Wednesday, January 27, 2010

ACE Government Contractor Seminar on February 23 in Washington, DC

Good afternoon,
One of our insurance carriers, ACE-USA is holding a seminar for Government Contractors on Feb 23rd in DC. It sounds like good information for companies who do business on US bases overseas. Details and RSVP information is below. Maybe I'll see you there!

Exclusive ACE International Seminar

"The Challenges of Government Contracting"

Update on Defense Base Act Requirements and Foreign Contract Risks

ACE USA is pleased to invite you to an exclusive International Seminar to be held on Tuesday, February 23, 2010 in Washington D.C. at the Navy Memorial Heritage Center.

Please RSVP by February 8th for seminar details and agenda and to reserve a seat.

Registration and continental breakfast: 9:00 AM

Seminar: 9:30 AM – 12:30

Room: Burke Theater


In today's global climate, managing foreign risk and financial exposure is a top priority for U.S.-based government contractors. Clients and brokers need up-to-date information on U.S. Department of Labor Defense Base Act requirements, on international risk management issues beyond workers compensation and on available solutions.

This seminar is an opportunity for you to participate with outside experts, as well as senior members of ACE's International underwriting and claims teams, including:


§ John A. Chamberlain, Chief, Branch of Financial Management, Insurance and Assessments, Department of Labor/OWCP

§ Miranda Chiu, Chief, Branch of Operational Policies, Regulations and Procedures, Department of Labor/OWCP

§ Keith Flicker, Attorney at Law and Partner, Flicker, Garelick & Associates, LLP

§ Robin Smith, DBA Claims Manager, ACE ESIS®

We look forward to seeing you on February 23rd.

If you have questions, please contact:

§ Cindy Schmidt-Khalil, ACE USA AVP DBA Underwriting, 302 476-6588,

§ Robin Smith, ACE ESIS® DBA Claim Manager, 813 281-1409,

§ Pat Goudarzi, ACE USA SVP and DC Branch Manager, 202 471-2911,

ACE Foreign Casualty, a unit of ACE USA, specializes in providing foreign insurance programs and specialty products to small, mid-sized and large U.S.-based companies and organizations. ACE USA is the retail U.S.-based operating division of the ACE Group of Companies. ACE USA, through its operating companies, is a leading provider of property, casualty, and accident and health insurance, as well as financial products and risk management services. The ACE Group of Companies is a global leader in insurance and reinsurance, serving a diverse group of clients. Headed by ACE Limited (NYSE: ACE), the ACE Group of Companies conducts its business on a worldwide basis with operating subsidiaries in more than 50 countries. Additional information on Foreign Casualty can be found at

Tuesday, January 26, 2010

Zurich Recommends Employers develop policies to prevent Distracted Driving

States have been banning it. Now, insurance companies are recommending against it. Distracted driving causes accidents. I'm as guilty as the next person. The little, red light flashes on my BlackBerry, and I MUST KNOW who has contacted me. What is it, little red light? Talk to me, little red light.

The Washington, DC area is known for its horrible and dangerous traffic. We can't see the road, if our eyes are glued to the little, red light.

Zurich Insurance Company stated that employers could be held "vicariously liable" if they allow employees to text/email/chatter while driving. Zurich recommends that companies develop their own "Electronic Usage Policies" that should:

* Restrict use of all types of technologies (cell phone, Blackberry, laptop, MP3 player).

* Prohibit use of non-work related technology gadgets in non-office work areas to help minimize distractions and other safety-related hazards.

* Enforce rules consistently and fairly with all employees.
In the world of liability, companies without formal policies prohibiting or regulating certain activities can be accused of permitting those activities. For example, "your driver hit my client's car because he was texting while driving your company truck. You didn't regulate his driving habits, so you have to pay for my damages."

Keep an eye on this issue, because it will continue to grow.

Here's a link to the full
article about Zurich's recommendations.

Monday, January 25, 2010

Insurance Audit Survival Guide

What's the old adage? Genius is 5% inspiration and 95% perspiration?

When it comes to Insurance Audits, a little bit of perspiration will go a long way. Last year, I wrote about Audits, Auditors and the information that they want to review. (See The Insurance Auditor Cometh). Now, let's talk about how to prepare for them.

Insurance Auditors are not robots; they're people, too. People will respond favorably when work is made easier for them. Auditors may like numbers, but they hate having to dig for them. So, I tell my clients to...


Unless your Auditor hates you, the above advice should ensure a quick and smooth experience. How does one do an Auditor's work for them?

Summarize, Summarize, Summarize.

Auditors ask for quarterly tax reports, individual payroll records, overtime reports, & 1099s. Help them out by preparing short summaries to guide them. Here are a few pointers:

A summary of all company employees separated by class code
Work Comp policies use class codes for different types of work. These class codes are referred to as "Scopes," and the Scopes for most states are developed by the National Council on Compensation Insurance (NCCI). For example, Clerical office employees are coded under 8810/Clerical; Plumbers are coded under 5183/Plumbing. Rates vary by class code according to the types and amounts of claims reported for each. General Liability policies use class codes as well. GL class codes are usually determined by the Insurance Services Office (ISO) or individually by your carrier.

List your employees & their gross wages according to their proper Class codes. Provide a subtotal of the employees' wages for each class code, so that the Auditor can just plug the figures into their worksheet.

Indicate OT
When tabulating employee wages, be sure to separate straight time from overtime. If you include a gross OT figure, then you are paying too much. Insurance companies only charge policyholders for 1/3 of Overtime. Indicate the OT figure on your summary.

List Company Owners
Most states do not charge company owners (sole-proprietors, partners, corporate officers, LLC members, etc.) for their total compensation. Their payroll is usually included at a minimum or maximum determined by the type of entity and your state. For example, the maximum chargeable payroll in VA is $58,500 for corporate officers. The max amount differs for sole-proprietors & partners. If your VA corporate officer makes more than that figure, they will only be charged premium up to $58,500. Find out the maximum and minimum chargeable payrolls in your state, and indicate such to your Auditor.

Make List of 1099s and provide Certificates of Insurance
After employees, Auditors want to know whom you paid on a 1099 basis. Make a list of these subcontractors along with the total amounts paid to them during the policy year. Auditors will want to see that these individuals or companies carried their own Work Comp & General Liability insurance. If these subcontractors did not carry their own coverage, then your insurance company will add their compensation to your payroll basis. This will cause an unexpected increase in your premium!

If subcontractors do not carry their own insurance, then they could create claims for your insurance company. Companies fund for this exposure by included uninsured subs on your policy. For my recommendations on protecting your liability exposure when using subs, see my Service & Sub Contractor Insurance Guide.

Insurance Auditors love summaries. A nice little spreadsheet means that they don't have to go through individual payroll records and piece together wage totals. It also means that they can pick up the information and slip silently out of your office. Auditors operate under tight deadlines. Their days are stacked with appointments around town. The faster they can finish yours, the better for them to stay on schedule.

My summary system has helped my clients to significanly cut audit times. In fact, my personal best is a 5-minute audit. Give it a try and let me know if you can beat it. Good luck.