Cultivating talent and retaining employees can be a challenge for every employer. Wages across all disciplines are increasing, which results in competitive new job offers and a difficulty for employers to staff and retain top talent (unless they can regularly dish out significant raises company-wide). Most employers compensate for their potential wage discrepancy by offering employees attractive, affordable, and comprehensive benefits programs.

Despite these efforts, employee-retention rates are not where most companies would like them to be, a sentiment that supports findings in Payscale’s 2018 Compensation Best Practices Report. Payscale highlights employee retention as one of employers’ top concerns across all sectors. Fifty-nine percent of those surveyed for the report worried about losing their best employees to competitors, and sixty-seven percent were concerned about the difficulty of holding onto skilled labor.

These fears are not ill-founded: In the event a quality employee leaves, the cost to replace them (i.e., disseminating and advertising the open position, interviewing and conducting background checks on candidates, drug testing, referral bonuses, signing bonuses, etc.) can creep up to 20 percent or more of that individual’s annual salary. There’s also a potential uptick in salary expectations from the new employee due to industry trends and recognition of a competitive marketplace. This is on top of the minimum wage increases we all are seeing now.

To further complicate matters, three distinct generations—Baby Boomers, Gen-Xers, and Millennials—with varying needs and expectations compose most of today’s workforce. Fewer in numbers, but also represented, are the Silent Generation (the demographic cohort following the G.I. Generation and the oldest group of employees in today’s workforce) and the Generation Z workers (the generation after Millennials), who represent opposite ends of the age spectrum. This multi-generational labor mix adds value to the work environment, but the combination also creates new demands when it comes to recruitment and retention.

All employees, regardless of their ages, are looking for increasing salaries, rich benefits, and subsidies for dependent coverage. Factoring in medical, dental, life, disability, 403(b), vacation pay, time off, and taxes, the total cost for employers is substantial. This is problematic for companies trying to reduce costs year over year and continue to offer benefits for five demographic cohorts that will help attract and retain talent.

Second only to wages, your employee-benefits program is your next highest expense. Employee benefits is a significant financial and administrative investment that could be a key variable in your efforts to both attract and retain quality team members—and get competitive advantage (if you know how to leverage it). One of the best ways to maximize your investment is to work with your broker to implement a benefits-communication strategy to help employees fully understand and, more importantly, appreciate what your organization offers.

Here are four ways your benefits program can help with recruitment and retention.

Prioritize Employee Retention Over Recruitment

You’ll get more mileage from your benefits program if you work with your broker to focus on employee retention first, as this is ultimately where your greatest return on human-capital investment comes from, and recruitment second. Focusing on retention involves investing time, money, and effort into designing rich, yet affordable, benefits options, and secondly communicating these efforts with your employees to demonstrate your dedication to keeping them. When you subsequently shift your focus to recruiting, be sure to also emphasize to candidates just how great your benefits program is. Prioritizing the “who gets communicated with about our benefits program and when” and in this order is more likely to help you reach your company objectives.

(Re-)Educate Employees about their Benefits Often at Various Touchpoints

Employees often don’t fully understand the scope of time and money an employer invests into offering a competitive benefits program. It’s also easy for employees to lose sight of the benefits package they’re receiving after they’ve been onboarded—rather than appreciating the program’s value with each paycheck, they simply see a hit on their net incomes. Whether they’ve just joined the company or are seasoned team members, employees must be educated and continually reminded of the value of their enrollment. Your broker can help you design a multi-touch educational campaign that includes communications tools such as benefit guides, wallet cards, and announcements, all of which can keep benefits top of mind for employees at every stage of their journey with you. Wellness/health fairs and campaigns throughout the year can also present multiple opportunities to educate employees and go beyond the standard annual open-enrollment meetings. Work with your broker to design the best communications strategy that allows you to speak loudly and frequently to all the perks of working for your community. You stand to get the biggest payback on your benefits-program investment: satisfied employees who stay.

Take a Traditional and Forward-Looking Approach to Benefits Communication

Since different age groups have different needs when it comes to benefits communications, there are multiple communications technologies your broker should be making available for you, including the following:

• Online enrollment
• Benefit portals
• Intranets
• Mobile phone apps (becoming very prevalent with Millennials)
• Webinars (livecast and on-demand)
• Video (generally preferred by Millennials and Generation Z populations)

Your broker shouldn’t discontinue administering the more traditional open-enrollment group meetings in favor of newer technologies though. In-person one-on-one meetings and answering employees’ questions via Q&A sessions are employee-communications approaches that are still generally preferred by the Baby Boomer and Silent Generation populations. As the workforce continues to evolve, multiple means of communication that are both “old school” and more leading edge will be needed to communicate effectively across all demographic bands.

Communicate the Total Value of Your Benefits Package

Another way to demonstrate to employees how greatly you value them is to employ a total-compensation strategy to share with them the full scope of their benefits and compensation programs. Total-compensation statements go beyond standard paychecks to provide a greater overview that gives a quantitative value of your benefits program. Research shows 80 percent of employees who ranked their benefits satisfaction as “extremely high” also ranked job satisfaction as “extremely high,” meaning a transparent communication approach can help increase employee appreciation and satisfaction. Use your existing benefits-administration system to set this up, or ask your broker to help you provide this to employees. Total-compensation statements are also a valuable recruitment tool, as they can also be shown to potential candidates to demonstrate how well you treat your employees.

If you want to retain your workforce and build employee morale, getting your management team behind the idea of communicating often and consistently throughout the year, using different communication vehicles, and providing total compensation statements can foster good will and improved productivity among your employees, which ultimately leads to a happier workforce and increased employee retention.

 

About the Author

 

Tuan Nguyen is Vice President, Employee Benefits, at Relation Insurance Services in Walnut Creek, CA. He can be reached via email at [email protected], via phone at (925) 322-6441, or on LinkedIn.

 

When considering deductible retirement plans, many business owners and CPAs only think about 401(k) and Simplified Employee Pension (SEP) plans. But there’s another option on the table they should be considering — defined benefit/cash balance retirement plans.

Why? The most an employer can contribute to a 401(k) or SEP is the lesser of 25% of compensation or $55,000 ($61,000 for those 50 and over). While fine for some small businesses and professional groups, the recent Tax Cuts and Jobs Act of 2017 (TCJA) means that many small to medium-sized business owners are now paying less in taxes and have more than that amount to save for retirement.

This is where a well-designed cash balance plan combined with a 401(k) plan comes into play. It can provide deductions of $100,000, $150,000, $200,000, and more, for highly compensated employees, with smaller amounts to non-highly compensated employees.

How a Cash Balance Plan Works

Remember the old-school defined-benefit plans our grandfathers had back in the 1950s, working for companies such as General Motors? A cash balance plan is similar, but has a 401(k)-like twist to it.

Traditional pension plans promise participants a certain benefit at retirement, such as 50% of their final monthly paycheck paid to them for as long as they live. A cash balance plan also provides a promised benefit but in an account that looks like the lump sum balance in a 401(k) account, rather than as a monthly income stream.

The closer one is to retirement, the more the employer can sock away for the employee on a deductible basis without that amount being reportable as compensation to the employee. A 60-year-old employee who wants to retire at age 66, for example, can have more than $200,000 as a tax-deductible contribution — a pretty good deal thanks to the recent tax reform legislation. The money would be taxable when paid out in retirement, but tax brackets may be lower then.

Benefits of Cash Balance Plans

The workforce is aging. Many employees don’t even begin to start thinking about retirement savings until their late 30s and early 40s. Some don’t get serious about doing anything until their mid-to-late 40s or even into their 50s.

By then it may be too late to fully fund a 401(k) plan to get the retirement outcome a highly compensated person wants. But the higher deductible limits allowed under a cash balance plan, combined with tax deductible dollars and tax deferred growth can turbocharge the plan and help reach the desired retirement outcome on time.

Who Should Use Them

The most significant cash balance plan action is taking place at small- to medium-sized employers. There have been increasing levels of interest from the technology sector, retail industry, and manufacturing companies, but the greatest interest comes from professional service firms. Doctors, lawyers, and accountants are typically highly compensated and are eager to save when the numbers for them are big, yet the contribution is deductible.

The growing gig economy of entrepreneurial consultants, professionals, and others can also benefit from these plans. Just one, two, or three employees in a combination 401(k)/cash balance plan can help employees and owners get larger deductions and more cash for their retirement. Regardless of industry, the best outcomes are generally for plans covering those over age 50.

Here’s an example of how a 401(k) combined with a cash balance plan worked for a small professional firm with 23 employees including three owners. The objective was to provide the three owners with deductible contributions of varying amounts chosen by each owner. Owners one and two wanted to contribute $100,000, while owner three wanted to contribute just $50,000 to the cash balance plan. They also wanted to make company contributions of as little as possible to the other 20 employees. Every employee could defer as much as they wanted (up to the limits allowed) to the 401(k) plan, which was a safe harbor plan. This meant the company would contribute 3% of each eligible employee’s pay, which allowed any highly compensated employee to make the maximum contribution to the 401(k) plan. As a result, almost 80% of the company contributions went to the three owners, while the company took a tax deduction of more than $500,000.

Setting up a Cash Balance Plan

How do I set up a plan? What does it typically cost, and what should make me think twice about doing it?

An actuary must design and certify the funding of the plan every year. A third-party administrator (TPA) generally prepares the plan document and provides all the ministerial services for the plan on an annual basis. There may also be investment advisory and brokerage fees. Expect to pay anywhere from $2,000 to $5,000 to set up the plan, with additional annual fees of $1,500 to many thousands of dollars depending on the number of participants.

The government also wants the plan to be permanent. An attorney who has a gigantic fee this year, or a real estate agent who has a career best commission that results in a windfall of taxable income that is unlikely to happen again, and wants to use a cash balance plan to reduce what would otherwise be a big income tax, shouldn’t use this plan for that sort of event without thinking through how to handle contributions in future years. Plan sponsors should think about doing similar contributions to the plan for a number of years. If everything stays the same, employee population and their compensation, investment returns for the plan, etc., then the contribution amounts will be about the same each year.

Is it Right for You?

The TCJA has given many business owners more cash to invest in things like retirement plans. If you’re looking for a tax-advantaged way to set aside some of the tax dollars you now have as a result of the TCJA, it might be a good time to look closely at how a cash balance retirement plan can work for you.

 

About the Authors

 

Mike Weintraub is president of the Retirement Plans Division at Relation Insurance Services in Walnut Creek, CA. He can be reached on LinkedIn, via email at [email protected] or via phone (925) 407-0412.

 

This article originally appeared on TheStreet website.

Dear Clients,

With Hurricane Florence gaining in strength and intensity and due to hit the East Coast in a matter of hours, we urge all of you to make sure you have a plan in place and are prepared for the worst-case scenario, even if you or your business are in an inland county. Your safety and wellbeing are important to us and we want to let you know that we care and we are here for you during this storm.

To be available to YOU when you need us most, our Relation Storm Team will be working remotely with extended hours from 7am-7pm throughout the storm, starting Thursday, 9/13, and continuing every day through Monday, 9/17 (including Saturday and Sunday).

We will be available to take your calls and respond to emails and file any necessary claims as needed. We have also included direct claims reporting and payment information for our major insurance carriers below for your convenience to report your claim directly on a 24-hour basis.

If you are unsure of your carrier or policy information, you can call our main number at 704-688-1228 or 800-456-1696 or email us at [email protected] during our extended hours to assist you in getting your claim filed. During normal business hours, you may continue to reach out to your account manager as you do currently.

Florence is expected to be the most powerful storm to make a direct hit on the Carolinas in decades. Experts are expecting wide and significant impact to our area, no matter where it ultimately comes ashore. At the very least, we can expect Florence to bring heavy rain and wind which can easily cause flooding and power outages. There is additional concern due to the large expected area of impact and the extended time that it may stay in our area. Many of our client families and businesses are already under a mandatory evacuation with more on the way. If you are in an evacuation zone, please heed that warning and DO NOT attempt to stay in your home. If you are not under an evacuation order, there is still time to prepare. We have attached some storm tips as well as a blank emergency plan that might be helpful to your household in this process.

Our Coast is expected to feel the blast early tomorrow with damaging and life-threatening storm surge, wind and rain. In central areas, we expect to feel the impact due to sustained rainfall and significant wind. In western areas of our states, we should still be prepared for heavy and sustained rain that might trigger flooding and mudslides. Please stay alert and take this storm seriously no matter where you live in our Carolinas and East Coast states. If you are under an evacuation order, please heed that order. If you aren’t under an evacuation order, take this time to gather your supplies: food, water, flashlights, extra batteries, medications and important documents. Remember to make plans for your pets. Clear your yard of debris that can cause damage in high winds.

Both North Carolina and South Carolina have some great resources and mobile applications for your use in preparation for and during the storm:

The ReadyNC mobile app gives information on real-time traffic and weather conditions, river levels, evacuations, and power outages and is an all-in-one FREE tool for emergency preparedness. The SC mobile app can help you build your emergency plan, keep track of supplies and stay connected to loved ones. In addition, coastal residents can now “Know Your Zone” instantly using the maps feature as well as locate the nearest emergency shelters when they are open. The tools section features a flashlight, locator whistle and the ability to report damage to emergency officials.

Federal sites are also helpful, or download the FEMA mobile app for resources on how to plan and prepare for a hurricane event as well as steps to take afterward to minimize damage and to get back in business or back in your residence as soon as possible. You can also text PREPARE to 4FEMA (43362) to receive useful tips about how to prepare for disasters.

See the National Hurricane Center for updates on the storm and to the National Weather Service for detailed warnings.

Please be safe during this storm and reach out to us at any time with questions and concerns.

 

Other Helpful Resources
Personal Lines Claims Reporting Phone List
Personal Lines Direct Bill Payment Phone List
Commercial Lines Claims Reporting Phone List
Commercial Lines Direct Bill Payment Phone List
Relation Storm Tips
Household Emergency Plan
What to Take to a Shelter
19 Post-Florence Tips: What to Do After the Hurricane

By Steven J. Billings, Michael Williams, and Travis Vance

Safety incentive programs have long been used by organizations to promote safe working environments and to encourage safety in the workplace. But a recent memorandum from the Occupational Safety and Health Administration (OSHA)  states that “Section 11(c) of the OSH Act prohibits an employer from discriminating against an employee because the employee reports an injury or illness. Reporting a work-related injury or illness is a core employee right, and retaliating against a worker for reporting an injury or illness is illegal discrimination under section 11(c).”  Given OSHA’s recent scrutiny of incentive programs, discipline programs and drug testing post-incident, employers should take this opportunity to review their safety program to ensure its compliance with OSHA’s new rules.

Consider the following 10 tips to make your incentive program OSHA compliant and more effective:

1. First, a safety incentive program should be behavior-based rather than being injury-rate-based. It means employers should provide incentives to workers practicing safe operating procedures and practices instead of incentivizing plans based solely on number of accidents.
2. Reporting near misses, hazardous behavior and situations on the front end should be a point of focus, which will prevent future accidents and injuries. (Leading vs. Lagging Indicators)
3. Praise and recognize employees through top management, in a timely manner, and in front of others to acknowledge their safe behavior and encourage others to act in the same manner.
4. Monetary rewards are okay for safety programs as long as they are not based on “reporting an incident”.  You can also utilize other rewards such as keeping points, safety bucks, certificates, days off, safety pins and recognition boards.
5. Reward employees for a wide variety of safety activities such as providing safety suggestions to daily operating procedures, guiding a co-worker or new hire to perform a task safely, identifying a hazard or participating in safety committees.
6. Programs cannot be vague or limited to the actual reporting of an incident.  “No injuries reported” or “Acting Safely” is not a safety incentive program, as these metrics give clear motivation for employees not to report injuries, or they are unclear as to what needs to be done in order to qualify.  Direct incentives based on employees behavior, and the qualifying metrics/procedures should be documented clearly.  A basic example would be “drivers must be on time every day, turn in all paperwork on time, follow all company outlined safety procedures and day to day tasks as outlined in the fleet safety manual to qualify for our company incentive plan”.
7. Make sure your safety program is robust and clear, outlining how you want your employees to conduct themselves and how you want them to perform the key elements of their job (3 points of contact getting in and out of truck, using all required PPE, wearing hard hat at jobsites, observing and following all posted road/traffic signs, not following too closely, observing smith system rules, etc.).
8. It is vital to incentivize/discipline all employees equally.  If you observe someone not following a company safety procedure, but no incident occurred, they should be disciplined the same way as someone not following the same safety procedure that led to an accident.  The accident/incident is the byproduct.  What we want to do is applaud/discipline the behavior/action, not the end result, evenly across your workforce.  This also requires management/supervisors to be engaged and actively observing all the time.
9. Ensure management commitment by demonstrating that organizational leaders care about safety.  This can be done by having them give presentations and establish safety as a core value of the company, believing that all injuries are preventable, and having zero incidents is possible.
10. Allow employees to set safety goals for themselves. This will motivate them to ensure their own commitment to safety and work towards achieving it.

 

The Bottom Line

Adopting these suggestions will empower your safety program, help minimize incidents and at the same time prevent OSHA violations.  To make things easier, think as if you are an employee working for your company. Does your plan incentivize you to become more safety focused, or afraid of the repercussions of reporting an incident or injury?  If the answer is the latter, then refocus your efforts in going through the 10 suggestions listed above, and find a partner that is well versed in safety incentive plans to help guide you.

 

By James Yankech, PhD, Senior Vice President for Client Relations

 

Eating disorder (ED) symptoms can be prevalent among college students and one demographic in particular may be more vulnerable: international students. Elements such as language barriers, a general lack of understanding regarding mental health, unawareness of access to health facilities, as well as the fear of losing their student visa are all contributing factors for this particular population.

I’ll be discussing this topic at this year’s Annual NAFSA Conference & Expo, along with my co-presenters: Eating Recovery Center’s (ERC) National Collegiate Outreach Director, Casey Tallent, PhD, and Yu Yun Liu, PhD, a clinical counselor for the University of Illinois, Urbana-Champaign. NAFSA unites nearly 10,000 attendees each year from more than 3,500 institutions and organizations from more than 100 countries. This year’s event, called “Diverse Voices, Shared Commitment,” takes place between May 27 and June 1, 2018, in Philadelphia, Pennsylvania at the Pennsylvania Convention Center.

Our session: “Eating Disorders and Co-Occurring Concerns in International and Diverse Students” is the result of a one-year working relationship between ERC and Relation Insurance Services that has focused on addressing the importance of eating disorders and other mental health issues on college campuses. ERC works to help college and universities identify signs and symptoms of eating disorders and co-occurring concerns and be able to develop policies and guidelines to support all students with these issues, including the often underserved international student population. Teaming up with ERC has given Relation the opportunity to better educate our clients on possible ways to support international and diverse students with eating disorders through various means, such as campus services, telehealth options, and insurance policies.

We’ll present during the Global Partner Session, tomorrow, May 31, from 9:00 A.M. to 10:15 A.M. at the Pennsylvania Convention Center, Room 112B. Our session will address the following: 1) how schools can understand mental health concerns facing international students including eating disorders; 2) identify the signs and symptoms of eating disorders and co-occurring concerns; and 3) develop the right policies and guidelines to support students with eating disorders and co-occurring concerns. We’ll be presenting case studies, along with viable solutions as part of our presentation and look forward to a productive discussion with attendees. We hope you can join us.

For event registration, and more information on the session, please follow this link.

To read the press release, click here.

 

It’s available to firms of all sizes.

As employers look for any and every means to control employee benefit expenses, an investment in outsourcing absence management has the potential to yield meaningful returns both objectively, in terms of costs and productivity, and subjectively, in terms of employee satisfaction. This solution is no longer available solely for the Fortune 1,000. It’s now an option for small and mid-sized firms and may also be a fit for your organization.

Among the numerous responsibilities of Human Resource teams, absence management is extremely time-consuming and perilous if executed incorrectly. There are a wide array of federal, state, county, and local statutes with which to comply, plus an ever-shifting landscape of constantly updating legislation, leaving government agencies and courts to interpret the statutes and regulations. To add to the complexity, company-specific absence procedures can lead to inadvertent and inconsistent application of policies and procedures that in turn could prompt allegations of discrimination.

The numerous types of programs involving mandated absences can also trip up an organization. Making matters worse, more than one type of mandated leave can be triggered at the same time. It’s not uncommon for there to be overlaps with short-term disability insurance and workers’ compensation return-to-work programs. Managing competing leave requirements, while staying within the law, creates an additional level of risk.

Types of Mandated Absences:

• Family medical leave – federal, state, local
• Military leave – federal, state, local
• State-mandated leaves – e.g., jury duty, state disability, pregnancy disability, domestic violence, organ donation
• ADA accommodation absences
• Company-specific leaves – e.g., personal, bereavement, paid sick time, extended family care, sabbaticals, education

One strategy to remain compliant in this environment is for an organization to continually strengthen current leave protocols and procedures and to retain full administrative responsibilities in-house. What many firms may not realize, however, is the administration and risks related to absence management can now be economically transferred to outsourcing administrators. While historically this was only a viable solution for very large firms, that’s now changed due to a combination of life, health, and disability insurers that have been acquiring absence management firms to broaden their in-house service capabilities, as well as quantum leaps in technology that have dramatically reduced the costs of outsourcing. As a result, an increasing number of small and mid-sized firms are choosing to outsource.

The greatest increase in outsourcing activities is by firms in the 50-249 and 250-999 employee bands.¹ However, other employers are increasingly evaluating a continuum of outsourcing options. They range from “co-sourcing,” in which the firm engages an outside insurance carrier or technology partner to handle some but not all absence management functions, to fully outsourced management and administration.

Why is Outsourcing Absence Management a Good Idea?
Whether an organization chooses to take a partial or a total approach, a well-designed outsourced absence management program offers the opportunity to implement a consolidated, consistent application of leave policies across multiple business units and jurisdictions. Beyond the reduced compliance risk and exposure to penalties afforded by having access to each state’s unique laws and coordination guidance—especially when they overlap with federal legislation, the benefits for employers are broad.

Outsourcing administrators leverage powerful technology tools to measure, analyze and monitor absence metrics, which reduces HR staff workloads. In addition, employees’ experiences improve with better communication about the full offering of company-provided benefits, which in turn increases productivity due to lower absentee rates and decreased employee abuse of leave benefits. It’s no surprise then that interest in outsourcing continues to increase for firms of all sizes, and employer satisfaction with outsourcing vendors is high.²

Is it Viable for My Organization?
Although outsourcing absence management holds the promise of being a valuable solution, the evaluation process can be significant and time-consuming. Project complexity will vary based on factors such as firm characteristics (e.g., headcount, different operating jurisdictions, and centralized vs. decentralized management) and the number of programs qualified for outsourcing. Regardless of project scope, a systematic approach and a detailed implementation timeline is needed to make an effective evaluation.

The first step is to establish a cross-functional evaluation team with complementary areas of expertise. In addition to human resources, internal stakeholders will likely include senior management, finance, legal, and IT. External participants typically comprise the firm’s benefit consultant, outsourcing partners (e.g., carriers and/or technology firms), and any other impacted outside vendors (e.g., payroll administrators, workers’ compensation/disability insurers, or third-party administrators).

Next, the effectiveness of existing programs must be assessed by looking at current policies and process flows, as well as the sources and cost drivers of employee absences. The overall objective is to develop baseline data to compare outsourcing against the status quo.

The final step in the evaluation process involves formulating a business case and designing an operating model to outsource some or all programs involving employee leaves. This will include anticipated results for increased productivity, operational savings, risk-mitigation efforts, technology enhancements, and the effect on employees.

How Do I Bring a Program to Life in My Organization?
If management agrees the business case is compelling and decides to proceed, the operating model and timeline from the evaluation project becomes the implementation roadmap. To ensure the outsourced absence management program is successful, senior management must explain the rationale for the change, as well as the goals and expected outcomes. Providing employees with clear, detailed communication on policies, procedures, and training requirements, and leveraging technology to monitor performance metrics is essential to actively manage and fine-tune the program on an ongoing basis.

 

About the Authors

 

Michael Stallone is a Senior Vice President  in the employee benefits practice at Relation Insurance Services in Walnut Creek, CA. He can be reached on LinkedIn, via email at [email protected] or via phone (925) 956-1640.

 

This article originally appeared on the BenefitsPro website here.

 

Footnotes

• The 2017 Guardian Absence Management Activity Index (SM) and Study
• 2016 Disability Management Employer Coalition and Spring Consulting Group

By Joe Dunn, Angel Mendez, and Scott W. Dunn

 

Agribusiness clients are acutely aware of the high premiums they pay for workers’ compensation, premises liability, health insurance and the steps they can take to mitigate those costs. On the other hand, automobile liability has historically been a low-cost, low-visibility afterthought. Not anymore.

The risk associated with catastrophic vehicle-related losses is on the radar of underwriters who insure agricultural operations.

Many have seen loss ratios spike to 90 percent or higher on their auto liability book of business and are alarmed by the skyrocketing frequency and severity trends. In an informal poll, agricultural insurers expressed concerns that the market for auto coverage is seriously underpriced, and some are considering rate increases as high as 30 percent. Said one underwriter, “If you can’t get enough rate, you just have to walk away from some accounts.”

Consider the following scenarios:

• As he does every day, a California farm labor contractor transports employees to and from job sites. One evening, while driving six workers home, the contractor drifts off the highway. He overcorrects, causing the van to flip several times. All six passengers, including two underage girls, are ejected from the vehicle. Three men are pronounced dead at the scene and one of the underage girls later dies from her injuries.
• After inspect-ing a field to be harvested, a farm labor contractor employee stops at a bar and consumes five shots of whiskey and two 22-ounce beers in a three-hour period. He subsequently climbs into his truck and, while texting, rear-ends a car stopped at a red light. A four-year-old boy in the rear-ended car is killed instantly, while his mother and sister are injured.

Catastrophic vehicle losses have a significant impact on the agribusiness industry and create turmoil for both insureds and insurers. The emotional and financial toll in the case of a death or severe disability resulting from a vehicular accident can affect victims and their families forever. Employers dealing with vehicle-related claims involving their employees also face the devastating financial consequences of insured and uninsured costs increasing exponentially.

The insured costs most likely to be impacted arise from automobile liability, umbrella/excess liability, workers’ compensation and employers’ liability policies. Insureds typically have deductibles, or self-insured retentions and claim costs will need to be paid. In the longer run, a poor motor-vehicle or employee-injury-loss history can result in premium increases, mid-term cancellations, or worse yet — the unwillingness of any carrier to quote the account. Uninsured costs, including the following, are frequently overlooked but can be even more costly:

• Lost production time;
• Damage to crops/other products;
• Increased overtime for existing employees;
• Loss of experienced staff;
• Need to hire and train new/temporary labor;
• Damaged employee morale;
• Investigation and legal expenses;
• Governmental agency audits/fines;
• Loss of management’s time; and
• Negative publicity.

The risk associated with catastrophic vehicle-related losses is on the radar of underwriters who insure agricultural operations.

According to the National Highway Traffic Safety Administration (NHTSA), 2016 was a deadly year on the roads with 37,461 deaths — a 5.6 percent increase over the number of deaths in 2015. In addition, vehicle crashes are the leading cause of work-related deaths, accounting for 24 percent of all occupational fatalities, according to the National Safety Council.

The silver lining in the NHTSA study is that more than 94 percent of accidents are caused by human error and are thus preventable with proper training.

For employers, the best preventative tools are careful driver recruitment and comprehensive driver and fleet safety education. The “gold standard” of driver training is the National Safety Council’s Certified Defensive Driver Courses, which are available in either a classroom setting or online. For employers that are unable to commit their workforce to the time and expense of an intensive certificate program, insurers and broker loss control and claims consultants can tailor short “tailgate talk” training sessions that focus on, amongst other things, the following topics:

• Driver-selection tips;
• Drug-and-alcohol testing protocols;
• MVR-review policies;
• Defensive-driving techniques;
• Cell-phone usage;
• Vehicle inspection and maintenance;
• Accident response and investigation procedures;
• Post-loss claim-mitigation strategies;
• Driver-incentive and discipline programs; and
• Mock DOT and OSHA audits.

Employers’ negotiating positions on auto liability, umbrella/excess and workers’ compensation program renewals are strengthened when they can demonstrate to underwriters the tangible steps they have taken to become a better-than-average risk. The potential return on investment? Objectively, a well-designed safety program that has achieved meaningful reductions in auto and employee injury claims can yield the following financial benefits:

• Increased competition for the account as underwriters vie for quality risks.
• The ability to effectively counter upward premium pressures.
• The confidence to increase deductibles or retentions, thus lowering premiums.

Subjectively, employers will have a safer workplace and more contented workforce.

The farm labor contractor from the first scenario did not have a driver’s license and ended up being sued by multiple parties. He filed for bankruptcy and ultimately went out of business. In addition, the U.S. Department of Labor sued the grower that hired him for violating worker safety and transportation laws.

The alcohol-impaired driver from the second scenario was sentenced to a mandatory 16-year prison term for gross vehicular homicide. His employer’s auto and umbrella liability coverage ended up paying out a multi-million-dollar settlement.

 

This whitepaper was featured in Insurance Journal’s Workers’ Compensation Newsletter on March 1, 2018 and published as an eMagazine on February 19, 2018.

Joe Dunn is the claim services manager, Mendez is a senior loss-control consultant, and Scott W. Dunn is vice president/risk advisor specializing in agribusiness, all of Pan American Insurance Services, a Relation company.

SF Biz Times Exclusive: Startup Zendrive to triple workforce at new San Francisco headquarters

Transportation data company Zendrive this month moved into a new office to expand its San Francisco operations and says it wants to triple its workforce here.

The company analyzes mobile phone data to predict driving behavior and helps insurers identify risky drivers. Its customers uses these analytics to manage their vehicles, drivers and liabilities.

Zendrive charges enterprise customers a fee per driver monthly and earns commissions through its insurance agency ZD Insurance Services, LLC. The affiliate acts as an agent for its insurance partners.

By using smartphones to track cars and driver behavior on the road, Zendrive works with insurance companies and transportation planners to lower their costs and collisions using data analytics. It is building out a new headquarters with 7,500 square feet on the third floor of 929 Market St. to triple its workforce. The company has 61 employees in San Francisco and Bangalore, India, with most of the anticipated growth here.

Distracted phone use causes a quarter of car accidents in the U.S., according to the National Safety Council. Zendrive said its technology and data can improve driver safety by collecting data on behavior, like speeding and hard braking, and phone use. The company said it is amassing data on tens of millions of drivers and tens of thousands of crashes but keeps the data anonymous and does not share with anyone.

These insights could affect how auto insurers set their prices and help transportation businesses learn more about what causes accidents, where they happen and types of drivers who cause them, Zendrive said. However, the startup said it doesn’t directly report data to insurance companies, and it cannot identify drivers, their companies or insurance from their data.

Zendrive has raised about $20 million in funding, backed by investors including First Round Capital and BMW iVentures. It was founded by Jonathan Matus and Pankaj Risbood in 2013 to focus on using data analytics to improve road safety. Matus, who spent several years at Google then Facebook working on mobile products, said he felt responsible for working on smartphone technology that added to people’s distractions on the road.

“I didn’t feel that was a meaningful use of the people around me and the use of my time,” said Matus, founder and CEO of Zendrive.

Smartphones were killing people, but they could also be used to save their lives, Matus said. So Zendrive has created a developer platform for companies to analyze driver behavior in order to prevent accidents and develop insight on their fleets.

Using smartphone sensor and GPS technology, it captures data around collisions, distracted driving and aggressive driving and then sends driver coaching insights and recommendations through its dashboard, an API, emails or text alerts. The app scores drivers’ performance and sets goals for them.

Zendrive said its driver coaching, which costs $4 per driver per month, can help reduce crashes by up to 49 percent, and the tool will get better as it accumulates more data. On average, the company analyzes more than 15 billion miles of data every two months, totaling about 50 billion miles so far.

That’s compared to Progressive Insurance, for example, which in 2017 reported collecting 15 billion miles of data over 18 years, Matus said.

“We’re going to hit 100 billion (miles) soon,” he added.

Zendrive will continue growing its team in India, which occupies a large building with two floors and will add two additional floors. The company has also been working with autonomous vehicle partners to research safety and road conditions in that upcoming market.

Using insightful data to determine prices has caught on in the business. Insurance company Metromile, also based in San Francisco, is using a small GPS device installed in customers’ cars to bill based on usage, and the company raised some $150 million in 2016 alone. It now has more than $200 million in funding, according to Crunchbase. It is available in seven states and expanding service to New York, Texas and Florida.

Tom Pataluch, director of software development at Walnut Creek-based Relation Insurance Services Inc., said these technological changes have enabled insurers and businesses to look beyond aggregated data, which traditionally included information like driving history and deductibles. Now they can collect more personal history and data in real-time to come up with more accurate rates.

“Data is becoming increasingly important. I can definitely see cases where it can help companies with fleets and the trucking sector to manage risk,” Pataluch said.

But not everyone will see savings on Zendrive. Rates are still tied to driver behavior: Drivers going slower on shorter trips will see rates go down, and drivers going faster over longer distances might see rates go up.

“It will lower the rates for some and increase the rates for others,” Pataluch said.

 

This article, authored by Antoinette Siu, originally appeared in the San Francisco Business Times on January  22nd, 2018.

 

Written by Joe Tatum, CEO

Today we announced to the world that we’ve changed our name from Ascension Insurance to Relation Insurance Services. I’m personally thrilled about this new name–it speaks to who we are and the legendary service we strive to deliver, every day.

Our clients have always faced a wide array of operating challenges and we’ve been by their side as a partner and an advocate to help them manage risk. As we head into 2018, we’re facing an increasingly complex world. Media headlines on topics as diverse as cyber-attacks, blockchain/cryptocurrency, autonomous vehicles, smart cities, drones, and the difficulties in attracting and retaining employees in an ever-transforming business environment, were unheard of just a few short years ago.

Business leaders are wondering how these challenges will impact their organizations and it’s our job to help clients understand the risks. To help them connect the dots between data and analytics, and leverage our insurance expertise and strategic relationships to develop and implement solutions that mitigate those risks. The name Relation emphasizes our ability to do all that, and from here on out, we’re proudly putting it front-and-center, on everything we do.

Looking back, 2017 was a strong year for us. We had excellent year-over-year revenue and EBITDA growth, which was driven by a combination of factors:

• Through Pan American Insurance Services, our wholly owned subsidiary, we made strategic acquisitions in the west and welcomed two outstanding firms, Yosemite Pacific Services and Agro Crop Insurance Agency, to our brand family. Both firms are leaders in what they do and we couldn’t be more excited to have them on board. These acquisitions combined have now positioned us as one of the largest agribusiness insurance writers in California.
• We expanded our personal lines and small commercial lines reach by continuing to integrate our Greenpoint acquisition in the east, (made late in 2016, it broadened our North Carolina footprint and extended our operations into Virginia), and purchasing a commercial book in Hollister, California from The Liberty Company.
• We invested a lot to make sure our production and service teams, which are some of the best in the business, had access to a full suite of sales techniques, tools, technologies and best practices to serve our clients. Our industry-leading retention rate is a result of their tireless efforts.

We also made executive and strategic regional hires with an eye toward managing our continued growth and aligning the business units with the evolving insurance and risk landscape. What follows is by no means an inclusive list, but our team grew even stronger in 2017 with the following, key additions:

• Natalie Zensius joined us as Vice President of Marketing and Communications to identify opportunities to strengthen our brand, increase awareness of our products and services, and attract and retain top talent.
• Scott Machado came on board as Vice President of Information Technology to implement customer-experience initiatives that build scale and drive value through employee and customer satisfaction.
• Kari Doeckel joined as Vice President, Operations to Pan American, to lead account retention, carrier management, and client-service efforts.
• Rob Bauer became our Corporate Legal Counsel to provide solutions in corporate governance, carrier and partner relationship negotiations, and regulatory compliance.
• Michael Williams joined as Loss-Control Consultant in our eastern region to provide comprehensive risk-management and loss-control programs.
• Kristine Fox brought account management and crop insurance expertise to the Pan American team.
• Jennie Hunsberger added additional retirement services expertise to the western region benefits team.

In addition, we recognized some outstanding individuals with new leadership promotions:

• Keri Lopez from President of western division employee benefits to President, employee benefits to manage our national Employee Benefits practice.
• Kate Rager from Corporate Legal Counsel to General Counsel.
• Greg Merrill from Senior Vice President to Executive Vice President of Pan American.
• Michael Lorente to Sales Leader, Western Region.

Wherever they sit on the org chart, our people and the culture they create, are our greatest strength and are what contribute to making this a great place to work.

We were also honored to be included alongside our esteemed peers in the industry in 2017:

• We were named as an “Elite Agency” by Insurance Business America for the third year in a row.
• We were named to Insurance Journal’s 2017 Top 100 Property/Casualty Agencies.
• We moved up from #47 to #42 on Business Insurance’s Top 100 Largest U.S. Brokers.

While we appreciate the accolades, at the end of the day it matters most to us what our clients need and we know that they need their broker to stay ahead of the curve and to provide intelligent, tailored solutions backed by deep experience. They need a broker to apply data-driven technology solutions to drive efficiency, innovation, and a competitive edge and to bring strategic carrier partnerships to collaborate with them. As we look forward to 2018, our new name Relation underscores all of the connections we make for our clients. This is always who we’ve been. Now we have a name that better reflects it.

I wish you all a Happy New Year and look forward to continuing to create great things in 2018!

Best,
Joe

Written by Greg Merrill

 

For more than 15 years, Pan American has been fortunate to count one of the oldest family-owned wineries in Northern California amongst our clients. This vineyard enjoys unique geology and diverse soils that enable the production of high-quality wine labels.

We began handling the winery’s crop insurance in 2002. Since then, our business relationship has strengthened, and the client has become familiar with our expertise in the agricultural sector. In 2009, the client entrusted Pan American to place all other lines of coverage.

This decision was heavily influence by Pan American’s recommended approach on covering their property risks. As we explain to all current and prospective clients, vineyard and winery operations have unique property-and-casualty exposures, yet many brokers default to a simple Package Policy to cover stock. As a result, there can be numerous exclusions and policy-form limitations. Rather that instituting a one-size-fits-all strategy, our approach comprises investing significant time with our clients to fully understand their potential risks, followed by outlining a range of alternative strategies.

For this particular client, we explained the advantages of using a “Stock Throughput Policy” (STP) rather than the Property Coverage part of a Package Policy. (An STP is an “all risk” insurance policy that provides seamless coverage from the field to final sale.) Unlike the Property Coverage in a Package Policy, a properly tailored STP can offer growers and distributors comprehensive protection against numerous perils, including earthquake, flood, and contamination.

Earlier this year, during production, a valve malfunctioned and several hundred gallons of fine wine in process—valued at more than $250,000—were lost. Coverage could have been excluded had they relied on a basic Package Property coverage, but because they had already implemented the “all risk” STP, it was fortunately a covered loss.

Do you have the correct coverage in place for your unique exposures? Contact us for a consultation today.

 

About the Author:

Greg joined Pan American more than a decade ago focusing on crop insurance. He soon began to practice other lines of insurance and is now versed in both Property/Casualty and Life/Health. In 2009, Greg was appointed Director of Pan American’s crop insurance division. Greg is dedicated to excellence in his field and is committed to providing comprehensive insurance coverage solutions to his clients. He specializes in agribusiness and has clients throughout Northern, Central & Southern California.

Designations & Achievements:
CIC – Certified Insurance Counselor
AFIS – Agribusiness & Farm Insurance Specialist
National Alliance School for Producer Development (Graduate)
2009 President’s Award