Waiver of Subrogation: Added Protection, Added Costs

Subrogation occurs when an insurer pays their insured for a loss caused by a third- party, and then attempts to recoup their payout by making a claim against the responsible third party.

For instance, if you’re in a car accident and it was the other party’s fault, your insurer pays for repairs to your vehicle and then pursues the other person’s insurance company for the loss. In your insurance policy, which is a contract between you and your insurance carrier, you agreed to allow the carrier to subrogate for any paid loss.

In a typical business contract, one business may ask another business to waive its rights of subrogation because the first business doesn’t want to be held responsible for a loss. When agreed to in such a contract, it prevents the business, and its insurer, who has agreed to waive their right, from seeking a share of the damages paid from the other party, even if they are at fault.

But be aware that when a business gives up its right to recover any losses, it increases the insurer’s risk and transfers responsibility to the insured and its insurer for sometimes uncontrollable losses. This can lead to unnecessary loss history and potentially increased insurance costs.

Conducting regular contractual reviews with your insurer agent can easily point out these exposures and help to you to understand and sometimes negotiate this requirement out of your risk profile.

Contact the professionals at The Reschini Group for more information.

Copyright 2022 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice. To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

Rates Held Ransom: Increased Breaches Impacting Coverage Terms

As instances and the scope of ransomware events, and losses associated with them, continue to increase, some insurers are tightening their standards in providing cybersecurity coverage.

According to industry experts, insurers are restricting capacity and implementing increases in premiums to accommodate for businesses not keeping pace with the threat of malware and other online attacks.

Ransomware events began to climb in 2019, leading to the continuing response by insurers. On average, insurance rates have doubled since the surge in attacks began, with rising reinsurance costs expected to drive those rates higher.

Insurers certainly are not abandoning cyber liability coverage, but recognize the underlying issue is that while coverage may be adequate today, the rapidly evolving risk means it may not be adequate tomorrow.

Business owners can help their own cause by implementing as many precautions against online attacks as they can, which can contribute to keeping their insurance costs manageable under the circumstances.

The digital universe has opened a world of opportunity for businesses to grow, expand, and succeed. But the flip side of all that openness poses a threat that continues to grow, expand, and succeed as well.

Managing that risk will be a challenge for business owners and their insurers for the foreseeable future. Eternal vigilance may be the price of liberty, but it’s also the price of keeping your data protected online.

Contact the professionals at The Reschini Group for more information.

Copyright 2022 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice. To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

Contractual Review: Ensuring that Your Coverage is Enough

Interesting how commitments can accumulate when you’re not looking, isn’t it?

You click on a subscription, you agree to get regular updates from a retailer, you cite a preference for a particular brand. And before you know it, funds have been deducted from your checking account, your email inbox gets choked with nuisance messages, and you can’t seem to escape online ads for something for which you are rapidly losing interest.

What began innocently can end up causing issues that can cost time, money, and patience. The same principle applies to insurance coverage, as a business enters into contracts with partners, suppliers, and vendors.

These agreements are recognized as necessary to conduct, expand, and protect a business’ interests. They make complete sense, and can serve a vital purpose. But caution must be taken when entering these arrangements, to make sure that the business’ insurance policies extend to the terms of any new contracts.

Terms and conditions of insurance coverages are written to specific situations – situations that may take on new wrinkles and specifics under new contractual agreements. The last thing any business owner needs or wants is to discover down the road that a partnership or other agreement under contract with another entity means an existing policy does not offer sufficient coverage.

Working with your insurance provider to conduct a contractual review represents an easy way to safeguard against getting caught in such a scenario.

Contracts and agreements accumulate over time. That’s smart business, typically. Benign, even. Just make sure that your insurance coverage keeps up with the terms of any new situation, to avoid costing you time, money, and patience.

Contact the professionals at The Reschini Group for more information.


Copyright 2022 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice. To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

Benefits Blog: ACA Affordability Percentages Down for 2022

The federal Affordable Care Act (ACA), through Internal Revenue Service (IRS) guidelines, has adjusted its affordability percentages downward in 2022, meaning that employers may need to change some of their employee contribution levels.

On August 20, 2021, the IRS issued Revenue Procedure 2021-36 to index the contribution percentages in 2022 for determining affordability of an employer’s plan under the ACA.

For plan years beginning in 2022, employer-sponsored coverage will be considered affordable if the employee’s required contributions for self-only coverage does not exceed the following:

  • 61% of the employee’s household income for the year for purposes of both the pay-or-play rules and premium tax credit eligibility; and
  • 09% of the employee’s household income for the year for purposes of an individual mandate exemption (adjusted under separate guidance). Although this penalty was reduced to zero in 2019, some individuals may need to claim an exemption for other purposes.

The updated affordability percentages are effective for taxable years and plan years beginning on Jan. 1, 2022.

This is a significant decrease from the affordability contribution percentages for 2021, which had been set at 9.83% and 8.27%.  As a result, some employers may have to lower their employee contributions for 2022 to meet the adjusted percentage.

Under the ACA, the affordability of an employer’s plan may be assessed in the following three contexts:

  • The employer shared responsibility penalty for applicable large employers (also known as the pay-or-play rules, or employer mandate).
  • An exemption from the individual mandate tax penalty for individuals who fail to obtain health coverage.
  • The premium tax credit for low-income individuals to purchase health coverage through an Exchange.

Although all of these provisions involved an affordability determination, the test for determining a plan’s affordability varies for each provision.

Understand where your organization falls within these ACA guidelines.  Contact the Benefits Team at The Reschini Group for more information.


Copyright 2022 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

Benefits Blog: Protecting Your Online Identity

When are you not you?

When hackers and other malicious parties steal your identity online, that’s when.  Identity theft occurs when others obtain and use your personal information without your permission.  Once this information has been acquired, thieves can use your existing credit cards or open new ones in your name, write bad checks, take out loans, and generally ruin your credit and reputation.

Once the theft has been spotted and reported, significant damage may – and most likely will – have been done.

Beyond taking the obvious precautions, another way to safeguard yourself from the impact of identity theft is to secure the proper identity theft insurance coverage.

Identity theft insurance can be purchased as a standalone policy or added as endorsement to existing homeowners or automobile insurance coverage.  Even though identity theft insurance does not protect against the cost of the actual theft, it offers a relatively inexpensive option that will cover the cost of reclaiming your identity, to include such items as:

  • Phone call charges, photocopying costs, and postage fees.
  • Salary loss due to uncompensated time off from work.
  • Legal fees.

Another attractive feature of this special coverage is that you can gain access to a fraud specialist who can provide valuable assistance in restoring your good name and protecting your identity.  This service is part of the reimbursement offer for expenses associated with credit restoration, as well.

Make sure you are always you.  Protect yourself from identity theft and the financial fallout it wreaks.  Contact the Benefits Team at The Reschini Group for more information.


Copyright 2022 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

Unsafe at Home: The Heightened Cyber Risk of At-Home Workers

Two years ago, employees across the country and around the world collaborated with their employers to establish ways they could perform their job duties while working from home.  Today, the urgent need for home-based workers has receded, but the popularity of this option remains high.

And while certain trends point to an actual increase in productivity, job satisfaction, and a better work-life balance from working at home, the choice does also come with a few risks, some quite disturbing and potentially very costly.

The Cost of a Data Breach Report, conducted by the Ponemon Institute and IBM Security, reports that 76% of respondents whose organizations have shifted to remote work expect that working from home could increase the time required to identify and contain a data breach.  What’s more, 70% of respondents expect remote working to increase the cost of a data breach.

Those results should cause business leaders to pause, at least for a moment, to think about what remote work represents regarding risks to your organization’s cybersecurity status.  With the geopolitical upheaval emanating from Eastern Europe currently, the world is getting a first-hand lesson in the power of benign cyber systems to damage economies, influence migration of populations, even wage war.  Just imagine the wreckage a malignant cyber attack could create.

Are your remote employees following strict cybersecurity protocols regarding password control?  Tracking and protecting the physical location of their laptops and smartphones?  Accessing only approved downloads and avoiding personal usage or inappropriate personal apps on company equipment?

Keep in mind that three out of four business leaders have concerns about cybersecurity regarding remote work.  Being concerned is one thing.  Acting on those concerns by clearly stating acceptable and unacceptable cyber behavior, and enforcing those standards, is what can make a real difference.

Contact the professionals at The Reschini Group for more information.


Copyright 2022 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

 

Control the Variables: Keeping Workers Comp Costs In Line

Workers Compensation sounds pretty cut-and-dried, right?  Your rate – determined by the state where your company is located and the type of business – gets multiplied by your total payroll and then divided by 100.

But then modifiers enter the picture, which can raise or lower your costs, based on your loss history, or the record of measurably reducing the risk of injury to employees.  Naturally, you want a modifier that drives your workers comp costs down.  Here are some ideas on how to do just that.

  1. Save Money on Workers’ Comp Insurance – The same as selecting car or health insurance, it’s important to shop around for the best workers’ compensation insurance policies.
  2. Ensure You’re Following Workers’ Comp Claims Management Best Practices – By making sure your claims adjuster always follows best practices associated with claims management, payouts can be reduced by up to 50%.
  3. Focus on Safety – Create and embed a true safety culture, continually providing information on safe processes and procedures, instituting regular safety checks, and characterizing safety less in terms of statistics and more by how injuries impact people and their families.
  4. Have an injury procedure in place – It is essential to manage any injuries quickly and effectively before they become worse, and for managers and employees to know their roles and responsibilities when someone is hurt at work.
  5. Start an Incentive Program for New Hires – Employees, especially new hires, often benefit from incentive programs that reward them for learning the safety protocol. Older employees can also be encouraged to help the newer hires learn about the culture of safety through group incentives.
  6. Implement a Return-to-Work Program – Maintaining ongoing communication with injured employees leads to them returning to the job faster, which means returning to a regular paycheck for them and lower overall costs to the company.
  7. Check With Your State – Some states offer discounts if a company implements a program that promotes safety, so it’s worth checking on your state’s policies.
  8. Review Your Employee Classifications – The simple act of ensuring that each employee is classified correctly regarding his or her current job can represent substantial savings.

When you understand and control the variables surrounding workers comp coverage, you can achieve the modifier level that leads to better control of those costs.  Plus, in virtually every example cited here, it’s the proper, practical, and ethical thing to do, as well.  Contact the workers comp professionals at The Reschini Group today to learn more.


Copyright 2022 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

Source: https://news.briotix.com/9-workers-compensation-cost-reduction-strategies

Time Is Money: Results from Latest ‘Cost of a Data Breach’ Report

A data breach creates all sorts of havoc, including significant financial costs.  That’s hardly new information.  But what those costs actually total does make news, as captured in the 2020 “Cost of a Data Breach” report, compiled by the Ponemon Institute and IBM Security.

The information from 2020 (the most current results available) provides a detailed glimpse the financial impacts security incidents can have on organizations, with historical data revealing trends in data breach causes and consequences.  The report shows some consistencies with past research.

Here are the major highlights:

  • The average cost of a breach in 2020 was $3.86 million per breach. This is actually good news, in a way, representing a 1.5 percent reduction from the 2019 cost per breach of $3.92 million.
  • The average time to identify and contain a breach in 2020 was 280 days, virtually identical with the 279 days it took on average in 2019.
  • Regarding prevention against breaches, 59 percent of organizations now have security automation deployed, up from 52 percent in 2019.

If one takeaway leaps out from these high-level results, it is that time is money.  While a higher percentage of businesses have security automation in place, it still takes nearly 10 months to discover and contain a major breach.  And the financial ramifications, even if slightly lower, remain substantial at nearly $4 million per breach.

The need for robust cybersecurity practices and protections continue to grow in importance and relevance.  For more information, contact the professionals at The Reschini Group today.


Copyright 2022 The Reschini Group

Source: https://securityintelligence.com/posts/whats-new-2020-cost-of-a-data-breach-report/

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

Heed the Warnings: Surfside Condo and Pittsburgh Bridge

On June 24, 2021, at approximately 1:22 a.m., a 12-story beachfront condominium in the Miami suburb of Surfside, Florida, partially collapsed, killing 98 people and injuring 11.

The main contributing factor was identified as long-term degradation of concrete structural support in the ground-level parking garage under the housing units, due to water penetration and corrosion of the reinforcing steel. The problems had been reported in 2018 and noted as “much worse” in April 2021. A $15 million program of remedial works had been approved before the collapse, although no main structural work had been undertaken.

On Friday, Jan. 28, 2022, at approximately 6:40 a.m., the Fern Hollow Bridge – which carried roughly 14,000 vehicles a day, connecting major areas of Pittsburgh, Pennsylvania – collapsed about 100 feet into a ravine.  Miraculously, no one was killed but about 10 people received injuries.  The bridge had received “poor” ratings for the past 10 years from inspectors, and was included in plans to be rehabilitated, but not for another five to seven years.

As the shock wears off, the impact on victims and families processed, and the physical work of cleanup and reclamation begins, next come the questions about liability and who is responsible for the costs involved in the aftermath.

In the case of the Surfside collapse, there may be issues surrounding the property insurance and the possibility of Director & Officer claims directed at the Condo board.  Regarding the Fern Hollow Bridge, various municipal bodies and agencies may face insurance investigations and subsequent litigation.  In each instance, warnings about potential failures of the respective structures had been issued, and corrective plans made, but none had been performed in time to prevent a collapse.

One thing may be more certain than anything else, however – claims of this scope will trigger enhanced underwriting by the marketplace.

Your organization may not necessarily face the same level of disaster as Surfside or Fern Hollow, but there may be identifiable risks in play nonetheless.  Once they have been identified and a plan to alleviate them has been developed, it is wise to implement those plans sooner than later, as much as practically and financially possible.

For more information on these matters and how to properly prepare, contact the professionals at The Reschini Group today.


Copyright 2022 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

Benefits Blog: Five Ways to Save on Healthcare Costs

It’s no secret that healthcare expenses have been on a steady, and costly, climb for the past two decades.  Price hikes of 6.5 percent are projected in 2022, with the ongoing COVID-19 pandemic playing a significant role in those increases.  This fact of financial life means employers must think both strategically and creatively about how to lower their health benefits expenses in 2022.  Here are five ways to help achieve savings:

  1. Control Drug Spending – Drug prices rise faster than any other medical service or commodity, with costs now 33 percent higher than in 2014, according to GoodRx.  Employers can educate employees on the price differences between name-brand and generic medications, and encourage using generics to save money while still receiving the same quality treatment.
  2. Encourage Active Benefits Participation – This includes encouraging employees to improve their health literacy, research treatments, and price shop.  By seeing specific prices for procedures and other services, employees can educate themselves before making costly health decisions.
  3. Offer Savings Accounts with Carryovers – Health savings accounts (HSAs), flexible savings accounts (FSAs), and other tax-advantaged savings account options empower employees to control their own spending and improve their health literacy.  Many accounts allow for fund carryover year to year, encouraging more contributions. Since many employers match contributions up to a limit, more money added to these accounts means greater tax savings for everyone.
  4. Embrace Virtual Health Options – A major takeaway from the pandemic has been the expansion of telehealth services, allowing individuals to connect with health professionals quickly, safely, and less expensively.  Employers adding telehealth services into their plan expand access to care and lower expenses for everyone.
  5. Consider Plan Funding Alternatives – A more drastic option for reducing health costs is restructuring how plans are funded.  For instance, a self-funded plan may be more cost- effective than paying a monthly premium for a fully insured plan.  Other options include level-funding or reference-based pricing models, each of which carries its own set of administrative rules and legal constraints.  Funding decisions should not be taken lightly and should be based on several factors, such as size of an organization, risk tolerance, and financial stability, including employees’ ability to take on large premium increases.

Selecting the best methods to contain healthcare costs depends on each organization’s unique capabilities.  The Benefits Team at The Reschini Group can help sort out the right option for your particular situation. Contact us today to get a conversation started.

Resources:

Benefits Insights: Preventive Care

Benefits Insights: Flexible Spending Accounts (FSA)

Know Your Benefits: Strategies for Saving on Prescription Drugs


Copyright 2022 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.