4rd Quarter Insurance Risk Newsletter 2019

Interview with Fred Prosser, President at Truss Components of Oregon

Truss Components of Oregon fabricates top quality roof and floor trusses for residential, commercial and agricultural buildings. They have had property and casualty insurance through broker Chris Foster for 40 years and added a benefits package for their employees this fall. Fred Prosser shared his experience working with our team…

What is your overall impression of Brown & Brown Northwest?
Brown & Brown Northwest has been a valuable member of Truss Components’ team for many years. We have been fortunate to work with our broker for all our business insurance needs. He goes above and beyond providing insurance. He cares about the welfare of Truss Components and all of our employees. The team at Brown & Brown have provided us excellent products and service.

You originally had just property and casualty insurance through Brown & Brown, and then added an employee benefits package. Why make that change?
Many years ago, our broker helped us with our workers comp coverage. We had a very poor record and were in the assigned risk pool. BBNW guided us to a safety consultant who worked with us to fortify our safety program and over a period of four to five years. We turned things around and have been fortunate to have an excellent record and benefit from the yearly dividends from SAIF.

Because of the efforts and our past experience with Brown & Brown, I chose to have the BBNW team give us options on our ever-increasing medical insurance. With a very short timeline, they came through with a competitive and comprehensive plan.

How has our benefits team stood out in the customer service we provide?
Brown & Brown Northwest now handles all of our insurance needs. Their customer service is by far the best I have encountered in my 43 years in business.

Anything else you’d like to share?
The greatest asset that Truss Components has is our employees and our team of vendors, suppliers and service providers that have allowed us to grow and thrive for the past 35 years.
Thank you Brown & Brown for knowledge, concern, encouragement and service to Truss Components.

What’s New in the Market: Commercial Insurance Prices RisingBar Char With Arrow Going Up

As pricing increases and coverage reductions for certain risks gain traction, many commercial policyholders are experiencing challenging insurance renewals. Multiple years of rate decreases, followed by record catastrophe losses in 2017 and 2018, are resulting in greater discipline on the part of insurance carriers, experts say. The Pacific NW insurance marketplace has not seen these market conditions in approximately 15 years.

Recent reporting from various sources state that average property insurance rates are increasing up to 20-25%, although a significant variance exists depending upon classes of business. The severely distressed accounts that are subject to higher catastrophe exposures or with a challenging loss history are renewing with significantly higher rate increases. On the other end of the scale, lighter classes of business with positive loss history may achieve rate increases at only single-digit levels.

Property valuation is another item of discussion among underwriters, with many carriers taking a hard look at what they had agreed to over the past ten years. As the cost of construction increases, insurance carriers are pushing for higher replacement cost valuations, as well as evidence of how those values were determined. The consequence could be a greater cost differential for the client: higher insurable values x higher rates = greater premium increases.   

Commercial property insurance is not the only insurance segment experiencing challenges. Business Auto insurance continues to see rate increases as well, with many insurance carriers reporting renewal increases of 10-15% on average. Rising auto repair costs, coupled with a dramatic rise in the frequency and severity of distracted driver claims, are major contributing factors.

General Liability and Umbrella/Excess Liability coverages are also being affected. In some areas, courts are proving more favorable to plaintiffs in actions targeting businesses, resulting in verdicts with higher settlements. These larger settlements – in both Auto and General Liability – are contributing to an increase in insurance claims that are breaching the Umbrella/Excess Liability layer of coverage at a higher rate than previously seen. As a result, insurance carriers are looking to limit their exposure by reducing the amount of Umbrella/Excess Liability coverage they offer, as well as increasing rate within this segment.

Experts have advised that we can expect current conditions to continue into at least the first half of 2020, with specific industry classes being more affected by rate increases and reduced capacity, including habitational properties, auto dealer’s open lot, recyclers, food-related accounts, foundries and wood product industry classes.

Man Going Up LadderRisk Management: Ladder Safety

While you might think of ladder-related accidents as an issue that happens at home, falls from elevated surfaces are frequently listed as one of the top 10 causes of accidents in the workplace. Most of these accidents occur due to failure to follow basic ladder safety. Here are some safety tips to help prevent ladder injuries.

Setting up Safely
Make sure you select the correct ladder for the job—check the length and duty rating. Proper length is a minimum of three feet extending over the roofline or working surface. Inspect your ladder before each use for any of the following loose or damaged parts:

• Steps
• Rungs
• Spreaders
• Rung dogs
• Safety feet
• Other parts

Clear the area where you will be working. Never place a ladder in front of a door that isn’t locked, blocked or guarded. Because metal ladders conduct electricity, use a wooden or fiberglass ladder near powerlines or electrical equipment.

Check that all locks on extension ladders are properly engaged before placing your ladder on a steady surface. The ground underneath the ladder should be level and firm. Large, flat wooden boards braced underneath a ladder can help level it on an uneven surface or soft ground.

Straight, single or extension ladders should be set up at approximately a 75-degree angle. Use the 1:4 ratio to ensure your safety when on a ladder. Place the base of the ladder one foot away from whatever it’s leaning against for every four feet of height up to the point of contact for the top of the ladder.

Use Caution
Always exercise caution when using a ladder with the following safety considerations:

• Make sure the weight that your ladder is supporting does not exceed its maximum load rating (user plus materials). And only one person should be on a ladder at a time.Always keep your body centered between the rails of the ladder. Do not lean too far to the side while working and never overreach. Instead, descend from the ladder and move it to a better position.Do not step on the top step, bucket shelf, or attempt to climb or stand on the rear section of a stepladder.
• Always face the ladder when climbing up or down and slowly step down from a ladder if you feel dizzy or tired.
• Never leave a raised ladder unattended.
• Always wear non-slip footwear when on a ladder.

Employees in a meetingEmployee Benefits: 2020 ACA Reporting Deadlines

Employers must comply with numerous reporting and disclosure requirements throughout the year in connection with their group health plans.

Listed below are upcoming important compliance deadlines for employer-sponsored group health plans, organized chronologically for the first quarter of 2020. For these requirements, the information provided shows the deadlines that apply to calendar year plans. For non-calendar year plans, these deadlines will need to be adjusted to reflect each plan’s specific plan year.

January 2020
Employers that filed 250 or more IRS Forms W-2 for the prior calendar year must file Forms W-2 with the Social Security Administration and furnish Forms W-2 to employees by Jan. 31 of each year, unless an extension applies.

February 2020
Applicable Large Employers (ALEs) that sponsor fully or self-insured health plans are required to report information about the coverage to the IRS each year, using IRS Forms 1094-C and 1095-C. Employers that are not ALEs use IRS Forms 1094-B and 1095-B to meet these reporting obligations. The deadline for filing paper versions of the forms is Feb. 28, 2020. The deadline for electronic filing is March 31, 2020.

March 2020
Group health plan sponsors that provide prescription drug coverage to Medicare Part D-eligible individuals must disclose to the Centers for Medicare & Medicaid Services (CMS) whether prescription drug coverage is creditable or non-creditable within 60 days after the beginning of the plan year. For calendar year plans, the deadline is March 1, 2020.

ALEs that sponsor fully or self-insured health plans to report information about the coverage to covered employees each year, using IRS Form 1095-C. Employers that are not ALEs use IRS Form 1095-B to provide this information. The IRS recently extended the deadline for furnishing 2019 employee statements, from Jan. 31, 2020, to March 2, 2020.

The electronic filing deadline for Code Sections 6055 and 6056 reporting is March 31, 2020. ALEs that sponsor fully or self-insured health plans are required to report information about the coverage to the IRS each year, using IRS Forms 1094-C and 1095-C. Employers that are not ALEs use IRS Forms 1094-B and 1095-B to meet these reporting obligations.

For More Information
Keeping track of these compliance deadlines can be tricky, but we’re here to help. Please reach out to your Employee Benefits team with any questions.

House Covered in SnowPersonal Insurance: Tips for Winterizing Your Home

As cold weather approaches, it is important to winterize your home to help ward against personal injury and financial disaster. As temperatures begin to dip, your home will require maintenance to keep it in good shape throughout the season.

Here are some ways that can help you prepare your home for winter:

Furnace Inspection
The first order of business is to call an HVAC professional to inspect your furnace and clean ducts. It’s also a good idea to stock up on furnace filters and change them monthly. Consider switching out your thermostat for a programmable one.

Get the Fireplace Ready
If your chimney hasn’t been cleaned for a while, call a chimney sweep to remove soot and other undesirable accumulations, like creosote. It’s best to cap or screen the top of the chimney to keep out rodents and birds. Buy firewood or chop your own. Whatever choice you make, store it in a dry place away from the exterior of your home.

Check the Exterior, Doors and Windows
This is critical for your health and safety. Inspect exterior for crevice cracks and exposed entry points around pipes and seal them. Use weatherstripping around doors to prevent cold air from entering the home and caulk windows. Replace cracked glass in windows and, if you end up replacing the entire window, prime and paint exposed wood. If your home has a basement, consider protecting its window wells by covering them with plastic shields.

Inspect Roof, Gutters and Downspouts
If your weather temperature will fall below 32 degrees in the winter, adding extra insulation to the attic will prevent warm air from creeping to your roof and causing ice dams. Check flashing to ensure water can’t enter your home. Consider replacing worn roof shingles or tiles. Clean out the gutters and use a hose to spray water down the downspouts to clear away debris. You may also want to install leaf guards on the gutters or extensions on the downspouts to direct water away from the home.

Check Foundation
Rake away all debris and edible vegetation from the foundation. Seal up entry points or cracks to keep small animals from crawling under and into the house – mice can slip through space as thin as a dime. Inspect sill plates for dry rot or pest infestation. Secure crawlspace entrances.

Prevent Plumbing Freezes
Locate your water main in the event you need to shut it off in an emergency. Drain all garden hoses. Insulate exposed plumbing pipes. Drain air conditioner pipes and, if your AC has a water shut-off valve, turn it off. If you go on vacation, leave the heat on and set to at least 55 degrees.

Prepare Landscaping & Outdoor Surfaces
A winter storm can ravage the outdoors to such an extent that you can experience devastating effects in your surrounding area and your home. Ask a gardener when your trees should be pruned to prevent winter injury to them, and trim trees if branches hang too close to the house or electrical wires. Seal driveways, brick patios and wood decks.

Prepare an Emergency Kit
Buy indoor candles and matches/lighter for use during a power shortage. Find the phone numbers for your utility companies and put them in the Contacts section of your cell phone. Buy a battery back-up to protect your computer and sensitive electronic equipment. Store extra bottled water and non-perishable food supplies (including pet food, if appropriate), blankets and a first-aid kit in a dry and easy-to-access location. Often overlooked, it’s smart to prepare an evacuation plan in the event of an emergency.

Man Thinking While He looks At His LaptopSurety: An Inner Monologue (Pt.1)

It’s a normal day and you’re on your second cup of coffee. It’s time to get through some emails. You open one that’s had a bit of back and forth with a representative from another company. They present a list of options or requirements your company needs to submit for the project you’re working on. As your eyes scroll down the list you see it…Surety Bond. You tilt your head askew and look up to the right. Then quietly say to yourself…

Hmmmm. What is a surety bond?
In the simplest terms, surety bonds are a three-party contract. There is the principal who needs to secure a bond; the surety who issues the bond, and the obligee who is the beneficiary of the bond. The surety provides the principal with a bond, which is to say the surety is guaranteeing to the obligee that there is money available to cover the cost of damages as a result of the principal’s failure to follow their contractual obligation.

This sounds a lot like insurance, is this insurance?
Close. It’s technically a credit product so it’s more similar to a banking line of credit. The difference between surety bonds and insurance is that surety underwrites on the goal of “zero losses.” This means that surety underwriters will issue or approve bonds with the goal of not losing any money if a claim is made. A good way to think about it is as a “financial guarantee.”

This all makes sense but why do we need a bond?
There are a lot of reasons businesses need bonds. The construction industry is the majority of the surety bond market. Approximately two-thirds of all surety premium is for “contract bonds.” Commercial bonds, which essentially cover everything else, fall into general categories: License & Permitting, Commercial and Court.

If you’re new to surety it may be hard to understand why you need a bond or what category it falls under. Thankfully we have you covered with a team that specializes in industries, sizes and obligations. Please reach out if you need a bond and don’t know where to start, or just have more questions on the process.

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