Beginning January 1, 2006, prescription drug coverage will be available to all Medicare recipients. You can help your friends and family members enrolled in Medicare consider this important new benefit by making certain they have the necessary information about it and how to enroll. Enrollment started November 15, 2005 and will run through May 15, 2006.
If you have a family member or friend whom you would like to assist through this decision-making process, there are five simple steps you should follow:
Understand the basics of Medicare Prescription Drug Coverage
Determine how your friend or family member gets prescription coverage today
Gather some important information
Review the plan choices
Point out to them how to enroll
Additional information about the new Medicare Prescription Drug Coverage, including a webcast of a television program that recently aired on CNBC entitled the "National Day of Conversation: Friends and Family First," can be obtained online by visiting www.medicare.gov or by calling 1-800-MEDICARE (1-800-633-4227) or TTY 1-877-486-2048. Operators are available 24/7 and can walk you, your friend, or your family member through the Plan Finder and provide personalized help in comparing and choosing a plan.
Thursday, December 29, 2005
Wednesday, December 28, 2005
2005 -- Year of Challenges and Accomplishments
In its 75th year, The McLaughlin Company took significant strides to better serve its clients, and to prepare itself for the rapidly evolving world of Risk Management and Insurance. Besides the daily challenges of meeting and placing its clients insurance needs, The McLaughlin Company prepared for the future in several significant areas:
Union Liability Insurance – The McLaughlin Company negotiated with the carriers of this insurance product several improvements in the policies including the ability of the insured to select its own counsel, broader coverage, and reduced premiums for Individual Labor Leaders. This product is essential to a Union in these days of heightened scrutiny by DOL, privacy concerns about Union membership lists, and the plethora of employment related practices claims.
Creative Risk Management – The Sarbanes – Oxley Act of 2002 has had a tremendous impact on an enterprises’ risk management function. Enterprises have an obligation to establish and maintain an adequate internal control structure and assess annually its internal controls. Lack of controls in certain insurance areas can lead to financial mistatement. Creative Risk Management, a division of The McLaughlin Company, is fully staffed to provide risk management services to new and existing clients.
Workers Compensation Insurance – This year, The McLaughlin Company, partnered with a database company to assist it in analyzing our client’s workers compensation claims. This database has proven to reduce many workers compensation premiums by 30 percent and insure that a client is never overpaying for workers compensation insurance.
Interactive Website – In 2005, The McLaughlin Company’s website received a completely new facelift. This new website allows existing clients to fill out applications on-line, provides an immediate vehicle for visitors to access up to date information on insurance products and trends in the industry, and gives new clients immediate availability to a trained insurance professional.
New Markets – This year, The McLaughlin Company, added several new insurance companies to its already long list of outstanding companies it represents. It has also developed markets for difficult to place coverages such as political organizations, technology companies, training funds, i.e. Finally, as markets tightened for some products The McLaughlin Company partnered with insurance companies to insure that its clients would always have certain products available. When there is a difficulty getting insurance coverage, The McLaughlin Company is the place to go.
Employee Benefits – In 2005, The McLaughlin Company entered into an association with a team of specialists in the area of employee benefit programs, group and individual life, health and disability programs. The McLaughlin Company is able to provide its clients significant savings and expertise in designing employee benefit programs.
Identity Theft – The McLaughlin Company saw a need for its personal lines clients to protect them when they become victims of identity theft. Through a program with St. Paul/Travelers every McLaughlin Company personal lines client is provided identity theft coverage free of charge.
The McLaughlin Company has a rich history of looking for better ways to provide service and products for new and existing clients. The year 2006 will present new challenges and we are prepared to meet them.
Union Liability Insurance – The McLaughlin Company negotiated with the carriers of this insurance product several improvements in the policies including the ability of the insured to select its own counsel, broader coverage, and reduced premiums for Individual Labor Leaders. This product is essential to a Union in these days of heightened scrutiny by DOL, privacy concerns about Union membership lists, and the plethora of employment related practices claims.
Creative Risk Management – The Sarbanes – Oxley Act of 2002 has had a tremendous impact on an enterprises’ risk management function. Enterprises have an obligation to establish and maintain an adequate internal control structure and assess annually its internal controls. Lack of controls in certain insurance areas can lead to financial mistatement. Creative Risk Management, a division of The McLaughlin Company, is fully staffed to provide risk management services to new and existing clients.
Workers Compensation Insurance – This year, The McLaughlin Company, partnered with a database company to assist it in analyzing our client’s workers compensation claims. This database has proven to reduce many workers compensation premiums by 30 percent and insure that a client is never overpaying for workers compensation insurance.
Interactive Website – In 2005, The McLaughlin Company’s website received a completely new facelift. This new website allows existing clients to fill out applications on-line, provides an immediate vehicle for visitors to access up to date information on insurance products and trends in the industry, and gives new clients immediate availability to a trained insurance professional.
New Markets – This year, The McLaughlin Company, added several new insurance companies to its already long list of outstanding companies it represents. It has also developed markets for difficult to place coverages such as political organizations, technology companies, training funds, i.e. Finally, as markets tightened for some products The McLaughlin Company partnered with insurance companies to insure that its clients would always have certain products available. When there is a difficulty getting insurance coverage, The McLaughlin Company is the place to go.
Employee Benefits – In 2005, The McLaughlin Company entered into an association with a team of specialists in the area of employee benefit programs, group and individual life, health and disability programs. The McLaughlin Company is able to provide its clients significant savings and expertise in designing employee benefit programs.
Identity Theft – The McLaughlin Company saw a need for its personal lines clients to protect them when they become victims of identity theft. Through a program with St. Paul/Travelers every McLaughlin Company personal lines client is provided identity theft coverage free of charge.
The McLaughlin Company has a rich history of looking for better ways to provide service and products for new and existing clients. The year 2006 will present new challenges and we are prepared to meet them.
Monday, November 21, 2005
Workers Wanted?
Bt 2010, many skilled workers will have retired and there will be too few active workers to replace and support them, even drawing on the dwindling labor resources of the Far East that have provided outsourcing labor. To fill the labor pool employers will increasingly turn to older workers, married women, and disabled individuals.
According to the Bureau of Labor Statistics, the number of workers aged 55 or older is expected to grow 50 Percent between 2005 and 2012.
According to the Bureau of Labor Statistics, the number of workers aged 55 or older is expected to grow 50 Percent between 2005 and 2012.
Wednesday, November 16, 2005
New ISO-CGL Changes Raise Concerns For Additional Insureds and Indemnitors
The whole issue of hold harmless, indemnity, and insurance requirements in contracts is an ongoing battle for risk managers. With the introduction of a new ISO additional insured endorsement and a change in the definition of what constitutes an insured contract, all you thought you might know about the subject is changing. Here is what you must know.
It is assumed by many policyholders that whenever the Insurance Services Office, Inc. (ISO) announces it is “clarifying original intent,” the result will be a reduction in coverage. ISO recently (in December 2003 and in March 2004) announced that it is introducing substantially revised additional insured endorsements as well as-a revised “insured contract” definition. Such changes have the potential to wreak havoc on an already complex and chaotic area of contractual indemnity and additional insured law. While the new ISO endorsements ostensibly are meant to address the insurance industry’s perception that courts have been extending additional insured coverage beyond the drafting intent behind that coverage, the new ISO endorsements also may result in increased litigation-and restricted coverage to additional insureds and indemnitors.
It is common among contracting parties to assess the liability risk of contractual activities and seek the allocation of the economic risk of such liability in advance. Such allocation is most frequently done through a combination of
indemnity provisions and insurance procurement requirements. Subject to certain anti-indemnity statutes and wording requirements, most states allow parties to fully shift liability risk by allowing one party to agree to indemnify another party rather than rely upon the application of common law liability allocation rules. Indemnitors often are more willing to take on such indemnity obligations because the indemnitor relies upon its contractual liability coverage for those “insured contracts.”
However, because even the most well-written indemnification provisions are only as good as the assets that the indemnitor has available to satisfy its obligations, indemnitees frequently require that they also be made additional insureds on the indemnitor’s liability policy. But this indemnity/insurance approach to contractual risk transfer is subject to a maze of statutory restrictions and has generated an enormous amount of widely varying, and frequently irreconcilable, court decisions. Indemnitors, indemnitees, insurers, and the courts have all struggled with the intent behind, and the enforceability of, indemnity provisions. Such a task is made even more difficult where parties have economic incentives to modify their intent and to create ambiguities where none would otherwise exist when large losses occur. Some
courts have been similarly guilty in engaging in result-driven interpretations of indemnity provisions to maximize financial compensation for a victim, despite the parties’ clear mutual contracting intent. These complex interpretation problems have not been limited to contractual indemnity provisions. Contracting parties and their respective insurers also have struggled with the rights of, and scope of
coverage for, additional insureds. As might be expected, the additional insured generally wants to transfer as much of its liability as possible onto the additional
insured carrier and avoid implicating its own coverage. At the same time, the insurer generally wants to construe the additional insured’s coverage
rights as narrowly as possible and to offset its obligations by seeking contribution from the additional insured’s own insurance program.
Outside of construction-related contracts and subject to wording requirements, the majority of states allow parties to broadly shift liability prior to a loss through
indemnity provisions. Further, most courts have construed additional- insured coverage broadly to
encompass not just vicarious or joint negligence, but the additional insured’s sole negligence as well. In response to this majority trend and significant insurance industry exposure, ISO introduced several
new additional insured endorsements and a new “insured contract” definition earlier last year.
Specifically, ISO introduced ten revised additional insured endorsements: CG 2007 01 96 (Engineers, Architects, or Surveyors), CG 20 10 10 01 (Owners,
Lessees,or Contractors as Scheduled),
CG 20 15 11 88 (Vendors), CG 2026 11 85 (Designated Persons or Organizations) CG 20 33 1001 (Automatic Status When Required in Contracts for Owners, Lessees, and Contractors),
CG 203403 97 (Automatic Status When Required in Contracts for Equipment Lessors), and CG 2037 1001 (Completed Operations). Finally, -ISO introduced a new form, CG 242606 04, which seeks to amend the standard ISO-CGL’s “insured contract” definition.
Additional insureds should be wary of the use of the new ISO additional insured endorsements, particularly where their risk management programs rely heavily upon their contractors or vendors being fully responsible for the entire risk associated with a project. Further, additional insureds can expect insurers to become increasingly aggressive in trying to characterize losses as arising from the additional insured’s sole negligence, potentially pitting insureds against each other while an underlying claim is pending. Finally, indemnitors who frequently enter into broad form indemnity agreements must make sure those indemnity obligations remain “insured contracts.”
These new endorsements should cause warning bells to sound for named insureds, additional insureds, indemnitors, and indemnitees alike. While ISO’s intent to limit the insurance industry’s exposures through these endorsements is clear, it is less clear whether these new endorsements will clarify these complex issues or, rather, simply result in more coverage disputes.
It is assumed by many policyholders that whenever the Insurance Services Office, Inc. (ISO) announces it is “clarifying original intent,” the result will be a reduction in coverage. ISO recently (in December 2003 and in March 2004) announced that it is introducing substantially revised additional insured endorsements as well as-a revised “insured contract” definition. Such changes have the potential to wreak havoc on an already complex and chaotic area of contractual indemnity and additional insured law. While the new ISO endorsements ostensibly are meant to address the insurance industry’s perception that courts have been extending additional insured coverage beyond the drafting intent behind that coverage, the new ISO endorsements also may result in increased litigation-and restricted coverage to additional insureds and indemnitors.
It is common among contracting parties to assess the liability risk of contractual activities and seek the allocation of the economic risk of such liability in advance. Such allocation is most frequently done through a combination of
indemnity provisions and insurance procurement requirements. Subject to certain anti-indemnity statutes and wording requirements, most states allow parties to fully shift liability risk by allowing one party to agree to indemnify another party rather than rely upon the application of common law liability allocation rules. Indemnitors often are more willing to take on such indemnity obligations because the indemnitor relies upon its contractual liability coverage for those “insured contracts.”
However, because even the most well-written indemnification provisions are only as good as the assets that the indemnitor has available to satisfy its obligations, indemnitees frequently require that they also be made additional insureds on the indemnitor’s liability policy. But this indemnity/insurance approach to contractual risk transfer is subject to a maze of statutory restrictions and has generated an enormous amount of widely varying, and frequently irreconcilable, court decisions. Indemnitors, indemnitees, insurers, and the courts have all struggled with the intent behind, and the enforceability of, indemnity provisions. Such a task is made even more difficult where parties have economic incentives to modify their intent and to create ambiguities where none would otherwise exist when large losses occur. Some
courts have been similarly guilty in engaging in result-driven interpretations of indemnity provisions to maximize financial compensation for a victim, despite the parties’ clear mutual contracting intent. These complex interpretation problems have not been limited to contractual indemnity provisions. Contracting parties and their respective insurers also have struggled with the rights of, and scope of
coverage for, additional insureds. As might be expected, the additional insured generally wants to transfer as much of its liability as possible onto the additional
insured carrier and avoid implicating its own coverage. At the same time, the insurer generally wants to construe the additional insured’s coverage
rights as narrowly as possible and to offset its obligations by seeking contribution from the additional insured’s own insurance program.
Outside of construction-related contracts and subject to wording requirements, the majority of states allow parties to broadly shift liability prior to a loss through
indemnity provisions. Further, most courts have construed additional- insured coverage broadly to
encompass not just vicarious or joint negligence, but the additional insured’s sole negligence as well. In response to this majority trend and significant insurance industry exposure, ISO introduced several
new additional insured endorsements and a new “insured contract” definition earlier last year.
Specifically, ISO introduced ten revised additional insured endorsements: CG 2007 01 96 (Engineers, Architects, or Surveyors), CG 20 10 10 01 (Owners,
Lessees,or Contractors as Scheduled),
CG 20 15 11 88 (Vendors), CG 2026 11 85 (Designated Persons or Organizations) CG 20 33 1001 (Automatic Status When Required in Contracts for Owners, Lessees, and Contractors),
CG 203403 97 (Automatic Status When Required in Contracts for Equipment Lessors), and CG 2037 1001 (Completed Operations). Finally, -ISO introduced a new form, CG 242606 04, which seeks to amend the standard ISO-CGL’s “insured contract” definition.
Additional insureds should be wary of the use of the new ISO additional insured endorsements, particularly where their risk management programs rely heavily upon their contractors or vendors being fully responsible for the entire risk associated with a project. Further, additional insureds can expect insurers to become increasingly aggressive in trying to characterize losses as arising from the additional insured’s sole negligence, potentially pitting insureds against each other while an underlying claim is pending. Finally, indemnitors who frequently enter into broad form indemnity agreements must make sure those indemnity obligations remain “insured contracts.”
These new endorsements should cause warning bells to sound for named insureds, additional insureds, indemnitors, and indemnitees alike. While ISO’s intent to limit the insurance industry’s exposures through these endorsements is clear, it is less clear whether these new endorsements will clarify these complex issues or, rather, simply result in more coverage disputes.
New Bankruptcy Act
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was signed into law on April 20, 2005. It largely deals with consumer debt, but several provisions affect employee benefits and executive compensation. The act improves protection from creditors for employee contributions to plans and for interest in retirement and education savings plans. It extends the avoidance period for fraudulent pre-petition transfers from one year to two. The act allows bankruptcy courts to throw out plan changes made within 180 days of the bankruptcy petition. It also significantly limits payments to plan insiders after a bankruptcy petition.
Wednesday, November 09, 2005
Easy To Be Hard
A great line from the musical "Hair." For fiduciaries and plan administrators the words "easy" or "free," should sound loud warning bells. Over two years ago, we warned against pension and fiduciary plan consultants wearing multiple hats, and this year there came subsequent and similar warnings by the SEC and the Department of Labor about consultants and conflicts of interest. ( see articles posted at www.mclaughlin-online.com) Yet, despite the warnings, plan administrators and fiduciaries continue to fall prey to "consultants" who offer to make their job easy by offering "one stop shopping."
Now we are even seeing a few insurance carriers trying to sell coverage directly to plans. Don't fall into that trap! Would you buy Enron stock direct from Ken Lay? As a pension fund trustee or administrator are you comfortable reading a fiduciary insurance policy and understanding the coverage it affords and more importantly, exclusion language contained in multiple endorsements. I can assure you your Fund's lawyer is not and will say so. Lawyers are good at raising questions but cannot give you an interpretation of how a policy will respond. An insurance company will give the interpretation, "the policy speaks for itself." An experienced Independent Insurance Agent specializing in Fund coverages can help you walk through this minefield of "whereas and wherefors" and if he/she is wrong carries E&O coverage to back up their work. Next time a "consultant" offers to sell your plan insurance ask for a copy of their insurance errors and omissions policy and state insurance license. You may be in for a surprise.
Most insurance companies cannot sell fiduciary coverages directly to Plans without violating their agreements with their agents. Besides they have only one incentive and that is to get your business. They have no incentive to "canvass the marketplace" or "explain the coverages or exclusions."
Plan trustees take their fiduciary responsibilities very seriously as they should. Be careful, even when someone you trust offers to get you insurance for "free" or "commission free." A fundamental tenant of risk management is "don't risk a lot for a little." Obtaining insurance coverage for your plan or yourself without a licensed, insured, expert independent agent is violating that tenant.
Independent Insurance Agents add value and protection to Plans. Don't let someone try to convince you otherwise by giving you a "free toaster." If you do, you may end up "burnt toast."
Now we are even seeing a few insurance carriers trying to sell coverage directly to plans. Don't fall into that trap! Would you buy Enron stock direct from Ken Lay? As a pension fund trustee or administrator are you comfortable reading a fiduciary insurance policy and understanding the coverage it affords and more importantly, exclusion language contained in multiple endorsements. I can assure you your Fund's lawyer is not and will say so. Lawyers are good at raising questions but cannot give you an interpretation of how a policy will respond. An insurance company will give the interpretation, "the policy speaks for itself." An experienced Independent Insurance Agent specializing in Fund coverages can help you walk through this minefield of "whereas and wherefors" and if he/she is wrong carries E&O coverage to back up their work. Next time a "consultant" offers to sell your plan insurance ask for a copy of their insurance errors and omissions policy and state insurance license. You may be in for a surprise.
Most insurance companies cannot sell fiduciary coverages directly to Plans without violating their agreements with their agents. Besides they have only one incentive and that is to get your business. They have no incentive to "canvass the marketplace" or "explain the coverages or exclusions."
Plan trustees take their fiduciary responsibilities very seriously as they should. Be careful, even when someone you trust offers to get you insurance for "free" or "commission free." A fundamental tenant of risk management is "don't risk a lot for a little." Obtaining insurance coverage for your plan or yourself without a licensed, insured, expert independent agent is violating that tenant.
Independent Insurance Agents add value and protection to Plans. Don't let someone try to convince you otherwise by giving you a "free toaster." If you do, you may end up "burnt toast."
Revision to DeMinimus Standard for LM-30's
FORM LM-30 ADVISORY - DE MINIMIS EXEMPTION INCREASED
The Form LM-30 (Union Officer and Emolovee Report) informs filers that they “do not have to report any sporadic or occasional gifts, gratuities, or loans of insubstantial value, given under circumstances and terms unrelated to the [filer’s] status in a labor organization.” (Form LM-30 Instructions, General Instructions.) This test has been referred to as a “de minimis exemption.” If the test is satisfied, the filer need not report the gift or gratuity on Form LM-30. If the test is not satisfied, the gift or gratuity must be reported on Form LM-30.
Guidance previously issued by the Office of Labor-Management Standards (OLMS) on “de minimis” situations included examples of an employer picking up a lunch tab or an employer giving a union officer a Christmas gift of nominal value. A car was given as an example of a gift that would require a report. In March 2005, in order to provide more guidance on this issue, OLMS revised its LMRDA Interpretative Manual to quantify as “de minimis” an item with a value of $25 or less.
Between March and October 2005, because of a grace period, Form LM-30 reporting increased dramatically compared to historical practice. Based on a review of these reports, and considering comments from union officers and employees that the de minimis threshold was too low, OLMS has concluded that setting the reporting threshold at $25 places an unnecessary reporting burden on union officials without a corresponding benefit to union members or the public. As an interim measure, pending issuance of a final rule establishing revised Form LM-30 reporting obligations, OLMS has determined that gifts, gratuities or loans with a value of $250 or less received by a union officer or employee will be considered insubstantial for the purposes of Form LM-30 reporting. However, if the aggregate value of multiple gifts or loans from a single employer to a single union officer or employee exceeds $250 in a fiscal year, the transaction will no longer be treated as “de minimis,” and the aggregate value of the transactions will be reportable. Gifts or loans from multiple employees of one employer should be treated as originating from a single employer when calculating whether the $250 threshold has been exceeded.
Although offers of numerous small gratuities would appear to be outside the de minimis exemption because they are not provided on an “infrequent or sporadic” basis, the Department will not seek to enforce the reporting requirement, so long as the aggregate value of these gratuities does not exceed $250 per union officer or employee. For example, a union officer or employee who receives coffee, provided by an employer, at bi-weekly meetings over the course of a year would not be required to report this gratuity on a Form LM-30.
In a Notice of Proposed Rulemaking, published in the Federal Register on August 29, 2005, concerning the Form LM-30, the Department has sought comment on this standard and the dollar threshold. (70 Fed. Reg. 51166, 51175.) The comment period has been extended to January 26, 2006. (70 Fed. Reg. 61,400.) The Department encourages comments from all members of the public on all aspects of this rulemaking.
Last Updated: 11/07/05
The Form LM-30 (Union Officer and Emolovee Report) informs filers that they “do not have to report any sporadic or occasional gifts, gratuities, or loans of insubstantial value, given under circumstances and terms unrelated to the [filer’s] status in a labor organization.” (Form LM-30 Instructions, General Instructions.) This test has been referred to as a “de minimis exemption.” If the test is satisfied, the filer need not report the gift or gratuity on Form LM-30. If the test is not satisfied, the gift or gratuity must be reported on Form LM-30.
Guidance previously issued by the Office of Labor-Management Standards (OLMS) on “de minimis” situations included examples of an employer picking up a lunch tab or an employer giving a union officer a Christmas gift of nominal value. A car was given as an example of a gift that would require a report. In March 2005, in order to provide more guidance on this issue, OLMS revised its LMRDA Interpretative Manual to quantify as “de minimis” an item with a value of $25 or less.
Between March and October 2005, because of a grace period, Form LM-30 reporting increased dramatically compared to historical practice. Based on a review of these reports, and considering comments from union officers and employees that the de minimis threshold was too low, OLMS has concluded that setting the reporting threshold at $25 places an unnecessary reporting burden on union officials without a corresponding benefit to union members or the public. As an interim measure, pending issuance of a final rule establishing revised Form LM-30 reporting obligations, OLMS has determined that gifts, gratuities or loans with a value of $250 or less received by a union officer or employee will be considered insubstantial for the purposes of Form LM-30 reporting. However, if the aggregate value of multiple gifts or loans from a single employer to a single union officer or employee exceeds $250 in a fiscal year, the transaction will no longer be treated as “de minimis,” and the aggregate value of the transactions will be reportable. Gifts or loans from multiple employees of one employer should be treated as originating from a single employer when calculating whether the $250 threshold has been exceeded.
Although offers of numerous small gratuities would appear to be outside the de minimis exemption because they are not provided on an “infrequent or sporadic” basis, the Department will not seek to enforce the reporting requirement, so long as the aggregate value of these gratuities does not exceed $250 per union officer or employee. For example, a union officer or employee who receives coffee, provided by an employer, at bi-weekly meetings over the course of a year would not be required to report this gratuity on a Form LM-30.
In a Notice of Proposed Rulemaking, published in the Federal Register on August 29, 2005, concerning the Form LM-30, the Department has sought comment on this standard and the dollar threshold. (70 Fed. Reg. 51166, 51175.) The comment period has been extended to January 26, 2006. (70 Fed. Reg. 61,400.) The Department encourages comments from all members of the public on all aspects of this rulemaking.
Last Updated: 11/07/05
Tuesday, November 08, 2005
Employment Related Practices Insurance
In case, you have been putting off talking to your Independent Insurance Agent about that Employment related practices insurance or Union liability insurance he/she has been recommending consider the following:
1. 1991 “Tailhook” convention —— $ 8 million to settle allegations of physical and verbal sexual abuse
2. State Farm —— $157 million to 800 staff employees to settle allegations of failure to pronlote and denial of opportunity
3. IDS Financial Services -- $ 35 million to 32 former employees to settle age discrimination allegations
4. Shoney’s -- $134 million out-of-court settlement arising from race discrimination allegations
Employment Related claims
1. Three of five businesses will be sued this year by an employee or a former
employee over an employment practice
41.5% of all claims-- employers of’ 15 to 100
23.9% of all claims -— employers of 500 or more
18.0% of’ all claims -- employers of’ 101 to 499
16.6% of all claims-- employers of less than 15
2. Employment practices suits account for 20% of all Federal Court filings
3. 56% of all employment practice filings going to trial result in a verdict for the plaintiff employee
4. The average jury award is S250.000, with 15% exceeding $1 million
5. 33% of wrongful termination verdicts have punitive damages equal to or exceeding compensatory damage.
Here are just a few sources of Liability for Employment Related Practices
• Civi1 Rights Act of 1964
• Civil Rights Act of 1991
• Americans With Disabilities Act (ADA)
• Age Discrimination in Employment Act of 1967 (ADEA)
• Worker Adjustment and Retraining Act (WARN)
• Employee Polygraph Protection Act of 1988
• Equal Pay Act
• Older Worker Benefit Protection Act
• National Labor Relations Act
• Uniform Services Employment and Reemployment Rights Act of 1994
• Family and Medical Leave Act (FM LA)
• Fair Labor Standards Act (FLSA)
• Immigration Reform and Control Act
• Occupational Safety and Health Act (OSHA)
• Civil Rights Act of 1866
• Attorneys Fees Award Act of 1976
• Pregnancy Discrimination Act of’ 1978
• State parallel laws
• Local parallel laws
Next time take a few minutes to discuss this with your Independent Insurance Agent.
1. 1991 “Tailhook” convention —— $ 8 million to settle allegations of physical and verbal sexual abuse
2. State Farm —— $157 million to 800 staff employees to settle allegations of failure to pronlote and denial of opportunity
3. IDS Financial Services -- $ 35 million to 32 former employees to settle age discrimination allegations
4. Shoney’s -- $134 million out-of-court settlement arising from race discrimination allegations
Employment Related claims
1. Three of five businesses will be sued this year by an employee or a former
employee over an employment practice
41.5% of all claims-- employers of’ 15 to 100
23.9% of all claims -— employers of 500 or more
18.0% of’ all claims -- employers of’ 101 to 499
16.6% of all claims-- employers of less than 15
2. Employment practices suits account for 20% of all Federal Court filings
3. 56% of all employment practice filings going to trial result in a verdict for the plaintiff employee
4. The average jury award is S250.000, with 15% exceeding $1 million
5. 33% of wrongful termination verdicts have punitive damages equal to or exceeding compensatory damage.
Here are just a few sources of Liability for Employment Related Practices
• Civi1 Rights Act of 1964
• Civil Rights Act of 1991
• Americans With Disabilities Act (ADA)
• Age Discrimination in Employment Act of 1967 (ADEA)
• Worker Adjustment and Retraining Act (WARN)
• Employee Polygraph Protection Act of 1988
• Equal Pay Act
• Older Worker Benefit Protection Act
• National Labor Relations Act
• Uniform Services Employment and Reemployment Rights Act of 1994
• Family and Medical Leave Act (FM LA)
• Fair Labor Standards Act (FLSA)
• Immigration Reform and Control Act
• Occupational Safety and Health Act (OSHA)
• Civil Rights Act of 1866
• Attorneys Fees Award Act of 1976
• Pregnancy Discrimination Act of’ 1978
• State parallel laws
• Local parallel laws
Next time take a few minutes to discuss this with your Independent Insurance Agent.
Tuesday, November 01, 2005
Non-Profit Executive Compensation
Do you have friends who serve as directors on boards of nonprofit hospitals, charities, social welfare organizations, other 501(c)(3) or 501(c)(4) organizations or foundations who are responsible for determining executive compensation? Please warn them about the new, aggressively funded IRS and state audits of nonprofit executive compensation. Those responsible for approving remuneration now face potential personal liability if found to have negligently determined excessive compensation packages (IRC § 4958).
The IRS is staffing offices and adding personnel to question excessively high-paying nonprofit organizations. And many state Attorney General offices are now actively reviewing their state-chartered nonprofit and not-for-profit corporations (New York and California both have new laws specifically focused on reasonable and/or “just” pay).
The IRS basically defines reasonable compensation as average compensation, and half of all tax-exempt executives are paid “above average.” That may be OK, but only if you have a documented rationale for higher compensation levels, including an independent competitive compensation analysis.
If you have anything to do with executive compensation at a nonprofit, educate your Board, CEO/Executive Director and CFO before it is too late. Here are easy steps you can take:
Tax-Exempt Survey Data: Subscribe to the survey that the IRS, the State AG Office of New York and others use to define reasonable compensation.
Online Nonprofit Executive Compensation Data: Smaller organizations can use the SalaryExpert.com executive compensation report for organizations with less than $1 million in revenue.
Compensation Committee Certification: Treasury regulations on intermediate sanctions imply that using good data is not enough if your Board members are not competent to use it. Encourage compensation committee members to become certified in executive pay oversight.
Finally, make sure you and your friends sit only on Boards that have D&O Insurance. Many organizations will try and convince you this is not a expense the organization needs or can afford. As a Board member you can't afford not to have it or comprable coverage.
The IRS is staffing offices and adding personnel to question excessively high-paying nonprofit organizations. And many state Attorney General offices are now actively reviewing their state-chartered nonprofit and not-for-profit corporations (New York and California both have new laws specifically focused on reasonable and/or “just” pay).
The IRS basically defines reasonable compensation as average compensation, and half of all tax-exempt executives are paid “above average.” That may be OK, but only if you have a documented rationale for higher compensation levels, including an independent competitive compensation analysis.
If you have anything to do with executive compensation at a nonprofit, educate your Board, CEO/Executive Director and CFO before it is too late. Here are easy steps you can take:
Tax-Exempt Survey Data: Subscribe to the survey that the IRS, the State AG Office of New York and others use to define reasonable compensation.
Online Nonprofit Executive Compensation Data: Smaller organizations can use the SalaryExpert.com executive compensation report for organizations with less than $1 million in revenue.
Compensation Committee Certification: Treasury regulations on intermediate sanctions imply that using good data is not enough if your Board members are not competent to use it. Encourage compensation committee members to become certified in executive pay oversight.
Finally, make sure you and your friends sit only on Boards that have D&O Insurance. Many organizations will try and convince you this is not a expense the organization needs or can afford. As a Board member you can't afford not to have it or comprable coverage.
Personal Umbrella Policy Continued
Work-Related home premises liability is liability for injuries to those coming on your premises for business purposes, such as a courier bringing a package from your employer, who falls on your premises and sues for their injuries. Homeowner policies completely exclude business-related lawsuits. These are people that either have home businesses or bring business home to work.
This is one of the most overlooked exposures not covered by homeowner’s policies. This coverage under an umbrella policy sometimes is provided only if there is underlying coverage on the homeowners and sometimes even if underlying coverage is added to the homeowners, the umbrella will not extend unless you ask for and pay for additionally a separate incidental office endorsement to the umbrella policy.
Employer’s liability is coverage for clients with domestic workers (nannies, handyman, personal care attendants); this exposure is completely excluded by underlying policies. It is available through some umbrella policies sometimes requiring underlying primary coverage or sometimes as a freestanding coverage not requiring underlying coverage at all.
Many times an individual assumes liability when they sign a contract. At times the exposure is a huge and assumed unwittingly. Here are some examples:
1. An individual has an elevator installed in his/her home. The contract with the elevator maintenance company requires the individual to defend and pay judgments against them even when the cause of the injury was at least partially caused by the negligence of the elevator maintenance company.
2. A wedding reception contract contains a restaurant requirement that the bride and groom defend and pay judgments against the restaurant even if caused by the negligence of the restaurant (i.e., 100 guests getting seriously ill from food poisoning).
3. A group of friends, all turning 30 years old, rent a building for a birthday party. In the contract, one of the friends agrees to defend and pay any judgment the building owner for injuries or property damage regardless of who was at fault.
Each of these examples represent a liability exposure that is largely uninsured by primary liability coverage. Many of these exposures are excluded by some umbrella policies but are covered by others. To properly manage risk, the Independent agent must first determine what liability risks your client faces that are not insured by his primary policies. Then locate an umbrella policy or policies that best covers as many of these uninsured risks as possible.
This is one of the most overlooked exposures not covered by homeowner’s policies. This coverage under an umbrella policy sometimes is provided only if there is underlying coverage on the homeowners and sometimes even if underlying coverage is added to the homeowners, the umbrella will not extend unless you ask for and pay for additionally a separate incidental office endorsement to the umbrella policy.
Employer’s liability is coverage for clients with domestic workers (nannies, handyman, personal care attendants); this exposure is completely excluded by underlying policies. It is available through some umbrella policies sometimes requiring underlying primary coverage or sometimes as a freestanding coverage not requiring underlying coverage at all.
Many times an individual assumes liability when they sign a contract. At times the exposure is a huge and assumed unwittingly. Here are some examples:
1. An individual has an elevator installed in his/her home. The contract with the elevator maintenance company requires the individual to defend and pay judgments against them even when the cause of the injury was at least partially caused by the negligence of the elevator maintenance company.
2. A wedding reception contract contains a restaurant requirement that the bride and groom defend and pay judgments against the restaurant even if caused by the negligence of the restaurant (i.e., 100 guests getting seriously ill from food poisoning).
3. A group of friends, all turning 30 years old, rent a building for a birthday party. In the contract, one of the friends agrees to defend and pay any judgment the building owner for injuries or property damage regardless of who was at fault.
Each of these examples represent a liability exposure that is largely uninsured by primary liability coverage. Many of these exposures are excluded by some umbrella policies but are covered by others. To properly manage risk, the Independent agent must first determine what liability risks your client faces that are not insured by his primary policies. Then locate an umbrella policy or policies that best covers as many of these uninsured risks as possible.
Tuesday, October 25, 2005
Personal Umbrella Policy
Most people buy a personal umbrella policy for its excess coverage, including defense costs. It also has significant value as a risk management tool.
Often there are liability coverage gaps that fall outside the scope of underlying auto, homeowners, and other personal policies. An Independent agent can assist you in recommending an umbrella policy that provides step-down primary coverage for those uninsured exposures.
There is a lack of consistency among umbrella policies. Most personal auto and homeowners policies, are fairly comparable, umbrella policies vary dramatically in their coverage.
For the next few blogs we are going to explore how the right umbrella policy can help an individual obtain coverage for which is normally excluded. For today we are going to discuss automobile exposures.
For individuals who have no personal auto policy of their own and thus have no automatic coverage to drive non-owned cars (they either have no automobiles at all or only have a vehicle furnished by their employer) the purchase of the right umbrella policy may be the way to go. Underlying drive other car or named non-owner coverage is very expensive or unavailable, thus it may be most economical to choose an umbrella policy that will provide step-down coverage.
Certain individuals neither own nor drive their own car and are elderly or disabled. However they may receive rides through the generosity of their friends or family members to shop, see doctors, etc. Under many states principal-agency law, these passengers can be sued and held liable for accidents caused by their drivers because the car that caused the accident was on the road for the sole benefit of the passenger. Again, these individuals can avoid this exposure with an umbrella policy that does not require underlying insurance for this exposure.
Those individuals who are either furnished or have access to a company vehicle and occasionally have coworkers as passengers, umbrella coverage is desirable. If the driver’s negligence injures a coworker, the business auto policy usually excludes coverage for “fellow employee” lawsuits. The driver’s personal auto policy excludes coverage for vehicles “furnished or available for regular use.”
Under most personal auto policies, your collision coverage will transfer on an excess basis to a rental car, but only if you have collision coverage on at least one car. There is no coverage outside the United States and Canada. The right umbrella policy will cover collision damage you cause to a rented or borrowed car on a primary basis and worldwide.
Sometimes an individual signs a fine print contract to defend and pay any judgment against the rental car company, even if you weren’t personally driving the vehicle! (An example would be renting a vehicle on a business trip with a co-worker where you sign the rental contract solely, and the coworker causes the accident with injuries. The obligation is to defend and pay judgments against the rental company even though the signer had nothing to do directly with the accident. This is another instance where the right umbrella policy will protect an individual from an exposure the person doesn’t know exists.
Again, the right umbrella is something an individual should discuss with the person’s Independent Insurance Agent.
Often there are liability coverage gaps that fall outside the scope of underlying auto, homeowners, and other personal policies. An Independent agent can assist you in recommending an umbrella policy that provides step-down primary coverage for those uninsured exposures.
There is a lack of consistency among umbrella policies. Most personal auto and homeowners policies, are fairly comparable, umbrella policies vary dramatically in their coverage.
For the next few blogs we are going to explore how the right umbrella policy can help an individual obtain coverage for which is normally excluded. For today we are going to discuss automobile exposures.
For individuals who have no personal auto policy of their own and thus have no automatic coverage to drive non-owned cars (they either have no automobiles at all or only have a vehicle furnished by their employer) the purchase of the right umbrella policy may be the way to go. Underlying drive other car or named non-owner coverage is very expensive or unavailable, thus it may be most economical to choose an umbrella policy that will provide step-down coverage.
Certain individuals neither own nor drive their own car and are elderly or disabled. However they may receive rides through the generosity of their friends or family members to shop, see doctors, etc. Under many states principal-agency law, these passengers can be sued and held liable for accidents caused by their drivers because the car that caused the accident was on the road for the sole benefit of the passenger. Again, these individuals can avoid this exposure with an umbrella policy that does not require underlying insurance for this exposure.
Those individuals who are either furnished or have access to a company vehicle and occasionally have coworkers as passengers, umbrella coverage is desirable. If the driver’s negligence injures a coworker, the business auto policy usually excludes coverage for “fellow employee” lawsuits. The driver’s personal auto policy excludes coverage for vehicles “furnished or available for regular use.”
Under most personal auto policies, your collision coverage will transfer on an excess basis to a rental car, but only if you have collision coverage on at least one car. There is no coverage outside the United States and Canada. The right umbrella policy will cover collision damage you cause to a rented or borrowed car on a primary basis and worldwide.
Sometimes an individual signs a fine print contract to defend and pay any judgment against the rental car company, even if you weren’t personally driving the vehicle! (An example would be renting a vehicle on a business trip with a co-worker where you sign the rental contract solely, and the coworker causes the accident with injuries. The obligation is to defend and pay judgments against the rental company even though the signer had nothing to do directly with the accident. This is another instance where the right umbrella policy will protect an individual from an exposure the person doesn’t know exists.
Again, the right umbrella is something an individual should discuss with the person’s Independent Insurance Agent.
Wednesday, October 05, 2005
No Good Deed Goes Unpunished
One of Ted Pappas’s, The McLaughlin Company’s President, favorite quotes rings very true to people who elect to serve on not-for-profit boards of directors.
According to a survey by consultants Tillinghast, 96% of the claims brought against nonprofit groups are from employees, compared with 23% against public companies. Nonprofit boards are now being held more accountable, just like corporate directors. The Internal Revenue Service has stepped up scrutiny of private foundations, auditing 400 of them this federal fiscal year (ending Sept. 30), more than double that of recent years. The Department of Labor has beefed up their investigative and audit staffs targeting Labor Unions. The Senate Finance Committee held hearings in April about the oversight of tax-exempt organizations.
Many directors of the nation’s over 1 million charities, labor unions, and other nonprofits are clueless that they have the same fiduciary duties as corporate board members. “If they make a bad decision, someone can come after them,” warns Jeffrey Klenk, senior vice president at St. Paul Travelers, which sells directors and officers (D&O) liability insurance to nonprofits. “It might cost you up to $200,000 from out of your own pocket defending a lawsuit”
One management consultant and investment banker who joined the board of a non-profit agency giving job training to the disadvantaged and the disabled found his charitable impulse landed him in a lawsuit filed by 100 employees seeking unpaid wages. He was aghast to learn that his board had been fed false reports of glowing financial health—and startled to find that he was personally liable. The agency’s coffers were bare, so the only ones left to pay were the directors. The board ended up settling with the workers for $355,000 in back pay and $88,000 in attorneys’ fees.
Luckily for the board, its insurer covered both. Most non-profits are uninsured for such claims. The directors also had to do much of the closing-down work. The consultant spent 600 hours of his time over two years on such chores as filing back payroll and sales tax forms.
Prior to joining a charitable board make sure that fellow directors and the staff are diligent and competent. Then investigate the extent of your group’s D&O policy, should there be one. If one doesn’t exist, contact an independent insurance agent to buy some coverage. Aside from Travelers, nonprofit D&O policies are available from Chubb, Hartford and American International Group. For Unions, both AIG and Ullico offer a Union Liability Policy specifically designed by The McLaughlin Company that covers those unique exposures arising from the Landrum-Griffin and Taft- Hartley Act. Many not-for-profit entities try to save money by telling their Boards that such coverage is not needed. This statement should be a “red flag” and an indication that someone is being “pennywise and pound foolish.”
If all else fails, you may be covered under your standard homeowners and umbrella policy. Talk to your independent agent like The McLaughlin Company about more than your car and homeowners insurance. Let him/her help you identify exposures that you haven’t even thought about, especially those good deeds that “never go unpunished.”
According to a survey by consultants Tillinghast, 96% of the claims brought against nonprofit groups are from employees, compared with 23% against public companies. Nonprofit boards are now being held more accountable, just like corporate directors. The Internal Revenue Service has stepped up scrutiny of private foundations, auditing 400 of them this federal fiscal year (ending Sept. 30), more than double that of recent years. The Department of Labor has beefed up their investigative and audit staffs targeting Labor Unions. The Senate Finance Committee held hearings in April about the oversight of tax-exempt organizations.
Many directors of the nation’s over 1 million charities, labor unions, and other nonprofits are clueless that they have the same fiduciary duties as corporate board members. “If they make a bad decision, someone can come after them,” warns Jeffrey Klenk, senior vice president at St. Paul Travelers, which sells directors and officers (D&O) liability insurance to nonprofits. “It might cost you up to $200,000 from out of your own pocket defending a lawsuit”
One management consultant and investment banker who joined the board of a non-profit agency giving job training to the disadvantaged and the disabled found his charitable impulse landed him in a lawsuit filed by 100 employees seeking unpaid wages. He was aghast to learn that his board had been fed false reports of glowing financial health—and startled to find that he was personally liable. The agency’s coffers were bare, so the only ones left to pay were the directors. The board ended up settling with the workers for $355,000 in back pay and $88,000 in attorneys’ fees.
Luckily for the board, its insurer covered both. Most non-profits are uninsured for such claims. The directors also had to do much of the closing-down work. The consultant spent 600 hours of his time over two years on such chores as filing back payroll and sales tax forms.
Prior to joining a charitable board make sure that fellow directors and the staff are diligent and competent. Then investigate the extent of your group’s D&O policy, should there be one. If one doesn’t exist, contact an independent insurance agent to buy some coverage. Aside from Travelers, nonprofit D&O policies are available from Chubb, Hartford and American International Group. For Unions, both AIG and Ullico offer a Union Liability Policy specifically designed by The McLaughlin Company that covers those unique exposures arising from the Landrum-Griffin and Taft- Hartley Act. Many not-for-profit entities try to save money by telling their Boards that such coverage is not needed. This statement should be a “red flag” and an indication that someone is being “pennywise and pound foolish.”
If all else fails, you may be covered under your standard homeowners and umbrella policy. Talk to your independent agent like The McLaughlin Company about more than your car and homeowners insurance. Let him/her help you identify exposures that you haven’t even thought about, especially those good deeds that “never go unpunished.”
Thursday, September 22, 2005
What If I Lost Everything?
Rightfully so, all of our attention is currently turned to the aftermath of Katrina and how much damage Rita will do. Our thoughts and prayers go out to all affected.
Over the next few weeks, this blog will explore some of the questions one should be asking their Independent Agent in the coming weeks and months. Although currently our hearts and attention are turned to the South and Southwest coasts, last year there were 68 major disaster declarations in 43 states, including hurricanes, tornados, earthquakes, flooding and wildfires. Disasters can happen anywhere. Individual tragic losses occur daily. Too often, we think all insurance is the same and the only variable is price. Price is actually the last consideration one should consider. A thoughtful discussion with one's agent about coverage options and individual needs is imperative, and cannot not be had with a website.
We hope you will ask questions as we highlight homeowners, umbrella, business interruption, earthquake, and other coverages.
As an aside, before Katrina it was predicted that homeowners insurance rates for southeastern coastal rates could rise 25% this fall, the largest jump in a decade, due to hurricane claims.
Over the next few weeks, this blog will explore some of the questions one should be asking their Independent Agent in the coming weeks and months. Although currently our hearts and attention are turned to the South and Southwest coasts, last year there were 68 major disaster declarations in 43 states, including hurricanes, tornados, earthquakes, flooding and wildfires. Disasters can happen anywhere. Individual tragic losses occur daily. Too often, we think all insurance is the same and the only variable is price. Price is actually the last consideration one should consider. A thoughtful discussion with one's agent about coverage options and individual needs is imperative, and cannot not be had with a website.
We hope you will ask questions as we highlight homeowners, umbrella, business interruption, earthquake, and other coverages.
As an aside, before Katrina it was predicted that homeowners insurance rates for southeastern coastal rates could rise 25% this fall, the largest jump in a decade, due to hurricane claims.
Wednesday, September 07, 2005
When who to my wondering ears should appear????
But- my former brother-in-law, Uncle Finis! Last week , interviewed from the Quarter in New Orleanson the O'Reilly Factor (FOX). Here's the story, initial background from Sally, confirmed last night.Apparently Finis chose to stay with his property and employees in the Quarter to defend both from nature and looters- not surprising if you know Finis. His building is next door to Antoine's and he seems to have had a good relationship with the owners. At any rate, rather than let their food spoil, he's been cooking it for both those hunkered down with him and the New Orleans Police who are holed up in theirstation across the street. At first he chose to stay and ride it out, but the lawless conditions worsened to the point where it was truly unsafe to leave the building and they had exhausted their supply of food and water. Yesterday morning he and others decided it was time to leave and scraped together enough money to hire a bus- where on earth from??!! The bus got there, they were trying to leave , and the Nat'l Guard came up and commandeered it, despite the attempted intervention by the Police. This was the tale he told on TV, emphasizing the lawlessness and total lack of cooperation between feds and local authorities.All this was confirmed by a surprise call from Finis himself later in the evening. He got all his employees out (one had a heart attack!) before it got so bad- now he and his friends (sans bus money) are more or less holed up with the police who are guarding their precinct building- no way to get out. How many times have we all said- "well, it seemed like a good idea at the time."?? I can't help but admire his spunk and determination,and I wish him safe and well.If you're so inclined, you can probably hear last week's interview at Bill O'Reilly.com- surely the only and last time I'll recommend anyone to a FOX news commentary!! (Sorry, Ellen!) If I've left anything out, Webb will fill you in- Guest Blogger Suzy Hubbell
The best comment of the night was by Finis...." Jesus will arrive in New Orleans, before we see the National Guard" Webb
Monday, September 05, 2005
Labor Day
It was FDR who said, " These unhappy times call for the building of plans... that build from the bottom up and not from the top down, that put faith once more in the forgotten man at the bottom of the economic pyramid." And FDR rephrased Thoreau and thus inspired his weary nation, "The only thing we have to fear is fear itself."
Wednesday, August 31, 2005
Pharmacy Benefit Plan Administrators-- Read the Fine Print
Recently, for our Benefit Plan Clients, we have been asked to review contracts with Pharmacy Benefit Managers. Use of Pharmacy Benefit Managers is a growing trend. Standard & Poor's recently reported that the three major Pharmacy Benefit Managers are "flush with cash and are expected to be strong cash flow generators." "The industry... is benefiting from long term trends of increasing need for pharmaceutical cost-control services, rising demand for pharmaceuticals in the U.S., growing mail-order usage, and greater generic drug penatration."
As a Benefit Fund Administrator the use of Benefit Managers is an attractive option, but go into such arrangements with your eyes wide open and having read the "fine print." Our review of several "form agreements" has caused us to explain to our clients that they are taking on certain exposures that they were not aware of and would be, without modification of their insurance program, uninsured.
Our company is working with a major carrier to try to cover these gaps for our Benefit Plan Clients. We are happy to review any proposed Pharmacy Benefit Management Contract and assist you in understanding the 'hidden" risks and address them.
As a Benefit Fund Administrator the use of Benefit Managers is an attractive option, but go into such arrangements with your eyes wide open and having read the "fine print." Our review of several "form agreements" has caused us to explain to our clients that they are taking on certain exposures that they were not aware of and would be, without modification of their insurance program, uninsured.
Our company is working with a major carrier to try to cover these gaps for our Benefit Plan Clients. We are happy to review any proposed Pharmacy Benefit Management Contract and assist you in understanding the 'hidden" risks and address them.
Tuesday, August 30, 2005
Hurricane Katrina
As the pictures of the devastation start to come in from Louisiana, Mississippi, and Alabama, and the number of deaths continues to rise, it is time for a pause. Hundreds of thousands of our fellow human beings wait anxiously, unable to even head home and determine the extent of the loss they have suffered. They deserve our thoughts, our prayers, and a person-by-person examination of, "how can I help" in the days and weeks ahead.
Thursday, August 25, 2005
Union Liability Insurance -- Addendum
We have previously posted new trends that explain why a Union should consider obtaining Union Liability Insurance. Here is another. HR 1074 has been introduced that would allow any "worker" who 'believes" his union has been misappropriating money to file a complaint with the U.S. Dept. of Labor, and the DOL would have the authority to file a civil suit based on the complaint.
No matter how frivolous the complaint a Union faced with a suit by the U.S. government can expect to incur tremendous legal defense costs. The newly enforced DOL --LM-30 requirements are reason enough for a Union to consider adding this coverage. If HR 1074 becomes law, union liability coverage becomes even more critical.
Go to www.mclaughlin-online.com to learn more about this important insurance coverage.
No matter how frivolous the complaint a Union faced with a suit by the U.S. government can expect to incur tremendous legal defense costs. The newly enforced DOL --LM-30 requirements are reason enough for a Union to consider adding this coverage. If HR 1074 becomes law, union liability coverage becomes even more critical.
Go to www.mclaughlin-online.com to learn more about this important insurance coverage.
Monday, August 22, 2005
ID Theft is not always computer related
The newspapers scare us all about wholesale computer ID theft, but most cases begin with lost or stolen wallets or purses. In 68 percent of reported cases the stolen information was obtained offline. Checks, credit card statements, and applications are often taken out of mailboxes in rural areas where people tend to leave mail unguarded, and people send out mail with checks and other information unaware that the red flag standing up is an attractive target for identity theives. Simple steps can help -- arrange for the post office to hold your mail when out of town and drop off mail with sensitive information or checks at a secured mailbox at the post office. It is disappointing, that something as simple as one's mailbox has become a source of risk, but it is reality.
Monday, August 15, 2005
Back to School Insurance
by Webb Hubbell
It’s August, parents and students alike are making checklists of what to purchase, what to pack, and what last minute items are needed before the school year begins. Very few lists contain the words, “call my independent insurance agent.” Here are several reasons why it should be on every parent’s list.
1. As college students start taking more and more valuable items to school – computers, televisions, expensive stereos, and jewelry -- the risk of theft or damage at the fraternities’ “Toga party” increases. Although some of these items may be covered under Mom and/or Dad’s homeowners policies a lot of items may be excluded. For example, off-campus students may not be protected at all under their parent’s policies and need to purchase renters insurance.
2. Cars owned by the parents still carry coverage when Junior takes it to school, but what if the young student purchased a car in his/her own name with summer job money? What if the young student is going away without a car, can the parents take the young student off their policy sometimes saving big bucks.
3. Most colleges require health insurance for all their students. Some offer very comprehensive plans at very low costs. Are there financial benefits to the family by eliminating the child from the parent’s health insurance plan and purchasing the colleges plan.
4. A fall semester abroad? Do you need to by a supplemental health insurance policy?
5. College is very expensive. How can you use your existing life insurance program to help or do you need more life or disability insurance to guarantee your child’s ability to go to college.
These are just a few examples of why spending a few minutes with your independent insurance agent in August may just as important as buying that new set of sheets.
It’s August, parents and students alike are making checklists of what to purchase, what to pack, and what last minute items are needed before the school year begins. Very few lists contain the words, “call my independent insurance agent.” Here are several reasons why it should be on every parent’s list.
1. As college students start taking more and more valuable items to school – computers, televisions, expensive stereos, and jewelry -- the risk of theft or damage at the fraternities’ “Toga party” increases. Although some of these items may be covered under Mom and/or Dad’s homeowners policies a lot of items may be excluded. For example, off-campus students may not be protected at all under their parent’s policies and need to purchase renters insurance.
2. Cars owned by the parents still carry coverage when Junior takes it to school, but what if the young student purchased a car in his/her own name with summer job money? What if the young student is going away without a car, can the parents take the young student off their policy sometimes saving big bucks.
3. Most colleges require health insurance for all their students. Some offer very comprehensive plans at very low costs. Are there financial benefits to the family by eliminating the child from the parent’s health insurance plan and purchasing the colleges plan.
4. A fall semester abroad? Do you need to by a supplemental health insurance policy?
5. College is very expensive. How can you use your existing life insurance program to help or do you need more life or disability insurance to guarantee your child’s ability to go to college.
These are just a few examples of why spending a few minutes with your independent insurance agent in August may just as important as buying that new set of sheets.
Saturday, August 13, 2005
News From The McLaughlin Company
Our Chairman, John T. Pappas, has made history – or at least he has donated some to the Senate. He recently 
contributed nine albums with pictures of Senators and Senate staff dating back to the late 18th century. An article in the Senate newsletter stated “The gift is significant not only because of the albums contents, but because of the individual responsible for creating many of the photographs (Matthew Brady) and the background and personal history of the donor.”
We always knew that Mr. Pappas was a bit of living history, but
who knew he had so much in his attic.
contributed nine albums with pictures of Senators and Senate staff dating back to the late 18th century. An article in the Senate newsletter stated “The gift is significant not only because of the albums contents, but because of the individual responsible for creating many of the photographs (Matthew Brady) and the background and personal history of the donor.”We always knew that Mr. Pappas was a bit of living history, but
who knew he had so much in his attic.
Tuesday, August 09, 2005
Identity Theft
It seems that every day we read in the news about identity theft. The Washington Post reports that over 50 Million accounts have been exposed to the possibility of identity fraud since the beginning of the year. The McLaughlin Company decided to do something about it for our clients. We have purchased for all our Personal Lines clients at, no cost, a St. Paul Travelers Identity Fraud Expense Coverage Master Policy with up to $25,000 in coverage and no deductible. Just by reason of being a personal lines client of The McLaughlin Company you are covered.
Some highlights of the coverage are:
- Lost wages as a result of time taken off work to deal with the fraud up to $500 per week for four weeks.
- Notary and certified mailing charges.
- Fees to reapply for loans that were denied due to erroneous credit information.
- Long distance telephone charges.
- Attorney fees incurred, with St. Paul Traveler’s consent, for defending suits, removing criminal or civil judgments, and challenging information in a credit report.
We are always looking for better ways to serve our clients. When you need insurance think The McLaughlin Company.
Webb
Thursday, August 04, 2005
Thank you!
Today was our first day with this form of communication. We welcome your comments and thoughts. Webb
SEC Issues Warning About Pension Consultants With Undisclosed Financial Ties
By Webster Hubbell
On May 16, 2005 the Securities and Exchange Commission issued a study finding that many firms that provide advise to pension plans appear to have undisclosed financial ties. Lori Richards, Director of the agency’s Office of Compliance and Examinations, said, “ We do think these findings are quite serious.” A copy of this study can be obtained by going to the SEC’s website http://www.sec.gov/.
Over a year ago The McLaughlin Company warned that Pension Funds should be wary of consultants, advisors, and actuaries who were “wearing multiple hats.”[1] The SEC goes much further raising concerns that only a few consultants informed pension-plan clients of their financial relationships. Ms. Richards described disclosure information as ranging from “none to very poor.” She said the SEC’s aim is to prompt fuller disclosure by consultants and more and better questions by pension plan sponsors and trustees.
The report on 24 pension consultants primarily dealt with ties the consultants had with money managers, but the principles of disclosure and conflicts of interest apply to all pension advisors and consultants. Ms. Richards did not reveal any of the names of the 24 consulting firms but acknowledged that a “large number of the firms have been referred to the SEC’s enforcement division for investigation and possible legal action. Ms Richards said, “ It is my hope and expectation that these firms will be dealt with in the enforcement context.” Two firms that have acknowledged that they are part of the study and report are Segal Advisors and Mercer Investment Consulting, Inc, the pension-advising unit of Marsh & McClellan Cos.
The study states that Pension Funds should have information about the Fund’s consultant’s real or potential conflict of interest in order to assess the objectivity of the advice that is or may be provided by the consultant. In The McLaughlin Company’s warning we used as an example of a clear conflict of interest an actuary, charged with evaluating the financial health of the fund, helping broker the fund’s fiduciary insurance thus “advocating” the financial health of the fund. The study raises additional concerns that consultants may steer clients based on other business relationships stating, “Such a conflict of interest can compromise the fiduciary duty that the … advisors owe their client.”
The study also raises concerns about the extent of conflict of interest disclosure. In our actuarial example, questions now must go beyond fees received for brokering insurance, to whether the actuarial firm has other business relationships with the insurance company it recommends and the extent and nature of those relationships. Also whether the actuarial firm has subsidiaries that advise pension funds and the nature and extent of those subsidiary’s financial ties to money managers and other consultants. Mere separate corporate entities with common ownership are nothing more than form over substance. Of course, the study contains many other examples of conflicts and non-disclosures. The McLaughlin Company anticipates that underwriters for fiduciary coverages will be soon be asking questions about consultants with multiple ties especially when the insurance broker is providing “other services.” Underwriters who determine that consultants are providing multiple services or have financial ties to other consultants may be forced to increase premiums to cover the plan’s increased exposure.
The McLaughlin Company believes that each of its clients is entitled to an insurance representative free of any conflicts of interest. Plan trustees have a duty to ask their insurance brokers do you have potential conflicts of interest or financial ties to other consultants. Or simple questions such as are you licensed to sell this service and do you have errors and omissions insurance for this “other service.” The McLaughlin Company has been dedicated to providing, first and foremost, excellent and ethical service to each and every one of its clients. Pension Plan’s fiduciary insurance is very important to the Funds and its trustees. The placing of such complex and important insurance needs to be handled professionally, and not as an afterthought or part of a package of “other services” provided by a plan consultant. We welcome the opportunity to discuss this further at any time and we appreciate you considering The McLaughlin Company for your insurance needs.
[1] To obtain a copy of the article Are Your Consultants and Advisors Wearing Multiple Hats, Lest They doubt Our Sincerity go to http://www.mclaughlin-online.com/.
Insurance for Labor Unions
Several individuals have asked our opinion regarding the discussion that is going on about insurance coverages for Unions. It is important that there not be confusion about these coverages. Of course, each individual Union may have special circumstances that may affect what an insurance company may be willing to write.
The McLaughlin Company designed the Union Liability policy in order to address certain unique issues created by the Taft-Hartley and Landrum-Griffin Acts. We are most aware of the difficulties faced by Unions in obtaining insurance coverage, and on behalf of the International and Local Union clients around the country we represent, we have been able to address many of the concerns raised in recent e-mails. We also have had an on going dialogue with both AIG and Ulico about improvements that are needed in their respective Union Liability policies. These discussions have led to AIG issuing, unique to our clients, the "McLaughlin endorsement" which allows the Union client to pick attorneys from a list of approved union counsel, not corporate counsel, and lowers the premium for the individual labor leader endorsement. Ulico has partnered with State National to upgrade their policy to an "A" rating and we are working with them to make improvements to their policy, as well. We have never failed in securing UL coverage for a client.
A little background is required to understand the problem with General Liability Policies and Personal Injury and Advertising exclusions.. The commercial lines manual, which is the rules and regulations used by the insurance industry to have consistency in underwriting, states that Personal Injury and Advertising Injury is to be excluded for labor unions. They are in the same category as a number of advocacy and non-profit organizations; it is not just discriminatory against labor unions.
Some insurance companies that have little background with labor unions have written locals describing them not as labor unions but as employee associations. This was particularly true of State Farm, which ended up being involved in a number of Caterpillar cases. Their answer was to cancel all policies when they discovered this. They may be back to writing locals again because underwriters have changed and memories fade, but if there is another series of claims, they will again start canceling policies.
When Ulico was active in the Property and Casualty business and started writing labor unions, they did not exclude personal injury. Because of losses, they exited the Property and Casualty business and turned over their business to Seneca, which from the get-go, was adamant in following the commercial lines manual and excluding Personal Injury and Advertising Injury. Despite this atmosphere, w e have been successful in almost every case in convincing insurance companies to provide Personal Injury and Advertising Injury on national and international unions due to our experience and Knowledge of each client and the class in general.
When we designed the Union Liability Policy, we were able to get the companies to agree to provide Personal Injury and Advertising Injury. This is available to local unions. Again, we have never failed to place a Union Liability policy for a union, be it an International or local. There is a possible exclusion in the Union Liability Policy for strikes and boycotts which is troublesome in organizing campaigns.
You will still find some underwriters and carriers who are not familiar with this class of business and will occasionally provide Personal Injury coverage but most companies when approached to write a local union say "No" even though we find carriers that will refuse in the District of Columbia and in another part of the country will insure them.
We have also been successful in getting standard carriers, like St.Paul/Travelers, to cover Local Unions under a General Liability policy when there is a Union Liability Policy in place.
We have been at the forefront of getting Joint Apprentice Training Funds covered. For several years we have been working on a program for Apprenticeship and Training Funds. We want to create an insurance product that would coordinate all of a training fund’s liability coverages so that in theory, there would be no gaps or overlaps between the policies.
There are four areas in which gaps or overlaps most commonly occur. These are (1) personal injury liability and employment related suits, (2) fiduciary liability exposures, (3) professional liability exposures, and (4) publisher’s liability exposures. In addition we needed to be sure coverage would provided for claims alleging violation of ADA, ADEA, FMLA etc. that might arise from the selection criteria used by the Funds.
In a nutshell, Labor Unions are our niche, and we take pride in meeting our Union client's needs whatever they may be. We were the first insurance agency to write an insurance policy specific to a Union and are proud of our affiliation with the labor movement over the past 75 years.
That said we want everyone to have a clear understanding of what can and cannot be covered. If you are interested in learning more go to www.mclaughlin-online.com or e-mail info@mclaughlin-online.com either requesting a list of Questions and Answers about Union Liability coverage or with your specific question. We recently sent out a letter highlighting the increased need for Union Liability coverage as a result of the DOL's increased focus on LM-30's and issues of privacy.
Although this may be more than you want to know about the unique problems facing Labor Unions and coverages I hope it is helpful. We would welcome the opportunity to discuss any insurance issue with you, especially concerning the unique coverages needed by a Labor organization.
Webb
The McLaughlin Company designed the Union Liability policy in order to address certain unique issues created by the Taft-Hartley and Landrum-Griffin Acts. We are most aware of the difficulties faced by Unions in obtaining insurance coverage, and on behalf of the International and Local Union clients around the country we represent, we have been able to address many of the concerns raised in recent e-mails. We also have had an on going dialogue with both AIG and Ulico about improvements that are needed in their respective Union Liability policies. These discussions have led to AIG issuing, unique to our clients, the "McLaughlin endorsement" which allows the Union client to pick attorneys from a list of approved union counsel, not corporate counsel, and lowers the premium for the individual labor leader endorsement. Ulico has partnered with State National to upgrade their policy to an "A" rating and we are working with them to make improvements to their policy, as well. We have never failed in securing UL coverage for a client.
A little background is required to understand the problem with General Liability Policies and Personal Injury and Advertising exclusions.. The commercial lines manual, which is the rules and regulations used by the insurance industry to have consistency in underwriting, states that Personal Injury and Advertising Injury is to be excluded for labor unions. They are in the same category as a number of advocacy and non-profit organizations; it is not just discriminatory against labor unions.
Some insurance companies that have little background with labor unions have written locals describing them not as labor unions but as employee associations. This was particularly true of State Farm, which ended up being involved in a number of Caterpillar cases. Their answer was to cancel all policies when they discovered this. They may be back to writing locals again because underwriters have changed and memories fade, but if there is another series of claims, they will again start canceling policies.
When Ulico was active in the Property and Casualty business and started writing labor unions, they did not exclude personal injury. Because of losses, they exited the Property and Casualty business and turned over their business to Seneca, which from the get-go, was adamant in following the commercial lines manual and excluding Personal Injury and Advertising Injury. Despite this atmosphere, w e have been successful in almost every case in convincing insurance companies to provide Personal Injury and Advertising Injury on national and international unions due to our experience and Knowledge of each client and the class in general.
When we designed the Union Liability Policy, we were able to get the companies to agree to provide Personal Injury and Advertising Injury. This is available to local unions. Again, we have never failed to place a Union Liability policy for a union, be it an International or local. There is a possible exclusion in the Union Liability Policy for strikes and boycotts which is troublesome in organizing campaigns.
You will still find some underwriters and carriers who are not familiar with this class of business and will occasionally provide Personal Injury coverage but most companies when approached to write a local union say "No" even though we find carriers that will refuse in the District of Columbia and in another part of the country will insure them.
We have also been successful in getting standard carriers, like St.Paul/Travelers, to cover Local Unions under a General Liability policy when there is a Union Liability Policy in place.
We have been at the forefront of getting Joint Apprentice Training Funds covered. For several years we have been working on a program for Apprenticeship and Training Funds. We want to create an insurance product that would coordinate all of a training fund’s liability coverages so that in theory, there would be no gaps or overlaps between the policies.
There are four areas in which gaps or overlaps most commonly occur. These are (1) personal injury liability and employment related suits, (2) fiduciary liability exposures, (3) professional liability exposures, and (4) publisher’s liability exposures. In addition we needed to be sure coverage would provided for claims alleging violation of ADA, ADEA, FMLA etc. that might arise from the selection criteria used by the Funds.
In a nutshell, Labor Unions are our niche, and we take pride in meeting our Union client's needs whatever they may be. We were the first insurance agency to write an insurance policy specific to a Union and are proud of our affiliation with the labor movement over the past 75 years.
That said we want everyone to have a clear understanding of what can and cannot be covered. If you are interested in learning more go to www.mclaughlin-online.com or e-mail info@mclaughlin-online.com either requesting a list of Questions and Answers about Union Liability coverage or with your specific question. We recently sent out a letter highlighting the increased need for Union Liability coverage as a result of the DOL's increased focus on LM-30's and issues of privacy.
Although this may be more than you want to know about the unique problems facing Labor Unions and coverages I hope it is helpful. We would welcome the opportunity to discuss any insurance issue with you, especially concerning the unique coverages needed by a Labor organization.
Webb
Welcome
Welcome to our newly created Blog. We will be commenting on current trends on insurance issues, but occasionally we will veer off path to comment on current events, sports and a variety of topics. We welcome your participation, but please keep them dignified. Webb
Welcome to "Webb Says"
Webb Hubbell is the former Associate Attorney General of the United States. Before coming to Washington with the Clinton administration, he was Chief Justice of the Arkansas Supreme Court. He practiced law for over 20 years specializing in litigation involving insurance, fiduciary liability and malpractice. He is now a Vice President of The McLaughlin Company.
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