Business Briefs

• Workers compensation costs continued their nationwide decline in 2006, according to a report from the National Academy of Social Insurance. It was the second consecutive year that costs to employers saw a decline. Between 2003 and 2006, the cost per $100 in covered wages has gone from 1.75 cents to 1.58 cents. The group attributed most of the decline to California’s aggressive attempts to reign in the once skyrocketing cost of workers compensation insurance. The group said if that state was not included, there would have been almost no change in the national numbers in 2006.
• While higher gas prices might put downward pressure on the cost of car insurance as people choose to drive less, there is another powerful trend that might help keep prices right where they are. The Insurance Research Institute recently found that injury claims from the drivers of smaller cars are about 14 percent higher than the claims from larger cars. This is significant because as gas prices rise, drivers are buying smaller, more fuel efficient vehicles. “The impact of higher gas prices on drivers, accident severity, and insurance costs is anything but simple,” said Elizabeth A. Sprinkel, senior vice president of the IRC. “Our findings indicate that higher average claim costs associated with lighter vehicles have the potential to offset, to some extent, whatever beneficial effects might occur from less driving. It’s far too early to know how all these effects together will influence insurance claim costs.”

Getting ready to make a claim

Those unfortunate enough to have been in the path of Hurricanes Gustav or Ike are now likely dealing with the problem of filing an insurance claim after a devastating natural disaster. Dealing with the paperwork might be trying even in the best of circumstances, but after a major natural disaster the task can seem overwhelming to the unprepared business owner. That’s why it is best to know what will be expected when filing a claim before the storm, fire or other disaster strikes.

The Insurance Information Institute recently gave some tips to those who were hit by Gustav, but knowing what to do before hand can give you a leg up on the process. Here is what the institute advised:

• Be ready to give your insurance representative a description of the damage. If you have had to evacuate, make sure your agent knows how to reach you.
Take photos of the damage. These will help you with the claims process.
• Prepare an inventory of all damaged or destroyed property. Be sure to make two copies — one for yourself and one for the adjuster. Your list should include a description of the items, their approximate age, cost at time of purchase and estimated replacement cost.
• Collect canceled checks, invoices, receipts or other papers that will assist the adjuster in obtaining the value of the destroyed property.
• If you are able to access your property, make whatever temporary repairs you can. Save receipts for supplies and materials you purchase. Your insurance company usually will reimburse you for reasonable expenses.

It is also important to know what is covered in your policy. This will help you plan and will also guide you while you are collecting information for your insurance representative. And if you have a business interruption policy, be sure to keep close records on how much you are spending and how much interruption or dislocation is costing you.

Are you ready?

No matter where you do business in the United States, you are almost certainly exposed to some sort of natural disaster. But a recent survey commissioned by FM Global shows that many businesses might be underestimating the risk they face from natural disasters.

The survey, which is based on the responses of some of North America’s biggest corporations, found that while almost all of the companies surveyed have operations exposed to natural catastrophes, less than 20 percent indicated that their firms were “very concerned” about such disasters hurting their bottom line.

“The findings reveal a surprising and concerning gap between the levels of natural catastrophe exposure among North America’s largest companies and their level of preparedness,” said Ruud Bosman, the executive vice president of FM Global.

The survey reported that there was a significant gap between the number of companies that reported that they were “well prepared” for a natural disaster and the number that were exposed to the threat.

The study should be taken with a grain of salt as FM Global is one of the largest business property insurers in the world, and so has an incentive to scare up some business. But business owners whose businesses aren’t usually subject to hurricanes and earthquakes should take note of the survey. Even if the risk is small, there is always some risk of natural disaster. Underestimating that risk is the surest way to be unprepared if the worst should happen.

Taking on texting

Talking on a cell phone while driving isn't a good idea. But until recently, lawmaker and others didn't give much thought to texting, arguably a much more distracting activity. But recently that has begun to change.

Texting, the act of typing short messages on cell phones, has been popular for years. But it wasn't until May of last year that Washington became the first state in the country to ban texting while behind the wheel. Other states have begun banning the practice as well, but staring and pecking at your phone while driving down the highway is still legal in many places.

And texting while driving is apparently common. A survey last year by Nationwide Mutual Insurance found that almost 1 in 5 Americans admit that they text while driving. And it's not just people driving cars. The California Public Utilities Commission recently banned the use of cell phones by train operators in the state after one of the deadliest train accidents in decades. The cause of the recent accident in Southern California is still under investigation but may have been caused by the train engineer's text messaging.

"Texting while driving is so obviously unsafe that it's hard to believe anyone would attempt it, yet everyday observation suggests there are an awful lot of folks who do," said California State Senator Joe Simitian, who wrote California's new law banning texting while driving.

Shaking the Big Apple

Earthquakes are generally thought of as a West Coast phenomenon. But a new paper in the Bulletin of the Seismological Society of America shows that New Yorkers should be ready for a little shaking.

The scientists who studied the issue say there are many active faults that run under the New York area and that there is the possibility of large quakes in the area. They say that the New York area suffers a 5.0-magnitude quake every 100 years or so. And while a quake that size would barely get a Californian’s attention, a 5.0 quake in New York could cause significant damage. That’s because while California is largely prepared for quakes much larger than that, New York has many older brick buildings that could collapse in a quake of that size. New Yorkers also are much less likely to have the emergency supplies or insurance to cover themselves in the event of a quake. And New York also contains a dense collection of people and infrastructure, something that isn’t true in most of California.

The chances of a big quake hitting the New York area, in any given year, are still relatively small. But this research emphasizes that while the risk is relatively small, New Yorkers face a real danger that shouldn’t be ignored.

Agreement on disaster policy

In this hotly contested political season, it seems that Republicans and Democrats can agree on very little. But one place where they can find some agreement comes in the area of natural disaster insurance.

Both parties recently included in their national platforms a commitment to adopt some sort of national natural disaster insurance policy. The Republican National Committee’s plan is a bit more vague. It simply promises some kind of insurance policy, and to have a better response to disasters. The Democratic proposal was a bit more concrete. The Democrats propose setting up a “National Catastrophic Insurance Fund to offer an affordable insurance mechanism for high-risk catastrophes that no single private insurer can cover by itself for fear of bankruptcy.”

The idea of some sort of government backed insurance program is not new. As losses from large natural disasters have gotten more expensive for insurance companies to cover, many have argued for some kind of government backed program to provide some relief.

“An integrated private-public partnership can increase mitigation and education before catastrophe strikes, enhance responsiveness during a catastrophe and assure the resources are available so homeowners can recover in the aftermath of massive natural events like devastating hurricanes and enormous earthquakes,” said Ed Collins, national director of ProtectingAmerica.org, a Washington group that advocates for better disaster preparedness.

Danger from above

Companies that have employees who work outside -- and even those that don’t -- should be aware of the dangers posed by lightning strikes. The National Weather Service recently said just as many people die every year from lightning as from tornados. They called it the “underrated killer” because while tornados do their damage in one episode of mass destruction, lightning tends to kill its victims one at a time. The service issued a few tips to protect yourself and your employees:

• Watch for storms: Most storms develop in spring and summer, but lightning strikes are common throughout the year.
• Go inside: Lightning can strike from 10 miles away. The general rule of thumb is if you can hear the lightning, you can be hit by it.
• While inside: Stay off corded phones, computers or other electronics that can carry an electric charge from a strike. Also avoid plumbing fixtures, as these also can carry a jolt.
• Before the storm: Buy surge protectors for your office equipment and install ground-fault protectors. The protectors can detect an electrical grounding, like a person getting shocked, and shut off the power.

Broadening scope of ADA

After a series of Supreme Court decisions that narrowed the scope of the Americans with Disabilities Act, the U.S. House of Representatives and the Senate have moved to restore protection to some workers. A series of decisions over the last several years have chipped away at the act. The restrictions included not covering those people who were able to control their disabilities with medication or prosthetics.

“The protections afforded under this historic law have been eroded and the result is that people with serious conditions like epilepsy or diabetes could be forced to choose between treating their conditions and forfeiting their protections under the law.,” said Sen. Tom Harkin, the chief author of the original ADA. “That is not what Congress intended when we passed the law, and this bill is the right fix.”

The bill passed overwhelmingly in the House and unanimously in the Senate. It was supported by both disability rights groups and business organizations like the U.S. Chamber of Commerce. It is widely expected to be signed by President Bush. For employers, the expansion means that some workers who might not have been covered under the original act might now be covered. Check with a legal professional if you have any concerns.