Claims and How to Improve Your Business

As 2022 starts up, Advisors Insurance is nearing it’s 10th year in business this March. Over the past 12 months, our clients have experienced claims and we want to share information on how to improve your business and further protect it from both harm as well as explore processes to improve profitability and efficiencies.

Read below for examples of better financial operations and risk management for strategies your business!

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US Marshall Fraud Scheme: One of our clients experienced fraud when scammers called a manager of a multi location business stating they were US Marshalls investigating the owner. After intimidating the manager to prevent him discussing this with anyone and cloning the owners cell phone, the manager took money from a safe, bought cash cards and sent the funds to the US Marshalls only to find out the elaborate scheme was fraud.
How to Apply to Your Business: Make sure you have healthy processes in place regarding who handles money, how checks and balances are done and reporting methods so there is a proper trail to track funds. This could include Cyber security checks and protocols to further protect again both phone fraud schemes and cyber crimes. Many businesses have never done a thorough cyber assessment or discussed money handling practices.

Warehouse Fire stopping operations: One of our clients operates a manufacturing facility while also having several tenants in other parts of the building. A tenant caused a fire, burning down part of the building and preventing all tenants from continuing their businesses. Loss of business income, damage to property and employees dealing with smoke inhalation all resulted.

How to Apply to Your Business: Make sure that if you have tenants in your building you keep up to date certificates of insurance from tenants (sent from their agent, not given direct from tenant). Make sure you check for fire hazards and that tenants have appropriate safety protocols. Confirm that you have proper Business Income coverage in place to capture lost revenues, and complete a BI worksheet with your CPA to confirm proper coverage; and update that worksheet regularly, especially if your business is growing.

Payroll Employee Dishonesty: A client uncovered an employee was fraudulently creating invoices to vendors then paying themselves the funds. The same employee, when discovered and fired, had access to passwords and began locking client out of their own email, bank accounts, etc. causing loss of inbound customer requests and communications. It caused significant delays to work things out.

How to Apply to Your Business: Checks and balances with employees who access, control pay and monies is a healthy practice. Even managing inventory, Fleet usage, etc. is a healthy policy to review. Check with your agent to make sure Employee Dishonesty and other ancillary coverages are added to your policy due to the many various risks businesses face.

Common Exclusions: Flood, Earthquake, Towing, Rental Reimbursement (for heavy equipment is key as it can be costly and hard to replace certain trucks and/or heavy equipment). Many policies have tiers of coverages so consider the levels of coverage and what is appropriate for your business.

Work Comp Injury: Client’s employee hurts back while lifting box resulting in medical bills and lost time at work.

How to Apply to Your Business: Every business needs to have a Return to Work program aimed at properly and promptly helping injured or ill employees. How you train staff to go to either an ER or urgent care facility makes a difference on your workers comp program. Getting employees property cared for and back to work is not something to leave for after an event occurs.

Cyber and EPLI are the 2 fastest rising claims currently. Many businesses have outdated Employee Handbooks and training practices, and many don’t get cyber threat assessments done or even talk with their managed IT service or a specific threat assessment firm to discuss a plan of security.

There are many different risks businesses face both from internal and external threats. At a minimum, annual risk surveys are best practice to confirm you and your agent have healthy communication and understanding of your business’ operations and the risk management plan that best fits your needs.

Resources that a business could use for the above: most EPLI policies have a hotline to discuss employee handbooks and HR related items to keep up to date with laws and proper documentation, most managed IT services have a way to advise their clients on cyber security practices, you can contact your insurance carrier’s loss control department and discuss how best to protect your business and even have an onsite loss control visit to identify areas of concern to help.