The Industry has moved to a new computer model to predict losses (RMS 11) and this new program is still the number one pressure point driving increased pricing on domestic catastrophic risks, specifically as respects Wind and Hail coverage.

The poor loss experience and new model predicting higher property losses  means pressure from ratings agencies such as A.M. Best to increase insurance rates , creating a need for additional capital reserves and/or an additional investment in reinsurance.  Accounts with heavy coastal exposures in Texas can expect to see increases in the vicinity of 40%, while all of Florida can anticipate a rate increase in the range of 5% – 20%. 

Despite all of the factors above, the reality is that peak catastrophic risk zones in the United States did not experience losses in 2011, and there is still no shortage of capacity in the property insurance industry.  Combined, this will lead to a continued transitioning state for the property insurance market throughout 2012. 

So what to do? Talk to your broker about higher deductibles, look at a wind sublimit, or consider a layered program.

For more information, contact Bill Cammann at 813.387.1880 or Bill.Cammann@LanierUpshaw.com.

Well, that’s exactly what happened to Aaron Feuerstein in 1994.  Feuerstein, who was the Chairman of Malden Mills at the time, was celebrating his 70^th birthday when he received the call informing him his mill was burning to the ground.  It was the largest fire Massachusetts had seen in over a century.

The Chairman who Became a National Hero

When the employees of Malden Mills heard the news they fully expected to be handed their pink slips the next day.

But the following day Feuerstein surprised his employees and the nation by announcing that at least for the next 30 days all employees would be paid their full wages and benefits (and later he ended up extending this commitment to 90 days).

When asked why he did this, Feuerstein said, “[Because] it was the right thing to do.”

Now, I wish this story had a happy ending.

Malden Mills Shuts Down

$25,000,000 of Feuerstein’s personal money and six years later, Malden Mills was forced to file Chapter 11 bankruptcy.  They hung on for another six years due to lenient creditors and government grants but the company, which before the disaster was the largest textile mill operating in the U.S., had to close their doors.

Everyone was rooting for this ethical business leader but the Malden Mills fire serves as a prime example of how a major disaster can serve a fatal blow to a healthy business.  Feuerstein spent most of his life running his business and was still unable to accurately predict how long it would take to get up and running after a disaster and how much it would cost.

It took about six months to resume most of the operations and 21 months to resolve the remaining construction delays and get the remaining operations back on line.  The insurance payouts were inadequate to cover additional financing and other unexpected costs.

What if they would’ve had Adequate Business Income Coverage?

While the details of the mill’s insurance coverage are not widely known, it’s safe to say that they did not have adequate Business Income (BI) coverage – especially since Feuerstein contributed an estimated $25,000,000 of his personal money to fund wages and benefits during the rebuild process.

Business Income coverage, also known as Business Interruption or Time Element insurance, is designed to pay the loss of income and continuing expenses that help a business recover following a total or partial shutdown of business operations due to a covered property loss. 

Structured properly, Business Income is designed to replicate the insured’s lost income stream and covers expenses as if the loss never occurred.  Once this coverage is triggered by a covered loss, (i.e.  fire or windstorm) it’s designed to replace the business’ net income stream, pay ongoing expenses and cover payroll while the business is out of commission.

What is Business Income Coverage?

While the importance of Business Income coverage should be obvious, selecting the right coverage and limits can be complicated by the variety of coverage-form options that exist, the terminology, and the Business Income worksheet that must be completed to help validate an insured’s exposure. 

These factors have made the sale of Business Income complex and time-consuming and many insurance companies and agents are nervous about the topic.  They don’t fully understand what the coverage is intended to do, and are uneasy about the process of helping insureds validate limits and coverage needs.

And that’s where we come in.  We are able to partner with our clients and guide them through the complex process of getting the right amount of Business Income coverage for their business.  We understand each business is different and there is no one size fits all coverage.

We’ll also be the first to admit that the best insurance program cannot assure the survival of every business; but we are certain that adequate protection can dramatically increase the likelihood of reopening after a major fire or disaster.

If you’re interested in learning more about Business Income coverage then call us at 863-686-2113.

Captives come in many different shapes and sizes, from group captive insurance companies to single parent and “micro captives”.  Existing group captives are especially attractive to middle market businesses because the upfront capital requirements are minimal when compared to establishing a new captive insurance company.

Group captives aren’t for everyone. They make good solutions for companies who are focused on preventing and controlling losses through documented safety and claim management programs. These captives reward good loss records in the form of dividends which represent the underwriting profit and investment income normally retained by the insurance company.

Typically, group captives have high barriers to entry as the other captive participants (owners) wish to associate only with best in class companies who share their philosophies and best practices.  And applying for entry into a group captive program is not like applying for traditional insurance.  This is where an insurance professional who knows and understands the captive insurance landscape can help prospects qualify for entry.  Whether it’s safety program analysis, recommendations, implementation, documentation, training, OSHA compliance or ongoing claims consulting, the right insurance professional positions clients to gain control of their insurance destiny through these group captive arrangements.

Have you have ever wondered if there’s an alternative to the pricing cycles of the insurance business?  If you would prefer that your future premiums truly reflect your individual performance, there is another way. 

While it’s common for us to speak fondly of those we’ve lost, Richard really was a special exception to the norm. The positive impact he had on his many clients – synonymous with friends in his case – was profound.  His calling card was “Happy Day,” along with a heartfelt hug. I can honestly say that there has never been anyone in my life (including family) from whom I would get a hug EVERY time I came into and departed from their company.  A day was always brighter for having spent time with Richard.

He wasn’t one of those artificial, rose-colored glasses folks who always seem to be cheerful. Richard’s joy and zest for life was real, probably because he came so close to losing it a little over a decade ago. He fought and survived a courageous battle against throat cancer that medical experts initially gave him slim odds of winning. He decided that no matter how bleak things looked, he would CHOOSE to remain upbeat.  His doctors credited his survival on his positivity and will to live.

When Christmas came and went in 2001, Richard was too consumed with his cancer fight to take down his decorations.  Over time, he came to regard his Christmas tree as his “Tree of Life” and decided to make it a permanent fixture in his home. When asked why he didn’t just take it down, he would say,”I want my tree to remind me daily of the preciousness of life and what a gift it is.”

 ”Reflections of Excellence” is a fairly “touchy feely” name for a men’s barber shop. For Richard, however, no monicker could more accurately capture the essence of his professionalism and his expectations of his staff.  He was a master barber and often lamented how his trade was becoming a lost art.  He was a perfectionist who wanted his work to ALWAYS reflect excellence.

Even though I never had to ask him to fix any deficiencies in his work, he would always take meticulous care to show me my haircut from every angle to ensure I was satisfied.  And though I never failed to tip him generously each time I saw him over the many years I went to him, he always gave me my change initially and seemed genuinely grateful when I gave him a tip.  

Richard also had a way of making sure you left his chair knowing that you were also a Reflection of God’s Excellence.  I am so thankful to have known him and call him my friend. That he touched so many in the same way, as evidenced by his packed memorial service, warms my heart.

When we all ultimately hang up our scissors and get the call home, all that will remain is the impact we’ve had on others. Thanks, Richard, for reflecting excellence and being such a shining testimony to the joy of life.  Happy Day, my friend. I’ll see you later.  

Scott

No, chances are a thief has stolen your identity and filed your tax return in order to steal your refund check. But it gets worse, now you have to deal with the IRS (who doesn’t have the greatest reputation for customer service) and explain the situation.

This very scenario happened to Florida resident, Debra Tyler. Tyler contacted the IRS and did what they recommended, filled out the paperwork and filed a police report.

Six months after Tyler submitted the necessary paperwork and police report, the IRS sent her a replacement refund check.

But she never got it. Her replacement check was also stolen!

And on top of all this Tyler received a bill from the IRS for $1,025, requiring her to pay the interest on the money from the first check the thief stole.

“Incompetence across the board,” said Tyler.

 How Common Is Tax Related ID Theft?

 So how common is this? Well for the 12th year in a row, identity theft topped the list of consumer complaints received by the FTC in 2011, with nearly 280,000 complaints, according to a recent FTC report. And the number of tax related cases continues to grow with 24% of identity theft complaints being tied to tax or wage-related fraud (up from about 15% in 2010, according to the FTC).

Identity theft is one of the biggest crimes happening today.  And now the thieves have figured out how to steal money, not only from individuals, but also from the government. And the unfortunate part is that the IRS can take all the time they feel is needed to investigate claims like this.

 7 Ways to Minimize Identity Theft

 So what can you do to protect yourself? Well here are eight practical things you can do to protect yourself from becoming a victim.

 1. Protect your Social Security number

Keep a careful watch over your Social Security number. Don’t carry it around in your wallet or glove box. And if someone asks for your Social Security number, ask:

What will happen if I don’t give you my Social Security number?

How will it be used?

What safety measures do you have in place to help protect my SSN from being stolen?

 2. Treat your trash and mail carefully

Get in the habit of always shredding your sensitive information (as well as credit offers you get in the mail). You may also want to opt out of receiving prescreened offers of credit in the mail by calling: 1-888-5-OPT-OUT (1-888-567-8688). Note: You’ll be asked to provide your SSN which the consumer reporting companies need to match you with your file.

Send mail that contain sensitive information at the post office or a post office collection box, rather than in an unsecured mailbox. Check your mail often. If you’re going away on vacation be sure to contact the USPS at 1-800-275-8777 or visit www.usps.gov to request a vacation hold until you return.

 3. Be careful about giving out your personal information online

When you’re online and a website asks for your personal information make sure you know and trust the business. Many times web forms only require you to input your name and email address while the rest of the information (i.e. address, DOB, etc.) is optional.

If you don’t know or trust the business then don’t enter your information (and especially don’t enter your Social Security number).

 4. Use difficult passwords

Avoid using easy passwords like your mother’s maiden name, DOB, the last four digits of your SSN, your phone number, a series of consecutive numbers, or a single word that would appear in a dictionary. If you want to create strong passwords it’s best to use a combination of letters, numbers, and special characters.

 5. Protect your purse and wallet

If you run into the store don’t leave your wallet or purse sitting out in the open. And when you get home make a habit of bringing your wallet and purse inside with you. It’s also a good idea to leave your Social Security card and passport in a secure place at home (i.e. fire proof safe).

 6. Consider placing a freeze on your credit

Many states allow consumers to “freeze” their credit. If you place a freeze on your credit, potential creditors and other third parties will not be able to gain access to your credit report unless you temporarily lift the freeze.  The reason for doing this is to prevent an identity thief from opening a new account in your name. A credit freeze does not affect your credit score – nor does it keep you from getting your free annual credit report.

Credit freeze laws are regulated on a state level. Some states allow anyone to freeze their credit, while in other states, only victims of identity theft are allowed. The cost of placing and lifting a credit freeze also varies. Some states make credit freezes free for identity theft victims, while other consumers pay a small fee. If you want to freeze your credit, it would mean placing the freeze with each of the three credit reporting agencies.

 7. Consider identity theft insurance

While identity theft insurance won’t stop identity thieves, it can help minimize losses if an identity theft happens to occur. As with any product or service be sure you understand what you’re purchasing.

One thing most people don’t realize until after the fact is that one of the major costs of identity theft is the time it takes to clear your name. You should also know that many companies and law enforcement officials will only deal with you (not a representative from the insurance company).

So, even if your policy provides you a personal identity theft counselor, that counselor can often only guide you, as opposed to doing all the work to clear your name.

 Minimize your chances of becoming a victim

If you practice these seven tips you will be taking a proactive step to help minimize your chances of becoming a victim of identity theft. The most important thing to remember is that your personal information is yours and you are free to decide if you want to give it out or not.

Picture by Don Hankins from Flickr

A common misconception is that only the breadwinner of the family needs life insurance. But have you ever considered how much it would cost to hire someone to do the job of a stay-at- home parent?

According to a recent study by Salary.com, the average stay-at-home mother in the United States works 96 hours each week which would equate to an annual compensation of $122,732!

You might think that’s an exaggeration…but is it?

Think about what it would really cost if you lost your spouse and you had to:

• Pay for day care or after school care.
• Tap into your emergency funds to pay for additional expenses.
• Hire a tutor to help your children with their schoolwork.
• Hire a housecleaner to maintain a clean and healthy home.
• Hire someone to drive your children to their extracurricular activities.
• Spend more eating out because of a lack of time to cook at home.

After you consider all that, $122k doesn’t seem too unrealistic now does it?

Cost of child care

Let’s take a closer look at just one of these items on that list: child care. If you or your spouse currently stay home with your kids you may not be familiar with the high cost of child care these day, so let’s review the cost…

Parents paid an average of $15,895 for full-time infant care in a center, according to the National Association of Child Care Resource and Referral Agencies (NACCRA). And one year of after school care at a center averaged $10,720 per child. So if you had three kids in after school care that would come to $32,160 a year!

On top of all this the National Funeral Directors Association reports an average funeral cost $6,560 (as of 2009). This is an expense that could be completely covered by life insurance.

If your stay-at-home spouse died with three kids

So let’s imagine, for one morbid moment, that your spouse passed away unexpectedly and you have three children, one in day care and two in after school care:

Funeral $6,560

Daycare $15,895

After School Care $21,440

Year 1 Total: $43,895

 And this doesn’t take into consideration other variables such as increased cost for food and housecleaning. As you can see the expenses in the first year alone could easily exceed $50,000.

The big picture…after the first year

If the average cost for child care and funeral is around $50k in the first year alone what will that look like over an extended period of time? Well according to Visual Economics, “The price tag on raising a child from birth to 18 is pretty staggering…Each child that you raise will cost more than buying three brand new, 2011 Jaguar XFs.”

Of course there are many variables and every situation is different but the bottom line is this: losing a stay-at-home parent is costly. And life insurance is a smart way to plan ahead.

Plan for the worst…hope for the best

Of course nobody wants to think about such things happening to them. But the truth is we don’t know how long we have here on this earth. People who have lost loved ones early on in life will be the first to tell you they never thought it would happen to them.

And that’s what insurance is for. It’s not a necessary evil…it’s a way to prepare for those unforeseen life events. It’s so you can put those fears to rest and have that peace of mind that’s so valuable.

www.youtube.com/watch?v=jLoeas67u74

www.youtube.com/watch?v=tIgtwTKzE58

Why are you buying life insurance coverage?

The first step in figuring out how much life insurance you need begins with a simple question: “Why do you want life insurance?”
Answering this question is half the battle. People purchase life insurance for different reasons. Here are some of the most popular reasons:
• To protect an income stream.
• To allow your survivors to pay off all your debt.
• To ensure your children can attend college if you are no longer here to support them.
• To compensate for the loss of a stay-at-home parent[Check out our blog post on this topic]

Protecting an income stream

Protecting an income stream is the most popular reason people take out life insurance and it’s easy to understand why. Think about it. If you or your spouse were to die unexpectedly what kind of financial burdens would that place on the surviving members of the family?
If you make $100,000 a year and your wife stays at home with the kids then what would happen if you suddenly passed away? In the absence of life insurance where would she obtain the financial resources to pay the mortgage, the car payment, food, and other expenses? Would she have to quickly find a job…would she feel pressure to have to quickly remarry?
If you had life insurance that was able to pay $50,000 a year for 15 years then that would be a tremendous help during an already difficult time.

To pay off debt

I’m assuming you’d prefer to leave an inheritance of money (not debt) to your family. Think of all the debt you currently have (including the house). If you were to die then the burden of that debt falls on your loved ones. How nice would it be if when you died your home, cars and other consumer debt was completely paid for?

To pay for your children’s college

College is expensive enough as it is. But imagine how much it will cost 10 years from now. Many single parents cannot afford to put their children through college. But a well-planned life insurance policy could change that. Even if you weren’t alive you could still put your kids through college by planning ahead today.

Stay at home parents

The primary breadwinner is not the only member of the family who needs life insurance. Have you ever considered how expensive it would be to pay someone to do the job your stay-at-home spouse does?

To read more for life insurance needs for stay at home parents check our blog here.

After you know “why” then the next step is…

Once you know why you need life insurance then you’re ready to proceed to the second step. This step involves taking into consideration several factors which include:
• Inflation
• The distribution rate (how much return can you expect on your money?).
• How many assets you have.
• How much debt you have.
• How long you want to have that income stream coming in.
• How the life insurance will impact your estate taxes.

Don’t do it “tomorrow”

So now can you see why a cookie-cutter approach simply will not do when we’re talking about a topic as important as life insurance? I know it can seem like a daunting task to answer all these questions and it’s tempting to put this on the “backburner” but I encourage you not to.

No, I’m not just trying to make a sale here…whether you go with Lanier Upshaw or another trusted advisor is not the point. What matters most is that you have a plan in place in case something unexpected happened to you tomorrow. I hate to sound so depressing but according to recent studies the mortality rate is expected to remain at 100% over the next 50 years.

So why not just bite the bullet and answer these important questions once and for all. Then you can check it off your list and go to sleep knowing your family will be taken care of even if you’re no longer here to support them.

If you want to speak with one of our life insurance specialist feel free to call 863-686-2113 for a free consultation. If nothing else at least you’ll find out how much life insurance you need for you and your spouse.

Safeway’s “Healthy Measures” Program

Safeway spearheaded a policy of “health re-engineering” back in 2005. The company’s goal was to give individuals more control of their health dollars and focus more on prevention than on treatment. 

Under Safeway’s “Healthy Measures” program, employees undergo screening tests (including blood pressure, cholesterol, and weight control), and participants who score well pay lower (up to $780 per individual) health insurance premiums.  According to Safeway their efforts reduced their total health care spending by 13% and employees who signed up have saved more than 20% on their premiums.

Steve Burd, President and CEO of Safeway wrote in the Wall Street Journal, “At Safeway, we are building a culture of health and fitness. The numbers speak for themselves. Our obesity and smoking rates are roughly 70% of the national average and our health-care costs for four years have been held constant. When surveyed, 78% of our employees rated our plan good, very good or excellent.”

In addition to the $780 Healthy Measures incentive, Safeway offers employees many other ways to be healthy including:

• A state-of-the-art fitness center near Safeway’s Pleasanton headquarters.
• Gym membership discounts.
• 24-hour nurse hotline.
• Free lunch at the company cafeteria for every eight visits to the gym.
• Subsidized cafeteria, which offers lots of vegetarian food.
• Portion size, calorie count, cholesterol and fiber count posted for all prepared meals in the cafeteria.

 Burd stated in the Journal, “As much as we would like to take credit for being a health-care innovator, Safeway has done nothing more than borrow from the well-tested automobile insurance model. For decades, driving behavior has been correlated with accident risk and has therefore translated into premium differences among drivers.

Stated somewhat differently, the auto-insurance industry has long recognized the role of personal responsibility. As a result, bad behaviors (like speeding, tickets for failure to follow the rules of the road, and frequency of accidents) are considered when establishing insurance premiums. Bad driver premiums are not subsidized by the good driver premiums.”

 Farrell Backlund Insurance Agency

 Taunton, MA insurance agency, Farrell Backlund (FB Insure) understands the cost of risk as they advise clients to minimize it wherever possible. Taking their own advice to heart, FB Insure knew there would be a positive return for investing in their employees’ health. They just weren’t sure what the best course of action to take would be. So they consulted with a company who specialized in wellness.

FB Insure chose EVOLUTION Bodywork & Nutrition, (EVOLUTION) to help them implement a wellness program. EVOLUTION’s solution was all encompassing. They addressed the company’s wellness and culture as a whole while also creating individualized programs to meet each participant’s needs and goals.

EVOLUTION’s first step was to ask employees to complete a confidential Personal 
Wellness Assessment followed by screenings for blood glucose (non-fasting), cholesterol, blood pressure and body composition. 

Up until now this sounds like standard operating procedure for any employee wellness program. But they didn’t stop there.

The next step, and most unconventional in our opinion, was that each participant was encouraged to bring a family member to the first interview with a registered dietitian, especially if that family member was responsible for shopping and cooking.

For the first six months of the program, participants met with a registered dietitian twice a month. These wellness counseling sessions were conducted on an individual basis, during business hours, paid by the employer.  Employees were also invited to attend cooking 
demonstrations, taste tests, and grocery store tours.

As the program progressed a physical fitness component was added which included small group exercise and stress management classes, as well as a pedometer program.

“We’ve been very happy with the results of EVOLUTION’s Employee Wellness Programs,” says Russ Martorana, President, FB Insure. Successful results have included:

• After three months, participation remained at 100%, despite anticipated attrition.

• At the completion of twelve months of programming, employees had lost nearly 500 pounds and those with total cholesterol results in the borderline and high risk ranges decreased. 

• In less than 18 months, significant improvements have been seen across the board  for FB Insure employees: in body fat; cholesterol; blood pressure; physical activity; smoking prevalence; systolic and diastolic blood pressure; seat belt use; and overall physical health.

• Decrease in employee absenteeism.

• Increased sense of community and peer support.  “Walk into the kitchen and you will see people sitting around talking about a recipe that they made for dinner last night,” says Josie Lorina-Baker, marketing director at FB Insure.

What About You?

In what ways could you take charge of your health related expenses at your company? If you currently have a wellness program please share what you believe has been the most effective and most challenging part of it.