, but don’t lower your coverage limits just to save on home insurance. “The inflation guard is actually there to help you stay in line with the inflation rate of the U.S. dollar,” says Conte.

If you live in an older home, check your policy for ordinance or law coverage. In the event of a covered claim, this coverage will pay the cost to meet current building codes when rebuilding. Without it, you’ll likely need to pay out of pocket for any work done to abide by building codes, even if you have guaranteed replacement cost coverage.

If you’re still worried about being underinsured, talk to your insurance company or agent, as they’re best equipped to break down your policy, including what’s covered and what’s not. Be sure to keep them informed of any changes you make to your home, such as upgrades or renovations, so they can increase your coverage limits accordingly.

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.

Insurance Requirements for Business Owners

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When it comes to protecting your business, insurance can get tricky. What policies do you need? How can you ensure you’re meeting insurance requirements given by a city, state, or government?

Don’t worry—Here we have Brenda Jo Robyn, Founder of Competitive Edge Insurance, on camera to discuss standard insurance requirements for business owners. Let’s dive in!

Why Do Business Owners Need to Comply with Insurance Requirements?

Business owners are required to have certain insurance.

Most cities, states, and governments fall into the category of asking for insurance requirements, including the SBA and the requirements they have for their EIDL loans that companies have taken out due to COVID or other disasters.

Vendors and service providers follow suit in asking for insurance requirements.

Lastly, as you might imagine, landlords frequently ask for different insurance requirements in their contracts. Anytime real property is part of a professional relationship, these requirements ensue.

What Policies Are Typically Required in Contracts?

Below is a general list of four policies you might see in a contract in terms of insurance requirements.

General Liability

The number one policy that’s required is general liability.

This type of insurance policy protects a third party in the event that there’s a bodily injury or property damage claim to your products or services that you provide for them.

General liability, for example, would also include this scenario: Let’s say you have someone come into your office (you’re either renting a space or the whole building). Then, this someone trips on your carpet and falls as they’re coming in. 

General liability would be the number one policy to make sure that you have your requirements buttoned up.

Property Insurance

The next policy would be property insurance. If someone is renting their property to you, they want to ensure that it’s covered in case of a loss.

If you’re a restaurant, for example, you could imagine you’re in someone else’s building. You need to make sure not only that you have the safety elements in place (i.e. fire suppression) but also insurance for the owner of the building, should something happen.

Professional Errors and Omissions (E&O) Insurance

Professional errors and omission (E&O) insurance come into play when there’s a failure in services or technology that you might be providing. The policy will provide the company with a way to make the client whole after an error that results from this mishap or financial loss occurs.

Directors and Officers (D&O) Liability Insurance

Directors and officers (D&O) liability insurance might come into play for a business owner as well.

This type of policy is typically required by investors before they fund, and before becoming a board member. Remember, when you’re working with investors and funding, there’s a contract involved—so you’ll probably see this there.

How to Manage Your Risk as a Business Owner

So, now what do you do? Here comes the risk mitigation part.

A lot of times, you will see that most contracts ask for reasonable requirements—and it only makes sense they should have these protections in place.

We recommend, however, that you keep your eye out for these elements in order to best manage risk.

Outlandish Requirements

There are times, however, that you see outlandish requirements. Brenda Jo reminds us that these need to come up as a big red flag for you. An example of an outlandish requirement would be an unusually high minimum occurrence or aggregate limits or policies that are unrelated to the scope of the contract.

Broad Language in Indemnity Agreements

Look at broad language within the indemnity agreement that works in their favor, and not in yours. Moreover, there is such a thing as being too broad.

Remember, indemnity agreement language should always be reviewed by your attorney.

Unreasonable Required Coverage

This is a big one!

If you’re the party in the contract that the insurance requirements are being imposed upon—in construction, typically the contractor or subcontractor—it’s important to confirm that the required coverage terms are either included in your current insurance program or can be purchased at a reasonable price.

Ideally, you’ve had your broker review the contract before you sign it so that they can let you know what might be remiss in the requirements that are being put in front of you, and what you might need to purchase.

Then, is the purchase of new insurance more than what would be justified for this amount of a contract? For instance, if your contract is $25,000, and you’re required to purchase additional insurance for $5,000, does that make sense? Is this something that you can write out of the contract? Or, do you need to rework your bid?

Then, what level of insurance is necessary for each of the different policies? Do the policies make sense regarding the contract or the scope of work? For any new requirements or endorsements that need to be added, are they reasonable, and are they reasonably priced?

Interested in learning more? Read on to learn about complying with insurance requirements for construction, manufacturing, and tech start-ups.

Insurance Trends in 2022: What to Watch For

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Competitive Edge Insurance is a commercial insurance brokerage that specializes in hard-to-place risks. This includes businesses that are in chaos or crisis with high-risk exposures such as construction and development, property investors and flippers, and those with excess losses or claims.

In 2022, we’re observing a noticeable change in favor of insurance buyers. In turn, we are optimistic for many segments of the commercial lines market in the coming year. Welcome to “Insurance Trends in 2022: What to Watch For.”

Let’s dive in.

From Pandemic to Endemic

“Adaptation is a profound process.  Means you figure out how to thrive in the world.” —John Laroch

As we well know, COVID-19 is an ongoing issue. In fact, variants have led many to expect that COVID-19 is here to stay.

Regardless, the sentiment, at least in the insurance industry, has shifted from uncertainty to adaptation.

For the past 10 quarters, rate increases have averaged 10%. Capital in the reinsurance market has increased by 30% which provides support against a large loss event, catastrophe, economic turmoil, and/or adverse claims.

In 2022, we recommend insurees proceed with caution. Additionally, we anticipate price increases to slow. Please note, however, the word “slow” in this sentence. Increases are expected to slow, not create a downward trend in pricing.

Today’s World of Insurance: An Overview

As we know, the past 18 months have been nothing short of eventful. This considered, what are we observing in the insurance world today? Here are a few elements.

  • Catastrophic Losses Continue
  • Social Inflation
  • Skilled Labor Shortages
  • Supply Chain Disruptions

Did you know that according to a study from the Society for Human Resource Management, nearly 90% of businesses are having a hard time filling open positions?

Next, let’s dive into each insurance sector a bit deeper: cyber, commercial property, auto, and workers’ compensation.

Cyber Insurance

When it comes to cyber insurance, premiums are rising but covering less.

What’s Causing Insurance to Increase?

  • Cyber extortion jumped by 150% in a year
  • Companies are more likely to rely on outside attorneys to handle cyber response (in order to contain potential lawsuits)
  • Every claims category has increased in the past year; cases of malicious breaches and unintentional disclosure increased by 18%
  • Cyber coverages are expected to rise sharply, 40% to 50% for optimal risks and 50% to 100% or more for less optimal risks, seeing as ransomware attacks continue to crowd the cyber insurance market

Additionally, executives do not have the knowledge to properly insure their companies from cyber risk. Here are some statistics from Munich RE to paint a picture for you:

  • “81% of C-level respondents think their company is not adequately protected against cyberthreats
  • 35% are considering taking out an insurance policy and will very likely do so
  • Only 34% of C-level respondents have been in contact with their insurers
  • One out of four C-level respondents was totally unaware of the opportunities that cyber solutions offer
  • 17% of C-level respondents still do not have an overview of the cyber insurance products on the market”

The bottom line? C-level executives, while they may be concerned about cyber threats, do not have an understanding of what insurance products and services are available to them.

Commercial Property

What Elements Are Driving Rates?

  • Increasing frequency of natural catastrophes, as well as the severity of those events
  • Higher rebuilding costs due to price inflation of materials and labor shortages

Today, however, commercial property markets are stabilizing. Additionally, increased rates are slowing while capacity is increasing.

We can also anticipate more favorable terms for clients who mitigate risk. Property owners who have been working hard to mitigate risk and decrease claims can see more favorable terms and conditions, and possibly lower rates.

This benefits commercial insurance buyers that maintain quality risks with strong data to back them up. However, rates will continue to be impacted by the location of the risk.

Companies in areas at high risk of natural catastrophes, such as tornadoes, hurricanes, hailstorms, and wildfires, are seeing the highest rate increases, as well as non-renewals and even difficulty in securing coverage. For example, in wildfire areas of California and wind zones of Florida, rates have increased by over 20%.

Auto Insurance

Rates have gone up and up. But what’s driving the increase?

What’s Causing Auto Insurance Rates to Increase?

  • An increasing amount of accidents and deaths caused by distracted driving
  • Higher medical costs for accident victims
  • Rapidly climbing repair costs for vehicles exacerbated by the disrupted supply chain for parts and paucity of skilled and trained labor

As a result, we expect to see averages of 5-15% increases in both commercial and personal auto insurance in 2022.

Workers’ Compensation Insurance

Workers’ compensation is a mixed bag.

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.

The state fund has announced rate increases, the 2022 WCIRB new policy assessment increase sits at 5.9318%.

Beginning January 1, 2022, new assessment levels took effect for the six workers’ compensation surcharges administered by the California Department of Industrial Relations (DIR). The six will total 5.9318% in 2022, compared to 3.9590% in 2021.

For more information on rate increases between 2021 and 2022, visit the graph below.

How Can You Prepare?

Let’s talk about risk management.

First things first, review your policies before they expire!

It is estimated that commercial properties were undervalued for underwriting purposes by more than 30% in November 2021 policies annually.

To rectify undervaluation, more frequent, in-depth property risk appraisals—that take into account more extreme weather events, potential supply chain hurdles, and inflation trends—are recommended.

Second, write your own story. Don’t let the underwriters do it for you! Work with your insurance broker and risk representative to take appropriate steps to reduce your risks whenever possible. This will make you more attractive to underwriters.

Below is simply an outline of factors that owners can address to influence the most favorable underwriting profile, which leads to the most favorable terms, conditions, and pricing:

  • Take inventory of assets
  • Pinpoint current exposures and cost drivers
  • Update contracts to the current environment
  • Review existing risk management techniques
  • Highlight business continuity plans and loss control measures in place
  • Build a company culture focused on safety
  • Manage claims efficiently
  • Be weather-ready

Additionally, to reduce negative consequences from supply chain crunches and labor shortages in the aftermath of a catastrophe, “risk managers and property owners should consider entering agreements with builders before an event occurs to ensure the availability of materials and manpower for the restoration job.”

Underwriters are more critical now than ever on property, asking in-depth questions on what you’re doing to control your risks; not only to employees but to tenants and visitors.

Read on for more on how to prepare as well as what to expect from workers’ compensation policy renewals this year.

What Mandating the Vaccine Might Mean for Your Business Insurance

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Business owners have experienced unforeseen challenges as a result of the last nearly two years in a global pandemic.

The conversation surrounding the ethics of requiring vaccines has been floating around the workplace for about just as long.

In September 2021, however, President Joe Biden directed the Occupational Safety and Health Administration (OSHA) to introduce an emergency temporary standard (ETS) that requires companies with 100 or more employees to ensure all employees are:

  • Fully vaccinated
  • Or, that they submit to weekly testing and mandatory masking

*As of November 17th, however, OSHA has paused all vaccine mandates “after a federal appeals court upheld a stay.”

Regardless, it is still top of mind for employees. Here’s what mandating the vaccine might mean for your business insurance along with how you can prepare if the mandate is passed.

Who Would This Mandate Affect?

According to The New York Times, companies with 100 or more employees would “have until Jan. 4 to ensure all their workers are either fully vaccinated or submit to weekly testing and mandatory masking.”

This measure would be enforced to promote workplace health and safety and will affect “some 84 million private-sector workers across the country, including some 31 million who are believed to be unvaccinated.”

If the mandate comes into play, OSHA anticipates the ETS will be in effect for six months depending on COVID-19 statistics.

When Did This Mandate Come About?

“The measure was announced by President Biden in September [2021], and details were released on Nov. 4 by the Labor Department’s Occupational Safety and Health Administration [OSHA],” according to The Times.

COVID, ELP, and EPLI

First things first, what is Employer’s Liability Insurance? This form of insurance “protects your business when an employee sues over a work injury or illness,” according to Insureon. It is especially important, considering “almost one in five small businesses will face employee litigation” at some point.

Equally as important to consider is Employment Practices Liability Insurance (EPLI), which is insurance that “provides coverage to employers against claims made by employees.”

With the potential vaccine mandate, we can anticipate an increase in EPLI claims. As a result, we might see EPLI premiums increase. Kyle Jeziorski, Executive Vice President at Founder Shield offered insight: “I think insurers will try to add COVID-19 exclusions to EPLI policies and potentially offer the coverage for an additional premium.”

It’s definitely something we here at Competitive Edge Insurance will continue to keep a pulse on.

How Responsible Are Businesses for the Spread of COVID?

During the onset of COVID, many employees wondered to what extent businesses and business owners should be held liable if an employee were to contract COVID-19 on the job and suffer sickness or even death as a result.

The answer today is still clear as mud.

There are, however, steps your business can (and should) take to prepare for these newly introduced COVID-19 vaccine mandates.

Steps Your Business Can Take to Prepare

Business Insurance tells us that now is the time that businesses should prepare U.S. Equal Employment Opportunity Commission processes as well as human resources (HR) departments for what lies ahead.

As we well know, there are many employees across the U.S. who will request exemptions from receiving the COVID-19 vaccine due to religious or health reasons. This process, called an ‘interactive process,’ can take weeks or even months.

For businesses, this can be a lot added on their plates—especially if they receive a high number of requested exemptions.

Businesses should know this ahead of time and prepare accordingly.

Erect a Framework in Advance

“Businesses owe it to themselves to put together a framework to manage this,” says Chuck Kable, Chief Legal Officer and Chief Human Resources Officer at Axiom Medical. “You have to have a protocol and a process that you have to administer consistently and over time, and you have to treat everybody equally.” 

If businesses fail to do so, this is when liabilities begin to pop up. 

“Any mishandling of an exemption request can run afoul of anti-discrimination laws,” says Adam Kempe of Kelley Kronenberg. Companies might face various liabilities including:

  • Failure to maintain and keep private workers’ health information
  • Failure to follow steps in Equal Employment Opportunity Commission (EEOC) exemption requests

Consider OSHA Fines

If the headache of one of your employees filing a claim with OSHA as a result of your negligence isn’t enough motivation to get your ducks in a line, consider the hefty OSHA fines you might face.

If a complaint is filed, the first thing OSHA is going to look for is your current OSHA Covid Protection Procedures that are in place, which includes your Injury and Illness Prevention Program (IIPP). All employers are required to have IIPPs in place.

OSHA fines can be especially detrimental to your company’s financials because while OSHA personnel might come in looking for one thing, chances are they will do some digging, which could lead to additional fines or penalties. OSHA, in that sense, is similar to the IRS—except for employers.

Employee Screenings

A final precaution that employers should take, according to Brenda Jo Robyn, founder of Competitive Edge Insurance, is to conduct thorough employee screenings.

Brenda Jo also acknowledges that it may be the case that many people will choose to not work as a result of this mandate.

“You can find out a lot about an employee or potential employee from a screening,” says Brenda Jo. “Be sure to look at their workers’ compensation claims and do reference checks.”

Take advantage of not only their most recent reference but reach out to prior references as well.

A Final Word

With this potential vaccine mandate firing up, it’s especially important for employers to be on their A-game as far as safety procedures and insurance are concerned.

“There’s nothing that prevents a company, especially one not familiar with these issues, from now bringing in appropriate HR personnel, a consultant, or employment counsel to understand what to expect,” says Kempe of Kelley Kronenberg.

On the topic of vaccines, did you know that Brenda Jo Robyn, founder of Competitive Edge, began her career as an Epidemiologist who specialized in immunizations? To hear more about vaccines, specifically, her passion for Polio research, visit this blog post.

Why is Phishing the #1 Thing Killing Small Businesses?

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What is phishing? And no, we’re not talking about the activity of catching fish for food or sport. Phishing, spelled with a ‘ph,’ 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 web site, in which the perpetrator masquerades as a legitimate business or reputable person.”

But why is phishing especially harmful to small businesses? Why are they being targeted? We have all the answers and more, thanks to Brenda Jo Robyn, founder of Competitive Edge Insurance.

So, welcome to ‘Why is Phishing the #1 Thing Killing Small Businesses?’ We hope you stick around to learn something new, including how you might protect yourself as a small business owner.

What is Phishing?

Today, phishing can come in a variety of forms. According to Brenda Jo, phishing is “any activity that compromises your organization’s security… It can come in the way of an email or a text or an application.” These applications that retrieve your data can be on your computer, phone, even your iPad. Scammers target you and ask questions to get your information in really creative ways.

An Example of Phishing

Let’s say you receive an email that you’ve been expecting from Bank of America. Why not just ignore it? Well, because…

“It looks like you really should open it. [After all,] it’s a secure document for the bank you’ve been working with lately,” says Brenda Jo. The culprits know you’ve been waiting for this specific type of document to arrive in your inbox because they’ve been screening your emails. 

“So, now they have captured that you’re working with this bank and now this bank is sending you a secure document that you need to open… You open it out of their Google docs, and all of a sudden, bam, you got a worm or a virus on your computer,” says Brenda Jo.

“That’s going to either start going through all your files and looking for stuff. They’re gonna track your emails or they’re going to track your keystrokes.”

Phishing is huge right now. Brenda Jo continues. “I can’t stress enough how important it is to make sure that your computers and data is secure from others. There are a lot of what are called ‘bad elements’ or ‘bad actors’ out there that are trying to steal your data… Right now data is money. And the more data you have, the more money you can make.”

How Dangerous is Phishing for Small Businesses?

The statistics speak for themselves. Right now, 60% of small companies that have been hit by a cyber attack are closing their doors within six months. The reason? It is very costly to come back from a cyber attack.

Most small businesses don’t have the collateral, backing, or lines of credit to make themselves whole again after an attack of this caliber.

How Can Small Businesses Protect Themselves from Phishing?

Training

Focus on training.

  • Training your employees: (For example, they need to know how not to send excel spreadsheets emails! Instead, create a zip file or convert the document into a PDF. Why? It is very easy to scrape data from an excel file while in an email.)
  • Training IT: They need to know what to look for.

Due Diligence

Due diligence is the bare minimum. Document your training and go over it on a weekly or quarterly basis. Next, ensure your IT systems are multi-layered. This means not only having firewalls on your computers and servers but also helpful, educated IT personnel available.

Develop a Planned Crisis Response

A planned crisis response includes a cyber liability policy. As Brenda Jo says, “one of the things that kills the small business is the lack of PR or response to their clients and/or vendors when a phishing attack occurs and data has been compromised.”

“It’s very expensive to go and let everybody know, ‘Hey, your information was taken and here’s the year’s worth of credit monitoring’”—especially if the data is health-related. 

You might face both federal fines as well as fines from the state government. The costs add up, and that’s where cyber liability comes in to help.

Reach Out to Competitive Edge Today

As you look at your coverage, think of the potential for cybersecurity issues, evaluate your tolerance for risk, and take the time to look at your policies in detail. As experts, we at Competitive Edge can tell you where you are vulnerable and what the risk might cost you. It is then your decision to accept the risk or mitigate it with coverage. You know what we would do.
Interested in learning more about the dangers of ransomware and why the need for cyber liability coverage is increasing? Read on in cyber liability coverage for the new era of ransomware.

What to Expect from Changing Contractor Costs

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